Mr. Brian Maher reports

PERUVIAN PRECIOUS METALS ANNOUNCES MOU TO BEGIN UNDERGROUND TEST MINING, BULK SAMPLING, AND PROJECT FINANCING

Peruvian Precious Metals Corp. has signed a memorandum of understanding (MOU) with Proyectos La Patagonia SAC, a wholly owned subsidiary of the Explora Peru Mining Group, Peru, that outlines the terms and conditions under which Patagonia will conduct underground bulk sampling and test mining, and develop appropriate underground infrastructure at Peruvian's Igor gold and silver project in northern Peru. The work program is intended to gather specific data on underground mining costs, acquire geotechnical information, collect bulk samples for metallurgical testing including test milling and evaluate selective mining methods. The data gathered will be utilized to complete a prefeasibility study (PFS) in accordance with Canadian National Instrument 43-101 that will evaluate economic parameters for potential future mine development at Igor.

Important aspects of the MOU are summarized below:

• Patagonia anticipates that it will take between seven and 10 months to develop underground mining infrastructure sufficient to allow collection of appropriate bulk samples and conduct test mining along the Callanquitas structure. Patagonia plans to develop mine workings on three levels over a vertical range of approximately 150 metres to access different areas within the Callanquitas structure where previous drilling has defined inferred gold and silver resources (please see technical report as amended on Sept. 27, 2013, entitled, "Technical Report on the Callanquitas Structure, Igor Mine Project, Northern Peru, South America," available on the company's website or SEDAR). Mineral resources are not mineral reserves and do not have demonstrated economic viability. There is no certainty that all or any part of the mineral resource will be converted into mineral reserves.
• During the mine development phase outlined above, Patagonia will be responsible for all costs in excess of $440,000 (U.S.) related to developing the underground mining infrastructure including obtaining appropriate permits, surface facilities, access to the mine site, security and site preparation. Patagonia will manage the operation in conjunction with Peruvian.
• In order to finance its portion of the mine development program, Peruvian has agreed to a non-brokered private placement with Patagonia, for gross proceeds of approximately $478,588. The private placement will consist of 5,317,644 common shares priced at nine cents per share.
• After completion of the mine development phase outlined above, the company and Patagonia will utilize the underground access and infrastructure to conduct test mining operations, and collect bulk samples for metallurgical testing and milling, and to determine mining cost profiles and detailed metallurgical data including potential milling recoveries. The mining infrastructure is planned to accommodate test mining at rates of up to 350 tonnes per day. Should the test mining program, metallurgical testing and/or test milling of gold- and silver-mineralized material from the Igor mine project generate any proceeds from the sale of any metal produced in the test program, the company and Patagonia will divide the proceeds 75 per cent and 25 per cent, respectively, after deducting the costs of the test mining and any costs related to the metallurgical/milling test program.
• The MOU allows for test mining to continue for a period of up to five years under the terms outlined above. The company has the right to terminate that agreement at any time by paying Patagonia a termination fee. During the first two years of the test mining program, Peruvian can terminate the agreement by paying Patagonia $2.5-million (U.S.); if the agreement is terminated within the third year of the test mining program, the payment is $2-million (U.S.); if the agreement is terminated within the fourth year of the test mining program, the payment is $1.5-million (U.S.); and if the agreement is terminated within the fifth year of the test mining program, the payment is $1-million (U.S.). If the termination of the test mining program coincides with the completion of a contract for mining services at Igor with Patagonia, the termination payments are reduced by $500,000 in each of the time periods specified above, and the total length of the test mining program can be extended for an additional two years beyond the original five-year program. Patagonia has the right to receive a 120-day notice in the event of a termination of the test mining program.

The private placement is subject to regulatory approval.

Peruvian Precious Metals is excited to enter this new phase in the exploration and development of the Igor project. Following the completion of the MOU and subsequent definitive agreement, Patagonia and Peruvian plan to begin development work at Igor as soon as possible. Patagonia will be responsible for acquiring all necessary permits for the test mining program, and Patagonia believes that the permits can be obtained in a timely manner. The company is in discussion with various metallurgical labs and mill operators regarding the design, cost and execution of a comprehensive metallurgical and test milling program. The test milling of bulk samples from the Callanquitas structure will be a key aspect of the overall work program, as the company develops a comprehensive database to be used in the eventual preparation of a PFS for the Igor project.

Brian J. Maher, president and chief executive officer of Peruvian, commented: "The completion of this MOU with Patagonia allows the company to develop a test mining and metallurgical program at Callanquitas with virtually no direct cash contribution from the company. Patagonia's participation in the private placement, providing the balance of the funding required to initiate the test mining and bulk sampling program, certainly underscores their confidence in the project. Explora/Patagonia are the premier underground mining contractors in South America, and we look forward to working with the Patagonia team in this next phase of development at Igor, and completing the work in an environmentally sound and safe manner."

All scientific and technical information in this press release has been reviewed and approved by Quentin J. Browne, PGeo, independent consulting geologist to Peruvian Precious Metals, who is a qualified person under the definitions established by National Instrument 43-101.

We seek Safe Harbor.