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LALIVE (London) LLP
25 Eastcheap
London, EC3M 1DE
United Kingdom
T +44 20 3880 1540
www.lalive.law

Dr. Marc D. Veit
Partner
direct line +44 20 3574 8510
[email protected]

Timothy L. Foden
Partner
direct line +44 20 3574 8511
[email protected]

Ministerio de Economía y Finanzas
Jr. Junín 319,
Cercado de Lima
Lima, PERÚ

London, 12 December 2019

By post

Re: Notice of Intention to Submit Claims to Arbitration Under the Free Trade Agreement between Canada and the Republic of Peru Arising from Investments in Peru by Lupaka Gold Corp.

Dear Sir,

We represent Lupaka Gold Corp. (the "Investor"). The Investor is a company incorporated under the laws of British Columbia, Canada which made investments in the Republic of Peru (“Peru") in connection with the Invicta gold mine project in the Huaura Province, Peru (the “Project”).

In accordance with Article 821(1) of the Free Trade Agreement between Canada and Peru which was signed on 29 May 2008 and entered into force on 1 August 2009 (the "FTA”), the Investor hereby notifies you of its intention to submit its claims (as particularised below) against Peru to arbitration. In accordance with the requirements of Article 821(1), this Notice of Intent to Submit a Claim to Arbitration specifies:

1. the name and address of the Investor (section 1);
2. the provisions of the FTA alleged to have been breached (section 3);
3. the issues and factual basis for the claim, including the measures at issue (section 2); and
4. the relief sought and the approximate amount of the damages claimed (section 4).

Geneva Zurich London

LALIVE (London) LLP is a limited liability partnership incorporated in England and Wales (with registered number OC421256) and is licensed and regulated by the Solicitors Regulation Authority (the "SRA"). We use the term 'partner' to refer to a member of LALIVE (London) LLP or to an employee or consultant with equivalent status. LALIVE (London) LLP is affiliated with LALIVE SA, a limited liability company registered and headquartered in Zurich, Switzerland with offices in Zurich and Geneva. LALIVE SA is not regulated by the SRA and therefore statutory protections for clients of a lawyer regulated by the SRA are not available to you in respect of any engagement you may have with LALIVE SA.

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1 THE INVESTOR AND ITS INVESTMENT IN PERU

The Investor is a company incorporated under the laws of British Columbia, Canada.¹ Its registered address is:

1569 Dempsey Road
North Vancouver
BC V7K 1S8
Canada

The Investor holds a 100% ownership stake in the Canadian company Andean American Gold Corp. (“AAG”) which, until the events which are the subject of the Investor's claims, in turn held a 100% stake in the Peruvian operating company Invicta Mining Corp. S.A.C. (“IMC").² Directly and indirectly through IMC, the Investor made substantial investments in Peru in connection with the Project and is therefore a protected Investor of a Party pursuant to Article 847 of the FTA.

As you are aware, the Project concerned the evaluation, acquisition, exploration and development of the Invicta gold mine located in the Huaura Province, approximately 120 kilometres north of Lima. The Investor's investment in the Project is or was previously comprised of, among other things, the following elements:

1. a block of six mining concessions covering a total of 4,700 hectares, duly titled and registered as belonging to IMC;
2. access agreements with the local communities surrounding the Project; and
3. IMC and its attendant equipment and infrastructure including, among other things, moveable and immoveable as well as tangible and intangible property.

2 ISSUES AND FACTUAL BASIS OF THE INVESTOR'S CLAIM

As we have explained in previous correspondence, from the beginning of October 2018 the government of the local community of Parán (“Parán”) took

¹ Certificate of Incorporation, Kcrok Enterprises Ltd., 3 November 2000, at Exhibit 1; Certificate of Change of Name from Kcrok Enterprises Ltd. to Lupaka Gold Corp., 4 May 2010, at Exhibit 2. ↩

² Register of Shareholders, Andean American Gold Corp. as at 1 October 2012, at Exhibit 3; Andean American Gold Corp. Share Certificate held by Lupaka Gold Corp., 1 October 2012, at Exhibit 4; Register of Shareholders, Invicta Mining Corp. S.A.C., Entry 8, 12 August 20126, at Exhibit 5. ↩

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illegal measures to oust the Investor from the Project, causing the Investor considerable loss.

Specifically, on 14 October 2018, Parán despatched armed men to force the Investor and its personnel from the premises of the Project. Further, these gunmen, upon the orders of Parán, blocked illegally the primary routes of egress and ingress to the Project. This illegal blockade has prohibited the Investor from transporting ore from the Project and has halted all exploration, mining development works and production. To date and despite multiple requests, Peru has not resolved this dangerous situation.

In order to regain access to and operation of the Project, the Investor requested assistance from Peruvian police forces. Despite promising to take down the barricade, ultimately the police did not despatch officers to do so. The Investor was never able to gain access to the Project site again.

On numerous occasions since November 2018, the Investor has communicated and met with senior officials from the Peruvian Ministry of the Interior, the Ministry of Energy and Mines (the “MoEM”) and the Prime Minister's office to discuss Parán's illegal actions and Peru's inaction. In early January 2019, the Investor requested support to end the blockade and to uphold its rights to the Project. Those meetings yielded no resolution.

On 26 February 2019, representatives of the Investor met with officials of both Parán and the MoEM. Neither before nor after this meeting did Parán's gunmen abandon their blockade. The Investor next sought to obtain assistance from the Peruvian Ministry of the Interior as well as the relevant police forces. Peruvian officials have thus far failed to act upon the Investor's requests. Further, there is now evidence that Parán has begun moving ore from the Project using heavy machinery, including the Investor's equipment, depleting the mine's resources and further harming the Investor's investment.

The Parán community has maintained the illegal road blockade from 14 October 2018 to the present date, for over a year. Since then, all Project-related developments and operating activities have been suspended.

On 2 July 2019 the provider of the Investor's debt facility accelerated its loan to the Investor and commenced foreclosure proceedings against IMC, alleging the company's inability to make scheduled repayments due to the ongoing illegal road blockade carried out by the Parán community. These foreclosure proceedings are now complete and the shares in IMC have been transferred to

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the lender. Thus, as a direct consequence of Peru's acts and omissions, the Investor has lost completely its investment.

3 BREACHES OF THE FTA BY PERU

Through its acts and omissions described above, Peru has breached numerous obligations it owes to the Investor under the FTA and international law. These include, but are not limited to:

1. Peru's obligation to accord fair and equitable treatment to the Investor's investments under Article 805(1) of the FTA;
2. Peru's obligation to accord full protection and security to the Investor's investments under Article 805(1) of the FTA; and
3. Peru's obligation not to nationalise or expropriate the Investor's investments directly or indirectly through measures having an effect equivalent to nationalisation or expropriation under Article 812(1) of the FTA.

To the extent Peru has agreed to provide more favourable treatment to investors or investments from third States, in accordance with Article 804 of the FTA the Investor is entitled to and hereby confirms its intention to claim that Peru failed to accord such treatment to the Investor and its investments.

4 RELIEF SOUGHT AND DAMAGES CLAIMED

Peru's breaches of the FTA have caused the Investor considerable loss. The Investor intends to submit a claim to arbitration seeking damages to compensate it for its losses, which include but are not limited to:

1. the financial and other losses suffered by the Investor during and as a result of Parán forcibly removing it and its personnel from the Project site and the costs it incurred in attempting to regain access to the site;
2. the equipment at the Project site and all other property lost as a result of the Investor being unable to access the site;
3. the value of the mining concessions and related rights to the Project of which the Investor has been deprived;
4. the loss of profits resulting from of the Investor's inability to continue with the development of the Project; and
5. the Investor's resulting loss of IMC.

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The Investor reserves its rights further to particularise losses suffered as a result of Peru's breaches of the FTA at the appropriate time during the potential arbitration proceedings and to seek further relief as is appropriate. The Investor is not yet in a position fully to quantify the above losses. However, the approximate amount of damages claimed is estimated to be in excess of USD 100 million.

5 REQUEST FOR CONSULTATIONS

Article 822 of the FTA provides that the Investor and Peru shall hold consultations in an attempt to settle the Investor's claims amicably. In accordance with Article 822(3), such consultations are to take place in Lima, Peru. Our client looks forward to meeting with duly authorised representatives of Peru for the purposes of conducting the consultations for amicable settlement noted above. The Investor and its counsel are willing to meet with such representatives in Lima at their earliest convenience within the six-month period specified in Article 822(2). The Investor emphasises its willingness to work towards a mutually acceptable solution to its claims.

Finally, nothing in this letter should be interpreted as a limitation of the factual or legal bases on which the Investor may rely before an arbitral tribunal. The Investor fully reserves its rights and remedies in respect of this dispute under international law.

Yours sincerely,

LALIVE (London) LLP

Cc: The President of Peru
The Government Palace
Jirón de la Unión s/n 1st block
Cercado de Lima 15001
Lima, PERÚ

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The President of the Council of Ministers of Peru
The Government Palace
Jirón Carabaya Cdra. 1 s/n
Cercado de Lima 15001
Lima, PERÚ

Ministry of Interior (Peru)
Plaza 30 de Agosto s/n Urb. Corpac
San Isidro 15036
Lima, PERÚ

Ministry of Energy and Mines (Peru)
Av De Las Artes Sur 260
San Borja 15036
Lima, PERÚ

Ambassador Roberto Rodríguez Arnillas
Embassy of Peru in Canada
130 Albert St, Ottawa,
ON K1P 5G4, Canada

Ambassador Ralph Jansen
Embassy of Canada to Peru
Bolognesi 228
Miraflores 15074
Lima, PERÚ

Mrs. Alexandra Laverdure
Trade Commissioner, Mining, Oil and Gas
Embassy of Canada to Peru
Bolognesi 228
Miraflores 15074
Lima, PERÚ