ENVIRONMENT

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UME is committed to respect and protect the environment whilst contributing to the sustainable development of mining activities.

The Company engages in ongoing development of environmental management systems while maintaining formal communications with regulatory bodies. Environmental responsibilities are managed under a comprehensive plan for the operation, which involves monitoring of key exposures using internal and external laboratories. Performance is also measured through external environmental and cyanide management audits.

UME consistently exceeds environmental regulatory requirements in Uruguay and adheres to the following environmental principles:

establish environmental standards and management systems based upon industry best practice;
integrate environmental factors into planning and operational processes;
establish broad consultation with stakeholders to assist environmental management;
implement measures to identify and minimise environmental impacts and risks from our current and future activities;
efficient use and recycling of natural resources, materials, consumables and energy;
minimise waste generation and the release of contaminating substances to the environment;
meet or exceed all legal and regulatory requirements;
measure our environmental performance through routine monitoring and auditing programmes;
rehabilitate the environment affected by our activities to maintain biodiversity;
develop and update contingency, reclamation and closure plans, ensuring that financial provisions are maintained for all present and future requirements;
promote environmental awareness and education among employees, contractors, the local community and other stakeholders; and,
promote awareness of our environmental performance to all stakeholders.

Mining activities and the operation of the tailings storage facility are performed under specific environmental licenses issued by the Uruguayan State. These licenses are issued by the Environmental National Direction ("DINAMA") of the Ministry of Housing, Land Planning and Environment.

As required by Uruguayan law, the Company's activities are insured against potential property and environmental damages, including rehabilitation costs.

A closure plan for the San Gregorio operation has been developed and accepted by DINAMA and is supported by a bank guarantee of US$1,500,000. The plan includes dismantling of the processing plant, revegetation of waste dumps, cyanide effluent treatment, sealing and revegetation of the tailings dam and post closure monitoring.

The most recent significant environmental and operational milestone achieved has been the approval of the Arenal expansion project that encompasses the diversion of the Arroyo Corrales river. The diversion was approximately 1.2 kilometres long and therefore the approval and public review was exhaustive.

Tailings Disposal
The tailings dam, lined with HDPE, lies on the western side of the San Gregorio Mine and was designed to be built in stages following production requirements. Currently on its sixth expansion stage, it extends over approximately 65 hectares and holds approximately nine million cubic meters of tailings storage. Plans call for two additional expansions, which will provide capacity for a further five years of production.

A cyanide destruction plant is installed at the site and contingency plans have been developed to deal with extreme circumstances that could possibly cause cyanide contamination. Monitoring bores and an underdrain system are used to ensure that no cyanide is leaking into the environment. There has never been an incident of contamination or unplanned discharge during more than 10 years of operation at Minera San Gregorio.

Waste Dumps
Waste rock does not contain significant amounts of sulphides and is not acid producing. Ongoing monitoring has demonstrated that there is no acid mine drainage from any stored or discarded material.

The waste dumps are being projected and constructed in accordance with best practice and reclaimed progressively, minimizing environmental impacts.