1. Understanding Regulations in the Colombian Mining Industry Diego Casas- Tax Partner Ricardo Ruiz (LL.M)- Tax Manager 17 June 2010

2. Understanding Regulations in the Colombian Mining IndustryPage 2 Objectives Colombian regulations applicable to mining industry with regard to the following aspects: 1. Taxation at a glance 2. Structuring and financing Colombian operations 3. Legal Stability Agreements

3. Understanding Regulations in the Colombian Mining IndustryPage 3 1. Taxation at a glance: Income tax At a glanceDetail Income tax & Capital gains tax rate FY 2010: 33% Free trade zones: 15% AmortizationTechnical units of production / straight line Other investment: Any method Unsuccessful investment – Accelerated Depreciation Straight line / declining balance Additional 25% quota for every extra 8 hours Obsolete or impaired tangible assets: Accelerated Special deductions (in addition to normal depreciation or amortization) Capital allowance (productive fixed assets): 30% Research & Development: 125% Non mandatory environmental investments: 100% Tax attributes: 1. NOLs carry-back 2. NOLs carry-forward 3. Excess of presumptive income 1. N/A 2. No time or amount limitation from 2007* 3. 5 years (No value limitation)* * Adjustable each year under a tax index

4. Understanding Regulations in the Colombian Mining IndustryPage 4 1. Taxation at a glance: Other matters At a glanceDetail Remittance taxEliminated from 2007 Treaties to avoid double taxationAndean Pact: Ecuador, Peru & Bolivia Spain and Chile: in force Canada*, Switzerland and Mexico: Signed but not in force * Expected to be in force in fiscal year 2012. Transfer pricing (OECD model)Applicable with foreign related parties (including branches with home offices) RoyaltiesVariable depending of metal/ mineral: 1% to 12%. Deductible. Lease fee (model concession agreement) Progressive depending on time holding of the exploration areas: 1 to 1.5 monthly legal wage per hectare (USD $255 to USD $375). Deductible

5. Understanding Regulations in the Colombian Mining IndustryPage 5 1. Taxation at a glance: Sales tax (VAT) At a glanceDetail Rate General rate 16% Taxable events Sale of movable tangible goods in Colombia Import of movable goods. Services rendered in Colombia* ( *) Included certain services rendered abroad with benefit in Colombia (i.e. License, consulting, advisory – including technical assistance- and audit) VAT CreditIf a VAT taxable events is related VAT refundIf an exempted VAT event is related Not creditable VATIt results on higher value of the cost or expense for income tax purposes

6. Understanding Regulations in the Colombian Mining IndustryPage 6 2. Structuring and financing Colombian Operations: Subsidiary vs. branch Foreign Investor Subsidiary Foreign Investor Branch No tax 1)Premise: Dividends are not taxed to the extent all profits are taxed at corporate level 2)Consequence on subsidiaries: Tax planning, exemptions or special deductions often generates NO real tax savings, just deferral. Exceptions: 30% capital allowance and exemptions under a tax Treaty 3)Consequence on branches: Tax planning always generate tax savings Deferral 33%

7. Understanding Regulations in the Colombian Mining IndustryPage 7 Operating Company Colombian Holding Colombian Holding Description: Sale of shares will not generate capital gain in Colombia at 33% Canadian Investor Operating Company Foreign Holding Canadian Investor 2. Structuring and financing Colombian Operations: Direct vs indirect acquisitions 1) 2) 21 Foreign Holding 1 Canadian Investor Foreign Holding 2 Operating Company Sale of shares will generate capital gain in Colombia at 33% 3) Sale of shares will not generate taxable capital gain in Colombia or Canada 3

8. Understanding Regulations in the Colombian Mining IndustryPage 8 Mining Operating Company Foreign Bank Description: Funding allowed by Exchange Law. Applicable to subsidiaries and branches under general Exchange Law Regime If loan is devoted to mining activities no WHT on interest payments Deductibility of interest payments Funding not allowed by Exchange Law, except international Leasing In this structure local funding should be requested by the MOC to achieve deduction. If made by the Holding would be non deductible Foreign Investor Mining Operating Company Col Holding Foreign Investor 2. Structuring and financing Colombian Operations: Debt Funding 1 2 2 2) 1)

9. Understanding Regulations in the Colombian Mining IndustryPage 9 Non taxable for share holders provided profits are subject to taxation at corporate level. otherwise 33% WHT. Taxable Beneficiario efectivo ExemptionTax Credit Non taxable for share holders provided profits are subject to taxation at corporate level. otherwise 33% WHT. Non taxable for share holders provided profits are subject to taxation at corporate level. otherwise 33% WHT Exemption Non taxable for share holders provided profits are subject to taxation at corporate level. otherwise 15% WHT. Note: Once Canada-Colombia treaty in force, dividens paid out of active business income should not be subject to tax in Canada 2. Structuring and financing Colombian Operations: Dividend repatriation under treaties

10. Understanding Regulations in the Colombian Mining IndustryPage 10 Assured StandardPremiumApplicants Local or foreign investors, individuals or legal entities Consortiums Transcription of standards or their linking interpretations Demonstrate its relationship with decision to invest 1% of investment value 0.5% during unproductive period Termination Investment Project New investments or increase of existing projects (approx. US$ 1.8MM) May cover the investors total activity or only the marginal cost Obligation to sign Not mandatory to sign, if agreement terms are not satisfactory No fines or other adverse consequences, if not signed Activities not included Nullity or unenforceability of standards or interpretations Standards not covered Stability Other Precedent 48 contracts signed 14 contracts approved 20 years period has been granted Many covers the entire activities of the companies Scope Law 963 of 2005 Market regulations Rules issued by the Central Bank Environmental standards Social security Reg. Taxes and mandatory investments in states of emergency Indirect taxes Financial sector regulations Public service tariffs 3. Legal Stability Agreements

11. Understanding Regulations in the Colombian Mining IndustryPage 11 E&Y Contacts In Colombia Luz Jaramillo; Country Managing Partner, 57 1 4847230 luz.jaramillo@co.ey.com Gustavo Pardo, Tax Managing Partner, 57 1 4847130 gustavo.pardo@co.ey.com Diego Casas; Tax Partner, 57 1 4847050 diego.e.casas@co.ey.com Ricardo Ruiz; Tax Manager, 57 1 4847537 ricardo.ruiz@co.ey.com