Tonogold Iron Ore Mexico

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1 Tonogold Iron Ore Mexico DISCLAIMER - Important Notice Tonogold Resources Inc (Tonogold). It is not recommended that any person makes any investment decision in relation to Tonogold based on this presentation. This presentation contains certain statements which may constitute "forward-looking statements". Such statements are only predictions and are subject to inherent risks and uncertainties which could cause actual values, results, performance or achievements to differ materially from those expressed, implied or projected in any forward-looking statements. No representation or warranty, express or implied, is made by Tonogold that the material contained in this presentation will be achieved or prove to be correct. Except for statutory liability which cannot be excluded, each of Tonogold, its officers, employees and advisers expressly disclaims any responsibility for the accuracy or completeness of the material contained in this presentation and excludes all liability whatsoever (including in negligence) for any loss or damage which may be suffered by any person as a consequence of any information in this presentation or any error or omission there from. Tonogold accepts no responsibility to update any person regarding any inaccuracy, omission or change in information in this presentation or any other information made available to a person nor any obligation to furnish the person with any further information.

2 Located approx. 40km north of Hermosillo (Capital of Sonora) Project accessed by sealed highway. 180 km the port of Guaymas where international shipments are sent to China. 35,000 hectares under ownership In production since Jan 13 SUBSTANTIAL POTENTIAL FOR GROWTH SHORT TERM Iron Ore Mexico TONOGOLD has negotiated an exclusive Option to acquire 34% interest for $10 million in two stages

3 Hermosillo Major, thriving city Capital of Sonora, Mexico Population 800,000 Main industries manufacturing, electronics, IT and commerce 26 major manufactures employing some 68,000 jobs Major manufacturing company includes: Ford Motor Company (3,300 employees increasing t0 4,300 for the manufacture of the Fusion for which Ford has invested $1.3 billion) Caterpillar Mining Cummings Source:

4 Project covers 35,000 hectares (approx. 135 square miles, 350 square kms) Currently privately owned by two groups US individuals (50%) and major Mexican construction company (50%) Commenced small scale mining/processing in January 2013 on two deposits (highlighted in yellow) Simple ore beneficiation process and product sold to China Two shipments so far this year a third expected within days. All necessary permits are in place Iron Ore Mexico

5 Current production from two deposits - Ponderosa and Fito 3 Ponderosa Drilling program commenced in November holes were drilled for a total of 3,800 metres. Drill holes ranged from 15 to 50 metres in depth. Fito 3 81 holes were drilled for a total of 3,500 metres. Drill holes range from 20 to 50 metres in depth. No official Reserves or Resources calculated yet but production from these two sources expected for at least 3 years

6 Project has no debt. All equipment bought outright includes: CAT excavators CAT Trucks Grader CAT front end loaders Cummins Generators Jaw crusher Cone crusher Light towers Dry Magnetic separation Screens, conveyors, maintenance equip etc Laboratory equipment

7 Company operates its own laboratory on-site

8 Simple beneficiation process being used to remove impurities and increase the grade of iron in the final product. Ore mined is crushed to ~2 inches and processed via dry magnetic separation to produce ~58% Iron ore Off take agreement with Chinese producer Flat 18% penalty on spot price applied for product impurities Impurities can be reduced by milling and wet mag separation process (Future) Based on current mining equipment, project mines around 22,000 of ore producing ~15,000 tonnes of final product per month.

9 Iron Ore is transported by road 180kms to the main port of Guaymas and shipped to China Off-take agreement in place whereby 95% is paid once product is loaded on ship

10 Project employs around 53 people (including administration staff) Current costs of around US$61 per tonne of final product Costs substantially less in Mexico due mainly to wage levels (approx. US$30/t saving). Average worker in the Australian Iron Ore industry = $100,000 pa Average worker in Mexico = $15,000 pa Company receiving ~US$100* per tonne of iron ore providing a margin of ~US$39 per tonne ($7 million per year) * Basis: spot price of $124/t (58% Fe)

11 Benefits of the Project Low wage bill Low strip ratio (~2:1) Close to main city 40kms (no FIFO costs) Close to main port (180kms by road) Low road transportation costs of around 9c per tonne km (compared with 15c in Australia) mainly the result of lower wage rates.

12 NEAR TERM (2-6 months) Additional mining equipment purchased from cash generated from previous shipment. Due to arrive on site within a few weeks. Project expected to double its mining rate to produce ~25,000 30,000 tonnes of iron ore in near term ($14 million cash PA)

13 MEDIUM TERM OPPORTUNITIES (6-12 months) 1. Evaluate tenements/patents for additional deposits and increasing mining and processing rate. 1. Upgrade process facilities to produce high quality product and reduce the penalty

14 EVALUATE LAND HOLDING Minimal exploration has been carried out over the extensive tenements/patents. Government flown aero magnetics highlight significant magnetic anomalies over the property Anomalies confirmed by significant magnetite and hematite outcropping

15 2. UPGRADE PROCESS FACILITY Company has secured a property approx. 20 kms from site which has: Ample water supply Mains power Just 20 metres from rail line that is currently used to rail copper concentrates from Arizona to Guaymas Test work required to determine equipment, capital cost and benefit of constructing milling and wet mag plant. Objective to produce quality product and increase sales price

16 Site of potential Milling operation - 20 metres from rail link and access to grid power

17 Indicative cost per tonne savings with additional treatment facilities However the principle benefit to emerge would be a lower penalty and thereby a higher price for the final product. Initial estimates highlight a margin increase from $39/t of final product currently to +$70/t could be expected.

18 Mexican Company was seeking an industry partner to bring mining expertise and capital to help further develop and grow the business. TONOGOLD

19 TONOGOLD S OPPORTUNITY Tonogold has secured an option to acquire a 34% interest in the Mexican company that owns the Project by investing US$10 million in two tranches. Formal agreement executed provides: Tonogold has to a free 6 week exclusive option (extendable by a further 30 days for $50,000) to subscribe for new shares in the Mexican entity ( MIL- LER ) by investing $5 million to earn 17%. Tonogold has a 6 month option (which commences when/if Tonogold elects to exercise 1 st Option) to subscribe for additional new shares (to provide with 34% on a fully diluted basis) in MIL-LER by investing a further $5 million. Tonogold to pay $100,000 for this 2 nd option.

20 TONOGOLD S OPPORTUNITY Implied value of MIL-LER - $29 million Implied project value - $19 million MIL-LER to have the option to be issued with 20 million fully paid ordinary shares in Tonogold which if exercised would reduce the cash component by $1 million (to $4 million). Tonogold will be investing in the entity that owns the tenements/patents, own the plant and equipment and will participate in its current cash flows

21 Initial $5 million investment: To fund a significant exploration program over tenements/patents (including ground magnetics, drilling etc) To fund metallurgical test work in Australia to determine cost/benefit of further beneficiation Second $5 million investment: To provide equity funding to upgrade treatment facility Further Exploration New opportunities in the region

22 Project currently cash flow positive and a low cost producer. Trail mining/processing has virtually eliminated risks associated with new start ups Potential for significant share price accretion in the short term. Spring board for further opportunities in Mexico Tonogold s mining expertise and MIL-LERS high reputation and competitive advantage in Mexico offers yet unknown future opportunities Tonogold well positioned to consolidate project ownership in the future Both management teams have like minded visions, aspirations and values a unique relationship is expected to develop

23 With minimal exploration success production of +500,000 1,000,000 tonnes of iron ore is achievable in the future.

24 IRON ORE FUNDIMENTALS World production 2.4 billion tonnes Iron Ore in 2010 China is the worlds largest producer ~ 900 million tonnes in 2010 data and the largest consumer Australia is the worlds second largest producer ~ 420 million tonnes (2010) USA is the world s 8 th largest producer at around 49 million tonnes in 2010 Mexico is the world s 14 th largest producer ~ 12 million tonnes in 2010 data China currently imports around 200 million tonnes per annum to supplement its own production. China s demand for Iron Ore has increased by 9.5% pa compounded since 2008 Iron Ore used to produce to produce steel and represents just under 95% of all metals used.

25 IRON ORE FUNDIMENTALS Historical pricing

26 Capital Raising Tonogold to raise ~$6 million via an issue of new shares within the next 6-10 weeks ($5 million for investment in project and $1 million working capital). Price and terms of capital raising yet to be determined Details to be provided to the market shortly Company invites current shareholders who are accredited to consider participating in new issue. Concurrent with the capital raising, Tonogold will apply to immediately become fully reportable on the US Stock Exchange