Karmin Exploration Inc. n Aripuanã; 46 million tonne Zn-Pb-Cu-Ag-Au deposit n construction starts 2018 then production in 2020 n 24 + year mine life n 30% carried interest (until 1 year after feasibility; 4Q19) n PEA; 19% IRR, US$461 million NPV (7% before tax) April 6, 2018 KAR:TSX-V & BVLima 1
Forward Looking Statements Certain statements in this presentation may constitute "forward-looking statements that involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of Karmin or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These statements reflect our current beliefs and are based on information currently available to us and on the assumptions Karmin believes are reasonable. Actual results and developments may differ materially from results and developments discussed in the forward-looking statements. 2
Corporate Essentials Exchange TSX-V & BVLima Trading symbol KAR Shares outstanding 76,748,714 Share price 6Apr18 $0.83 Market Capitalization $64 million Karr Securities & directors 36% Arias Family 29% 3
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FOTOS PROJETO Área do Projeto Cidade de Aripuanã Aeroporto Usina Hidrelétrica 49 5
Aripuanã Joint Venture n 30% Karmin / 70% Nexa* Karmin does not contribute until 1 year after a bankable feasibility study has been completed (4Q19) JV agreement stipulates financing is preferably project finance on a limited recourse basis n Karmin has commercial rights on 30% of production; zinc, lead, copper, silver & gold in concentrate Nexa has rights of first refusal on zinc concentrate n Karmin s rights on silver & gold production provide financial flexibility for stream financing 6
Aripuanã Joint Venture n Nexa Resources 2017 Brazilian company listed on NYSE & TSX Revenues US$2.5 billion EBITDA US$668 million Zn production; 594,000 tonnes (in the top 5 globally) 3 zinc smelters, 5 mines Aripuanã is Nexa s main near-term growth project 7
Aripuanã Zn-Pb-Cu-Ag-Au Mine n Very large massive sulphide system & still open 21.8 million tonne resource (measured & indicated) 24.6 million tonne resource (inferred) Measured & Indicated Inferred Zinc 2.3B lbs. 2.1B lbs. Lead 0.9B lbs. 0.8B lbs. Copper 158M lbs. 226M lbs. Silver 31M oz. 30M oz. Gold 279,000 oz. 732,000 oz. Technical information in PEA filed on SEDAR under Karmin Revised mineral resource scheduled for 2Q18 8
MAIN OREBODIES AREX AND AMBREX AREX AMBREX Stratabound blue and red, Stringer - yellow 9 6
GEOMETRY OF THE MINERALIZED DEPOSIT Aripuanã; open at depth & along strike W AREX Open along strike LINK AREA (Ambrex West) AMBREX E New discoveries Stratabound Stringer Over 80% of drill holes yield positive results Open at depth Longitudinal View of the Mineralized Deposits, By Ore Type Looking North FPAR 159; 635.4 m to 646.7 m (down the hole) 36.5% Zn 13.5% Pb 242.7 g/t Ag 10
Aripuanã Timeline n Feasibility study complete 4Q18 n Construction starts 4Q18 n Capital Expenditures (US$354 million; 100% basis) 2018 US$ 20 million & US$5.5 million exploration 2019 ~US$150 million 2020 ~US$184 million n Production starts 4Q20 n Strong track record of mine development Cerro Lindo processes 21,000 TPD; originally was 5,000 TPD Aripuanã is a similar type of deposit 11
Aripuanã Mine n n 5,000 tonnes per day.. for 24 + years Production (metals in concentrate) Zinc 51,000 tonnes/yr Lead 20,000 tonnes/yr Copper 4,000 tonnes/yr Silver 1,000,000 oz/yr Gold 25,000 oz/yr 12
Aripuanã Mine; excellent economics n Preliminary Economic Assessment by RPA 19% IRR before tax US$461 million pre-tax NPV @ 7% n Zn price US$1.06/lb. & Pb price US$0.88/lb. n C$2.27 per Karmin share n Scotiabank 19% IRR US$338 million after tax NPV @ 8% n Kallpa Securities (Lima, Peru) 20% IRR US$262 million after tax NPV @ 11% 13
Aripuanã Upside; higher metal prices n n Base case metal prices Zn US$1.06/lb. Pb US$0.88/lb. Cu US$2.74/lb. Ag US$18.95/oz. Au US$1,278/oz. Consensus metal prices Zn US$1.26/lb. (+19%) Pb US$1.09/lb. (+24%) Cu US$3.42/lb. (+25%) Ag US$18.95/oz. Au US$1,312/oz. (+3%) metal prices +20% increases NPV by US$330 million CIBC metal prices; Zn US$1.40/lb., Pb US$0.93/lb., Cu US$3.70/lb. 14
Aripuanã Upside; low cost production Zinc All-in Cost Curve 15
Aripuanã Upside n Highly leveraged to Zinc price (~40% of revenue) metal prices +20% over the PEA base case increase NPV by US$330 million (9% after tax) n Revised mine plan with higher grades upfront additional ore found near current deposits n Amazon tax rate 17% versus the normal 34% Brazilian corporate tax n Increase of production above 5,000 tpd Cerro Lindo has increased from 5,000 tpd to 21,000 tpd n Development of satellite deposits to extend mine life beyond 24 years 16
Aripuanã: after 24 years. n Six known massive sulphide deposits n 20-25 km. along strike AREX AMBREX BABAÇU MASSARANDUBA BOROCA MOCOTÓ 10 kilometres 17
www.rpacan.com 59 40'W 59 30'W 59 20'W 59 10'W Aripuanã 20 kilometres N District - Mineral Rights n very large land position n 820 km 2 10 00'W 10 00'W 10 00'W Legend: Aripuana City Drainages Federal Highways State Highways Secondary Roads 10 00'W 10 00'W 10 00'W 59 40'W 59 30'W 59 20'W 59 10'W 0 5 10 15 20 Kilometres Status: Final Report Submitted (Waiting for Approval) Mining Application Postponed Mining Application Submitted Negative Report Submitted (Maintenence Strategy) Valid Exploration Permit Waiting for Exploration Permit Waiting for Exploration Permit Renewal January 2013 Source: Karmin Exploration Inc., 2012. Figure 4-2 Karmin Exploration Inc. Aripuanã Zinc Project Mato Grosso State, Brazil Mineral Dispositions and Property Map 18 4-6
Karmin Strategic Review n CIBC World Markets hired to review strategic alternatives.. n financing options for participation in Aripuanã n value enhancing alternatives corporate sale sale of assets 19