Open Pit Regulatory Status

In August 2005, the Regional Government of Asturias halted open-pit project development of Salave due to the introduction of certain new zoning legislation. The decision was not based on environmental factors and contradicted several other authorizations previously received by Dagilev´s predecessor Rio Narcea, the most important of which being the expropriation of farm land and its dedication to mining use. There has been over €40 Million spent with encouragement from the Asturias Government for many years for the advancement of Salave.

Immediately after, three separate legal proceedings were commenced by Rio Narcea against the Government of Asturias seeking reversal of the decision. Those cases are now before the Supreme Court of Spain. Dagilev Capital inherited these cases with the purchase of the property. A forth case for damages against the Government of Asturias was launched in the High Court of Asturias for monetary compensation of €320,000,000. The High Court of Asturias ruled that a cash ruling is "premature" as Dagilev could still get the open-pit permit if it wins one of the three cases before the Supreme Court of Spain.

The High Court of Asturias stated that a new law suit for monetary compensation can be launched against the Government of Asturias for damages once the appeal process is completed. If this case is launched, the figure for damages will be calculated with the current gold price, and therefore will be significantly higher than the previous figure of €320,000,000, which was calculated at the January 1, 2006 gold price of $525/oz. Any cash award received will be equally split with Lundin Mining Corporation (TSX: LUN, OMX: LUMI) after a deduction of the upfront payment as well as litigation and court related costs incurred by Dagilev between April 13, 2010 and the time of settlement or final judgment in the lawsuit.

The Principality of Asturias has stated the zoning change does not affect a potential underground permit.