Regulus is a newly listed junior exploration company listed on the Toronto Stock Exchange (TSX V.REG). It was formed as a spin-off from Antares Minerals Inc. (“Antares”), a former client of IFC, in December 2010 and the Company continues to work under the directorship and close involvement of the original Antares management team. The Company currently has a market capitalization of C$45 million (as of August 5, 2011). The Company has several strategic partners, including Farallon Capital Management holding 25.2%, IFC currently holding 13.2% and First Quantum Minerals holding 9.9%. The management team and directors hold approximately 7.5% of the Company.

The total project cost to fund the current exploration drilling program, which started in late June and will include approximately 15,000 meters of drilling, and associated exploration works and studies is estimated to approximately C$5 million, but will depend on exploration results. The proposed IFC investment consists of an equity investment of C$708,000 to increase IFC’s equity interest in Regulus back to the 14.6% that IFC held in Antares prior to the spinout of Regulus from Antares in December 2010.

0.74 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan
Equity	0.74

* These investment figures are indicative

The Rio Grande property is located in the high Puna of NW Argentina, 450km west of the city of Salta in high altitude. The main activities currently being undertaken are trench sampling and core drilling. The project is located in an area with existing access roads. Other infrastructure available but less accessible includes a gas pipeline extending from Salta to Chuquicamata copper mine in Chile, with a branch line to the Hombre Muerto lithium mine 75 km east of Rio Grande. A high tension power line also extends from Salta to Chuquicamata, and this line lies about 200 km from the project site.

The proposed investment will be made before the completion of a full project feasibility study that would confirm the commercial viability of the Rio Grande project. The IFC investment will thus fund exploration and further studies and will not fund the development of a mine or result in any immediate incremental production. Development impacts from exploration activities are typically limited but nonetheless create local employment.

Should Rio Grande be developed into a commercial mining operation, significant development impacts are likely to be realized during the construction and production phases, including employment opportunities, tax revenues and foreign exchange contribution to the national economy, purchase of local goods and services and associated economic development.

The Company has indicated to IFC that it plans to raise equity financing by the end of the year to continue to fund its exploration program. IFC''s investment in Regulus would send a positive signal to the market and provide a stamp of approval, which would allow the Company to raise further equity financing in the market required to move the project to feasibility stage.

Whereas Regulus has expressed its intent to achieve E&S best practice already at exploration stage, it is a junior mining company that lacks in-house resources/expertise and the Company seeks IFC advice/help in this regard. IFC''s deep experience helping other junior mining companies address the needs to build HSEC risk management capabilities in South America and elsewhere makes IFC uniquely positioned to add value to the Company in this regard.

This is a Category B project according to IFC’s procedures for Environmental and Social Review of Projects because the project involves early exploration activates related to core sample drilling and trench sampling and therefore has limited adverse impacts and risks which are manageable.

IFC’s appraisal of this potential investment has identified the following environmental, social, health and safety issues as well as potential issues if and when mine development commences:

(i) Management of exploration activities – control of erosion and rehabilitation of drill roads, drill sites, safe disposal of oils, waste, etc.
(ii) Social issues - Management of community and stakeholder relations during on-going consultation and disclosure.
(iii) Potential future impacts (if Regulus prospects are developed into mines) typical of those associated with open pit mining – community impacts, waste management, surface and groundwater protection, health & safety, hazardous materials exposure and management, emergency preparedness & response.

The identified risks will be managed through the implementation of an Environmental and Social Action Plan (ESAP) ensuring that the operations are compliant with the requirements of IFC Performance Standards. Prior to developing any mine activities a full Environmental and Social Impact Assessment (ESIA) will be conducted in line with IFC Performance Standard requirements.

Refer to the Environmental and Social Review Summary for more detail.