In late March, the Company completed new resource and reserve estimates at Aguas Blancas based on the drilling campaign of 2012. Measured and indicated resources increased by 86% to 105Mt grading 426ppm of iodine. The reserves have been estimated using both agitated leach plant ("ALP") and heap leach processing. Reserves have been expanded 57% to 82.9Mt grading 463ppm of iodine (see table below for details).

	Tonnes (millions)	Iodine (I2 ppm)
Reserves *
Proven	14.6	492
Probable	68.4	457
Total	82.9	463
Resources *
Measured	16.8	474
Indicated	88.2	417
Total Measured & Indicated	105.0	426
Inferred Resource	67.4	338

* Resources are reported above a cut-off grade of 200ppm iodine and are inclusive of the reported Proven and Probable Reserves. Reserves are based on mining factors of 0% dilution and 95% mining recovery, cut-off grade of 250ppm iodine and iodine price of $35/kg. These Resource and Reserve estimates have been prepared by Adam Wheeler, independent consultant and Qualified Person pursuant to NI 43-101.

RESULTS FROM OPERATIONS

Sirocco reported a loss of $1.1 million (Q1 2012: net income of $5.0 million) on revenues of $12.0 million (Q1 2012: $19.6 million) during the first quarter of 2013. Gross profits for the quarter were $2.3 million or 19% of revenues (Q1 2012: $9.5 million or 48% of revenues).

The financial results in Q1 2013 compared to Q1 2012 were negatively impacted by the following factors:

• the Chilean port strike in March, effectively deferring $5.6 million of revenues from March to April;
• a decrease in iodine selling prices from the all time high of $65 per kilogram in Q1 2012 to $55 in Q1 2013;
• a general increase in operating costs as well as higher processing costs and depreciation principally due to the ALP which only commenced operations in the second quarter of 2012 ("Q2 2012"); and
• increased levels of exploration in Chile.

Administration costs of $1.9 million (Q1 2012: $1.6 million) have increased because of the one-time impact of performance bonuses related to 2012, which were approved in 2013.

Finance costs of $0.2 million (Q1 2012: $0.3 million) reflect the interest on the outstanding loan amounts and accretion expense. The foreign exchange gain of $0.4 million (Q1 2012: loss of $0.4 million) reflects principally the strengthening of the US dollar against the Canadian dollar in the quarter.

Exploration costs of $1.6 million in the first quarter of 2013 (Q1 2012: $0.7 million) reflect mainly the continuing drilling in Chile to upgrade inferred resources to measured and indicated resources. This work is expected to be largely completed by mid-year. The Company's project in Côte d' Ivoire is currently in care and maintenance awaiting approval of permits and agreements. The potash exploration project in Brazil is in the process of being wound down.

The $11,000 equity income on investment (Q1 2012: loss of $0.2 million) is Sirocco's 50% share of the results of operations realized by Amssega Exploration Sarl ("Amssega") on its exploration project in Mauritania. This project is also in care and maintenance as the Company is discussing alternative way forwards with its joint venture partner. During Q1 2013, Amssega realized small cost recoveries which were sufficient to offset the low level expenses incurred during the quarter, thus resulting in the small equity income position.

Income tax expense of $0.2 million (Q1 2012: $1.6 million) is calculated by applying the Chilean statutory tax rate to the profits from the iodine operations for the period. No tax expense or recovery is recognized for other jurisdictions the group operates in as a result of the nature of activities and expectations of profits.

The Company also reported a loss of $1.4 million on translation of its parent company stand-alone accounts from the Canadian dollar functional currency to the U.S. dollar presentation currency for the quarter ended March 31, 2013 (Q1 2012: gain of $1.1 million). This is principally the result of the strengthening of the US dollar against the Canadian dollar. As a result, the Company has reported comprehensive loss of $2.5 million for the quarter ended March 31, 2013 (Q1 2012: income of $6.1 million).

Key operating statistics and financial results for the last eight quarters are provided in the table below.

Three Months Ended	Mar-13	Dec-12	Sep-12	Jun-12	Mar-12	Dec-11	Sep-11	Jun-11
Total revenues ($000's)	11,984	18,561	14,961	21,701	19,613	14,665	8,591	11,784
Gross profits ($000’s)	2,288	3,312	4,347	6,392	9,501	4,886	(676)	1,456
Net income (Loss) ($000’s)	(1,048)	(1,226)	(244)	3,237	4,982	(22,926)	(809)	(117)
Income (loss) per share basic and diluted ($)	(0.00)	(0.00)	(0.00)	0.01	0.02	(0.14)	(0.00)	(0.00)
Tonnes mined (’000t)	829	553	1,195	1,180	1,218	1,311	1,008	1,117
Average grade of ore mined (ppm)	603	615	552	542	483	586	574	568
Iodine produced (t)	363	282	259	338	344	277	191	286
Iodine sold (t)	217	319	238	367	302	260	194	329
Iodine avg. price ($/kg)	55	58	63	59	65	56	44	36
Cash operating cost ($/kg) (Note)	35	42	38	37	30	35	43	29

Note: this is a non-GAAP measure. As shown below, it was calculated by dividing cost of sales, adjusted for related depreciation and stock-based compensation, by quantities of iodine sold in the period.

Cost of sales ($000’s)	9,696	15,249	10,614	15,309	10,112	9,780	9,267	10,328
Depreciation ($000’s)	(2,005)	(1,671)	(1,567)	(1,693)	(980)	(756)	(841)	(800)
Stock-based compensation ($000’s)	(30)	(69)	(88)	(54)	(147)	(1)	(1)	(2)
	7,661	13,509	8,959	13,562	8,985	9,023	8,425	9,526
Iodine sold (t)	217	319	238	367	302	260	194	329
Cash operating cost ($/kg)	35	42	38	37	30	35	43	29

Iodine sales in the last quarter were affected by the Chilean port strike, effectively deferring revenues of $5.6 million and after tax profits of $1.0 million to Q2 2013. Aside from this event in Q1 2013, the two key variables that normally affect the Company's financial results are the price of iodine and the level of production. Iodine selling prices have declined slightly from the all time highs seen in 2012. This notwithstanding, gross profits as a percentage of sales improved slightly in Q1 2013 compared to the last quarter in 2012 as production levels increased.

Cash operating costs for the last four quarters include ALP processing costs. The ALP commenced production at the beginning of Q2 2012; prior to that, costs only reflected heap leach operations. With increasing production expected from the ALP following the introduction of a slurry system in Q2 2013 and with operating costs relatively fixed in nature, unit production costs are estimated to decrease further between now and year end.


 

The Company's 2012 operating highlights were:

• Iodine production of 1,224 tonnes (2011: 1,122 tonnes)
• Average realized iodine prices of $61 per kilogram (2011: $40/kg)
• Gross profit of $23.6 million (2011: $7.1 million)
• Net income of $6.7 million (2011: loss of $24.3 million)
• Cash flow from operations of $18.6 million (2011: $4.5 million)
• Bank debt reduction of $11.0 million (2011: increase of $8.9 million)

Commenting on the results, Rick Clark, CEO, stated: "We are very encouraged with the progress made at Aguas Blancas in our first full year in management. With a combination of strong iodine pricing (up 52% year on year) and increasing production (up 9% year on year), we were able to deliver significant improvements in profitability with a 232% increase in gross profit and net income of $6.7 million compared to a large loss in 2011. Significantly, cash flow from operations also increased almost fourfold year on year. With operational changes underway we look forward to continued increase in Iodine production in 2013."

The table below summarizes key financial and operating results of the Company for the last three years.

Year Ended	Dec-12	Dec-11	Dec-10
Tonnes mined (’000t)	4,146	4,488	3,804
Average grade of ore mined (ppm)	537	581	623
Iodine Produced (t)	1,224	1,122	1,256
Iodine Sold (t)	1,226	1,134	1,244
Cash operating cost ($/kg) (Note)	37	31	21
Total revenues ($000's)	74,836	45,076	33,989
Gross profit ($000’s)	23,552	7,057	4,184
Net Income (loss) ($000’s)	6,749	(24,312)	(2,380)
Income (loss) per share, diluted ($)	0.03	(0.15)	(0.01)
Total assets ($000’s)	188,154	127,689	112,246
Long-term liabilities ($000’s)	8,274	10,861	5,048

Note: this is a non-GAAP measure. It was calculated by dividing cost of sales, adjusted for related depreciation and stock-based compensation, by quantities of iodine sold in the period.

From the experience gained during 2012, management has determined that the ALP crushing and screening circuit cannot operate efficiently due to the highly variable proportion of hard, abrasive volcanic pebbles and chips in the feed. These volcanics reduce throughput and cause significant wear in the leach tanks. To solve this problem a SAG mill has been ordered and will be installed in Q1 2014 which will produce a clean pebble reject and grind the volcanic chips. The installation of the mill will enable the ALP to operate at its designed throughput of 400 tonnes of ore per hour, increasing total production rates to over 2,000 tonnes of iodine per annum. The total capital cost of the mill installation is estimated to be approximately $15 million.

Until the SAG mill is commissioned, ALP throughput will be increased by feeding fines generated from mobile screens operating in the mining area. The fines will be trucked to the ALP, slurried and processed in the leach section of the ALP. The screened coarse product will be trucked directly to the heap leach pads. With these process changes the Company expects to achieve production of approximately 1,600 tonnes of iodine in 2013. The slurry plant is scheduled to be operational in Q2 2013.

Following the delivery of a positive pre-feasibility study in Q3 2012, a feasibility study is underway to examine the production of sodium nitrate using existing water supply and current brine concentrations. This study includes the construction and utilization of a pilot plant. The total cost of the study is estimated to be $2.5 million and it is expected to be complete by year end.

Other capital projects in 2013 include expanding the mining fleet ($10 million, financed by finance leases), and increasing the capacity of the chemical plant ($2.0 million). In addition, sustaining capital in 2013 is budgeted at $4.0 million to upgrade site infrastructure and increase maintenance capacity to support owner mining and expanded ALP production. In total, capital expenditures are forecast at $34 million in 2013.

An updated resource and reserve statement for Aguas Blancas will be released before the end of Q1 2013.

Average Iodine prices realized for the year were $61 per kilogram and are expected to remain robust for 2013.

Sirocco stands at December 31, 2012 with a strong balance sheet that includes $69 million in cash and working capital of $87 million.

A conference call to discuss the financial and operating results will be held at 8am PST on Thursday March 7, 2013. Participants should dial in on 1 800 814 4860 or 416 644 3416 and follow the prompts. A replay of the call will be available until midnight on March 14, 2013 by dialing 416 640 1917 or 1 877 289 8525, passcode 4601642#.

Other Matters

At a meeting of the Board of Directors of the Company (the "Board") held on March 6, 2013, the Board adopted an Advance Notice Policy (the "ANP"), which includes, among other things, a provision that requires advance notice be given to the Company in circumstances where nominations of persons for election to the Board are made by shareholders of the Company. In the case of an annual meeting of shareholders, notice to the Company must be made not less than 30 days nor more than 65 days prior to the date of the annual meeting. However, in the event that the annual meeting is to be held on a date that is less than 50 days after the date on which the first public announcement of the date of the annual meeting was made, notice may be made not later than the close of business on the 10th day following such public announcement. In the case of a special meeting of shareholders (which is not also an annual meeting) notice to the Company must be made not later than the close of business on the 15th day following the day on which the first public announcement of the date of the special meeting was made.

Additionally, the ANP sets forth the information that a shareholder must include in the notice of the Company, and establishes the form in which the shareholder must submit the notice for that notice to be in proper written form. The full text of the ANP is available on the Company's website and on SEDAR.

About the Company

Sirocco Mining Inc. is a Canadian company which produces iodine from its Aguas Blancas mine in northern Chile. In addition, the Company has exploration interests in Brazil and West Africa and is actively assessing other opportunities in the resource sector.


 

Highlights of the quarter include:

• Iodine production of 259 tonnes (year-to-date: 941 tonnes)
• Average realized iodine prices of $63 per kilogram (year-to-date: $62)
• Gross profit of $4.3 million (year-to-date: $20.2 million)
• Cash flow from operations of $1.9 million (year-to-date: $15.7 million)
• Bank debt reduction of $2.6 million (year-to-date: $8.3 million)

Positive pre-feasibility studies for the production of nitrates and sulphates were received near the end of the third quarter. These studies have indicated the potential to produce up to 90,000 tonnes per annum of sodium nitrate from the existing water supply and current brine concentrations at an estimated production cost of $175 tonne and an estimated capital cost of $80 million. Operating margins are robust at current Chilean export sale prices of approximately $600 per tonne of NaNO3. The Board has approved the decision to move to a full feasibility study for the construction of a sodium nitrate processing facility. This study is anticipated to commence before the end of 2012.

The studies also support the potential of producing sodium sulphate at Aguas Blancas. Testwork and processing analysis is continuing, with various production and marketing scenarios being evaluated.

In support of the various development opportunities at Aguas Blancas, a preliminary economic assessment for the installation of a sea water pipeline is underway and is scheduled to be completed by the end of 2012.

Financial Results

The tables below summarize key financial and operating results of the Company for the Quarter.

	Three Months Ended September 30, 2012	Three Months Ended September 30, 2011
Tonnes Mined (000t)	1,195	1,008
Iodine Grade (ppm)	552	574
Iodine Produced (t)	259	191
Iodine Sold (t)	238	194
Cash operating costs per kg (note 1)	38	43
Sales Revenue ($'000)	14,961	8,591
Gross Profit ($'000)	4,347	(676)
Net Income/(loss) ($'000)	(244)	(809)
Comprehensive Income/(loss) ($'000)	2,237	(1,985)
Diluted Income/(loss) per share ($)	0.00	(0.00)
Total Assets ($'000)	189,832	124,061
Net Assets ($'000)	162,751	87,749

Note 1: Cash operating costs per kg is calculated by dividing cost of sales, adjusted for related depreciation and stock-based compensation, by quantities of iodine sold in the period.

Iodine production in Q3 2012 continues to reflect ongoing operating improvements. Aguas Blancas produced 36% more Iodine in Q3 2012 as compared to Q3 2011.

After three quarters of testwork and operations, the crushing and screening circuit at the agitated leach plant ("ALP") has proved to be impractical due to the highly variable proportion of volcanics in the feed which reduce throughput and cause significant wear in the leach tanks. During the third quarter this issue resulted in four weeks of downtime in the ALP. As a result, the Company has revised the forecast level of production for 2012 to a range of 1,200 to 1,250 tonnes of iodine, a reduction of approximately 12% from previous forecast levels of between 1,350 and 1,450 tonnes.

The solution to the volcanics issue will be the installation of a grinding mill which will produce a clean pebble reject and grind the volcanic chips to minimize wear issues. Testwork is being completed to determine the optimum sizing of the new mill. The Board of Directors has approved the purchase of the mill and operation is slated for 2014. With this new mill and installation of an associated thickener, leach throughput of 400 tonnes per hour is targeted, increasing production rates to over 2,000 tonnes of iodine per annum. The total capital cost is estimated to be approximately $15 million.

The Company has also initiated temporary measures to maximize production for 2013. The mined product will now be screened at source using mobile screening plants. The screened fines will be trucked to the ALP, slurried and processed in the leach section of the ALP. The screened coarse product will be trucked to the Heap Leach pads. These measures are expected to increase Iodine production rates at Aguas Blancas to approximately 1,600 tonnes iodine per annum in 2013.

The small third quarter loss is mainly attributable to the deferral of two late-September iodine shipments until the fourth quarter in accordance with the Company's revenue recognition policy. The associated net revenue for these shipments will be recognized in Q4 2012. Additional items affecting the net result included increased exploration costs at Aguas Blancas ($1.2 million) as the Company continues its program of converting inferred resources to indicated resources, and unrealized CDN-USD foreign exchange losses ($0.7 million) on US denominated short-term investments held by Sirocco.

Iodine prices realized for the quarter were $63 per kilogram and are expected to remain robust for 2012.

Sirocco stands at 30 September 2012 with a strong balance sheet that includes $72.8 million in cash and working capital of $89.2 million.


 

The Company's second quarter highlights were:

• Iodine production of 338 tonnes (year-to-date: 682 tonnes)
• Average realized iodine prices of $59 per kilogram (year-to-date: $62)
• Gross profit of $6.4 million (year-to-date: $15.9 million)
• Net income of $3.2 million (year-to-date: $8.2 million)
• Cash flow from operations of $5.6 million (year-to-date: $13.8 million)

RESULTS FROM OPERATIONS

Net income for the three and six months ended June 30, 2012 were $3.2 million and $8.2 million respectively (2011: losses of $0.1 million and $0.6 million) on revenues of $21.7 million and $41.3 million (2011: $11.8 million and $21.8 million). Gross profits for the quarter and year-to-date were 29% and 38% of revenues respectively (2011: 12% and 13% of revenues). The improved financial performance over 2011 reflects higher iodine prices. Cost of sales increased over the same periods in 2011 due to higher labour costs (settlement of a new union contract), depreciation and processing costs (start of the agitated leach plant ("ALP")), including high maintenance costs in the ALP as a result of significant wear in the agitators. A number of engineering (blade profile and composition) and process (leach time) solutions are being implemented in the third quarter. Lower contract mining costs are due to the progressive move from contract to owner mining.

Administration costs of $1.6 million and $3.2 million for the three and six months ended June 30, 2012 (2011: $0.4 million and $1.0 million) reflect increased compensation costs, in the form of salaries, stock-based compensation and management fees, and professional and travel costs in support of operations and business development activities following the appointment of a new executive management team in October of 2011.

Finance costs of $0.2 million and $0.5 million (2011: $0.2 million and $0.4 million) include interest on the
outstanding loan amounts and accretion on the asset retirement obligation. Finance income of $0.2 million and $0.4 million (2011: $0.1 million and $0.2 million) reflect the interest earned from cash held on deposit and invested in short-term money market instruments. Foreign exchange gains of $0.4 million and $nil million (2011: loss of $0.1 million and $0.05 million) reflect the short-term fluctuations of the Canadian dollar and Chilean peso against the US dollar in the first half of the year.

Exploration costs of $0.9 million and $1.7 million (2011: $0.2 million and $0.7 million) reflect expenses incurred in Brazil for maintenance of claims, in Côte d' Ivoire for project generative activities since the acquisition of Sirocco Gold Inc. ("Goldco") in early 2012, and in Chile for work designed to convert inferred resources into measured and indicated resources (see Outlook section below). In 2011, exploration was limited to Brazil.

The $0.3 million equity loss on investment (year-to-date: $0.5 million) is Sirocco's 50% share of the costs
incurred by Amssega Exploration Sarl ("Amssega") on its exploration project in Mauritania. Sirocco acquired this interest as part of the Goldco acquisition on January 23, 2012. The $0.4 million gain on disposition of equipment relates to the sale of two crushers whose costs were written off last year as part the re-configuration of the screening and crushing circuits of the ALP undertaken in late 2011 and early 2012. Current income tax expenses of $0.9 million and $1.2 million (2011: $nil) and deferred income tax expenses of $0.1 million and $1.5 million (2011: $0.04 million and $0.1 million) are calculated by applying the applicable Chilean statutory tax rate to the profits from the iodine operations. No tax expense or recovery is recognized for other jurisdictions the group operates in because of the nature of activities and absence of profits at this time.

The Company also reported a loss of $1.4 million and $0.3 million for the three and six months ended June 30, 2012 respectively (2011: loss of $0.1 million and gain of $0.6 million) on translation of its non-consolidated accounts from the Canadian dollar functional currency to the U.S. dollar presentation currency. This is principally due to fluctuations in the foreign exchange between the Canadian and the US dollar. As a result, the Company has reported comprehensive income of $1.8 million and $7.9 million for the three and six months ended June 30, 2012 respectively (2011: loss of $0.2 million and income of $0.05 million).

Three Months Ended	June-12	Mar-12	Dec-11	Sep-11	June-11	Mar-11	Dec-10	Sep-10
Total revenues ($000's)	21,701	19,613	14,665	8,591	11,784	10,036	9,086	9,046
Gross profits ($000's)	6,392	9,501	4,886	(676)	1,456	1,391	920	945
Net Income (Loss) ($000's)	3,237	4,982	(22,926)	(809)	(117)	(461)	(1,119)	(694)
Income (loss) per share basic and diluted ($)	0.01	0.02	(0.14)	(0.00)	(0.00)	0.00	(0.01)	(0.00)
Tonnes mined ('000t)	1,180	1,218	1,311	1,008	1,117	1,052	1,033	976
Average grade of ore mined (ppm)	542	483	586	574	568	586	570	618
Iodine Produced (t)	338	344	277	191	286	367	345	321
Iodine Sold (t)	367	302	260	194	329	350	325	329
Iodine avg. price ($/kg)	59	65	56	44	36	29	28	27
Cash operating cost ($/kg) (Note)	37	30	35	43	29	23	22	22

Note: this is a non-GAAP measure. It was calculated by dividing cost of sales, adjusted for related depreciation and stock-based
compensation, by quantities of iodine sold in the period.

Modifications to the crushing and screening circuits of the ALP were commissioned by the end of the first
quarter. Depreciation of the ALP commenced at the beginning of the second quarter, an impact of approximately $0.7 million on the second quarter gross profits compared to the first quarter.

The ALP circuit achieved a recovery of 78% to produce 69 tonnes in the second quarter. Availability was
impacted by significant wear in the agitators. Unit cash operating costs increased over the first quarter due to increased labour costs and high maintenance costs in the ALP. Cash costs in the first half of 2011 and in 2010 were lower as they only reflected heap leach operations while in 2012 they include ALP operations.

In line with budgets and plans, further test work is being undertaken to finalize the circuit configuration to increase ALP throughput to optimum capacity by the end of the first quarter of 2013.


 

The Company's first quarter highlights were:

• Average realized iodine prices of $65 per kilogram (Q1 2011: $29)
• Gross profit of $9.5 million (Q1 2011: $1.4 million)
• Net income of $5.0 million (Q1 2011: loss of $0.5 million)
• Iodine production of 344 tonnes (Q1 2011: 367 tonnes)
• Cash flow from operations of $8.2 million (Q1 2011: $0.4 million)
• Closing of the acquisition of Sirocco Gold Inc. ("Goldco")
• Receipt of proceeds from CAD $60 million private placement
• Bank loan reduction of $5.3 million (Q1 2011: increase of $0.9 million)

Modifications to the crushing and screening circuits of the ALP designed to achieve 50% capacity were completed by late February with commissioning completed by the end of the first quarter. Detailed engineering of the crushing and screening circuits to increase ALP throughput to 100% capacity is underway. The ALP is scheduled to start operating at full capacity in the first quarter of 2013.

Cash operating costs for the first quarter of 2012 include ALP related costs, although ALP production was very limited due to the completion and commissioning of planned modifications. This notwithstanding, they showed a significant improvement over the second half of the 2011. Cash costs earlier in 2011 and in 2010 only reflect heap leach operations.

Selected operational information for Aguas Blancas mine for the three months ended March 31, 2012 compared to 2011 is set out in the following table:

	Three Months Ended March 31, 2012	Three Months Ended March 31, 2011
Tonnes Mined (Mt)	1,218,559	1,051,889
Iodine Grade (ppm)	483	586
Total Iodine Produced (Mt)	344	367
Iodine Sold (Mt)	302	350

 

As a result of these actions, certain equipment previously forming part of the ALP has been removed. The related capital cost has been written off, as well as the costs relating to the original ALP pilot plant previously recorded in mineral property, for a total charge to income of $6.5 million. In addition, during the first nine months of the year, the Company incurred approximately $1.0 million relating to the commissioning of the ALP.

Owner mining

During the year, half of the mining operations were transitioned from contract mining to owner mining, incurring $1.3 million of non-operational costs in the process. These costs are presented separately on the statement of income as they are considered specific to these transitional activities and non-recurring.

Production Results

Selected operational information for Aguas Blancas mine for the three months and year ended December 31, 2011 compared to 2010 is set out in the following table:

	Three Months Ended December 31, 2011	Three Months Ended December 31, 2010	Year Ended December 31, 2011	Year Ended December 31, 2010
Tonnes Mined (000’s t)	1,311	1,033	4,488	3,804
Iodine Grade (ppm)	586	570	581	623
Iodine Produced (t)	277	345	1,122	1,256
Iodine Sold (t)	260	325	1,134	1,244

Compared to 2010, increased tonnes mined during the year helped offset the lower grade profile of portion of the deposits mined. Lower annual iodine production was also partially caused by the delays associated with the commissioning of the ALP. The higher volume of tonnes mined in the fourth quarter was directed to the heaps with the related production expected in 2012.

Improved operations from the heap leach and production from the ALP are expected to improve Aguas Blancas production profile in 2012. During the first quarter of 2012, iodine production was 344 tonnes, an improvement of 24% over the last quarter of 2011.


 

	Three Months Ended September 30, 2011	Three Months Ended September 30, 2010	Nine Months Ended September 30, 2011	Nine Months Ended September 30, 2010
Tonnes Mined (Mt)	1,008,276	976,395	3,177,001	2,770,687
Iodine Grade (ppm)	574	618	576	643
Total Iodine Produced (Mt)	191	322	844	912
Iodine Sold (Mt)	194	329	873	919

The tonnage and grade mined in the third quarter were consistent with the mine plan. Iodine production decreased substantially in the third quarter of 2011 due to the poor availability of crushing screening plant in the ALP and a cold winter which caused the precipitation of sulphates from the Heap Leach brine.

Salvador Potash Project - Brazil

The Salvador project is located near the city of Salvador, Bahia, on the north eastern coast of Brazil, and is within the large on-shore Reconcavo sedimentary basin with the potential to host a major new potash deposit. The Company holds exploration permits covering an area of 2,500 square kilometres over the southern on-shore portion of the Reconcavo sedimentary basin.

The Company is reviewing the status of this project.


 

Production Results

Selected operational information for Aguas Blancas mine for the three and six months ended June 30,2011 compared to 2010 is set out in the following table:

	Three Months	Three Months	Six Months	Six Months
	Ended June	Ended June	Ended June	Ended June
	30, 2011	30, 2010	30, 2011	30, 2010
Tonnes Mined (Mt)	1,116,836	865,165	2,168,725	1,794,292
Iodine Grade (ppm)	568	693	577	656
Total Iodine Produced (Mt)	286	275	653	591
Iodine Sold (Mt)	329	273	679	590

Consistent with the mine plan, the tonnage mined in the first half of 2011 was higher as compared to 2010. The lower grade mined is consistent with the 2011 mine plan. As a result of the higher tonnage and better plant efficiency production also increased in the first half of 2011. As the process is transitioned from heap leach to the ALP system, there are likely to be a few months of lower production due to the reduction in water available for application on the heaps as the ALP production gradually ramps up.

Salvador Potash Project - Brazil

The Salvador project is located near the city of Salvador, Bahia, on the north eastern coast of Brazil, and is within the large on-shore Reconcavo sedimentary basin with the potential to host a major new potash deposit. The Company holds exploration permits covering an area of 2,500 square kilometres over the southern on-shore portion of the Reconcavo sedimentary basin. Historical drilling records indicate the occurrence of potash beds at depths of approximately 1,000 metres, directly overlying the halite salt bed located in the evaporitic section of the lower Alianca Formation of upper Jurassic age. In 2010, studies and review of information provided by the drill holes, indicated that though the region near the north central part of the concession showed potash mineralization, the indications were that the grade-thickness of the mineralization was probably not sufficient for a stand alone potash project. Additional gravimetric studies indicate that the area south of this region, where large salt formations appear to be at a similar depth, may be more suitable for continued exploration. Studies are underway to identify locations for further exploration.

Production Results

Selected operational information for Aguas Blancas mine for the three months ended March 31, 2011 compared to 2010 is set out in the following table:

	Three Months Ended March 31, 2011	Three Months Ended March 31, 2010
Tonnes Mined (Mt)	1,051,889	929,127
Iodine Grade (ppm)	586	621
Total Iodine Produced (Mt)	367	315
Iodine Sold (Mt)	350	317

Consistent with the mine plan, the tonnage mined in 2011 was higher as compared to 2010. As a result of the higher tonnage and better plant efficiency production also increased in 2011.

Salvador Potash Project - Brazil

The Salvador project is located near the city of Salvador, Bahia, on the north eastern coast of Brazil, and is located within the large on-shore Reconcavo sedimentary basin with the potential to host a major new potash deposit. The Company holds exploration permits covering an area of 2,500 square kilometres over the southern on-shore portion of the Reconcavo sedimentary basin. Historical drilling records indicate the occurrence of potash beds at depths of approximately 1,000 metres, directly overlying the halite salt bed located in the evaporitic section of the lower Alianca Formation of upper Jurassic age.

In 2010, attempts were made to complete the first hole of a three hole drill program designed to define the depth, thickness and grade of the potash beds within the central portion of its Salvador Potash Project. Due to various difficulties including encountering fractured, fragmented shales that the drilling rig could not penetrate and after trying three separate rigs on the first hole, it was determined that the hole should be abandoned and a new site selected. The second drill hole, which was 5 kilometres away from the first drill hole, was completed in 2010 and while containing potash salts, did not hit the massive salt zone.

Permitting of additional drill sites is continuing, and five permitted locations currently remain to be tested. Gravimetric studies were expanded to help locate additional targets. An independent engineering firm has been contracted to carry out an evaluation of the project potential and to recommend the path forward for continued exploration. Their draft report agrees with the Company's current approach to better define the region of interest through gravimetric studies to determine the optimum location for continued drilling.

Production Results

Selected operational information for Aguas Blancas mine for the three months and year ended December 31, 2010 compared to 2009 is set out in the following table:

	Three Months Ended December 31, 2010	Three Months Ended December 31, 2009	Year Ended December 31, 2010	Year Ended December 31, 2009
Tonnes Mined (Mt)	1,033,499	847,345	3,804,186	3,203,373
Iodine Grade (ppm)	570	633	623	570
Iodine Produced (Mt) (000's)	345	318	1,256	1,096
Iodine Sold (Mt) (000's)	325	338	1,244	1,086

Consistent with the mine plan, the tonnage mined in 2010 was higher as compared to 2009. Ore grade was substantially higher as a result of encountering higher grade remnant ores from previously mined areas. As a result of the higher tonnage, higher grades and improvements in leaching and water distribution, production also increased in 2010.

New Reserve/Resource Estimate

The new Reserve and Resource estimates as at December 31, 2010, as per independent 43-101 Technical Report, representing a 23% increase in measured and indicated iodine resource over the prior estimate, are as follows (Company's news release dated February 16, 2011):

Aguas Blancas Reserves and Resources* December 31, 2010
	Tonnes (millions)	Iodine (I2 in ppm)	Sulphate (SO4 in %)	Nitrate (NO3 in %)
Reserves
Proven	7,831	430	21.1	2.88
Probable	44,403	461	11.8	1.87
Total	52,237	456	13.2	2.02
Resources
Measured	7,931	478	24.3	3.31
Indicated	47,018	497	13.1	2.14
Total	54,948	494	14.8	2.31
Inferred	68,227	391	11.1	2.70

*The Measured and Indicated Resources are inclusive of the reported Proven and Probable Reserves, which represent those parts considered as being economically viable, according to CIM Definitions and Guidelines as required by National Instrument 43-101. Adam Wheeler, independent consultant and Qualified Person pursuant to NI 43-101, was commissioned to prepare a reserve and resource estimate (dated December, 2010) in accordance with NI 43-101 based on results of recent drilling and analytical results.

The Reserve estimation parameters were governed by estimated recoverable iodine and economic estimates which will be available in the Technical Report on the SEDAR website (www.sedar.com) as well as the Company's website (www.atacama.com). These include a calculated 260 ppm cutoff grade based on current and estimated costs going forward as well as assuming $28 per kg iodine price. Mining ore recovery is estimated at 95% with 16% dilution based on historical data. Process recovery is estimated at 56% overall for heap leach and 74% overall for agitated leach.

Salvador Potash Project - Brazil

The Company holds exploration permits covering an area of 2,500 square kilometres over the southern on-shore portion of the Reconcavo sedimentary basin. Historical drilling records indicate the occurrence of potash beds at depths of approximately 1,000 metres, directly overlying the halite salt bed located in the evaporitic section of the lower Alianca Formation of upper Jurassic age.

The Salvador project is located near the city of Salvador, Bahia, on the northeastern coast of Brazil, and is located within the large on-shore Reconcavo sedimentary basin with the potential to host a major new potash deposit. In 2010, attempts were made to complete the first hole of a three hole drill program designed to define the depth, thickness and grade of the potash beds within the central portion of its Salvador Potash Project. Due to various difficulties including encountering fractured, fragmented shales that the drilling rig could not penetrate and after trying three separate rigs on the first hole, it was determined that the hole should be abandoned and a new site selected. The second drill hole was completed earlier in the year and while containing potash salts, did not hit the massive salt zone. Permitting of additional drill sites is continuing, and two permitted locations currently remain to be tested. Gravimetric studies were expanded to help locate additional targets. An independent engineering firm has been contracted to carry out an evaluation of the project potential and to recommend the path forward for continued exploration.