Red Eagle Mining's Santa Rosa Project in Colombia

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RED EAGLE MINING CORPORATION MATERIALS
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TABLE OF CONTENTS
CORPORATE SUMMARY.................................................................................................................3
MINING IN COLOMBIA .....................................................................................................................3
KEY PROJECT – SANTA ROSA (100% - COLOMBIA)...................................................................4
San Ramon Deposit ...................................................................................................................5
Access and Infrastructure...........................................................................................................6
Geology......................................................................................................................................6
Early Exploration ........................................................................................................................8
Drilling ........................................................................................................................................9
Resource Estimate ...................................................................................................................11
Metallurgy.................................................................................................................................12
PAVO REAL PROJECT ..................................................................................................................13
FINANCIAL POSITION....................................................................................................................13
VALUATION ....................................................................................................................................14
Acquisition Value per Resource Ounce....................................................................................14
San Ramon – In-situ.................................................................................................................15
Santa Rosa Exploration Credit .................................................................................................16
TARGET PRICE AND RECOMMENDATION..................................................................................16
UPCOMING CATALYSTS...............................................................................................................16
COMPANY SUMMARY & FORECASTS.........................................................................................17
RISKS ..............................................................................................................................................17
Commodity Price Risk..............................................................................................................17
Currency Risk...........................................................................................................................17
Operational Risk.......................................................................................................................17
Development Risk ....................................................................................................................17
Financing Risk..........................................................................................................................17
APPENDIX 1: MANAGEMENT AND DIRECTORS........................................................................18
APPENDIX 2: CAPITAL STRUCTURE...........................................................................................20
RED EAGLE MINING CORPORATIONATERIALSM
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CORPORATE SUMMARY
Red Eagle Mining Corporation is a Canadian-based mineral
exploration company focused on gold exploration and development
stage projects in Colombia. Specifically, the company is advancing
the development of its flagship San Ramon deposit, part of the Santa
Rosa project in the Department of Antioquia, Colombia.
Since the company incorporated in January 2010, it has been actively
engaged in pursuing mineral exploration opportunities in Colombia.
In October 2010, the company optioned the Santa Rosa project (via
its wholly-owned Red Eagle Mining de Colombia subsidiary).
Additionally, the company holds the Pavo Real property, an early-
stage gold exploration project for which work is not actively being
conducted at this time.
Red Eagle Mining Corporation currently trades on the Toronto Stock
Exchange Venture under the symbol “RD”. As of December 31, 2012,
there were 58.5 million shares outstanding and 74.8 million shares
on a fully diluted basis, of which ~6.5 million warrants (at a strike of
$1.50 and $1.25 per share) are set to expire out of the money at the
end of June, 2013. Over the last 52 weeks, trading of Red Eagle’s
shares has averaged just over 36,500 shares per day on the TSX-v.
Currently, management and insiders of Red Eagle Mining Corporation
own ~15% of the shares outstanding, strategic and institutional
investors own ~30% (including Liberty Metals & Mining Holdings,
LLC [19.9%], and Appian Natural Resources Fund LP [9.9%]), and
retail and other investors own the remaining ~55% of the outstanding
shares.
MINING IN COLOMBIA
According to the World Bank, Colombia ranked as the fourth largest
economy in Latin America with a GDP of ~US$333 billion in 2011. With a
GDP growth rate of 4.0% in 2012, Colombia’s President Juan Manuel
Santos plans to continue spurring robust economic growth by
maintaining the mining sector as an essential driver for economic growth
under the “Prosperity for All” campaign, part of the National
Development Plan (2011-2014). Although the mining industry only
represents 2.6% of Colombia’s GDP, in the coming years it could reach up
to 7% according to the Colombian Chamber of Mining (CCM). Additionally,
as a result of a stable business climate open to foreign investment,
Colombia has enjoyed an increase in its level of foreign direct investment
to US$13.2 billion in 2011 (of which the majority was comprised of the
energy and mining sectors), from US$3.24 billion in 2009.
The nation continues to improve its level of economic freedom, with an
overall score of 69.6 (up from ~62.0 in 2009), as defined by the 2013
Index of Economic Freedom, which ranks the country as the fifth most
free in Latin America. The nation’s economic freedom has improved
significantly as the government has adopted various reforms to improve
regulatory efficiency and competitiveness, including the signing of several
free trade agreements (such as the free trade agreement between the U.S.
and Colombia, which took effect in May 2012) and reducing corporate
income tax rates to 33% from 35.5%. Additionally, for 2012 the World
Bank ranked Colombia as the third most business friendly country in
Latin America and the best country to protect investors against misuse of
corporate assets by directors.
Colombia has an abundance of natural resources with a rich mining
history and an established minerals and mining industry. Gold
production dates back to as early as the 1500s and up until 1937 it was
the largest gold producer in the Americas. In 2011, the value of
production from the exploitation of Colombia’s mines, including energy
and metals, was US$38.3 billion (up from US$25.7 billion in 2010), of
which metallic mineral production represented US$2.6 billion.
Mining Concessions in Colombia
Source: Human Rights Everywhere (HREV), Map of
mining concessions in Colombia as of 2010, Fidel
Mingorance, 2011-2012
Source: Red Eagle Mining Corporation
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The mining industry in Colombia is governed by the Colombian Ministry of Mines and Energy (MME), which was
established in 1939, while the Mining and Energy Vision, National Development Plan and Mining Code comprise
Colombia’s mining policies. The Mining Code was enacted in 2001 and states that all resources can be explored and
exploited for up to 30 years (and renewed for an additional 20 years) with a single concession license, which covers
the exploration, construction, and exploitation phases. Mining operations are subject to government royalties of 4.0%
(effectively 3.2% given that the royalty is based on the gross production of gold and silver at 80% of the London gold
price). The Mining Code was reformed in 2010 to reflect Law 1382, which requires that mining and exploration
activity be restricted from the “Páramos” ecosystem, which lies at an elevation level above 3,200 meters. The Páramos
ecosystems supply ~75% of Colombia’s freshwater. However, in May 2011 the Constitutional Court ruled that Law
1382 was unconstitutional as it required prior consultation with indigenous and Afro-Colombian communities, which
would be directly impacted. The Law is to remain conditionally valid for up to two years (until May 2013), at which
point if a new law is not passed, Law 1382 would become ineffective.
Despite a rich gold mining history in the country, there are only a few small scale precious metals mines permitted to
date. However, given the influx of mining exploration in recent years, there are a number of companies at or near the
permitting phase, including Red Eagle, Continental Gold Limited (CNL – TSX), and Eike Batista’s private company
AUX, which owns the La Bodega e Cal-Vetas project. The relatively recent gold rush by foreign companies
commenced in 1995 with the discovery of Eco Oro Minerals Corp.’s (EOM – TSX) Angostura deposit and was followed
by AngloGold Ashanti Limited (AU – NYSE), which established a presence in 2000, and a number of other Canadian-
based companies from 2006 – 2010. These companies staked and explored land across Colombia’s four main gold
districts, which include the Choco Belt, the Middle (Mid) Cauca Belt, the Antioquia Batholith, and the California
District. Despite the country’s extensive historical gold production, Colombia remains relatively under explored, and
based on strong geological evidence, could potentially host deposits similar in grade and size to those in Chile and
Peru.
Given Colombia’s high level of economic freedom, significant exploration potential, and improving security risk, the
nation’s projects are highly regarded and sought after. This has been exemplified with the recent consolidation of the
California District region by Brazilian mogul Eike Batista. In late 2010, Batista’s AUX Canada Acquisition Inc., a
subsidiary of EBX Group, acquired Ventana Gold Corp., which wholly-owned the high-grade gold-silver-copper La
Bodega-La Mascota projects, for ~$1.5 billion. Subsequently in late 2012, Batista via AUX Canada Acquisition Inc.
acquired Galway Resources Corp. and Calvista Gold Corp. Galway’s principal asset was the California project, a
high-grade gold-silver-copper project located adjacent and along strike to La Bodega, while Calvista held numerous
prospects in the California Valley, including the Callejon Blanco zone, also close by to La Bodega-La Mascota.
KEY PROJECT – SANTA ROSA (100% - COLOMBIA)
The Santa Rosa project lies within the Antioquian Batholith gold district, located ~5 kilometers southeast from the
town of Santa Rosa de Osos and 70 kilometers northwest of Medellín in the Department of Antioquia in northern
Colombia. With the acquisition of certain mineral exploration rights in October 2012, the property now covers a total
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of ~39,000 hectares, up from ~3,170 hectares accessed by a total of six concessions, four of which have been
registered to the company, and two of which have been granted and are awaiting title transfers.
In October 2010, Red Eagle signed an option to acquire the Santa Rosa property from the local owner who was
mining high-grade veins on the property. The company currently has a 100%-interest in the project and has a final
payment of US$5.5 million due to the underlying owners by November 30, 2013. Additionally, US$740,000 is to be
paid upon the title transfer of two properties adjacent to San Ramon.
The Santa Rosa area has been recognized for gold potential since the 1600s, with artisanal mining having taken place
since the 18th century as evidenced by the substantial number of adits on site. It is estimated that ~30 million tonnes
of oxide material was sluiced from the property historically, while small-scale mining of saprolite-hosted veins have
been carried out in small adits. The company commenced modern exploration on the property in late 2010 with
mapping and sampling of historic workings and adits.
In addition to the effective 3.2% federal royalty on producing mines in Colombia (4% of the gross value of gold
production at 80% of the current London gold price), the Santa Rosa property has a 2% NSR royalty on production
(acquired by Liberty Metals & Mining Holdings) from the original roughly 3,170 hectare property (of which 1% can be
acquired within two years of gold production for ~US$8.3 million) and a 1.5% NSR royalty on any future production
from the additional 35,910 hectares of mineral exploration rights (adjacent to the Santa Rosa property) acquired by
the company in October 2012.
San Ramon Deposit
The San Ramon deposit was initially discovered through an active small scale mining operation, which was operating
on the deposit. San Ramon is a mesothermal gold deposit hosted in a mineralized shear zone located in the eastern
half of the original Santa Rosa property. Drilling completed at the deposit to date has traced mineralization over
1,900 meters of strike length and up to 50 meters in width. The mineralization, which commences from surface,
trends east-west and dips 70 degrees to the north. At an elevation of 2,453 meters above sea level, the San Ramon
deposit lies below the 3,200 meter Páramos level, which is the prohibited level from mining and exploration activity.
The company plans to incorporate the Phase 4 drill program in an updated resource estimate (expected in mid-2013),
which would be the basis for an initial Preliminary Economic Assessment (PEA) (expected in Q3 2013), for the San
Ramon deposit. Work on the PEA is currently being advanced and is expected to evaluate a potential combined open-
pit and underground mining operation, which the company plans to construct in 2014.
The surface rights over the planned operations are relatively simple with roughly 90% held by one landowner. The
company engaged Conestoga-Rovers & Associates (CRA) to complete the Environmental Impact Assessment (EIA),
which is based on environmental baseline studies being advanced by two local universities, The Universidad de
Antioquia and The Universidad Catolica de Santa Rosa. Management noted that the project has full community
support and expects it to be fully permitted by the end of 2013.
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Santa Rosa Project Access Map
Access and Infrastructure
The Santa Rosa project is located near the town of Santa Rosa de
Osos and 70 kilometers northwest of Medellín, the second
largest city in Colombia (with a population of ~3.8 million) and
the capital of the Department of Antioquia, Colombia. The
project is situated on the Antioquia Batholith, which also hosts
the B2Gold Corp. (BTO-TSX) and AngloGold Ashanti joint-
venture of the Gramalote project (49% B2Gold and 51%
AngloGold) to the east and Continental Gold’s Buritica project to
the northwest of Santa Rosa, which is located on the northern
end of the Mid-Cauca belt and outer edge of the batholith.
The project can be accessed via Highway 25, a paved highway,
for ~65 kilometers from Medellín and an unpaved road for the
remaining ~8 kilometers.
The company has access to labour and supplies from the local
town of Santa Rosa de Osos, which has a population of ~40,000,
with most working males having been involved in small scale
mining previously.
A 44kV power line lies to the west of the property, while a
13.2kV power line runs to the north of the property, both of
which come within ~5 kilometers from site. Water is readily
available from proven ground water sources in the area.
The area is characterized by gently rolling hills and level valley
floors, which lend themselves favourably to processing sites,
waste disposal and tailings storage. The PEA is considering the
use of dry stacked tailings and cyanide detoxification, which will
assist the permitting process.
Geology
The Santa Rosa project lies in the Antioquia batholith, which “occupies more than 7,000 square kilometers and is a
subduction-related, multi-phase, calc-alkaline, I-type plutonic-intrusive complex composed mostly of quartz-diorite
and granodiorite” as per the Mine Development Associates NI 43-101 Technical Report. The rocks surrounding the
deposit are comprised largely of “hornblende-biotite diorite and quartz diorite typical of the Antioquia batholith.
Metamorphic rocks including amphibolites and metasedimentary rocks occur as isolated roof pendants, primarily in
the western half of the deposit area. Pleistocene-Holocene volcanic ash cover is extensive. River valleys contain
unconsolidated alluvium.”
Source: Mine Development Associates NI 43-101 Technical Report
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Regional Geology near Santa Rosa
San Ramon is a mesothermal quartz vein system (comprised of sulfide-bearing quartz veins, sheeted veins, and
anastomosing veins), which is contained in a shear structure (up to 50 meters in width) trending east-west. “The
shear zone is characterized by both ductile deformation in the form of mylonite development in the most intense
zones and brittle deformation in the form of breccia and gouge zones.” “Red-brown saprolite is widespread and often
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deep (up to 50m). Deep weathering associated with saprolite formation has intensely altered the granites to clay.
Oxidized saprock continues below the saprolite and consists of more competent, albeit somewhat decomposed,
granitic rocks.”
“In the San Ramon shear zone, mineralization occurs in fractured, brecciated, and ductily deformed rock. Lower
grades (~0.1 to ~0.6g Au/t) are present in weakly to moderately sheared rocks. Where grades are greater than ~0.2g
Au/t, the mineralization is usually associated with scattered thin quartz veins and veinlets ± sulfide minerals.” “High-
grade mineralization, at >0.6g Au/t, within the San Ramon shear zone is characterized by narrow, 1m to 2m-wide,
strongly sheared zones, commonly with sericite, fine-grained sulfides, and quartz veins and vein fragments.
Individual quartz veins range from 2cm to 5cm wide. The highest grades (>6.0g Au/t) are associated with quartz
veins that contain coarse-grained sulfide minerals and usually range from 0.3m to 1m wide (artisanal miners have
reported up to 2m). Some high-grade veins of similar thicknesses occur outside the shear zone in the hanging wall of
the dioritic host rock.” “Sulfides range from 1% to 5% but can reach 10%, and there appears to be a direct correlation
between sulfide and gold grade. Sulfides are dominated by fine- to coarse-grained pyrite with subordinate sphalerite
and galena and traces of chalcopyrite and pyrrhotite. Oxides include hematite, goethite, and limonite.”
The quartz and quartz-carbonate veins associated with the deposit “commonly extend along strike and down dip
over very significant distances and occur alone or, typically, in complex vein networks and shear zones.”
Gold Domains (Section 856500 East)
Early Exploration
The Santa Rosa area has a history of gold production dating back to the 18th
century, when gold production peaked
from the upland placers. The amount of gold produced from the area is uncertain; however, it contains 63 large
sluice workings and over 250 adits surveyed by the company. Despite the longstanding history of gold production in
the area, modern exploration on the property has been limited to Red Eagle’s exploration activity.
In late 2010, Red Eagle initiated a thorough modern surface exploration program commencing with mapping and
sampling of old colluvial gold workings, adits and quartz veins in the Santa Rosa area. An extensive geochemistry
program has been completed with a total of 2,605 samples taken to test the more disseminated zones of quartz
veins and areas containing sulfides. Aerial magnetics surveys were completed in late 2010 and highlighted
northwest-striking anomalies.
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Drilling
In September 2011, the company commenced a diamond drill program focused on testing the San Ramon shear zone
of the Santa Rosa property, where mineralization had been traced for roughly two kilometers along strike, following
a trend hosting historic workings and anomalous radiometrics. The initial five drill holes all intersected gold
mineralization, inclusive of high-grade intercepts, at depth in the shear zone. The most significant hole was SR-003,
which intersected 39.7 meters at 1.59 g/t Au from a depth of 297.3 meters. The Phase 1 drill program comprised
12,600 meters of drill data and formed the basis for a 1.8 kilometer strike length and an average width of 19 meters,
with a weighted average grade of 1.21 g/t Au.
The company followed up with the Phase 2 drill program in April 2012, which was focused on definition drilling of
the sulfides at 100 meter centers in order to form a resource estimate contained in a potential open-pit. The program
was comprised of 5,400 meters (24 holes), which continued to confirm a strong mineralized system containing high-
grade gold intercepts up to a depth of ~250 meters. Incorporating the results from the Phase 2 drill program, the
average grade of the drill program increased to 2.1 g/t Au (from 1.2 g/t Au previously) on deeper drilling.
Highlights from the Phase 2 drill program include:
Phase 2 - San Ramon
 Infill – Hole SR-042: 66.9 meters at 3.06 g/t Au from a depth of 138.7 meters, including 6.0 meters at 31.85
g/t Au from a depth of 184.0 meters
 Infill – Hole SR-045A: 35.5 meters at 2.28 g/t Au from a depth of 147.0 meters, including 1.5 meters at 28.26
The company then initiated a Phase 3 infill drill program in mid-2012 to test the continuity and depth of the
shallower oxidized and transitional mineralization, which was estimated to extend to a depth of around 50 meters
from surface. The program, which drilled 5,000 meters (over 74 holes) at 50 meter spacings, was successful with 90%
of drill holes intersecting gold mineralization.
Based on a total of 23,015 meters of core drilling conducted at Santa Rosa, primarily at San Ramon, we calculate that
all-in drill costs (drilling, assays, and sampling) totaled ~$200/meter.
Highlights from the Phase 3 drill program include:
Phase 3 - San Ramon
 Infill – Hole SR-069: 11.7 meters at 4.96 g/t Au from a depth of 68.4 meters
 Infill – Hole SR-072: 47.4 meters at 1.34 g/t Au from surface, including 0.9 meters at 20.70 g/t Au from a
depth of 43.2 meters
 Infill – Hole SR-110: 28.4 meters at 1.96 g/t Au from surface
Subsequent to the release of the maiden resource estimate, the company commenced a Phase 4 drill program to infill
down to a depth of 250 meters (on 50 meter centers) in order to upgrade current Inferred Resources, as well as to
test the extension of mineralization down dip (which remains open) between the 250 and 500 meter level. Initial
results from the planned 22,000 meter program continue to confirm the continuity of mineralization, while initial
results from deeper drilling have demonstrated promising grades at depth. With 100 meter centers being drilled
between the 250 and 500 meter level, for the updated resource estimate the company plans to provide an initial
Inferred Resource, which would be amenable to underground mining methods.
As of early April, 2013, the company had drilled over 19,000 meters (86 holes) of the 22,000 meter Phase 4 drill
program, which it expects to be completed in May 2013.
Highlights from the Phase 4 drill program to date include:
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Phase 4 - San Ramon
 Infill – Hole SR-211: 23.3 meters at 3.50 g/t Au from a depth of 91.1 meters, including 4.5 meters at 15.3 g/t
Au from a depth of 104.2 meters
San Ramon Drill Map
With only one shear zone identified on the property to date and a recently expanded land package, there exists
exploration potential to discover additional similar deposits on the property. The company has commenced a
regional exploration program at the Santa Rosa property to examine the potential of satellite targets.
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Santa Rosa Exploration Potential (pink shows highest gold anomalies)
Resource Estimate
In January 2013, Red Eagle released its maiden resource estimate for the San Ramon deposit. The resource estimate
was completed by Mine Development Associates and incorporated a total of 23,015 meters (139 holes) to a
maximum depth of 300 meters, which were drilled between September 2011 and October 2012. The resource was
modeled into 5 (north-south) x 5 (vertical) x 10 (east-west) meter blocks, which reflect block sizes for open-pit
mining. Gold domains were modeled on north-south 50-meter cross sections, with low-grade domains (0.035 – 0.60
g/t Au) representing weak to moderate mineralization in sheared rock containing thin quartz veins, while high-grade
domains (above 0.6 g/t Au) represent zones of strong shearing containing relatively thick quartz veins (less than 2
meters). As part of the Phase 4 drill program, the company is confirming continuity of high-grade mineralization
since the high-grade gold domains were modeled as continuous zones.
Based on the tighter drill spacing of 50 x 25 meter centers for the oxide zone (from the Phase 3 drill program), over
65% of the oxide material was classified in the Indicated Resource category, while only 35% of the sulfide material
was contained in the Indicated category due to the wider drill spacing of 100 x 100 meter centers between the 50 and
250 meter level. With total contained gold ounces of 778,000, the unoxidized material comprises 92% of the total
resource, while oxide and transitional (mixed) material makes up 5% and 3%, respectively.
Note: Resources are estimated using a 0.30 g/t Au cut-off
Grade Contained
Category
Tonnes
('000)
Gold
(g/t)
Gold
('000 oz)
Indicated 7,339 1.37 322
Inferred 9,453 1.50 456
San Ramon Deposit
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Note: Resources are estimated using a 0.30 g/t Au cut-off
In the initial resource estimate the Indicated Resource category has an average grade of 1.37 g/t Au, while the
Inferred Resource category had an average grade of 1.50 g/t Au. However, ~50% of the Inferred Resource has an
average grade above 5 g/t Au.
With drilling ongoing at San Ramon and the resource open at depth, there remains exceptional potential to expand
the current resource as the company has intersected significant mineralization above resource grades between the
250 and 500 meter level. For the updated resource estimate, the company expects total contained resources to
increase to over 1 million ounces of gold.
Gold Block Model Section 856500 East
Gold Block Model Section 857500 East
Metallurgy
In August 2012, the company released preliminary metallurgical test results on samples taken from the San Ramon
deposit revealing gold recoveries of between 65.8% and 86.3% on samples from the oxide leach material (based on
cyanide leach tests over 6 days at crush sizes ranging from 0.25” – 1.00”) and 93.5% for the sulfide material (based
on flotation and high-intensity cyanide-leach tests). However, given the composition of the resource, which has been
determined to contain a limited quantity of oxides, the company is contemplating the use of a CIL or hybrid CIP/CIL
plant to process all the ore at San Ramon.
The sulfide sample was taken from a crosscut mined from fresh rock, which exposed the shear. The company
conducted column-leach simulation, bench-scale flotation, and CIL tests on the 54kg sample, which contained an
average grade of 0.90 g/t Au. Work was completed to test heap-leach amenability; however, gold recoveries after 144
Tonnage Grade Contained Tonnage Grade Contained
('000s)
Gold
(g/t)
Gold
('000 oz) ('000s)
Gold
(g/t)
Gold
('000 oz)
Oxide 973 0.82 26 510 0.82 13
Mixed 556 1.05 19 90 1.13 3
Unoxidized 5,811 1.49 278 8,854 1.54 439
Total 7,339 1.37 322 9,453 1.50 456
Inferred
San Ramon Deposit
Resource Zones
Zones
Indicated
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hours were unfavourable, coming in between 34.5% and 45.9% for crush sizes of between 2.0” and 0.25”. As a result,
tests were conducted using flotation and high-intensity cyanide-leach processes, which improved gold recoveries to
93.5% after 48 hours of leaching, based on the concentrate being re-grounded to 80% passing 0.030mm. A high-grade
sulfide sample, which was ground to 80% passing 0.075mm, also demonstrated robust gold recoveries of over 90%
within 24 hours of leaching and 94.6% within 48 hours.
As part of the ongoing work being completed for the PEA, the company has engaged Kappes, Cassiday & Associates
to conduct detailed metallurgical test work using samples representing portions of drill core over the entire deposit.
The tests are being conducted to confirm the preliminary metallurgical results and determine an optimal recovery
process and crush size. The processing options being analyzed for all ores include CIL or hybrid CIP/CIL and initial
flotation followed by CIL or hybrid CIP/CIL.
PAVO REAL PROJECT
The company’s second project is Pavo Real, which is located in the Department of Tolima, Colombia. The project is
situated in the Mid-Cauca gold belt 20 kilometers south of Ibagué, the capital of Tolima, and 45 kilometers southeast
of AngloGold Ashanti’s massive La Colosa gold project. The property covers 15 x 20 kilometers and hosts a
sedimentary gold system and portions of a 15 kilometer Cu-Au-Ag skarn formation. The project consists of
applications and concessions and a 70% joint venture with Miranda Gold Corp. (MAD-TSX-v). To date, the company
has met all its option commitments, with the final work commitment of $1.75 million, of which ~$500,000 is
outstanding, is to be completed by June 25, 2014.
The project is in the early-stages, but has exploration potential with only limited drilling completed to date and ~10%
of the property mapped and sampled. Previous exploration on the property includes trenching, soil and rock chip
sampling, including across ten artisanal adits. Red Eagle conducted an initial 9-hole drill program (3,400 meters)
focused on various targets, including quartz vein and veinlet systems. In July 2012, the company released its initial
drill results, which encountered a number of gold intercepts. However, the property requires further exploration
activity, which has been deferred whilst current efforts are focused on bringing the San Ramon deposit to production
by 2015.
FINANCIAL POSITION
As at December 31, 2012, Red Eagle held a cash position of $15.9 million, working capital of $9.5 million, with no
debt. With a burn-rate expected to fall to ~$350,000 per month, down from ~$800,000 per month after the
completion of its current drill program, management believes its working capital position is sufficient to meet its
spending requirements in 2013.
Products Extraction Au (%)
Pregnant Solution 93.5%
Leach Residue 2.1%
Rougher Float Concentrate 95.6%
Rougher Float Tails 4.4%
Total 100.0%
Sulphide Recoveries
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Since the company’s IPO in June 2011, Red Eagle has successfully completed a $20 million financing in October 2012
with Liberty Metals & Mining Holdings for the acquisition of a 2% NSR royalty on San Ramon’s original land package
and ~21.2 million shares.
VALUATION
Acquisition Value per Resource Ounce
With the recent exploration success for gold and an improving economic and security situation in Colombia, we have
seen some consolidation in the country’s California District over the last few years, with Eike Batista acquiring
several companies. We analyze Red Eagle based on these precedent transactions, which comprised of the target
holding exploration and development projects with resource estimates for their flagship properties. We highlight the
following transactions:
 In November 2010, Eike Batista, through AUX Canada offered to acquire the remaining outstanding shares
(the ~80% which it did not already own) of Ventana Gold in a hostile attempt for $12.63 per share in cash,
representing a $1.5 billion value for the equity of Ventana. A friendly offer of $13.06 per share was
subsequently accepted in February 2011 for total consideration of ~$1.5 billion. Based on the ~$1.5 billion
cash transaction and factoring in working capital and the respective FX rate at that time, we calculate that
AUX Canada paid US$364/oz AuEq for Ventana. At the time of the transaction, gold was trading at
US$1,336/oz in an escalating gold price environment.
Ventana Gold, which had received several acquisition offers by Eike Batista previously, held mineral rights to
exploration property, including its flagship the La Bodega-La Mascota deposit, which was considered to
potentially host a world-class gold-silver deposit near Bucaramanga, Colombia. In November 2010, Ventana
released the results of a scoping study, which presented an Inferred Resource of 3.5 million ounces of gold
(3.9 g/t) as the basis for average annual production of 347,000 gold-equivalent ounces for first six years at
an average cash cost of US$322/oz Au. The study provided a pre-tax NPV(5%) of US$807 million, including an
estimated capital cost of US$297 million, based on metal prices of US$1,000/oz Au, US$17/oz Ag and
US$3.00/lb Cu.
 In October 2012, Eike Batista announced two tender offers in an attempt to consolidate the California
District as AUX Canada reached an agreement to purchase all the outstanding shares of Galway Resources
Corp and Calvista Gold Corp. Galway held the California project, which lies along strike between AUX’s
concession (formerly Ventana’s) and Calvista’s concessions. In September 2012, Galway released an initial
resource estimate for the California project, which contained 424,000 ounces of gold (5.53 g/t) in the M&I
resource category and 666,000 ounces of gold (5.38 g/t Au) in the Inferred category. Based on a cash offer of
$2.05 per share, a 47% premium was offered to Galway’s 20-day VWAP, plus one common share of Galway
Gold and one common share of Galway Metals. We calculate Galway Resources was acquired for a total of
~$344 million, which represents US$315/oz AuEq adjusting for working capital and the appropriate FX.
However, based solely on the cash portion paid for Galway’s flagship California project, we calculate an
acquisition price of US$257/oz, which we deem more suitable for our analysis.
Calvista Gold held the Buenavista and Callejón Blanco prospects hosted along the La Mascota trend within a
1.5km2
property in the California District. The Buenavista and Callejón Blanco projects, which were
contiguous to La Bodega-La Mascota and Galway’s California project, contained total resources of ~0.9
million ounces of gold (3.6 g/t) and ~4.0 million ounces of silver across all categories. In addition, silver
mineralized zones at the Callejón Blanco prospect added ~0.3 million ounces of gold and 3.3 million ounces
of silver. Based on a cash offer of $1.10 per share and in-the-money warrants, which represented a 100%
premium to Calvista’s 10-day VWAP, we calculate Calvista was acquired for ~$63 million. Based on its
contained resource and adjusting for working capital and the appropriate FX rate, we calculate the
transaction valued Calvista at US$48/oz AuEq.
We note that the price of gold was US$1,722/oz at the announcement of these acquisitions.
Source: Salman Partners Inc. estimates
Transaction Value
(US$/oz AuEq Resource)
November 17, 2010 AUX Canada Ventana Gold Corp. Scoping Study $364
October 19, 2012 AUX Canada Galway Resources Corp. Resource Estimate $257
October 19, 2012 AUX Canada Calvista Gold Corp. Resource Estimate $48
October 19, 2012 AUX Canada Galway & Calvista Resource Estimate $143
Average (excl. Galway and Calvista)
TargetAcquirer
$223
Offer Date Stage
15

With the political and economic stabilization in Colombia, the nation has emerged as an attractive region for junior
gold exploration, which has resulted in the consolidation of the California District. Recently, the acquisitions of
Galway and Calvista demonstrate the strong demand by Eike Batista to consolidate the district subsequent to the
initial high-grade resource estimate by Galway and the updated resource estimate by Calvista. The high acquisition
price commanded by Galway reflects the strategic concessions held by Galway, the high-grade nature of the
California deposit, and a 47% control premium offered.
In our analysis, we highlight the Galway and Calvista offers as precedent transactions for Red Eagle given the stage of
development both companies were at when they were acquired. We have combined the Galway and Calvista
transactions as both offers, which were announced on the same date, were tendered to consolidate the region. Erring
on the side of conservatism, we apply the US$143/oz AuEq acquisition value to Red Eagle’s gold resources contained
in the M&I category only. Based on Red Eagle’s current contained M&I resources of 322,000 gold ounces, and
incorporating the company’s working capital, we arrive at a value of $0.63 per share (on a common share basis),
which is higher than current levels. The acquisition value has further upside potential as the company is expected to
upgrade current Inferred resources with the incorporation of its Phase 4 drill program.
San Ramon – In-situ
With the release of an initial resource estimate, the advancement of a PEA, and progression through the permitting
process, the company remains focused on advancing the San Ramon deposit to production. However, given its
relatively early stage of development, we have modeled the company’s flagship San Ramon deposit based on an in-
situ valuation.
In our analysis, we have examined the current Enterprise Value per Contained Gold-Equivalent Resource Ounce
(EV/oz AuEq) of Red Eagle’s peer group to arrive at our relative valuation for the company. The peer group is
comprised of companies with primary assets in Latin America and relatively similar growth profiles, development
risks, permitting risk, and financing risk. Based on our long-term commodity price assumptions, we calculate a peer
group average EV of ~US$27/oz AuEq. Erring on the side of conservatism, we round-down the peer average to
US$25/oz AuEq and apply it to the company’s global resource of 778,000 ounces for an in-situ value of US$19.5
million or $0.31 per share for San Ramon. Currently, Red Eagle is trading at an EV of ~US$18/oz AuEq, below its
explorer/developer peer group average; however, as the company continues to rapidly de-risk the San Ramon
deposit, we believe its valuation should increase towards the ~US$72/oz AuEq average commanded by the junior
producers in its peer group.
EV / Total Resources (US$/AuEq oz)
Source: Salman Partners Inc. estimates
0.00
2.00
4.00
6.00
8.00
10.00
12.00
$0
$20
$40
$60
$80
$100
$120
$140
$160
P
TMM
RIO
LGC
IRL
LSA
CNL
BSX
SUE
GUY
SGP
EPZ
ATM
RD
RN
EOM
GlobalResourceGrade(g/tAu)
EV/ozAuEq
EV/oz Total Resources Average Grade Au Grade
Explorer/Developer Average = US$26.7/oz AuEq
Producers Average = US$71.8/oz AuEq
16

With an updated resource estimate anticipated in mid-2013 followed by the PEA in Q3 2013, the company is
proceeding to de-risk the project, which it intends to bring into production by 2015. With a clear path to production
and further clarity expected from the PEA (with regards to estimated production and economic parameters from the
proposed open-pit and underground mining scenario), we plan to analyze San Ramon on a DCF valuation in due
course.
Santa Rosa Exploration Credit
With an extensive Phase 4 drill program at San Ramon consistently intersecting mineralization and the deposit open
at depth, coupled with an aggressive regional exploration program as the company searches for additional deposits
on the property, we expect the resource to grow from current levels. We consider an additional 500,000 ounces of
gold to be added to the resource at US$25/oz AuEq (conservatively rounded down from the peer group average of
~US$27/oz AuEq). Given that the resources have yet to be realized, we also apply a 50% discount on the potential
resources for a total value of US$6.3 million.
TARGET PRICE AND RECOMMENDATION
Our valuation for Red Eagle, which is based on mining assets valued on an EV per in-situ gold ounce using
comparable companies for the San Ramon gold deposit and an exploration credit for Santa Rosa and non-mining
assets, has resulted in a NAV of US$34.5 million or $0.55 per share. Thus, we are initiating coverage on Red Eagle
Mining Corporation with a 12-month target price of $0.55 per share and a SPECULATIVE BUY recommendation.
The company continues to rapidly advance San Ramon to production with the planned incorporation of the Phase 4
drill program to form an updated resource estimate, which is to be used as the basis for an upcoming PEA. With the
PEA slated for release in Q3 2013, the company plans to have San Ramon fully permitted by the end of the year and
to commence production in 2015, which would represent an exceptional accomplishment of going from discovery to
production within only four years. Additionally, the company is well positioned to uncover additional deposits with
an expanded land position at Santa Rosa, which is currently being explored. With a quality management team in place
that is experienced in putting mines into production coupled with a strategic relationship with Liberty Metals &
Mining, which has provided a significant cash injection in a challenging market and signifying confidence in the
project, we believe the company is on the verge of garnering additional attention as it continues to advance and de-
risk the deposit.
UPCOMING CATALYSTS
As exploration and development advance at the San Ramon deposit, catalysts for the next twelve months include:
 Results from the 22,000-meter Phase 4 drill program at the San Ramon deposit
 Updated Resource Estimate for the San Ramon deposit incorporating the Phase 4 drill program
 Preliminary Economic Assessment (PEA) for the San Ramon deposit
 Submission of the Environmental Impact Assessment for the San Ramon deposit
 Permitting for the San Ramon deposit
Source: Red Eagle Mining Corporation and Salman Partners Inc. estimates
Q1 2013 Q2 2013 Q3 2013 Q4 2013
Environmental Impact Assessment
PEA
Phase 4 drill results
Updated Resource Estimate
Permitting
17

COMPANY SUMMARY & FORECASTS
All figures in Cdn$ unless otherwise indicated.
Source: Company reports, Salman Partners Inc. estimates
RISKS
Commodity Price Risk
Our valuation for Red Eagle is based on both near-term and long-term commodity price assumptions. Red Eagle is
most exposed to changes in the price of gold. Precious metals have an inverse relationship with the U.S. dollar, as it
is used as a retainer of value when the U.S. dollar is undergoing a period of weakness. This typically occurs during
downturns in the economic cycle and during periods of high inflation. As a result, acts of terrorism, changes in the
Federal Reserve overnight banking rate and general economic trends all have an impact on the performance of
precious metal related equities.
Currency Risk
Gold is priced in U.S. dollars; however, Red Eagle’s principal project is located in Colombia, resulting in costs priced
in Colombian Pesos, creating a dominant relationship between the Colombian Peso/US Dollar. If the Colombian Peso
appreciates relative to the U.S. dollar, Red Eagle’s cost structure is impacted (after translating into U.S. dollars) by
shrinking margins as costs would escalate. As a result, the company’s financial performance and our forecasts can be
significantly impacted by changes to the international exchange rate.
Operational Risk
Our forecasts are based upon technical data, guidance from the company and our own knowledge and experience
with regard to the operations of individual mining projects, and first-hand site visits. As a result, there is potential
for operational and financial performance to change rapidly due to weather-related issues, unexpected changes in
mineralogy and general, unforeseen operational difficulties.
Development Risk
Our valuation of Red Eagle is based on an in-situ value for the San Ramon deposit, which is part of the Santa Rosa
project. The company has yet to complete a PEA on the project or a full feasibility study, which would provide an
indication of the viability of a potential mining operation. As a result, an inherent risk of a negative construction
decision resulting from poor economics exists. In our valuation of Red Eagle, we utilized several assumptions in our
estimation of both the capital and operating costs of the project. The forecast economics for this development
project have the potential to incur higher development costs and/or overruns, procurement delays, permitting issues
and other associated factors that could materially impact the actual economics of the operations, or delay their start-
up, which in turn could adversely impact our valuation of Red Eagle Mining Corporation.
Financing Risk
Red Eagle’s liquidity is relatively low and without additional financing, the company’s funds over the next 12 months
may be insufficient to cover its costs. Thus, additional third party financing may be required. Any issues with
securing the necessary financing, on favourable terms, could adversely affect our valuation.
Share Price $0.29 Recommendation Major Holders (% of shares O/S):
Shares O/S (M)* 58.6 Target Price (Cdn$) $0.55 Liberty Metals & Mining Holdings, LLC 19.9%
Shares Diluted (M)* 74.9 Potential Return 93.0% Appian Natural Resources Fund LP 9.3%
Market Cap, O/S (M) $16.7 Dividend Rate - Sprott Asset Management LP 1.4%
Cash (M, est.) $15.9 Dividend Yield - Mgmt & Insiders 14.2%
Working Capital (M) $9.5 One-Year Avg. Daily Volume 36,830
Debt (M) -
Adjusted Market Capitalization (US$ M) $7.2
Precious Metals Assets (US$ M) $25.7 Share Price Valuation Cdn$/share Upcoming Catalysts for San Ramon
Non Gold Assets (US$ M) $8.7 Value of Precious Metal Assets $0.41 • Drill Results from the Phase 4 program
NAVPS $0.55 Apply multiple of 1.0x $0.41 • Updated resource estimate
Gold Reserves (P&P, M ozs) 0.0 Add: Value of Non-Precious Metals Assets $0.14 • PEA
Gold Resources (P&P&M&I, M ozs) - 0.3 g/t Au cut-off 0.3 • EIA submission
Gold Resources (all categories, M ozs) - 0.3 g/t Au cut-off 0.8 • Permitting
December 31
$0.55
SPECULATIVE BUY
Fiscal Year:
Target Price (Rounded)
18

APPENDIX 1: MANAGEMENT AND DIRECTORS
Ian Slater, CA – Chairman & CEO
Mr. Ian Slater has been active in the mining industry for more than twenty years. In addition to his role at Red Eagle,
Ian is also Chairman of Black Eagle Mining Corporation (private company). Previously, Mr. Slater is a Chartered
Accountant and held Managing Partner positions at Ernst & Young's Canadian and Arthur Andersen's Central Asian
Mining Practices.
Robert Bell, P.Eng - COO
Mr. Robert Bell has over 40 years of experience working in the mining industry including the construction of several
mines globally. Mr. Bell spent his early years in both Mine Manager and Mine Superintendent roles at many projects.
He was one of the founding partners of Minproc Engineers' Mining Division, and was accountable for numerous
bankable feasibility studies. Recently, Mr. Bell was the General Manager of the Chelopech Mine in Bulgaria for Dundee
Precious Metals Inc (TSX – DPM). Mr. Bell is a Mining Engineer from the Western Australian School of Mines.
Jeff Toohey, M.Geo. – Vice President Exploration
Mr. Jeff Toohey has over 38 years of experience in the mining industry including over 20 years in South America (he
spent 12 years as a Senior Geologist for Teck Resources Limited in Latin America). Prior to his current tenure with
Red Eagle, Mr. Toohey was Vice President Exploration for Peregrine Metals Ltd. (which was acquired by the Stillwater
Mining Company in 2011) and was in charge of all activity at Peregrine's flagship Altar copper and gold project in
Argentina. Mr. Toohey graduated as a Geological Engineer from Colorado School of Mines and received his Master of
Science, Geology (MINEX) degree from Queen's University.
Alan Baker – Project Director
Mr. Alan Baker has more than 35 years of experience specifically in design and construction of both surface and
underground gold projects. Mr. Baker has held senior management positions at AngloGold Ashanti in Ghana as well
as Eldorado Gold Corp. Mr. Baker has been brought on to head design, permitting and construction of the San
Ramon gold deposit.
James Howson, CA - CFO
Mr. James Howson has more than 12 years of accounting and auditing experience with Ernst & Young's Mining
Division.
Tim Petterson, P.Eng – Director
Mr. Tim Petterson has 15 years of experience in Mining Consultancy and Investment Banking in London including
several senior positions at HSBC (Head of Global Mining Research) and at ABN AMRO (Head of Pan European Equity
Research). Mr. Petterson graduated with a B.Eng ACSM degree from the Camborne School of Mines and is currently
the CEO of Black Eagle Mining Corporation.
Ken Cunningham, P.Geo - Director
Mr. Ken Cunningham has 36 years of experience in mineral exploration including gold, copper and uranium
discoveries, and is currently CEO of Miranda Gold Corp. Previous to Miranda, Mr. Cunningham held senior executive
positions with several mining companies. Mr. Cunningham is a Registered Professional Geologist and holds a BSc.
degree in Geology from Oregon State University and a MSc. in Geology from Texas Christian University.
Christopher Noel Dunn – Director
Mr. Dunn has spent the majority of his career in various capacities of investment banking, including managing a
capital underwriting business at Goldman Sachs, then leading investment banking metals and mining divisions at
Bear Stearns and JP Morgan. Mr. Dunn is currently Managing Director of Liberty Metals & Mining.
Jeffrey Mason, CA - Director
Mr. Jeffrey Mason is the Chair of the Company’s Audit Committee and was most recently the Chief Financial Officer
of the Hunter Dickinson group of companies for twelve years.
19

Robert Pease P. Geo - Director
Mr. Robert Pease is currently the CEO of Sabina Gold & Silver. Previously Mr. Pease was the founder, CEO and a
Director of Terrane Metals Corp which was acquired by Thomson Creek Metals Company (TSX – TCM) in 2010. Prior
to that, Mr. Pease held several positions at Placer Dome Inc., including General Manager, Canada Exploration and
Global Major Projects. Mr. Pease received a B.Sc degree in Earth Science from the University of Waterloo, and is a
Fellow of the Geologic Association of Canada. Mr. Pease has also previously been the Chairman of the Association for
Mineral Exploration of British Columbia.
Jay Sujir - Director
Mr. Jay Sujir has 23 years of experience advising public companies as a securities and natural resources lawyer. Mr.
Sujir has been a partner with Anfield, Sujir, Kennedy & Durno since 1991. Over the past three years Mr. Sujir has
acted as director or officer of several mining companies which have completed more than $800 million in equity
financings. Mr. Sujir is also a member of the Law Society of British Columbia, the Canadian Bar Association, and the
British Columbia Advisory Committee of the TSX Venture Exchange.
20

APPENDIX 2: CAPITAL STRUCTURE
As of April 5, 2013 Red Eagle’s share structure was as follows:
As of April 5, 2013, the company provided a breakdown of its options held by Management and Directors as follows:
As of April 5, 2013, the company provided a breakdown of its warrants as follows:
Shares Outstanding 58,567,818
Options 5,215,000
Warrants 11,081,883
Fully Diluted
Share Structure
74,864,701
Exercise Price
(Cdn$)
June 28, 2016 $1.25 2,550,000
July 28, 2016 $1.25 200,000
December 6, 2016 $1.00 160,000
December 6, 2017 $0.55 2,305,000
Expiry Date Options
5,215,000$0.93
Exercise Price
(Cdn$)
June 28, 2013 $1.50 5,748,550
June 28, 2013 $1.25 833,333
February 12, 2015 $0.25 4,500,000
Expiry Date Warrants
11,081,883$0.97
21

22

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