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Letter to Shareholders: Change in Mining Philosophy by New Argentina Government Watched with Keen Interest by Mining Industry

February 11, 2016

Dear Shareholders,

Meilan Named National Mining Secretary

The mining world is watching with keen interest the promise of change made by the recently elected new Argentina government.

Daniel Meilan, a licensed geologist, returns to the Mining Ministry as the National Mining Secretary. He previously held the position of Sub Secretary of Mining in 1994 and then moved on to become the National Mining Secretary until 1999. He was an original pioneer who promoted mining investment in Argentina and was instrumental in bringing about the bilateral agreement with Chile to develop the huge cross-border mineral resources. Until recently, Mr. Meilan was working as an international consultant for a wide range of multinational companies with an interest to re-enter Argentina's mining industry.

He is therefore very aware of the changes needed in Argentina's mining policy in order to attract foreign investors. His decision to return to the Mining Ministry was stimulated by his firm belief that there would be a revised plan and a government policy to bridge the existing disparity and notable differences existing between federal/provincial fiscal policies and their implementation, which has been a concern for international investors.

The return of Mr. Meilan as Secretary of Mining is a sign that Argentina's government is now ready and committed to continue with mining growth by building the incentives needed to attract foreign investors. It is hoped that the new approach will aim to put a balanced fiscal policy, so that Argentina is in line with the most advanced and successful mining jurisdictions around the world.

Message Needed from the Argentina Delegation During PDAC

Argentina's delegation to the PDAC, which will be making its presentation on Monday, March 7, 2016, has the responsibility of bringing the new government's message of change to an international audience who is already aware of the prospective geological potential of the country. The mining industry will be very interested to learn the details of proposed policy changes. It will be important to show the world that Argentina is just as economically competitive as its prominent neighbouring countries.

The mining industry welcomes the recent policy shifts in December 2015, including:

  • Lifting of currency controls - a devalued Peso may result in lower costs for project development;
  • Elimination of export taxes including 5% on gold/silver doré and 10% on concentrate;
  • Lifting of some import restrictions allowing for international sourcing of equipment; and
  • Restarting negotiations with holdout bondholders from Argentina's 2001 default.

Junior Exploration Companies

Major mining discoveries are extremely rare and require early and advanced exploration financed by high-risk capital raised by junior companies in the risk capital markets. When an economic project is found, it is usually taken to production by a major mining producer which has the required funds that can total several billion dollars. These large investments must produce revenues for conservative financial institutions that seek to invest in countries with low political risk and adequate incentives for the invested capital. Argentina's new government is demonstrating its desire to be competitive in wanting to attract the capital needed to develop its vast, yet undeveloped, natural resources which are one of the primary sources for building a strong Argentine economy.

A Mining Pioneer's Observations

The Grosso Group is one of the many junior mining operators whose affiliated companies explore and provide new discoveries to major producers. Sourcing capital for companies listed on stock exchanges is highly sensitive to government stability and investor friendly economic policies. As Argentina is a major destination of choice for the Grosso Group and its affiliated companies for the past 23 years, we are looking forward to improved investor policies that incentivize and attract foreign investment to Argentina making it a natural resource destination of logical choice to invest and create a:

  • Win for the community
  • Win for the government
  • Win for the investor

Company Commitment Entering Argentina

Serious companies entering Argentina will have to be inclusive of local community leaders and make them part of the decision making process, respecting cultural norms and work together with authorities and communities to address fears and environmental concerns. It is important to also discuss the economic benefits to communities and be committed to work in a transparent and informative way always within federal / provincial objectives and mining code compliance.

A corporate presence is very important in order to keep authorities and impacted communities and surface owners apprised of contemplated activity or changes that may affect them, especially in times of intense technical activity in a region.

The Grosso Group and its affiliated companies intend to remain in Argentina, continuing to explore to achieve a fourth world class discovery to benefit the communities, government and investors and are looking forward to Argentina implementing a more friendly fiscal environment for foreign investment possible only with favourable mining policies.

If you have any questions please do not hesitate to contact us.

Yours truly,

"Joseph Grosso"
Joseph Grosso, Executive Chairman, President, CEO

About Golden Arrow:
Golden Arrow is a Vancouver-based explorer focused on identifying, acquiring and advancing precious and base metal projects in Argentina with the goal of achieving a world class discovery. The main focus is on advancing the flagship Chinchillas Silver Project located in Jujuy, Argentina. Golden Arrow is a member of Grosso Group, a management company specialized in resource exploration, and working in Argentina where it is highly regarded and trusted since 1993.

This letter contains certain "forward-looking statements" and certain "forward-looking information" as defined under applicable Canadian securities laws that may not be based on historical fact, including, without limitation, statements containing the words "believe", "may", "plan", "will", "estimate", "continue", "anticipate", "intend", "expect" and similar expressions. Forward-looking statements are necessarily based on estimates and assumptions made by us in light of our experience and perception of historical trends, current conditions and expected future developments, as well as the factors we believe are appropriate. Forward-looking statements in this letter include, but are not limited to, statements relating to: Silver Standard exercising its election to proceed with the completion of the arrangement; the completion of and benefits to be derived from the arrangement with Silver Standard; receipt of shareholder and other necessary approvals for the arrangement with Silver Standard; the mine life of Pirquitas; the potential for the Chinchillas project to provide mill feed and extend the life of the Pirquitas mine; the potential synergies created by the arrangement with Silver Standard, including bringing Chinchillas into production sooner and at lower production costs than if the Company advanced the project itself and the benefits of an experienced mine production team; Silver Standard's funding of the joint development model; Golden Arrow receiving benefits from earnings of the Pirquitas mine since September 30, 2015; financial returns to shareholders of the Company; and the reduced dilution to Golden Arrow shareholders through the arrangement with Silver Standard.

These forward-looking statements are based on the beliefs of Golden Arrow's management, as well as on assumptions, which such management believes to be reasonable based on information currently available at the time such statements were made. However, there can be no assurance that the forward-looking statements will prove to be accurate. Such assumptions and factors include, among other things, general business and economic conditions, completion of the arrangement with Silver Standard; Silver Standard not terminating the arrangement prior to completion; that the joint arrangement will result in synergies that would not otherwise be available to the Company; the Company receiving earnings of the Pirquitas mine since September 30, 2015; Silver Standard expending greater than the minimum US$4 million in expenditures on the production model; and synergies from the combination of the Chinchillas project and Pirquitas mine following completion of the arrangement with Silver Standard.

Forward-looking statements are subject to a variety of known and unknown risks, uncertainties and other factors which could cause actual events or results to differ from those expressed or implied by the forward-looking statements, including, but not limited to, the risks associated with the arrangement with Silver Standard as well as the risks described in under the heading "Risk Factors and Uncertainties" in the Company's most recently filed management's discussion and analysis which is available on SEDAR (www.sedar.com). Should one or more of these risks and uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in the forward-looking statements. These forward-looking statements are made as of the date of this letter and we do not intend, and do not assume any obligation, to update these forward-looking statements, except as required by applicable securities laws. Investors are cautioned that forward-looking statements are not guarantees of future performance and are inherently uncertain. Accordingly, investors are cautioned not to put undue reliance on forward-looking statements.


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