Rosemont Heap Leach Conceptual Design Page 1

FOR INTERNAL DISCUSSION PURPOSES ONLY

TECHNICAL MEMORANDUM TO: Augusta Resource Corp.

ATTENTION: Jamie Sturgess

FROM: Troy Meyer – Project Manager, Vector Colorado LLC (Vector)

DATE: June 5, 2006

SUBJECT: Conceptual Heap Leach Pad Design Layout

PROJECT #: Rosemont Mine / 06.50.0300

1.0 General As requested by Augusta as part of the Preliminary Economic Assessment for the Rosemont Mine, this report presents conceptual design and cost estimates for the development of the Heap Leach Pad proposed for the Project. The conceptual design work for this report was requested by Augusta to determine the general level of pad layout for a +/-35% cost estimate. The preliminary general facilities arrangement for the project is presented on Figure 1. The leach pad layout is shown on Figure 2 with a typical section and details shown on Figure 3. An Excel spreadsheet of calculations for approximate pad tonnage limits and lift placement time for pad startup and expansion siting purposes is shown on Table 1.

1.1 Background

The Rosemont project site lies in a high, sparsely populated intermountain area approximately 35 miles southeast of Tucson, Arizona on the east slope of the Santa Rita Mountains. Access to the site is via Highway 83 which connects Interstate 10 with the town of Sonoita. Augusta controls a large portion of the site including the Hidden Valley Ranch and Rosemont Ranch. The Coronado National Forrest is custodian of much of the slopes of the Santa Rita Mountains.

Vector Colorado – Technical Memorandum Page 2 FOR INTERNAL DISCUSSION PURPOSES ONLY

Rosemont Heap Leach Conceptual Design

1.2 Site Visit

Troy Meyer, P.E. of Vector visited the Rosemont property March 8 through 9, 2006 to perform site reconnaissance and familiarize Vector with the proposed facility locations, site features, surficial geology and soils. Photographs taken during this site visit are presented in Attachment A.

2.0 Leach Pad Siting The general leach pad siting location was determined by Vector, Augusta and WLR Consulting as part of the overall mine and waste rock dump layout as shown on Figure 2. Ore production and process flows for conceptual siting purposes were discussed with Washington Group International (WGI) to be 11,000 tons per day (tpd) with 3,100 gpm flow to the PLS flow and recycle flow from a mid-grade PLS pond of 3,857 gpm. The preliminary design incorporates a raffinate bleed rate of 1,500 gpm to agitation leach and a raffinate pond flow of 4,600 gpm resulting in an overall total application rate of 6,957 gpm including recycle (see Table 1). Pad drainage toward the pit was preferred for optimizing waste rock layout around the pad and associated process ponds and for closure drainage planning. The total ultimate ore tonnage is currently planned at approximately 60 million tons. The pad site will require significant grading to achieve this configuration with initial grading via cut/fill operations and borrow from the nearby pit area. Subsequent expansion pad grading can then be performed by controlled waste rock placement. The drain fill for the pad overliner system likely will include selected durable crushed rock from the pit overburden supplemented with closely spaced 3 inch diameter perforated drain pipes. 3.0 Ore Stack Layout The ore stacking sequence assumed approximate 25 ft ore lifts stacked in 10 lifts to the 250 ft heap height at overall 2H:1V side slopes. A conceptual cross section of the pad and ore stack is shown on Figure 2. The ore tonnages and ore lift times are approximate and presented on Table 1 attached. The Phase I pad can accommodate approximately 17.3 mt (4.3 years of production at 11,000 tpd) to the 125 ft height. The Phase II pad will accommodate approximately 21.5 mt (5.3 years of production) to the 125 ft height with the remaining tonnage stacked over the entire pad area to the 250’

Vector Colorado – Technical Memorandum Page 3 FOR INTERNAL DISCUSSION PURPOSES ONLY

Rosemont Heap Leach Conceptual Design

height. An ore density of 1.6 tons per cubic yard was assumed for the conceptual layout. 4.0 Conceptual Pad Design

4.1 General The startup pad construction will include the site grading fill for controlled drainage to the collection ditch and ponds, perimeter and interior pad cell berms as needed, the pad drain fill cover, the drain pipes within the drain fill, and the temporary diversion ditch uphill of the pad limits. The state of practice composite pad, collection ditch and pond liner systems are the major cost components for the startup pad. The intermediate Phase II expansion pad will require an additional downhill collection ditch but will not require additional pond liner. The ultimate heap stack above the startup and expansion pad heaps will require minimal additional pad costs.

4.2 Startup Pad The startup (Phase I) and Phase II pad areas are about 3.1 million sq. ft. each and will include 60 mil LLDPE pad liner. The downhill collection ditch tie-in to the pad toe berm is about 35 ft wide by 1390 ft long at about 48,000 sq ft of 80 mil HDPE liner. The liner system will include a geosynthetic clay liner (GCL) underlying the geomembrane to form a double lined pad. The process pond will be double lined and the storm overflow will be single lined with an 80 mil HDPE top liner and the process ponds (PLS and mid-grade) bottom liner will be 60 mil LLDPE liner with geonet leak detection between liners. The process pond may include netting or “bird balls” for bird protection. The downhill toe site grading for the ultimate 250 ft ore stack will require about a 375 ft of textured geomembrane liner for adequate slope stability based on previous experience. The site grading volume for Phase I startup pad is about 1.7 million cubic yards (cy) of cut to fill and 630,000 cy of fill from borrow without considering any bulkage or shrinkage from borrow to fill conditions. Future design may allow optimization of the pad layout with respect to grading costs, however this is thought to represent a conservative estimate of the required grading. The temporary uphill diversion channel south of the pad is about 2100 ft long and could be eliminated once waste rock is placed in this area. The permanent uphill diversion

Vector Colorado – Technical Memorandum Page 4 FOR INTERNAL DISCUSSION PURPOSES ONLY

Rosemont Heap Leach Conceptual Design

channel west of the pad is about 5900 ft long. The diversions are likely less than 3 ft in depth in a “V” ditch cut along a 0.5% contour grade.

4.3 Expansion Pad The Phase II expansion pad costing will include additional 10 million cy pad grading fill which was assumed to be waste rock placed and compacted by mine haul trucks. The downhill collection ditch tie-in to the pad toe berm is about 35 ft wide by 3640 ft long (including the northern ditch) for about 127,400 sq ft of 80 mil HDPE liner. The liner system will include a geosynthetic clay liner (GCL) underlying the geomembrane to form a double lined pad. Lump sump costs were estimated for diversion ditches, perimeter and interior berms, sumps, pumps and pipelines. Raffinate pond construction costs were not estimated and were assumed to be included in work by others for the SX/EW plant. Unit rate or lump sump cost assumptions for this conceptual design estimate are included in Table 2 attached. Attachments: Table 1 – Ore Stack Tonnage Estimates Table 2 – Quantities and Cost Estimate Figure 1 – General Facilities Arrangement Figure 2 – Leach Pad Layout Figure 3 – Leach Pad Sections and Details

TABLE 1 - ORE STACK TONNAGE ESTIMATE

PROJECT: ROSEMONT PROJECT DATE: APR 2006 PROJECT # 06-5003

11,000 TONS/DAY 93 DAYS2 H TO 1 V 688,889 SQUARE FT

1.6 TONS/CUBIC YARD 0.0045 GPM/SFLEACH RATIO: 3.8 TON SOLUTION/TON ORE 6,957 GPM

3,100 GPM (from WGI)RECYCLE FROM MID-GRADE POND: 3,857 GPM

RAFFINATE BLEED TO AGITATION LEACH: 1,500 GPM (from WGI)RAFFINATE POND FLOW: 4,600 GPM

ORE LIFT BOTTOM BOTTOM TOP TOP LIFT TOP LIFT LIFT ACCUM. ACCUM. LIFT ACCUM. ACCUM.NUMBER LENGTH1 LENGTH2 LENGTH1 LENGTH2 AREA HEIGHT VOLUME VOLUME TONNAGE TIME TIME TIME

(#) (FT) (FT) (FT) (FT) (SQ FT) (FT) (CU FT) (CU FT) (TONS) (DAYS) (DAYS) (YRS)

Starter Pad1 2,300 1,410 2,200 1,310 2,882,000 25 76,562,500 76,562,500 4,537,037 412 412 1.13 2 2,200 1,310 2,100 1,210 2,541,000 25 67,787,500 144,350,000 8,554,074 365 778 2.13 3 2,100 1,210 2,000 1,110 2,220,000 25 59,512,500 203,862,500 12,080,741 321 1,098 3.01 4 2,000 1,110 1,900 1,010 1,919,000 25 51,737,500 255,600,000 15,146,667 279 1,377 3.77 5 1,900 1,010 1,800 910 1,638,000 25 44,462,500 300,062,500 17,781,481 240 1,616 4.43

Expansion Pad(s) 1 Expansion Phases1 2,300 1,410 2,200 1,410 3,102,000 25 79,312,500 79,312,500 4,700,000 427 2,044 5.60 2 2,200 1,410 2,100 1,410 2,961,000 25 75,787,500 155,100,000 9,191,111 408 2,452 6.72 3 2,100 1,410 2,000 1,410 2,820,000 25 72,262,500 227,362,500 13,473,333 389 2,841 7.78 4 2,000 1,410 1,900 1,410 2,679,000 25 68,737,500 296,100,000 17,546,667 370 3,212 8.80 5 1,900 1,410 1,800 1,410 2,538,000 25 65,212,500 361,312,500 21,411,111 351 3,563 9.76

Ultimate Expansion Pad1 1,800 2,320 1,700 2,220 3,774,000 25 99,332,624 99,332,624 5,886,378 535 4,098 11.23 2 1,700 2,220 1,600 2,120 3,392,000 25 89,532,546 188,865,170 11,192,010 482 4,580 12.55 3 1,600 2,120 1,500 2,020 3,030,000 25 80,232,455 269,097,625 15,946,526 432 5,013 13.73 4 1,500 2,020 1,400 1,920 2,688,000 25 71,432,346 340,529,971 20,179,554 385 5,397 14.79 5 1,400 1,920 1,300 1,820 2,366,000 25 63,132,216 403,662,188 23,920,722 340 5,738 15.72

Total Tons 63,113,315 15.72

FLOW TO HIGH GRADE POND:

ORE PRODUCTION:ORE HEAP SLOPE:

ORE DRY DENSITY:TOTAL APPLICATION FLOW:

LEACH CYCLE TIME:ACTIVE AREA:

APPLICATION RATE:

TABLE 2 - QUANTITIES AND COST ESTIMATE

Rosemont Heap Leach and Site Civil FOR INTERNAL DISCUSSION ONLYEstimated Costs based on Conceptual Designs

Phase I Leach Pad and Process PondsPond Pad Clearing and Grubbing Acre 259 $1,000 $259,412Heap and Pond Foundation Preparation (Cut to Fill) yd3 1,744,000 $0.80 $1,395,200 Includes estimate for perimeter fill to provide possitive drainage to diversionHeap and Pond Foundation Preparation (Fill from Borrow) yd3 629,000 $1.20 $754,800 Assumes borrow source is within 1/2 mile of the padDiversion Ditches lump sum 1 $250,000 $250,000 Approx. 8000' v-ditch 2' deepPerimeter & Interior Berms and Ditches lump sum 1 $150,000 $150,000 18' wide perimeter berms and 25' wide permiter ditchesHeap Geomembrane Liner ft2 3,243,000 $0.45 $1,459,350 60 mil LLDPE Perimeter Ditch Liner ft2 49,000 $0.45 $22,050 80 mil HDPE Heap Liner Bedding (GCL) ft3 3,243,000 $0.40 $1,297,200 Assumes fill can be compacted for suitable surfacePad Drain Piping ft2 3,243,000 $0.10 $324,300 3" dia perforated secondary pipes and 6" perforated primary pipesDrain Cover Fill (2ft thickness crushed rock) yd3 240,222 $5.00 $1,201,111 Assumes durable rock is available from pitPregnant Solution Pond (PLS) Excavation yd3 111,000 $2.20 $244,200 Assumes soil or rippable rockPregnant Solution Pond Liner (Double) ft2 135,000 $0.90 $121,500 60 mil HDPE top liner, 80 mil LLDPE bottom linerPregnant Solution Pond Liner Bedding (GCL) ft2 135,000 $0.40 $54,000 Assumes excavation can be compacted for suitable surfaceMid Grade PLS Pond Excavation yd3 100,000 $2.20 $220,000 Assumes soil or rippable rockMid Grade PLS Pond Liner (Double) ft2 125,000 $0.90 $112,500 60 mil HDPE top liner, 80 mil LLDPE bottom linerMid Grade PLS Pond Liner Bedding (GCL) ft2 125,000 $0.40 $50,000 Assumes excavation can be compacted for suitable surfaceLeak Detection Geonet and Sumps lump sum 1 $100,000 $100,000Pumps and Pipelines lump sum 1 $750,000 $750,000 Includes PLS and raffinate systemsStormwater Pond Excavation yd3 268,000 $2.20 $589,600 Assumes soil or rippable rockStormwater Pond Liner ft2 298,000 $0.45 $134,100 60 mil HDPE linerStormwater Pond Bedding (GCL) ft2 298,000 $0.40 $119,200 Assumes excavation can be compacted for suitable surface

Subtotal $9,608,523Phase II Leach Pad ExpansionHeap Foundation Preparation (Compaction Only) yd3 9,963,000 $0.20 $1,992,600 Assumes waste rock fill will be supplied by the Mine and compacted by haul trucksPerimeter & Interior Berms lump sum 1 $150,000 $150,000 18' wide perimeter berms and 25' wide permiter ditchesHeap Geomembrane Liner ft2 3,243,000 $0.45 $1,459,350 60 mil LLDPE Perimeter Ditch Liner ft2 127,400 $0.45 $57,330 80 mil HDPE Heap Liner Bedding (GCL) ft3 3,243,000 $0.40 $1,297,200 Assumes fill can be compacted for suitable surfacePad Drain Piping ft2 3,243,000 $0.10 $324,300 3" dia perforated secondary pipes and 6" perforated primary pipesDrain Cover Fill (2ft thickness crushed rock) yd3 240,222 $5.00 $1,201,111 Assumes durable rock is available from pit

Subtotal $6,481,891

TOTAL HEAP LEACH $16,090,415

CommentsCostDescription Unit Quantity Unit Cost

APPENDIX A

SITE PHOTOS

Rosemont Project Appendix A - Page 1 Tailings Facility Siting Study A_Site Photos_Heap Leach.doc

Barrel Canyon Area – Near proposed heap leach site

Barrel Canyon Basin– near top of basin looking north

Rosemont Project Appendix A - Page 2 Tailings Facility Siting Study A_Site Photos_Heap Leach.doc

Arcosic near surface soils in Barrel basin

Typical rocky ground surface at Rosemont site