Management's Discussion and Analysis

MINERA IRL LIMITED

Management's Discussion and Analysis

For the Period Ended 31 March 2013

The following Management's Discussion and Analysis ("MD&A"), prepared as of 13 May 2013, should be read together with the audited consolidated financial statements (the "Financial Statements") and related notes thereto of Minera IRL Limited ("Minera IRL", the "Group" or the "Company") for the fiscal year ended 31 December 2012 and the unaudited condensed interim consolidated financial statements of the Company for the three months ended 31 March 2013 and related notes thereto (the "Quarterly Statements"), which were prepared in accordance with International Financial Reporting Standards ("IFRS"). Additional information about Minera IRL, including the Company's most recently filed Annual Information Form and the risks and uncertainties discussed therein, may be found at the Company's website at www.minera-irl.com and within the Company's SEDAR profile at www.sedar.com. All figures are in United States ("US") dollars unless otherwise noted. References to C$ are to Canadian dollars and to £ are to British pound sterling.

Background and Business of the Company

Minera IRL Limited is a Jersey registered company and together with its subsidiaries is a Latin American precious metals mining, development and exploration company. The Company was privately funded from inception in 2000 until an initial public offering and admission of its ordinary shares on the AIM Market of the London Stock Exchange plc ("AIM") in April 2007. The Company subsequently listed on the Lima Stock Exchange in Peru, Bolsa de Valores Lima ("BVL"), in December 2007 under the same trading symbol of "MIRL". In April 2010, the shares of the Company were listed on Toronto Stock Exchange ("TSX") under the trading symbol "IRL".

In Peru, the Company operates the Corihuarmi Gold Mine, has completed a feasibility study ("FS") on the Ollachea Project and is exploring a number of other gold prospects. In Argentina, the Company has completed a FS, received approval of its Environmental Impact Assessment and has been granted a development permit at the Don Nicolas Gold Project in Patagonia. In addition, the Company continues to prospect a large land package under exploration licences.

Details of the Company's corporate structure can be found on the website www.minera-irl.com.

Operational, Project Development and Exploration Review

Corihuarmi Gold Mine

The Company's 100% owned Corihuarmi Gold Mine ("Corihuarmi") is located approximately 160 kilometres ("km") southeast of Lima, Peru, in the Central Andes at an altitude of almost 5,000 metres. The Company acquired the Corihuarmi leases in 2002, and it was brought into production in March 2008. There is no hedging in place and all the gold is sold at the spot price.

Below is a summary of the key operating statistics for Corihuarmi for the three month periods ended 31 March 2013 and 2012:

1. Refer to Non-IFRS Measures at the end of this MD&A.

Q1 2013

As anticipated, gold production during the first quarter of 2013 decreased by 13% to 5,848 ounces versus the 6,747 ounces produced in the same prior year period.

As expected, the grade was 25% lower for the quarter when compared with the same period in the prior year, and this resulted in lower production. Mining was split between the Susan outcrop and broken scree material below the outcrops. The site operating costs per ounce were 45% higher for the current quarter when compared to the same period in the prior year primarily due to fewer ounces being produced and general inflationary increases.

Ollachea Project - Development

Minera IRL's flagship Ollachea Gold Project is located in southern Peru, approximately 250km north of Lake Titicaca, on the eastern escarpment of the Andes Mountains. The project was acquired from Rio Tinto plc in 2006. A surface rights agreement was signed with the local community in late 2007. The 100% owned company, Minera Kuri Kulla SA, was registered to own the leases and manage the Ollachea Project.

Drilling commenced with two diamond rigs in October 2008, and by the end of December 2011 81,073 metres had been completed in 208 holes. 

A significant gold discovery was announced in early 2009 and a Scoping Study for the Minapampa Zone, based upon 49 diamond drill holes, was completed by Coffey Mining in November 2009. With the receipt of positive results from this Scoping Study, the Company undertook a Pre-feasibility Study, which was announced in July 2011. The Company recently released the positive results of its Feasibility Study in November 2012.

On 14 June, 2011, the Company released an updated National Instrument 43-101 ("NI 43-101") compliant resource estimate for the Ollachea Project. The resource estimate was carried out over the Minapampa and Minapampa East Zones and was an update on the November 2010 resource estimate. The subsequent in-fill drilling at Minapampa East contributed to the contained ounces in the Indicated category, increasing by nearly 20% to 1.4 million ounces. In the process both tonnage and grade increased. This increase was also assisted by an increase in the dry in-situ bulk density from 2.80 tonnes per cubic metre to 2.83 tonnes per cubic metre.

This NI 43-101 compliant resource estimate was carried out by consultancy Coffey Mining over the Minapampa Zone and the contiguous strike extension known as Minapampa East. The estimate was based upon 88 diamond drill holes for 31,980 metres at Minapampa and 32 diamond drill holes for 14,424 metres at Minapampa East, for a combined 120 drill holes totalling 46,404 metres. The resource estimate applies a 2 grams per tonne ("g/t") gold bottom cut and top cutting as appropriate for each of the seven discrete gold-mineralized horizons, or "lenses" that have been defined to date.

Several of the most easterly holes drilled at Minapampa East, beyond which steep terrain precludes further drilling from surface, returned strong gold intersections including DDH11-148 with 7 metres grading 20.7g/t gold and DDH11-152 with 3 metres grading 27.2g/t gold. This bodes well for future exploration of the eastern extension of the deposit from the underground exploration drive (see below for more details).

Management considers the drill exploration targets from underground to be compelling. The gold bearing structures outcrop for approximately one kilometre to the east of the Minapampa Zones. The most easterly drilling from surface recorded strong gold intersections and supports geological continuity of the open-ended Minapampa mineralization towards the east. Extremely steep terrain precludes further drilling from surface towards the east. The exploration tunnel, which was completed in January 2013 and is explained more fully below, was designed parallel to this eastern strike extension to provide suitable locations for underground diamond drilling from cuddies, or chambers, at regular intervals as the drive advances.

Based upon all of these positive results, the Company embarked upon a pre-feasibility study which was completed and announced on 17 July 2011. Furthermore, on 29 August 2011, the Company announced that it had committed to the construction of the 1.2 km exploration tunnel with which to access the ore body defined in the Ollachea Pre-feasibility study. A well-known and experienced underground contractor, JJC Contratistas Generales S.A., was retained to execute the underground project. Consultants TWP Sudamerica S. A. were engaged to assist Minera IRL to manage the project. A general assembly of the Ollachea community overwhelmingly endorsed the project.

On 7 September 2011, the Company announced the maiden Inferred Mineral Resource at the Concurayoc Zone, approximately 400 metres west of the Minapampa Zone, based on infill drilling completed during the second quarter of 2011.

Inferred Mineral Resource (applying a 2.0g/t gold cut-off)

This NI 43-101 compliant mineral resource estimate was carried out by consultancy Coffey Mining Pty Ltd. The new estimate at the Concurayoc Zone, which covers a strike length of 700 metres, was based upon 45 diamond drill holes on approximately an 80 metres grid for 16,943 metres. The mineral resource estimate, reported at a 2g/t gold bottom cut-off, includes top cutting as appropriate for each of the six broad gold-mineralized horizons, or "lenses", that have been quantified in the estimate. The total mineral resource at Ollachea is based upon 165 diamond drill holes for 63,347 metres.

The dip and spatial orientation of the mineralized zones at Concurayoc are broadly similar to the mineralized zones hosted within the Minapampa zones. Within the six horizons identified at Concurayoc, mineral resource modelling has additionally identified seven discrete higher grade lenses. Examples of higher grade intersections include drill hole DDH10-130 which intersected 33 metres grading 4.57g/t gold including 12 metres grading 8.66g/t gold, DDH10-135 with 7 metres at 4.03g/t gold plus 4 metres at 8.68g/t gold, DDH11-168 with 9 metres grading 3.38g/t gold plus 4 metres at 22.0g/t gold and DDH11-171 with 7 metres at 17.6g/t gold. The effective true width of mineralized intersections is expected to range between 67% to 98% of the width reported, with the majority of the drill holes reporting around 92% true width. The true width is dependent upon the variation of the angle of incidence between the trace of the Concurayoc exploration drill-hole(s) and the dip of the targeted mineralized horizon(s). The Ollachea Feasibility Study is predicated upon the Indicated Mineral Resource at Minapampa and Minapampa East which is only 400 metres from Concurayoc. As a result, the Company believes that the Concurayoc mineral resource has the potential to substantially enhance the life of mine of the Ollachea mine development.

On 7 June 2012, the Company announced that the Ollachea Community had extended the Surface Rights Agreement for the Ollachea Gold Project, Peru, for a period of 30 years.Minera IRL will continue with the community programs commenced during the past five years. These include health, education and sustainability programs. Of particular importance, going forward, will be the provision of educational personnel and infrastructure to train local residents in specialized mining related skills to support the future mine operations. The Company will also assist in the development of community enterprises for the provision of goods and services. The new Agreement also ratifies the commitment in the original 2007 Surface Rights Agreement to grant the Community of Ollachea a 5% equity participation in the subsidiary company Minera Kuri Kullu SA, which holds the Ollachea leases, upon the commencement of commercial production.

On 18 July 2012, the Company announced that infill drilling has confirmed the resource estimate within the Minapampa Zone at the Ollachea Gold Project. The objective of this drilling program was to increase the confidence level in the Indicated Resource estimate by confirming continuity of gold bearing horizons and gold content through carefully targeted in-fill drill holes within the established Minapampa zone. A total of 31 holes for 12,840 metres of infill drilling have been carried out since August 2011. This process was considered important to ensure sign-off by future third party due diligence associated with project financing.

This resource update supersedes the Minapampa resource announcement of June 2011 (note: Minapampa and Minapampa East are now reported as a single resource known as Minapampa). The Inferred Resource at the Concurayoc zone, some 400 metres to the west of Minapampa, announced in September 2011, remains unchanged.

Indicated Mineral Resource applying a 2.0g/t gold cut-off

Inferred Mineral Resource applying a 2.0g/t gold cut-off

Included within the above resource envelope, the higher grade core Indicated Resource, using a 3.5g/t gold cut-off, has increased slightly to 5.1 million tonnes grading 5.3g/t gold containing 0.9 million ounces.

This Canadian National Instrument 43-101 ("NI43-101") compliant resource estimate was carried out by consultancy Coffey Mining Pty Ltd over the Minapampa zone. The new estimate was based upon 151 diamond drill holes for 59,509 metres. The resource estimate applies a 2g/t gold bottom cut and top cutting as appropriate for each of the seven discrete gold-mineralized horizons that have been defined to date. The dry in-situ bulk density within mineralized zones remains unchanged at 2.83 tonnes per cubic metre. An enhanced assay database has been provided by the re-assaying over one metre intervals or less of all mineralized early stage two metre assay intervals.

Better intersections obtained from the infill drilling program includes drill hole DDH11-188 with 8 metres at 10.7g/t gold plus 13 metres at 9.7g/t gold, DDH11-190 which intersected 20 metres grading 10.2g/t gold including 11 metres grading 15.3g/t gold and DDH12-197 with 18 metres grading 3.9g/t gold plus 16 metres at 11.4g/t gold.

The effective true widths of mineralized intersections listed above are expected to range between 97% to 99% of the widths reported. The true width is dependent upon the variation of the angle of incidence between the trace of the Minapampa resource drill-hole(s) and the dip of the targeted mineralized horizon(s).

On 29 November 2012, the Company released the results of the Feasibility study ("FS") on Minipampa. The FS was managed by AMEC Peru SA, which is part of the international engineering firm AMEC plc, in conjunction with Coffey Mining who has contributed the resource estimation and underground mining aspects. Part of the FS included limited final resource in-fill drilling with two diamond rigs which was completed in the second quarter of 2012. On 18 July 2012, the Company announced a resource update which confirmed the resource estimate within the Minapampa Zone at Ollachea based upon the results of this infill drilling program. The objective of this drilling program was to increase the confidence level in the Indicated Resource estimate by confirming continuity of gold bearing horizons and gold content through carefully targeted in-fill drill holes within the established Minapampa zone. This process was considered important to ensure sign-off by future third party due diligence associated with project financing.

The FS was based on a NI 43-101 compliant Indicated Resource of 10.6 million tonnes grading 4.0g/t gold containing 1.4 million ounces. This mine design and production scheduling has resulted in a Probable Mineral Reserve of 9.3 million tonnes grading 3.4g/t gold containing 1.0 million ounces. An underground mining and treatment rate of 1.1 million tonnes per annum has been established giving a mine life of nine years. The orebody will be accessed through a 1.2 kilometre slightly inclined tunnel from an adjacent valley. Mining of the steeply dipping lenses will utilize the sub-level open stoping method with cemented paste fill. The ore is metallurgically responsive to standard treatment techniques with a projected gold extraction of over 91%. Processing will be by way of conventional crush, grind and carbon-in-leach (CIL) technology.

Key performance and economic indicators are shown in the table below:

On 21 December 2012, the Company announced that it had submitted the Environmental Impact Assessment for the Ollachea project and thereby initiated the permitting process for the project.

In January 2013, the exploration tunnel reached its planned 1.2 kilometre objective, and did so more than a month ahead of schedule and approximately $1.1 million under budget. The speed and reduced cost associated with the completion of the drive as well as the practical experience gained indicates that assumptions used in the FS are conservative. This particularly relates to better ground conditions, a much higher advance rate and minimal water infiltration.

The Company commenced an underground drilling campaign in January 2013. The initial program consisted of three completed diamond drill holes, all of which intersected potentially ore grade gold mineralization.  DDH13-T01 intersected 20 meters grading 4.48g/t gold, DDH13-T03 intersected 11 meters grading 5.47g/t gold and DDH13-T04 intersected 9 meters grading 5.45 g/t gold. The eastern-most intersection (DDH13-T03) is located approximately 320 meters east of the eastern limits of the Minapampa resource upon which the 2012 FS was based, thereby confirming significant strike extent which still remains open ended to the east.

In addition to providing access for underground exploration drilling, the completed drive will facilitate rapid mine development when project permitting and project financing is in place, which is expected in the second half of 2013.

Don Nicolas Project - Development

In late 2009, Minera IRL completed the take-over of Hidefield Gold Plc ("Hidefield") via an all share transaction. This transaction enabled Minera IRL to acquire the Don Nicolas Project and an extensive exploration tenement package totalling some 2,700km2 in the Patagonia region of Argentina. The project is located within a large geological complex known as the Deseado Massif. This geological formation hosts existing gold and silver mines and a number of recently discovered low sulphidation, epithermal gold deposits.

At the time of Minera IRL's takeover of Hidefield, the Don Nicolas Project was based upon a NI 43-101 compliant Indicated Resource of 1.078 million tonnes grading 5.8g/t gold containing 201,000 ounces plus an Inferred Resource of 1.075 million tonnes grading 4.6g/t gold containing 158,400 ounces. A Scoping Study completed in 2008 provided the basis for Minera IRL to embark on a full feasibility study. A substantial component of this study has included in-fill and extension drilling both to increase the confidence levels of the Measured and Indicated Resource and to also attempt to increase the number of ounces. On 29 August 2011, an updated resource estimate for the Don Nicolas Project was announced. This resource estimate supersedes the resource inventory inherited with the Hidefield transaction. That estimate was based upon a 1.0g/t gold lower cut-off grade so the new Minera IRL estimate is not directly comparable. However, a relatively small portion of the 89% increase in gold in the overall Measured and Indicated category is related to reducing the gold lower cut-off grade to 0.3g/t.

There are two vein field districts that make up the Don Nicolas Project, La Paloma and Martinetas. The reported resource is made up of nine vein systems (refer to the table below). At La Paloma, resources have been defined at the Sulfuro, Arco Iris, Ramal Sulfuro and Rocio Veins. Martinetas consists of five vein swarms contained in the Coyote, Cerro Oro, Armadillo, Lucia and Calafate deposits. The resource estimation methodology that was applied to each system was appropriate for the particular mineralized deposit. For Sulfuro, Arco Iris, Ramal Sulfuro, Rocio, Armadillo and Calafate, the Ordinary Kriging ("OK") technique was used and, using this method, no mine dilution was included in the resource estimate for these deposits. For Coyote, Cerro Oro and Lucia, the Multiple Indicator Kriging ("MIK") method was considered more appropriate and this method includes dilution for an assumed mining scenario and Selective Mining Unit ("SMU").

On 16 February 2012, Minera IRL announced the results of the Don Nicolas Feasibility Study. International engineering firm Tetra Tech managed the Feasibility Study, with the resource estimate compiled by Coffey Mining Pty Ltd. The high grade Measured and Indicated Resource formed the basis for the Feasibility Study. Mine design and production scheduling on this resource resulted in Proven and Probable Mineral Reserves of 1.2 million tonnes grading 5.1g/t gold and 10g/t silver containing 197,000 ounces gold and 401,100 ounces silver (contained within the reported Measured and Indicated Resource). An all open pit mining scenario was adopted for the Feasibility Study, with ore production from the two vein fields, Martinetas and La Paloma (location of the Sulfuro Vein). The conventional crush, grind and carbon-in-leach (CIL) treatment plant at Martinetas is planned to have a rate of 350,000 tonnes per annum providing initial expected mine life of 3.6 years. An average annual steady-state gold and silver production of 52,400 ounces and 56,000 ounces respectively at a cash operating cost of US$528 per ounce after silver credits is expected. From the reserves outlined to date, peak production is scheduled to occur in Year 2 of operation at 63,800 ounces of gold and 92,200 ounces of silver. The Project's logistics are excellent, with close proximity to a major highway, and an adequate supply of ground water has been defined.

Key performance and economic indicators are shown in following table:

The Company believes that there is significant opportunity for enhancement of the Don Nicolas Project in the future including the following:

·; The low grade resource in the Indicated category totals 6.1 million tonnes grading 0.7g/t gold and 3.3g/t silver for a total of 143,000 ounces of gold and 648,000 ounces of silver. Preliminary metallurgical testing confirms that the ores are amenable to heap leaching techniques and planning is progressing for an expanded test program during early 2013 with the objective of completing a feasibility study on heap leaching during the second half of 2013. During the mining operation outlined in the Feasibility Study, 2.1 million tonnes of low grade material, included in the above resource, grading 0.7g/t gold and 3g/t silver containing 49,000 ounce of gold and 215,000 ounces of silver will be stockpiled. This can be readily reclaimed if heap leaching proves practical;

·; Potential exists for a future underground mine at La Paloma where a resource already exists in the open ended high grade shoot which extends below the Sulfuro open pit;

·; The 7,000 metre reverse circulation ("RC") in-fill and extension drilling program completed during 2011 at Martinetas was highly successful. A further 12,000 metre RC program commenced in March 2012 at Martinetas, and it successfully added 87,000 ounces in the Measured and Indicated category and 20,000 ounces to the Inferred category of the resource base. This in turn is expected to extend the proposed mine life;

·; Potential to outline high grade gold and silver resources which may be defined from exploration prospects within trucking distance and treated at the Martinetas plant. Examples of planned follow-up exploration include reported intersections of 0.7 metres grading 136g/t gold and 157g/t silver and 4.2 metres grading 1.63g/t gold and 663g/t silver that have already been reported in separate systems at the Escondido discovery, approximately 35 kilometres from Martinetas;

·; The newly discovered mineralized system at Choique which is located approximately 1km for the Martinetas Vein field. Additional details are disclosed below; and

·; Further work is underway to investigate the potential to further reduce operating cost.

On 10 July 2012, the Company announced that it had signed a Social License Agreement for a period of 10 years with the communities of Jaramillo and Fitz Roy relating to the development of the Don Nicolas Gold Project, in the Province of Santa Cruz, Argentina. The objectives of the Social License Agreement are to jointly develop policies for local training, jobs and sustainable health programs as well as to establish supply companies to complement and diversify the provision of goods and services required by the future Don Nicolas mine. The Company views this agreement as a very important step forward in the development of the Don Nicolas Gold Project.

In early July 2012, an 18,700 metre extension drilling program was completed at the Martinetas area. The objective of this program is to increase the Don Nicolas resource base. In November 2012, the Company announced the following resource update.

On 6 September 2012, the Company announced the discovery of a significant mineralized system at Choique, which is located approximately 1km from the Martinetas Vein Field at the Don Nicolas Project. Results from 35 holes totaling 2,386 metres of drilling have demonstrated substantial gold and silver intersections in a new mineralized rhyolite dome host within 50 metres of surface. Furthermore, key high grade intersections include drill holes CH-D12-015 with 6.70 metres at 10.5g/t gold and 19.8g/t silver, CH-D12-018 with 6.10 metres at 5.43g/t gold and 27.6 g/t silver and CH-D12-021 with 11.10 metres grading 5.38 g/t gold and 5.26g/t silver. (Full drill results are available at the Company's website www.minera-irl.com) Management believes that the Choique discovery not only shows immediate potential for increasing the current Don Nicolas resource base and mine life, but also provides great encouragement for more potential discoveries close to Martinetas.

On 16 October 2012, it was announced that the Company received approval of its Environmental Impact Assessment and was granted a Development permit by the Santa Cruz government. The Company is negotiating to engage an engineering company and arranging finance to allow an early commencement of development. Mine development at Don Nicolas is expected to take approximately 12 months with target production in 2014.

Exploration Projects

Patagonia Regional Exploration

In addition to the Don Nicolas Project, the Company is advancing a number of exploration projects in Argentina's Patagonia region, including Escondido, Michelle and Chispas. Since Minera IRL's takeover of Hidefield late 2009, the Company has carried out extensive airborne and ground geophysical surveys. During the second quarter of 2011, a second heli-borne magnetic and radiometric geophysical survey totalling 5,374 line kilometres was completed over four project sites. This is in addition to the 4,400 line kilometres completed in 2010. The database generated by these programs is of exceptional quality and resolution and is of marked assistance to the geologists in identifying targets and fine tuning drill site locations.

The Escondido Project is contiguous to the Las Calandrias discovery first announced by Mariana Resources Limited in late 2009. Extension of the Las Calandrias mineralization into the Escondido property was confirmed by mapping and surface sampling conducted by Minera IRL, which identified a breccia zone in excess of 100 metres wide with anomalous gold and silver values over a strike length of some 700 metres. This was followed up by geophysical studies which identified structural and conductivity anomalies in several areas. The first phase of scout drilling was undertaken during the third quarter of 2010. Of the 11 holes drilled, 10 intersected gold mineralization demonstrating that a significant portion of the deposit lies within the Minera IRL Patagonia license.

On 15 September 2010, the results of the scout drilling were announced. Best intersections are:

·; E-D10-02 25.38 metres averaging 1.45g/t gold and 9.62g/t silver, including 13.75 metres grading 2.39g/t gold and 14.56g/t silver

·; E-D10-03 100.0 metres averaging 1.19g/t gold and 7.77g/t silver, including 48.00 metres grading 1.71g/t gold and 9.18g/t silver

·; E-D10-07 120.40 metres averaging 0.65g/t gold and 5.70g/t silver, including 14.70 metres grading 1.30g/t gold and 11.86g/t silver and 8.40 metres grading 2.45g/t gold and 8.31g/t silver

In December 2010, the widely spaced second-pass scout drilling program was carried out. On the 3 March 2011, results of the drill program were announced, which confirmed that mineralization extends over almost 700 metres of strike from the northern tenement boundary and remains open-ended toward both the east and south-east. Selected intercepts from the second pass Escondido scout drilling are tabulated below:

*Gold equivalent grade is calculated by dividing the silver value by 60 and adding this to the gold value.

An extended IP Gradient Array geophysical survey carried out in late 2010 showed a wide resistivity anomaly over the remaining 900 metres of untested ground between the current drilling and the eastern boundary of the Escondido tenement block. A substantial, chargeability anomaly coincident with the resistivity was identified. This led to a Phase 3 drilling in which 59 additional drill holes, for a total of 7,104 metres, was completed during the second quarter.

In July 2011, results from un-reported Phase 2 and the first 20 holes of Phase 3 Escondido drilling were reported. These results continued to confirm the low grade, bulk tonnage potential to the North West but also, for the first time at this project, reported high grade intersections. Selected intercepts are tabulated below:

*Gold equivalent grade is calculated by dividing the silver value by 50 and adding this to the gold value.

At Pan de Azucar, part of the Chispas vein field, scout drilling was completed in the fourth quarter of 2010. The assay results were announced on 22 February 2011 from the first pass diamond drilling program at Pan de Azucar, one of many prospects within Minera IRL's 2,700 square kilometres of exploration licences in the Deseado Massif in Patagonia. Twenty seven holes were drilled for a total of 3,976 metres. This program probed a 950 metre strike length with staggered holes which targeted the vein structure between 30 and 160 metres below surface. This drilling at the Pan de Azucar prospect is the first step in a much larger program to explore more than 12km of other outcropping epithermal veins within the Chispas Vein Field.

Selected intercepts for the Pan de Azucar drilling are shown in the table below:

This drilling indicated that the Pan de Azucar vein is relatively deeply eroded. However, other veins, with a surface expression of some 11 kilometres within the Chispas project areas, appear to be largely un-eroded. Of particular interest is the Veta Sur vein which outcrops over a strike length of some 4km. The outcrop of this vein appears to be high in the system and, if this is correct, the vein can be expected to be largely intact. A 3,240 metre, 16 hole diamond drilling program was carried out in late 2011 to test other veins in the area. No significant intersections were recorded.

Exploration has identified approximately 22km of cumulative vein strike length at its 143km2 Michelle Project, located immediately adjacent to AngloGold Ashanti Limited's majority owned and operated multimillion-ounce Cerro Vanguardia Gold-Silver Mine in Santa Cruz Province, Argentina. Many of the veins, which can be traced at surface from Cerro Vanguardia into Minera IRL's property, are Au-Ag bearing with classic low sulphidation epithermal textures that indicate significant depth potential. Of the 51 surface rock samples taken from the Michelle and Jackpot veins, 33 returned values above 1g/t gold, of which 16 were above 5g/t gold. Eleven samples analyzed also assayed above 30g/t silver including one sample of 1,460g/t silver. A 27 hole diamond drilling program totalling 4,698 metres was carried out in late 2011. Results were of sufficient encouragement to justify a further diamond drilling program in 2012, where the Company completed 16 trenches for a total of 1,405m followed by a 3,180m, 23 hole diamond drilling program testing targets on 7 vein structures. Four holes returned assay results greater the 1g/t gold. Best results from the 2012 drill program included:

·; MI-D12-038 0.70m @ 1.22g/t gold, 159g/t silver from 36.00m

·; MI-D12-040 0.75m @ 0.13g/t gold, 569g/t silver from 72.00m

MI-D12-038 and MI-D12-040 both tested the Paris structure which has surface channel results of >1,000g/t silver. Many of the other drill holes intersected significant wide zones of gold anomalism (between 0.1g/t gold - < 1g/t gold). Overall, the 2012 assay results did not identify economically significant mineralization but many vein targets remain to be tested in future drilling campaigns.

Bethania Prospect

The Bethania Project comprises three exploration licenses held for some years by Minera IRL plus an additional 942 hectare lease under option from Minera Monterrico Peru SAC ("Moneterrico") to acquire 100% ownership for a total holding of 3,294 hectares. Limited exploration had previously been carried out by Newcrest in 1998. Bethania is located only 10km from the Minera IRL's Corihuarmi Gold Mine in the high Andes of central Peru. The target is a large porphyry gold or gold/copper deposit. An extensive alteration zone, measuring approximately 3.5km by 1.2km, is associated with an Induced Polarization chargeability/resistivity anomaly indicating the presence of extensive disseminated sulphide mineralization.

On 5 July 2010, the Company announced an update on the phase 1 exploration program. The program consisted of a 12 hole, 4,856 metre RC drilling program. The drilling program encountered substantial intersections of low grade gold, copper and molybdenum in a porphyry setting. Six drill holes intersected broad zones of gold copper molybdenum mineralization, characteristic of the targeted porphyry system. The best drill hole results, from RC10-BET10 intersected 276m from surface averaging 0.38g/t gold, 0.09% copper and 30ppm molybdenum including, also from surface, 72m at 0.66g/t gold, 0.13% copper and 40ppm molybdenum. Hole RC10-BET07 averaged 0.32g/t gold, 0.09% copper and 32ppm molybdenum over the entire 426m of the hole and included a better zone of 124m at 0.39g/t gold, 0.10% copper and 22ppm molybdenum from 260m down hole. Drill hole RC10-BET09 recorded two intersections, 90m from surface at 0.46g/t gold, 0.15% copper and 54ppm molybdenum plus 64m from 216m down hole grading 0.41g/t gold, 0.11% copper and 25ppm molybdenum. Drill hole RC10-BET11 averaged 0.29g/t gold, 0.10% copper and 30ppm molybdenum for 424m from surface.

Based upon the encouraging results from the 2010 Bethania exploration program, the Company undertook an additional drill program in 2011. The 2011 Bethania Project drill program was carried out in two stages. The first stage of exploration drilling included 7 diamond drill holes for a total of 2,099 metres. The second stage of drilling, completed during October 2011, included 6 drill holes totalling 723 metres. Confirmation drilling in the mineralized zone drilled in 2010 was positive, but drilling at the other targets failed to intersect significant mineralization. The Company has identified additional prospective targets that have yet to be drill tested.

Although this gold-copper system is yet to be fully understood, the results received thus far indicate that potentially economic gold/copper porphyry style mineralization might be present in this large mineralized system.

For example, drill hole DDH11-BET01 obtained an intersection of 72 metres at 0.72g/t gold and 0.14% copper. This hole was designed to twin hole RC drill hole RC10-BET10 which intersected 72 metres at 0.66g/t gold and 0.13% copper. This indicated:

·; There was a 9% increase in gold grade between the twinned diamond drill hole and the RC drill hole in this instance.

·; The mineralization of interest in DDH11-BET01 continues down vertically for 100 metres from surface (i.e., 100 metres at 0.64 g/t gold and 0.13% copper).

·; It has been recognized that gold and copper content is associated with the intensity of quartz-magnetite-sulphide stockwork veinlets within magnetite-feldspar-biotite-silica potassic alteration zones.

The tenor and consistency of grade distribution that has been intersected from surface justifies continued exploration interest in this mineralized gold porphyry system, which has been interpreted to form a minor part of a far larger hydrothermally altered lithocap which is known to extend for more than 15 kilometres along the Central Andean trend.

There was no exploration activity at Bethania during the current period, however, the Company did enter into an amended agreement with Minera Monterrico Peru SAC to provide for a 5-year extension. Under the terms of the amended agreement:

·; Minera will pay $1 million at the end of year 3;

·; Minera will pay $10 per ounce of gold contained in Proven and Probable Mineral Reserves as defined in a FS;

·; In the event that a FS has not been completed by the end of year 5, then Minera will pay $2 per ounce of gold contained in the Measured and Indicated Mineral Resource. This payment will be deductible against future payments for gold in Mineral Reserves as described above;

·; The term of the agreement can be extended for up to an additional 5 years with annual payments of $1 million; and

·; Minera has the right to terminate the agreement at any time without further obligation, and accordingly the El Alcatraz 12 property will revert back to Monterrico.

Huaquirca Joint venture

Minera IRL entered into a Letter Agreement in June, 2010 with Alturas Minerals Corp. ("Alturas") providing the opportunity for the latter to earn up to an 80% interest in the Company's 6,903 hectare Chapi-Chapi project, located in the department of Apurimac in southern Peru. The Chapi-Chapi property block is immediately adjacent to Alturas's 5,276 hectare Utupara property, both which lie within the Huaquirca copper-gold district. Together the two projects now comprise a larger joint venture area designated the Huaquirca Joint Venture ("Huaquirca JV").

On 13 January 2011, Alturas and Minera IRL entered into an amendment of the Letter Agreement regarding the Huaquirca JV. The amendment modifies an earlier letter agreement announced on 2 June 2010 and grants Alturas an extension within which to execute drilling at Huaquirca JV.

The Chapi-Chapi property hosts a large copper-gold-molybdenum skarn system (the +3 km long "Chapi Chapi Corridor") within Cretaceous limestone and cut by dioritic and monzonitic stock-work. In addition, the property hosts a large "gold-in-soils" geochemical anomaly located within fractured Cretaceous sandstones. The limestone in the Huaquirca District is part of the same unit that hosts large skarn deposits in the Apurimac-Cusco porphyry-skarn belt, such as the Tintaya and Las Bambas copper-gold skarn projects of Xstrata. The quartzite unit also hosts a significant copper oxide resource at the nearby Antilla project of Panoro Minerals, situated some 15km to the west.

In accordance with the amended agreement, Alturas has the option to acquire an 80% interest in the Huaquirca JV by starting drilling on the property no later than June 30, 2011, completing a minimum 15,000 metres of drilling on the Chapi-Chapi Property and completing a scoping study on any potential discovery before 31 December 2012. Once Alturas has fulfilled its obligations and has earned an 80% interest in the Huaquirca JV, both parties would contribute pro-rata according to their percentage interests, subject to usual dilution. If Minera IRL were to dilute its interest below 20%, then it has the option to convert that part of its interest to a 2% Net Smelter Royalty ("NSR"). If Minera IRL were to further dilute its interest to below 10%, it would be entitled to an additional 1% NSR. The NSR is subject to a total buyout for $5M at Alturas' option. Alturas is the operator of the exploration program on the Huaquirca JV and is responsible for all community and environmental issues during the drilling and Scoping Study phases.

On 30 June 2011, Alturas initiated a first phase of drilling, and it signed a new 2-year agreement with the Huaquirca community that gives Alturas access to community land for its planned exploration program and has obtained the permit to conduct its first phase drilling program from the Peruvian mining authority.

On 10 May 2012, Alturas announced encouraging assay results from its first phase diamond drill program. The program was comprised of 16 diamond holes for 5,498 metres drilled over the central part of the 4.5-by-2.5km mineralized area. The strong metal values intersected have confirmed a large copper-gold-molybdenum system, and highlight the need of a follow-up drilling program to define possible extensions of the intersected mineralized bodies and to explore numerous additional untested drill targets. Full program results can be viewed in the Alturas press release issued on 10 May 2012.

On 15 January 2013, it was announced that the Company had granted Alturas extensions of the terms within which to complete its exploration commitments at the Huaquirca property. Under the amended agreement Alturas has the option to earn an 80% interest in the Huaquirca Joint Venture by resuming exploration drilling no later than June 30, 2013 and completing a further 9,502 metres of drilling on the Chapi Chapi Property and completing a Scoping Study on any potential discovery before 31 December 2013.

Frontera Joint Venture

The Frontera project is a 35/65 joint venture with Teck Cominco, which is managed by the latter. The property consists of a 1,200 hectare package of tenements located in Region I of northern Chile, on the north-western border with Peru and close to the eastern border with Bolivia.

No exploration activity was conducted on this property during the quarter.

Quilavira Project

The Company signed an option agreement in February 2010 to acquire the Quilavira Gold Project from Newcrest. The 5,100 hectare tenement package is in the Tacna district of Southern Peru. The transaction was conducted through a surrogate local Peruvian company authorized to work within the Strategic Frontier Zone facing Chile. The Peruvian company acquired the property from Newcrest on behalf of the Company. Once permission is granted to the Company to work in the Frontier Zone, the properties will be transferred at nominal cost.

The main exploration target at Quilavira is an alteration zone approximately 1200m x 300m in size. Sampling by Newcrest identified a 200m x 200m zone of anomalous gold mineralization (>1g/t gold rock chip samples) within the western part of the alteration zone.

No exploration activity was conducted on this property during the quarter. Exploration activities are planned following the negotiation and signing of a surface rights agreement with the local community.

Summary of Quarterly Results

(tabular data in thousands of US dollars, except per share amounts)

The business of the Company is not generally subject to seasonal influences. The variation in revenues and net profit are due to a number of factors, among which are the market price of gold, the grade of the ore extracted from the mine and therefore the cost of production, the impairment of exploration assets, and the incidence of corporation tax in Peru.

Over the last eight quarters, the Company has experienced diminishing grades from production leading to higher operating costs, but this has been substantially offset by increased gold prices. However, the Company did experience after tax losses during the fourth quarter of 2012 and the first quarter of 2013.

Note - All of the results presented are prepared under IFRS and are in United States dollars, which is the Company's functional currency as well.

Overview of Financial Results

1. Refer to Non-IFRS Measures at the end of this MD&A.

Three Months Ended March 31, 2013

During the first quarter of 2013, sales revenue decreased by 17% over the same quarter in 2012. This decrease was attributed to lower gold production and a decreased average realized gold price for the period.

The Company reported a loss after tax of $1.1 million for the first quarter of 2013, compared with a profit of $1.7 million in the same prior year period. Decreased production coupled with increasing production costs were the fundamental reasons behind the decline. In addition, the Company also recorded an income tax expense during the quarter that was significantly higher than the Peruvian statutory rate of 30%. The increase was largely the result of a reassessment from the audit of prior years' tax returns.

Cash used in operating activities increased by $4.0 million from $2.5 million in the first quarter of 2012 to $6.5 million in the current period. This increase can be attributed primarily reduced profitability at the Corihuarmi mine, the payment of trade payables outstanding at 31 December 2012 and increased corporation taxes paid.

Administration expense as presented in the consolidated statement of comprehensive income was comprised of the following:

Cost of sales as presented in the consolidated statement of comprehensive income was comprised of the following:

Selected Annual Information

The following is a summary of the Company's financial results for the three most recently completed financial years:

Revenue in 2012 was down when compared to 2011 due primarily to a 17% decline in gold produced during the year. This resulted in a significantly lower after-tax profit for the year as well. The Company continued to expend the vast majority of its resources on the development of the Ollachea and Don Nicolas Projects which is evident in the Company's asset base.

Revenue in 2011 was significantly higher than 2010, due also to a higher realized gold price plus slightly higher gold sales. This contributed to a higher total income for 2011, offsetting the higher costs at Corihuarmi. The profit for the year gave a rise to an increase in total assets for 2011 compared with 2010. The majority of the expenditure on exploration and development, which again mainly related to the Ollachea and Don Nicolas Projects, was capitalized.

Outlook

The Company is scheduling production of 24,000 ounces of gold from its Corihuarmi Gold Mine in 2013; down from 27,321 ounces of gold produced in 2012 due to anticipated lower grade. Mining at Corihuarmi is currently scheduled to continue until early-2015; however, the Company is currently carrying out a Feasibility Study of a prospect known as Cayhua with the objective of extending the mine life to mid-2016.

In February 2013, the Company completed an equity financing for gross proceeds of C$15.5 million. The funds have been applied to advancing the Company's flagship Ollachea Project, including the completion of the production sized exploration drive, a successful exploration drilling program from underground and limited additional engineering design.

At March 31, 2013, the Company had $6.5 million in cash. Following the high expenditure levels of 2012 and early 2013 in which all objectives were achieved, including a Feasibility Study and Environmental Impact Assessment at Ollachea, programs have now been scaled back to conserve cash and reduce the Company's cash burn rate. The priority use of funds at Ollachea going forward is to expeditiously complete the permitting process and arrange project financing during the second half of 2013 to allow for the expeditious commencement of development.

In Argentina, the focus is being directed toward financing the Don Nicolas Project from sources within Argentina. The exploration program in Patagonia has been scaled back and is being directed toward generative work to define future drill targets.

Given the current cash position, exploration activities at Don Nicolas and on the Company's large exploration tenement in the Patagonia region have been significantly reduced, with no drilling currently planned until financing for Don Nicolas is secured.

Capital Management

The Company's objectives when managing capital are to safeguard the Company's ability to continue as a going concern in order to pursue the exploration and evaluation of its mineral properties, acquire additional exploration and evaluation assets and to maintain a flexible capital structure which optimizes the cost of capital at an acceptable risk. In the management of capital, the Company includes its cash and cash equivalent balances, interest bearing loans and components of shareholders' equity.

The Company manages the capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. To maintain or adjust the capital structure, the Company may attempt to issue new shares, issue debt, acquire or dispose of assets or adjust the amount of cash and cash equivalents and investments.

The Company is not currently subject to externally imposed capital requirements. There were no changes in the Company's approach to capital management.

Liquidity and Capital Resources

As at 31 March 2013, the Company had cash of $6.5 million, compared with $6.2 million as at 31 December 2012.

As at 31 March 2013, the Company had a working capital position of $0.9 million, compared to a $5.3 million deficit as at 31 December 2012.

As at 31 March 2013, the Company had the following undiscounted future contractual obligations outstanding:

On February 7, 2013, the Company completed an offering of 21,775,000 ordinary common shares at C$0.71 per share for gross proceeds of $15,504,000. The offering was completed under a base shelf prospectus which was filed with Canadian Securities Regulators on 12 July 2012. This base shelf prospectus allows the Company to make offerings of ordinary shares, debt securities, warrants to purchase ordinary shares, warrants to purchase debt securities, and securities convertible into or exchangeable for ordinary shares (collectively, the "Securities") or any combination thereof up to an aggregate initial offering price of C$80,000,000 during the 25-month period that the final short form base shelf prospectus, including any amendments thereto, remains effective. Securities may be offered separately or together, in amounts, at prices and on terms to be determined based on market conditions at the time of sale and set forth in an accompanying shelf prospectus supplement and, subject to applicable regulations, may include 'at-the-market' transactions, private placements, public offerings or strategic investments. Unless otherwise specified in a shelf prospectus supplement, the net proceeds from the sale of the Securities will be used for general corporate purposes including capital expenditures and working capital.

On 2 November 2012, the Macquarie Bank Finance Facility dated 7 July 2010 was amended to make available the $10 million Tranche 2 Facility and extend the Facility Repayment Date from 31 December 2012 to 30 June 2014. The Amendment Agreement was subject to customary Condition Precedents including the amendment of existing options on issue to Macquarie Bank of 6,944,444 at $1.08 per share and 1,633,987at $1.53 per share with expiry on 28 June 2013 to 6,944,444 at $1.08 per share and 1,633,987at $1.08 per share plus the issue of additional options of 680,828 at $1.08 all with expiry on 31 December 2014. The Facility interest rate is LIBOR plus 5.0% margin. In December 2012, the second Tranche of $10 million was drawdown in two separate $5 million draws, in consideration 4,672,897 options at $1.07 per share and 4,854,369 options at $1.03 per share all with expiry on 31 December 2014 were issued to Macquarie Bank.

In addition, the Company completed an equity offering on 5 March 2012. The Company issued 29,260,000 ordinary shares at a price of C$1.13 per share for gross proceeds of approximately C$33,063,800.

Both the Ollachea and Don Nicolas projects will require additional financing in order to proceed with mine development, and consequently the Company is currently evaluating financing alternatives.

The consolidated financial statements have been prepared on a going concern basis. The Company's future plans and expectations are based on the assumption that the Company will be able to continue in operation for the foreseeable future and will realize its assets and discharge its liabilities in the normal course of business rather than through a process of forced liquidation. There can be no assurance that the Company will be able to generate sufficient cash from operations or obtain adequate financing in the future or if available that such financing will be on acceptable terms. If adequate financing is not available when required, the Company may be required to delay, scale back or eliminate various programs and may be unable to continue in operation. The Company may seek such additional financing through debt or equity offerings. Any equity offering will result in dilution to the ownership interests of the Company's shareholders and may result in dilution to the value of such interests.

Commitments and Contingent Liabilities

The Company has entered into a contract with Generacion Electrica San Gaban SA for the supply of power for the construction and operation of the Ollachea project. In the event that certain minimum power usages are not achieved, then the Group is exposed to a maximum penalty of up to approximately $0.7 million.

Financial Instruments

The Group's principal financial assets comprise of available-for-sale financial assets, cash and other receivables. With the exception of available-for-sale financial assets, which are recorded at fair value, all of the Group's financial assets are classified as loans and receivables and are measured at amortised cost. The Group's financial liabilities include trade and other payables, interest bearing loans and other long-term liabilities. They are all classified as financial liabilities and measured at amortised cost.

Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. Liquidity risk is managed by maintaining sufficient cash balances to meet current working capital requirements and access to lines of credit with certain banking institutions. The Company is in the production and development stage and for the latter depends on obtaining regular funding in order to continue its programs. There is no guarantee that additional funding will be obtained. Accordingly, the Company has a planning and budgeting process in place to help determine the funds required to support the Company's normal operating requirements on an on-going basis. The Company ensures that there are sufficient funds to meet its short-term business requirements, taking into account its anticipated cash flows from operations and its holdings of cash and cash equivalents. The Company's cash is invested in business accounts with high-credit quality financial institutions in Jersey and are available on demand.

Credit risk

Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss. The Company's credit risk is primarily attributable to its liquid financial assets and would arise from the non-performance by counterparties of contractual financial obligations. The Company limits its exposure to credit risk on liquid assets by maintaining its cash with high-credit quality financial institutions, as determined by rating agencies, for which management believes the risk of loss to be minimal. Management believes that the credit risk concentration with respect to receivables on sales is minimal.

Currency risk

Foreign currency risk is the risk that the fair value of assets and future cash flows will fluctuate as a result of changes in foreign currency exchange rates. The Company operates in Jersey, Peru and Argentina and is therefore exposed to foreign exchange risk arising from transactions denominated in foreign currencies. The operating results and the financial position of the Company are reported in United States dollars. Fluctuations of local currencies in relation to the US dollar will have an impact upon the reported results of the Company and may also affect the value of the Company's assets and liabilities. The Company has not entered into any agreements or purchased any instruments to hedge any currency exposures.

Interest rate risk

Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company invests its cash in instruments with maturities of 180 days or less from the original date of investment, thereby reducing its exposure to interest rate fluctuations. Debt obligations are exposed to interest rate variations as well. The Company has debt denominated in US dollars and is therefore exposed to movements in US dollar interest rates. This debt bears interest at 5% over LIBOR and allows for interest periods of between 30 and 180 days. A change in LIBOR of +/- 1% would not have a material effect on the financial results of the Group or the Company.

Commodity price risk

Commodity price risk is the risk that the fair value of future cash flows will fluctuate as a result of changes in commodity prices. The commodity price for gold is impacted by world economic events that dictate the levels of supply and demand. The ability of the Company to mine, develop and explore its mineral properties and the future profitability of the Company are directly related to the market price of precious metals, specifically gold. The Company monitors commodity prices to determine appropriate actions to be undertaken. The Company has not entered into any agreements or purchased any instruments to hedge possible commodity price risk. The Company is also exposed to the risk that the cost of mining, development or construction activities for its planned activities might increase and cause some elements to be uneconomic.

Off-Balance Sheet Arrangements

The Company has no off-balance sheet arrangements.

Transactions with Related Parties

During the three month period ended 31 March 2013, the Company had no transactions with related parties other than with key management as disclosed in note 3 of the condensed interim consolidated financial statements.

Significant Accounting Policies and Critical Accounting Estimates

The preparation of financial statements in conformity with IFRS requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Based on historical experience, current market conditions and expert advice, management makes assumptions that are believed to be reasonable under the circumstances. These estimates and assumptions form the basis for judgments about the carrying value of assets and liabilities and reported amounts for revenues and expenses.

The Company follows the accounting policies described in the audited consolidated financial statements for the year ended 31 December 2012 that was filed on SEDAR on 28 March 2013.

Critical Accounting Estimates

The preparation of consolidated financial statements requires the Company to select from possible alternative accounting principles, and to make estimates and assumptions that determine the reported amounts of assets and liabilities at the balance sheet date and reported costs and expenditures during the reporting period. Estimates and assumptions may be revised as new information is obtained, and are subject to change. The Company's accounting policies and estimates used in the preparation of the consolidated financial statements are considered appropriate in the circumstances, but are subject to judgments and uncertainties inherent in the financial reporting process.

Intangible Assets

Property acquisition costs and related direct exploration costs may be deferred until the properties are placed into production, sold, abandoned, or impaired, where appropriate. The Company's accounting policy is to capitalize exploration costs, which is consistent with IFRS, and the policy is consistent with other resource companies which are similar to Minera IRL. An alternative policy would be to expense these costs until a feasible mineral resource has been objectively established. Management is of the view that its current policy is appropriate for the Company at this time. Based on annual impairment reviews made by management, or earlier if circumstances warrant, in the event that the long-term expectation is that the net carrying amount of these capitalized exploration costs will not be recovered, then the carrying amount is written down accordingly and the write-down is charged to operations. A write-down may be warranted in situations where a property is to be sold or abandoned; or exploration activity ceases on a property due to unsatisfactory results or insufficient available funding.

Asset Retirement Provisions

Restoration costs will be incurred by the Company at the end of the operating life of the Company's facilities and properties. The ultimate restoration liability is uncertain and can vary in response to many factors including changes to relevant legal requirements, the emergence of new restoration techniques, experience at other production sites, or changes in the risk-free discount rate. The expected timing and amount of expenditure can also change in response to changes in reserves or changes in laws and regulations or their interpretation. As a result, there could be significant adjustments to the provisions established which would affect future financial results.

Depreciation Rate

Mining properties are depreciated on a straight line basis over the expected life of the mine. The calculation of mine life and depreciation could be impacted to the extent that actual production in the future is different from current forecast production based on proven plus probable reserves. This would generally result from significant changes in any of the factors or assumptions used in estimating reserves.

Income Taxes

In assessing the probability of realizing income tax assets, management makes estimates related to expectation of future taxable income, applicable tax opportunities, expected timing of reversals of existing temporary differences and the likelihood that tax positions taken will be sustained upon examination by applicable tax authorities. In making its assessments, management gives additional weight to positive and negative evidence that can be objectively verified.

Share Based Payments

The Company uses the Black Scholes Option Pricing Model for valuation of share-based compensation. Option pricing models require the input of subjective assumptions including expected price volatility, interest rate, and forfeiture rate. Changes in the input assumptions can materially affect the fair value estimate and the Company's earnings and equity reserves.

Estimation of Ollachea acquisition payment

The second additional payment to be made to Rio Tinto under the Ollachea acquisition agreement requires an estimation of the project net present value based on the feasibility study results and the sunk costs incurred on the project up to 31 December 2012.

Management's Responsibility for Financial Statements

The information provided in this report, including the consolidated financial statements, is the responsibility of management. In the preparation of these statements, estimates are sometimes necessary to make a determination of future values for certain assets or liabilities. Management believes such estimates have been based on careful judgments and have been properly reflected in the accompanying consolidated financial statements.

Outstanding Share Data

The Company has an authorized share capital of an unlimited number of no par Ordinary Shares, of which 173,677,884 are issued as at the date of this report. Each share entitles the holder to one vote. All shares of the Company rank equally as to dividends, voting powers and participation in assets upon a dissolution or winding up of the Company.

As at date of this report, the Company also had 28,516,525 options issued and outstanding, of which 9,730,000 options were issued for the benefit of directors, employees and consultants of the Group under the Company's Share Option Plans and the balance were issued in connection with a finance facility. Each option entitles the holder to acquire one Ordinary Share at exercise prices detailed below. Additional disclosure regarding the Company's share and option data can be found in note 12 of the condensed interim consolidated financial statements.

1. The options granted on 18 March 2008 had an expiry date during a closed/black-out period for the Company. Under the Company's Share Option Plan, the expiry date can be extended to 10 business days after the cessation of the closed/black-out period, and accordingly these options have not yet expired.

2. In connection with an amendment to the Macquarie Finance Facility, the expiration date of these options was extended from 28 June 2013 to 31 December 2014. Additionally, the exercise price on the 1,633,987 options issued on 30 September 2010 was changed to $1.08 from $1.53.

Changes in Accounting Policies including Initial Adoption

Other than what is disclosed in note 1 of the Company's audited annual financial statements for the year ended 31 December 2012, the Company has not and does not expect to adopt any new accounting policies during the year ended December 31, 2013. The Company also did not adopt any new accounting policies during the most recently completed financial year.

Subsequent Events

Mr. Brad Boland has been appointed Chief Financial Officer ("CFO") effective 1 April 2013 and is replacing Mr. Tim Miller. Mr. Boland will be based in Toronto, Canada. Mr. Boland is a past CFO of Azul Ventures Inc., Crocodile Gold Corp. and Consolidated Thompson Iron Mines Ltd. Prior to this, he held senior posts in the financial divisions of Kinross Gold Corporation and Goldcorp Inc.

Risks

The Company operates in the resource industry, which is highly speculative, and has certain inherent operating, development and exploration risks which could have a negative effect on the Company's operations.

Significant risk factors for the Company include operating, land title, environmental regulations and compliance, litigation, surface rights, health & safety, the ability to obtain additional financing, metal prices, Mineral Reserves and Resources estimates, insurance coverage, infrastructure, key management and staff, legal climate considerations, changes in government policy, geopolitical climate government, currency, economic, local community, geological, competition, and general business risk. For details of risk factors, please refer to the Company's Annual Information Form filed on SEDAR at www.sedar.com.

Designated Foreign Issuer

The Company is considered a "designated foreign issuer" as such term is defined by Canadian Securities Regulators in National Instrument 71-102 -Continuous Disclosure and Other Exemptions Relating to Foreign Issuers, and as such is subject to the foreign regulatory requirements of the AIM market of the London Stock Exchange plc.

Additional Information

Additional information regarding Minera IRL, including Minera IRL's Annual Information Form for the year ended 31 December 2012 is available on the Company's website at www.minera-irl.com or on SEDAR at www.sedar.com.

Cautionary Statement on Forward-Looking Information

Certain information in this MD&A, including information about the Company's financial or operating performance and other statements expressing management's expectations or estimates of future events, performance and exploration and development programs or plans constitute "forward-looking statements". Forward-looking statements often, but not always, are identified by words such as "seek", "believe", "expect", "do not expect", "will", "will not", "intend", "estimate", "anticipate", "plan", "schedule" and similar expressions of a conditional or future oriented nature identify forward-looking statements. Forward-looking statements are, necessarily, based upon a number of estimates and assumptions. While considered, by management, to be reasonable in the context in which they are made forward-looking statements are inherently subject to political, legal, regulatory, business and economic risks and competitive uncertainties and contingencies. The Company cautions readers that forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause Minera IRL's actual financial results, future performance and results of exploration and development programs and plans to be materially different than those expected or estimated future results, performance or achievements and that forward-looking statements are not guarantees of future performance, results or achievements. Forward-looking statements are made as of the date of this MD&A and Minera IRL assumes no obligation, except as may be required by law, to update or revise them to reflect new events or circumstances. Risks, uncertainties and contingencies and other factors that might cause actual performance to differ from forward-looking statements include, but are not limited to, changes in the price of precious metals and commodities, changes in the relative exchange rates of the US dollar against the Peruvian neuvo sol and the Argentinean peso, interest rates, legislative, political, social or economic developments both within the countries in which the Company operates and in general, contests over title to property, the speculative nature of mineral exploration and development, operating or technical difficulties in connection with the Company's development or exploration programs, increasing costs as a result of inflation or scarcity of human resources and input materials or equipment. Known and unknown risks inherent in the mining business include potential uncertainties related to the title of mineral claims, the accuracy of mineral reserve and resource estimates, metallurgical recoveries, capital and operating costs and the future demand for minerals. Please see Risks, elsewhere herein.

Qualified Person

Pursuant to National Instrument 43-101, Courtney Chamberlain, Executive Chairman of the Company, BSc and MSc Metallurgical Engineering, a Fellow of the Australian Institute of Mining and Metallurgy (AUSIMM); and Donald McIver, VP Exploration of the Company, MSc Exploration and Economic Geology, a Fellow of the Australian Institute of Mining and Metallurgy (AUSIMM), are the Qualified Person ("QP") responsible for the technical disclosure in this MD&A.

Non-IFRS Measures

1. "Site cash operating costs per ounce" is a non-GAAP or non-IFRS measure which does not have a standardized meaning prescribed by GAAP or IFRS and may not be comparable to other similarly titled measures of other companies. Site cash operating costs include costs such as mining, processing and administration, but are exclusive of royalties, workers' profit participation cost, depreciation, amortization, reclamation, capital, development, exploration and other non-site costs (transport and refining of metals, and community and environmental). These costs are then divided by ounces produced to arrive at the cash operating cost per ounce. Management believes this information is useful to investors because this measure is considered to be a key indicator of a company's ability to generate operating earnings and cash flow from its mining operations. This data is furnished to provide additional information and is a non-GAAP and non-IFRS measure which does not have any standardized meaning prescribed by GAAP or IFRS. It should not be considered in isolation as a substitute for measures of performance prepared in accordance with IFRS, and is not necessarily indicative of operating costs presented under IFRS.

2. The term EBITDA (Earnings Before Interest, Income Taxes, Depreciation and Amortization) is used, which are financial measures used by many investors to compare companies on the basis of operating results, asset value and the ability to incur and service debt. EBITDA is used because Minera IRL's net income alone does not give an accurate picture of its' cash-generating potential. Management believes that EBITDA is an important measure in evaluating performance and in determining whether to invest in Minera IRL. However, EBITDA is not a recognized earnings measure under IFRS and does not have a standardized meaning prescribed by IFRS. It is not intended to represent cash flow or results of operations in accordance with IFRS. Therefore, EBITDA may not be comparable to similar measures presented by other issuers. Investors are cautioned that EBITDA should not be construed as an alternative to net income or loss determined in accordance with IFRS as an indicator of Minera IRL's performance or to cash flows from operating, investing and financing activities of liquidity and cash flows.