Projects in Brief

Process Description and Development Phases of the Sotkamo Silver AB's Taivaljärvi Silver Mine.

Phase	Exploration				Deposit development				Exploitation
Stage	1	2	3	4	5	6	7	8	9	10
Description	Regional survey	Anomaly exploration	Anomaly, Showing verification	Discovery, Delimitation	Deposit definition	Project engineering	Project economics	Feasibility Decision	Mine develop- ment	Mine exploitation
Evaluation methods	Regional survey, geological, geo- chemical, geophysical surveys and inventories	Ground surveys, staking, geology, exploration, geo- chemistry, geophysics	Staking, detailed surveys, trenching	Stripping, trenching, sampling, drilling	Detailed mapping, sampling, drilling on surface or under-ground	Engineering studies, Pilot tests, mine and political constrains	Extraction policy. Market, price and cost surveys. Social and political constrains	Review of geological, engineering, economic, legal, financial and site data. Evaluation and decision	Construct. of mine/mill infra-structures; pit/mine develop- ment	Mine planing, develop- ment. Exploitation sales.
Evaluation objectives	Find regional or sector anomalies	Locate and confirm anomalies	Property aquisition. Anomaly and showings verifi-cations.	Discowery, confirma- tion and first delimitation of a mineral deposit	Etablish limits, distribution, mineralogy, grade and controls of minerali-sation	Engineering planing and environ- ment protection	Establish parameters of economic evalution	Complete and appropriate project review. Net present value. Risk factors	Prepare commercial exploitation	Efficient manage- ment, profibality, company survival
Margin of error	100 %	100 %	100 %	40 %	30 %	20 %	15 %	10-15 %	10 %	10 %

Taivaljärvi	Kajaani Oy	Kajaani Oy	Kajaani Oy	Kajaani and Outokumpu	Kajaani and Outokumpu	Sotkamo Silver 2010	Sotkamo Silver 2011	Sotkamo Silver 2011	Sotkamo Silver 2012	Sotkamo Silver 2013

Approximately 15 million euros have been spent on exploration of the Taivaljärvi Project, it was originally discovered in 1980 by university researchers, who identified several silver-lead-zinc-gold anomalous glacial boulders one kilometre down in the ice from outlined mineralization.

Kajaani Oy, a Finnish exploration company followed up these initial boulder indications by percussion drilling, bedrock-moraine interface sampling and a small boulder rock chip sampling program. Results from the percussion drilling led to the identification of the sub-crop mineralization. Followed-up diamond drilling intersected mineralization in 1981.

Further work by Kajaani, which consisted of mapping, geochemical till sampling and the completion of several geophysical studies, resulted in the definition of silver-lead-zinc-gold mineralization of over a 400 by 100 metre surface area, to a depth of approximately 500 metres, with a strike length of nearly 550 metres. The quantity of mineralized rock in this area were estimated to be approximately 10 million tonnes.

In 1986, Kajaani entered into an agreement with Outokumpu Oy, resulting in the formation of the 50:50 Taivalhopea Joint Venture in 1988. The objective of the joint venture was to develop underground access to the identified mineralization and to investigate further potential of the Taivaljärvi Project.

In 1991, Outokumpu Oy conducted a feasibility study with respect to the exploitation of the Taivaljärvi Project. Metallurgical tests were completed as a part of the feasibility study. The tests generally demonstrated that the mineralization was amenable to concentration with standard floatation techniques. Outokumpu Oy concluded at that time that due to weak metal prices, development of the Project was not financially feasible.

Combined 308 drill holes (152 surface and 156 underground) of tabout 51,000 metres have been drilled on the Taivaljärvi Project and its immediate surrounding area, with the completion of over 8,500 assays for silver, zinc, lead and gold on samples collected from the area. Selected results include 721 grams of silver, 1.2 grams of gold, 0.4% zinc and 0.6% lead per ton over 7.8 metres, 1.531 grams of silver, 1.0 grams of gold, 1.8% zinc and 0.5% lead per tonne over 8.1 metres and 575 grams of silver, 1.7 grams of gold, 1.9% zinc and 1.6% lead over 4.1 metres.

Sotkamo Silver has continued the exploration and development of the Taivaljärvi Project inclusive completion of an environmental baseline study of the Project area in 2006 and preparation of a first NI-43-101 compliant resource in May 2007. The first measured and indicated resources were estimated to 1.2 million tonnes grading 153 grams of silver, 0.9% zinc and 0.5% lead per tonne, with inferred resources of 617.000 tonnes grading 130 grams of silver, 0.8% zinc and 0.4% lead per tonnes. The historical average gold grade was 0.7 grams of gold per tonne.

Sotkamo Silver has during 2011 received an independent estimatte of the mineral resources for Taivaljärvi Silver deposit. Total measured and indicated resources were 3.5 million tonnes grading 125 grams of silver equivalents/ton, and inferred resources of 1.5 million tonnes grading 127 grams of silver equivalents/ton.

Other work has included preparation of a proposed mine plan based on the assumption that approximately 3 to 5 million tonnes of the total outlined 13 million tonnes are financially viable ore. This estimate has been prepared by management based on their geological knowledge and current understanding of the Taivaljärvi deposit. NI 43 101 compliant estimated projected mine life is 9 to 10 years, with annual estimated concentrate production of 46,000 tonnes excavated from an open pit mine, as well as from an underground mine operation.