Independent Competent Persons Report on the Moeijelijk Chromite

Transcription

1 Annexure 4 Independent Competent Persons Report on the Moeijelijk Chromite Mineral Asset prepared for Bauba Platinum Limited AN CLAY MSc (Geol), MSc (MinEng), DipBusMan, PrSciNat, MSAIMM, FAusIMM, FGSSA, MAIMA, MSPE, MInstD Managing Director Competent Person TC orford BSc Hons (Geol), GDE (MinEng), MGSSA, MGASA, MMINSA. Mineral Project Analyst ja MYBURGH BSc (Mathematics), MIASSA, MGASA Mineral Project Analyst k MPHAHLELE BSc Hons (Geol), PrSciNat, MGSSA Mineral Industry Advisor S DYKE MSc (EnvSci), CandSciNat, MIAIASA, MGSSA, MIAIASA Environmental Industry Advisor Reference number: VMD1582R v6 Effective date: 1 March 2014 [SR1.1A(ii); JSE12.9a] Final report date: 19 August 2014 Synopsis SR1.1A(ii)(iii); SR1.2A(i); SV2.1 Bauba Platinum Limited (Bauba Platinum) is a platinum group metals (PGM) exploration company which holds a number of PGM projects in the Eastern Limb of the Bushveld Complex. It is Bauba Platinum s intention to acquire the Moeijelijk Chromite Project located in the Bushveld Complex of South Africa. The beneficial right to 60% of the Moeijelijk Chromite Project is held by Highland Trading Investments Limited, Danene Trust, Kumane Trust, Math-Pin Trust, Pimlico Investment Trust, and Hlabirwa (collectively, the Vendors). The directors of Bauba Platinum requested that Venmyn Deloitte Proprietary Limited (Venmyn Deloitte) prepare a Competent Persons Report (CPR) on a chromite asset in South Africa. It is understood that Bauba Platinum intends to purchase the chromite asset. Bauba Platinum is listed on the main board of the Johannesburg Stock Exchange (JSE). Venmyn Deloitte has undertaken an independent technical review of the mineral asset for Bauba Platinum, in order to identify all the factors of a technical nature that would influence the future viability of the Moeijelijk project. Venmyn Deloitte considered the strategic merits of the asset on an open and transparent basis. This CPR has been compiled in order to incorporate all currently available and material information that will enable potential investors to make a reasoned and balanced judgement regarding the economic merits of the chromite asset reviewed. The Moeijelijk Chromite Project is an early stage exploration project and consists of the farm Moeijelijk KS412. The farm covers an area of ha and is located on the R37 road between Burgersfort and Lebowakgomo, approximately 51km east of Lebowakgomo and approximately 57km northwest of Burgersfort in the Limpopo province of South Africa. The farm is approximately 72km southeast of the town of Polokwane and 58km north of Steelpoort as illustrated in the locality map to follow. This CPR has been prepared in compliance with the 2009 South African Code for Reporting of Mineral Resources and Mineral Reserves Code (SAMREC Code) and the 2009 South African Code for Reporting of Mineral Asset Valuation (SAMVAL) published under the joint auspices of the Southern African Institute of Mining and Metallurgy and the Geological Society of South Africa. This CPR details the early stage exploration completed on the Moeijelijk Project to date. Site visits have been conducted on a routine basis by the Moeijelijk Project Geologist Mr GPL van der Linde, including a site visit on 3 January The Moeijelijk Project is located in the northern regions of the Eastern Limb of the Bushveld Complex (BC), a world renowned. mafic-ultramafic layered intrusive, 2 060Ma in age and approximately 200km by 370km in extent. The BC comprises a set of interconnected intrusives that crystallised to form the three main layered mafic and ultramafic units known as the Rustenburg Layered Suite (RLS), the granites of the Lebowa Granite Suite (LGS) and the felsic extrusive of the Rashoop Granophyre Suite (RGS). The RLS comprises suites of mafic units that are consistently present throughout the BC and which host the target chromium, vanadium and nickel mineralisation. In general, the RLS comprises from the base upwards: the Marginal Zone; the Lower Zone; the Critical Zone; the Main Zone and the Upper Zone. The Moeijelijk Project is covered by recent sediments, with minimal outcrop of the underlying geology. The geology comprises essentially the pyroxenites of the Critical Zone, covered by recent sediments. The Critical Zone in the Moeijelijk Project area comprises well defined, and easy to correlate layers, which can be broadly sub-divided into the dunite, harzburgite, pyroxenite, norite, anorthosite and chromitite with both sharp and gradational contacts. Subtle variations in mineralogy result in leuco-cratic and melano-cratic variations of the medium grained intrusives and pegmatoidal pipes and segregations are known to occur in the surrounding regions. The target chromitite layers are confined to the Critical Zone and are sub-divided into Lower, Middle, and Upper Groups and the Moeijelijk Project focuses on the Lower Group (LG) chromitites, which occur within the pyroxenites of the lower critical zone (LCZ). The LG contains seven chromitite layers, and chromite mining in the region is typically focused on the LG-6 unit due to its favourable thickness and chemistry. The Moeijelijk Project focuses on the LG-6A, LG-6B and LG-6C layers, which are separated by pyroxenite partings and are referred together as the LG-6 Unit. The units dip typically 20 to the west and the average width of the LG-6 Unit is approximately 2,69m. The LG-6 B is the thickest chromitite layer with an average width of 1,29m. The pyroxenite parting betwenn the LG-6 A and the LG-6 B is typically less than 0,1m while the parting between the LG-6 B and the LG-6 C is thicker and varies between 0,51m and 1,16m. It should be noted that the exploration borehole information has been considered to be in a form that is insufficient to publicly declare a quantified SAMREC Code compliant maiden mineral resource. Therefore, many aspects of the SAMREC Code are not applicable in this report. Since additional scientific confidence has been considered to be required, only when this has been obtained will a resource be declared. 37

2 Venmyn Deloitte has independently compiled this CPR in terms of the South African Code for Reporting of Exploration Results, Mineral Resources and Mineral Reserves (SAMREC Code) as an independent review. The effective shareholdings of Bauba Platinum in the various assets are also presented in this table and in the associated corporate structure diagram is illustrated on page 39. The corporate structure also presents the companies in which the mineral asset is held. Venmyn Deloitte has conducted a valuation of the mineral assets in compliance with and to the extent required by the 2009 South African Mineral Asset Valuation Committee Code (SAMVAL Code), published under the joint auspices of the Southern African Institute of Mining and Metallurgy and the Geological Society of South Africa. This valuation aims to identify the attributable value of the asset by means of identifying the total asset value as at the effective date of this report. The asset has been valued according to its respective development stage by applying the applicable valuation methods. The mineral asset valuations have been based on exploration information available up to and including 1 March A summary of the results of these valuations is provided in the table to follow. The results of the Bauba valuations carried out by Venmyn Deloitte are given in the table below. Venmyn Deloitte used the Historic Cost Approach based on exploration expenditure provided by Bauba management, and the Market Approach based on a USD/km 2. Bauba Summary of valuation results Valuation method Lower ZARm Project value Upper ZARm Preferred ZARm Lower ZARm Bauba attributable value** Upper ZARm Preferred ZARm Cost approach 0,99 4,96 2,97 0,59 2,97 1,78 Market approach 55,39 59,76 57,57 33,23 35,86 34,54 **Based on 60% ownership of the licences. Location of the Moeijelijk Chromite Project in relation to the South African Bushveld Igneous Complex and major infrastructure 38

3 Bauba Platinum s Corporate Structure 39

4 Summary of Mineral asset details Project Farm name and number Total licence area ha Company holding rights Moeijelijk Moeijelijk 412KS 2 270,93* Bauba A Hlabirwa Mining Investments Proprietary Limited * Quoted as in the Prospecting Right Development status Early stage exploration Licence type Prospecting Right no. Mineral Prospecting LP30/5/1/1/2/390PRR Unspecified minerals with emphasis on PGM, vanadium ore, titanium ore, chrome ore, iron ore, and associated minerals and metals* Date issued Date of last renewal Expiry date SAMREC exploration target SAMREC mineral resource SAMREC mineral reserve 7 June July July

5 Disclaimer and Risks Venmyn Deloitte has authored this Competent Persons Report and, in so doing, has utilised information provided by Bauba Platinum and its contractors as to its operational methods and forecasts. Where possible, this information has been verified from independent sources with due enquiry in terms of all material issues that are a prerequisite to comply with the SAMREC and SAMVAL Codes. The authors of this Competent Persons Report are not qualified to provide extensive commentary on legal issues associated with Bauba Platinum s right to the mineral properties. Bauba Platinum has provided certain information, reports and data to Venmyn Deloitte in the preparation of this Competent Persons Report which, to the best of Bauba Platinum s knowledge and understanding, are complete, accurate and true and Bauba Platinum acknowledges that Venmyn Deloitte has relied on such information, reports and data in preparing this Competent Persons Report. No warranty or guarantee, be it express or implied, is made by the authors with respect to the completeness or accuracy of the legal aspects of this document. Operational Risks The businesses of mining and mineral exploration, development and production by their natures contain significant operational risks. The businesses depend upon, amongst other things, successful prospecting programmes and competent management. Profitability and asset values can be affected by unforeseen changes in operating circumstances and technical issues. Political and Economic Risks Factors such as political and industrial disruption, currency fluctuation, increased competition from other prospecting and mining rights holders and interest rates could have an impact on Bauba Platinum s future operations, and potential revenue streams can also be affected by these factors. The majority of these factors are, and will be, beyond the control of Bauba Platinum or any other operating entity. Forward-Looking Statements This report contains forward-looking statements. These forward-looking statements are based on the opinions and estimates of Venmyn Deloitte and Bauba Platinum at the date the statements were made. The statements are subject to a number of known and unknown risks, uncertainties and other factors that may cause actual results to differ materially from those forward-looking statements anticipated by Venmyn Deloitte and Bauba Platinum. Factors that could cause such differences include changes in world platinum group metal markets, equity markets, costs and supply of materials, and regulatory changes. Although Venmyn Deloitte believes the expectations reflected in the forward-looking statements to be reasonable, Venmyn Deloitte does not guarantee future results, levels of activity, performance or achievements. 41

6 List of Contents SR1.1A(i) Page 1. Introduction Scope of the Opinion Statement of independence Reliance on other experts and sources of information Personal inspection Bauba Platinum s corporate structure Mineral assets Location and access Legal aspects Ownership Surface rights Royalties Environmental and social compliance status Material contracts Other legal issues Climate Topography Vegetation and Fauna Local resources Site infrastructure Roads Water and power supply Regional geological setting The Critical Zone Regional structure Local geological setting Deposit type and mineralisation Historical ownership Historical exploration and mining Recent exploration Mining Mineral processing Mineral Resource and Mineral Reserve Statement Environmental practices Environmental and social General disclosure Environmental and social permitting status Operational environmental management Operational social management Mine closure provision, closure planning and rehabilitation South Africa country profile Political and economic climate Minerals industry Legislative framework Mineral and Petroleum Resources Development Act (Act 28 of 2002) (MPRDA) Mineral and Petroleum Resources Development Amendment Act 49 of Mineral and Petroleum Resources Development Draft Amendment Bill (2012) 65 42

7 Page Broad-Based Socio-Economic Charter Amendment of the Broad-Based Socio-Economic Empowerment Charter (2010) Promotion of Beneficiation Bill Mineral and Petroleum Resources Royalty Act (Act 28 of 2008) (MPRRA) Institutional and administrative environmental and social regulatory structures Environment Conservation Act (Act 73 of 1989) (ECA) (Section 25 Noise Regulations) National Environmental Management Act (Act 107 of 1998) (NEMA) National Environmental Management: Waste Act (Act 59 of 2008) (NEM:WA) National Water Act (Act 36 of 1998) (NWA) National Environmental Management: Air Quality Act (Act 39 of 2004) (NEM:AQA) National Heritage Resources Act (Act 25 of 1999) (NHRA) National Environmental Management Biodiversity Act (Act 10 of 2004) (NEMBA) Global chromite market review Global occurrence Ore processing Uses and applications Chromite supply Chrome ore prices Ferrochrome demand Ferrochrome supply Ferrochrome price Ferrochrome outlook Moeijelijk chromite market General mineral asset valuation approach Mineral asset valuation methodologies Cost approach Market approach General mineral asset valuation assumptions Mineral asset valuation Cost approach valuation Market approach valuation Valuation summary Valuation assumptions Previous valuations Audits, reviews and historic verification Adjacent properties Chrometco and Chromex Chromite Projects Sefateng Chromite Project Exploration programme and budget Risk analysis Conclusions Date and signatures 82 43

8 List of Figures SR1.1A(i) Page Figure 1: Bauba Platinum s corporate structure 50 Figure 2: Location of the Moeijelijk Chromite Project in relation to the South African Bushveld Complex and major infrastructure 51 Figure 3: Location of the Moeijelijk Project in relation to regional infrastructure and the adjacent chromite mines 52 Figure 4: Locality plan in relation to local infrastructure and legal tenure 53 Figure 5: Schematic regional geology 55 Figure 6: Local geological map 56 Figure 7: East-west sections over the Moeijelijk Project 57 Figure 8: Typical stratigraphic column and cross section 58 Figure 9: Photos of the Moeijelijk Project site 59 Figure 10: Global chromite resources 70 Figure 11: Chromite market material flow 71 Figure 12: Chrome ore and ferrochrome prices (August 2008 March 2013) 72 Figure 13: Project lifetime value and valuation methodology curve for mineral resource projects 77 Figure 14: Market valuation 78 44

9 List of Tables SR1.1A(i) Page Table 1: Summary of mineral asset details 49 Table 2: Stratigraphic Zones of the Rustenburg Layered Suite 54 Table 3: Environmental and social compliance status 60 Table 4: Types of rights applicable in South Africa 63 Table 5: Global chromite Mineral Resources and Mineral Reserves 69 Table 6: Global mine production 72 Table 7: South African chromite production in Table 8: Prospect exploration phase classification and the corresponding PEM 75 Table 9: Cost approach valuation results 76 Table 10: Market approach valuation results 79 Table 11: Bauba Summary of valuation results 80 45

10 List of AppendicesSR1.1A(i) Page Appendix 1: References 83 Appendix 2: Glossary and abbreviations 84 Appendix 3: Certificates of Competent Persons 86 46

11 1. Introduction SR1.1A(ii)(iii); SR1.2A(i); SV2.2; JSE12.9(a) Venmyn Deloitte Proprietary Limited (Venmyn Deloitte) was requested by Bauba Platinum Limited (Bauba Platinum) to compile and author an independent Competent Person s Report (CPR) on the Moeijelijk Chromite Asset (Moeijelijk Project) which is located in the northern regions of the Eastern Bushveld Complex (BC) of South Africa. Bauba Platinum s primary business objective is the exploration, evaluation and development of its platinum group metals (PGM) prospects situated within three prospective segments of the Eastern Limb of the Bushveld Complex. Bauba Platinum has been listed on the JSE Limited since September 2010 and is fully compliant with the requirements of the South African Mining Charter in terms of its Broad Based Economic Empowerment (BBEE) equity component. As part of its exploration project portfolio, Bauba Platinum is seeking to acquire a 60% shareholding in an eastern BC chromite asset which is currently wholly owned by a group of at least six different shareholders. Approximately 60% of the shareholders, collectively termed the vendors, are prepared to dispose of their shareholdings to Bauba Platinum. The CPR on the chromite asset, namely the Moeijelijk Project, is required by the JSE Limited as supporting technical documentation for this transaction which will be considered by the JSE Limited as a material and significant change to the Bauba Platinum holdings. The Moeijelijk Project CPR describes the historic and recent exploration data which has been prepared by Bauba Platinum in compliance with, and to the extent required by the South African Code for Reporting of Exploration Results, Mineral Resources and Mineral Reserves (SAMREC Code). Venmyn Deloitte has undertaken an independent technical review of the technical information in order to identify all the factors that could influence the potential economic viability of the Moeijelijk project. Venmyn Deloitte considered the strategic merits of the Moeijelijk project on an open and transparent basis and provides an independent opinion as to whether or not all the scientific and technical information required to ensure the report is not misleading, has been disclosed. The Moeijelijk Project is classified as an early exploration project for which both historic and current exploration results are available. The Moeijelijk Project is located in the Limpopo province of South Africa as shown in Figure 1. The target horizon is the tabular, shallow dipping LG6 chromitite seam which is extensively mined in the eastern BC as illustrated in Figure 2 and for which comprehensive geological and mining information is available from numerous active mines in the area. The current owners of the Moeijelijk Project have not yet published a maiden Mineral Resource estimate and consequently full disclosure in terms of the SAMREC requirements is not possible. The requirement by the JSE Listings Requirement for a South African Code for the Reporting of Mineral Asset Valuation (SAMVAL Code) compliant valuation (Section 12.9 (f)) is possible as a valuation based on historic costs can be undertaken and a comparative value per hectare. The early exploration status of the Moeijelijk Project does not provide enough information to undertake a discounted cash flow analysis. However, the directors of Bauba Platinum have prepared an estimated cashflow based upon a potential of table agreements with a local smelter and by using a contract miner to produce chromite. 2. Scope of the Opinion SR1.1A(ii)(iii); SV2.2 Venmyn Deloitte has undertaken an independent technical review of the mineral asset for Bauba Platinum, in order to identify the factors of a technical nature that would influence the future of the Moeijelijk Project. Venmyn Deloitte considered the strategic merits of the Moeijelijk Project based upon its location in the prime chromite LG-6 area. This CPR has been compiled in order to incorporate currently available information that will enable potential investors to make a reasoned and balanced judgement regarding the potential of Moeijelijk. Venmyn Deloitte s professional advisers are Competent Persons as defined by the SAMREC Codes. Venmyn Deloitte s advisers are also internationally accredited. The Competent Persons involved in the preparation of this CPR are members in good standing with their respective professional institutions. The JORC, SAMREC, VALMIN and SAMVAL Codes are considered by Venmyn Deloitte to be a concise recognition of the best-practice due-diligence methods for these types of mineral projects and accord with the principles of open and transparent disclosure that are embodied in internationally accepted Codes for Corporate Governance. The work in this CPR has been based upon technical information that has been provided by Bauba Platinum and has been independently reviewed by Venmyn Deloitte, where possible. Venmyn Deloitte confirms that, to the best of its knowledge and having taken all reasonable care to ensure that such is the case, the information contained in the CPR is in accordance with the facts, contains no omission likely to affect its integrity. Venmyn Deloitte reserves the right to, but will not be obliged to, revise this report or sections therein, and conclusions thereto, if additional information becomes known to Venmyn Deloitte subsequent to the date of this report. It must be noted that this review does not form an assurance report in accordance with the International Auditing and Assurance Standards Board (IAASB) standards. 3. Statement of Independence SR1.1A(ii)(iii); SR8A(ii); SR9A(ii); SR11A(ii); SV2.2; SV2.14; JSE12.9(c)(e) This CPR has been prepared by Venmyn Deloitte, which is an independent advisory company. Its consultants have extensive experience in preparing Competent Persons, Technical Advisors and Valuation Reports for mining and exploration companies. Venmyn Deloitte s advisers writing this report have, collectively, more than 50 years of experience in the assessment and evaluation of chromite mining and exploration projects worldwide and are members in good standing of appropriate professional institutions. Neither Venmyn Deloitte nor its staff or subcontractors have, or have had, any interest in thi project capable of affecting their ability to give an unbiased opinion and, have not received, and will not receive, any pecuniary or other benefits in connection with this assignment, other than normal consulting fees. Neither Venmyn Deloitte nor any of its personnel involved in the preparation of this CPR have any material interest in Bauba Platinum. Venmyn Deloitte was remunerated a fixed fee amount for the preparation of this CPR, with no part of the fee contingent on the conclusions reached or the content. Competent Person (CP) Mr A Clay has the relevant and appropriate experience and independence to appraise the assets. Mr A Clay is considered a CP, having more than five years relevant experience in the assessment and evaluation of the types of exploration and mining properties discussed in this report. Mr A Clay can be considered a Competent Valuator as defined by the SAMVAL Code, by way of relevant education, qualifications and experience. Mr A Clay is responsible for the overall report. Competent Persons certificates are presented in Appendix 3. Venmyn Deloitte reserves the right to, but will not be obliged to, revise this report or sections therein, and conclusions thereto, if additional information becomes known to Venmyn Deloitte subsequent to the date of this report. The authors of this report are not qualified to provide extensive commentary on the legal issues associated with Bauba Platinum s and/or its subsidiaries right to the mineral properties. Venmyn Deloitte has obtained copies of the relevant mining and prospecting licences/authorisations, and these have been reviewed to the satisfaction of Venmyn Deloitte. No warranty or guarantee, be it express or implied, is made by the authors with respect to the completeness or accuracy of the legal aspects of this document. 47

12 4. Reliance on Other Experts and Sources of Information SR1.3A(ii); SV2.11; SV2.14 Venmyn Deloitte has not relied on any other experts during the preparation of this report. Venmyn Deloitte has based its review of Bauba Platinum s material chromite assets on information provided by Bauba Platinum and its subsidiary companies, along with technical reports by its contractors, associates and other relevant published data. A full list of all sources of information is provided in Appendix 1. Drafts of this CPR have been provided to Bauba Platinum, in order to identify and address any factual errors or omissions prior to finalisation. 5. Personal Inspection SV2.14 Site visits have been conducted on a routine basis by the Project Geologist, Mr GPL van der Linde, including a site visit on 3 January Mr Clay is familiar with the area, having worked on a number of LG-6 operations in the area. 6. Bauba Platinum s Corporate Structure In terms of the legal tenure sections of this report, specific reference is made to the associated subsidiary companies holding the various rights, as appropriate, and their relationship to Bauba Platinum as set out in the corporate structure. However, for ease of reference, and throughout the remainder of the CPR, references to Bauba Platinum should be understood to mean Bauba Platinum Limited and not Bauba A Hlabirwa Mining Investments Proprietary Limited (Hlabirwa) which is a subsidiary of Bauba Platinum. Bauba Platinum s corporate structure pre- and post-transaction, with respect to the chromite mineral assets to be discussed in this report, is presented in Figure Mineral Assets Bauba Platinum intends to acquire a chromite asset located in the Eastern Limb of the BC in South Africa (Figure 2). This asset includes a prospecting right in the early exploration phase. The mineral asset details are summarised in Table 1 and illustrated in Figure Location and Access SR1.2A(i); SR1.5A(i) Farm Moeijelijk KS412 covers an area of 2 271,4ha and is located on the R37 road between Burgersfort and Lebowakgomo, approximately 51km east of Lebowakgomo and approximately 57km northwest of Burgersfort in the Limpopo province of South Africa. The farm is approximately 72km southeast of the town of Polokwane and 58km north of Steelpoort as illustrated in Figure 4. The farm can be accessed from the east via the tarred R37 national road linking the town of Burgersfort and the Lebowakgomo township. 9. Legal Aspects SR1.2A(i); SR1.7A(i-iv); SR5.1A(i); SR5.2A(i); SV Ownership The Prospecting Right for the Moeijelijk Project is held by Bauba A Hlabirwa Mining Investments Proprietary Limited (Hlabirwa). Prospecting Right no. LP30/5/1/1/2/390PRR was granted to Hlabirwa on 7 June 2006 and was due to expire on 6 July 2011 but was renewed on 18 July The Prospecting Right expires on 17 July Bauba Platinum intends to purchase the Moeijelijk chromite asset of which 60% is held together with Hlabirwa by Highland Trading Investments Limited, Danene Trust, Kumane Trust, Math-Pin Trust, and Pimlico Investment Trust (collectively the Vendors). A summary of the Prospecting Right details is provided in Table 1. 48

13 9.2. Surface rights Bauba Platinum does not own surface rights to the Moeijelijk Project. Table 1: Summary of mineral asset details Project Farm name and number Total licence area ha Company holding rights Development status Moeijelijk Moeijelijk 412KS 2 270,93* Bauba A Hlabirwa Mining Investments Proprietary Limited Early stage exploration * Quoted as in the Prospecting Right Licence type Prospecting right no. Mineral Prospecting LP30/5/1/1/2/390PRR Unspecified minerals with emphasis on PGM, vanadium ore, titanium ore, chrome ore, iron ore, and associated minerals and metals* Date issued Date of last renewal Expiry date SAMREC exploration target SAMREC mineral resource SAMREC mineral reserve 7 June July July

14 Figure 1: Bauba Platinum s Corporate Structure 50

15 Figure 2: Location of the Moeijelijk Chromite Project in relation to the South African Bushveld Complex and major infrastructure 51

16 Figure 3: Location of the Moeijelijk project in relation to regional infrastructure and the adjacent chromite mines 52

17 Figure 4: Locality plan in relation to local infrastructure and legal tenure 9.3. Royalties There are no private royalties payable for the Moeijelijk Project. However, state royalties, as per the MPRRA (Section ), are payable Environmental and social compliance status Bauba Platinum s current environmental and social compliance requirements and status associated with the Moeijelijk Project are detailed in Section Material contracts Venmyn Deloitte is not aware of any material contracts pertaining to the Moeijelijk Project other than negotiations with a local FeCr smelter that wishes to purchase chromite. No details are available Other legal issues Venmyn Deloitte has not been made aware of any land claims, litigation or competing rights associated with the Moeijelijk Project. 10. Climate SR1.6A(i) The climate of the area is typical of sub-tropical Highveld conditions, with warm humid summers (from September to April) ranging between 15 C and 38 C and cool dry winters (usually only June and July) ranging between 5 C and 22 C. The rainfall on escarpments is an annual average of 700mm compared to about 500mm in the valleys. Precipitation occurs mainly during the summer months from September to April, and occurs in the form of afternoon thunderstorms. The sudden downpours pose some risk of flooding in low-lying areas. Temperatures recorded at nearby town Steelpoort vary between 17,6 C and 30 C in January and 3,8 C to 21,6 C in July. Extremes of 40 and -2,3 C have also been recorded. The mostly moderate climate means that exploration and mining operations can be undertaken throughout the year, with no extraordinary measures required. 11. TopographySR1.6A(i); SR1.6C(i) The Moeijelijk Project lies on the edge of a hill, with the majority of the property located within the valley floor at approximately 800mamsl. The valley floor is surrounded by mountains to the east and south, with the Brakfontein Peak situated in the southwest corner of the farm reaching a height of approximately 1 295mamsl. The mountains on the farm s eastern boundary reach a height of approximately 1 100mamsl. The elevation increases steadily from approximately 800m at the chromite sub-outcrop to 1 100m at the peak of the mountain to the east of the Moeijelijk Project area. 53

18 12. Vegetation and Fauna SR1.6A(i) The vegetation in the Moeijelijk Project area consists of sparsely distributed bushveld thornveld with grasses and a witgatwortelboom. The bushveld thornveld can be hampering. Several species of antelope are found in the area. Larger wildlife species occur only in the nature reserve and game farms in the area, whilst hares, gerbils and foxes are also found in the area. Birds are commonly found within the Moeijelijk Project area. 13. Local Resources The Bushveld Complex hosts some of the world s largest reserves of chromite and platinum group metals along with significant resources of iron, tin, chromium, titanium and vanadium. Numerous mines are currently exploiting these commodities within the vicinity of Moeijelijk. The well established mining industry in the area ensures that both skilled and unskilled labour is readily available from the surrounding towns of Lydenburg, Steelpoort, Burgersfort and Mokopane. In addition, the area will be well serviced due to good infrastructure and services in the surrounding mines and towns. 14. Site Infrastructure SR5.6C(i) The Moeijelijk Project is an exploration project and there is limited permanent infrastructure or equipment associated with activity on the property. The regional infrastructure is relatively good given the mining activities on numerous adjacent properties to the Moeijelijk Project area. All relevant logistics for the current activities have been considered Roads The main tarred R37 road linking Steelpoort and Burgersfort traverses the Moeijelijk Project from southeast to northwest. The Moeijelijk Project is accessible by gravel roads Water and power supply Water is transported to site as and when required and power is sourced from generators. More permanent water and power supply options will be investigated as part of any pre-feasibility studies that will be undertaken by the Moeijelijk Project as the Moeijelijk Project s development. 15. Regional Geological Setting SR1.2A(i); SR4.1A(i); SV2.5 The Moeijelijk Project is located on the northern part of the Eastern Limb of the BC. The Eastern Limb forms part of three layered mafic-ultramafic arcuate limbs, namely the Northern, Western and Eastern Limbs, which together form an ellipse in plan, approximately 200km by 370km in extent. The BC was intruded at approximately 2 060Ma into the Transvaal Supergroup sequence along the unconformity between the Magaliesburg quartzites and the overlying Rooiberg felsites. The total estimated area of the BC is km 2, approximately 55% of which is covered by younger formations. The BC comprises a set of interconnected intrusives that crystallised to form the layered mafic and ultramafic units known as the Rustenburg Layered Suite (RLS), the granites of the Lebowa Granite Suite (LGS) and the felsic extrusive of the Rashoop Granophyre Suite (RGS). The mafic RLS of the BC outcrop and can be divided into a number of units according to their representative gravity anomalies. The Steelpoort Fault is a major fault that runs approximately southwest-northeast through the Eastern Limb of the BC. The Steelpoort Fault has caused displacement locally as well as smaller scale associated faults. These faults have not materially impacted the Moeijelijk Project, which is located approximately 30km north of the fault. The RLS consists of remarkably consistent layering that can be connected over the extent of the BC and is the host of the chromium, vanadium and nickel mineralisation. The regional geology of the BC and stratigraphy of the RLS is illustrated in Figure 5 and Table 2, respectively. The target horizon for the Moeijelijk Project is the LG-6 chromitite layers. Table 2: Stratigraphic Zones of the Rustenburg Layered Suite Unit Width Dominant lithology Description Upper Zone Varies Gabbros with banded anorthosite and magnetite layers Main Zone 3 900m Norite, gabbro-norite, anorthosite and minor pyroxenite No chilled contact with the hanging wall rocks, which consist of rhyolites and granophyres. Comprises half of the RLS. Banding and layering not well developed. Critical Zone Upper Critical Zone (UCZ) 1 400m Layered pyroxenites, norites, anorthosites and chromitites The base of the UCZ is marked by cumulus plagioclase. Norites dominate the UCZ, with subordinate pyroxenites and anorthosites present at intervals through the sequence. Economic chromite mineralisation is hosted in the Upper Group (UG) and Middle Group (MG) chromitite layers. The MG series straddles the contact between the LCZ and UCZ, whereas the UG2 series occurs within the UCZ. Lower Critical Zone (LCZ) Pyroxenite inter-layered with hartzburgite and chromitite Economic chromite mineralisation is hosted in the Lower Group (LG) chromitite layers. The LG contains seven chromitite layers. This project considers LG-6 A, B and C. Lower Zone Varies, reaches a maximum of 1 700m Cyclically layered units of dunite-hartzburgite Thickness varies and thins over basement highs. The most complete exposure is in the northeastern part of the Eastern Limb of the RLS which occurs as a series of dunite-harzburgite cyclically layered units. Marginal Zone Several metres to hundreds of metres Unlayered, heterogeneous ultramafic rocks mostly norites Contamination of the basic magmas by the enclosing host rocks. Sedimentary rock fragments are contained as xenoliths in the lower portions. Exposures of this zone are poor. 54

19 15.1. The Critical Zone The Critical Zone contains generally well defined, and easy to correlate layers, which can be broadly sub-divided into the dunite, harzburgite, pyroxenite, norite, anorthosite and chromitite rock types. These layers have both sharp and gradational contacts and progress through subtle variations to produce leuco-cratic and melano-cratic variations of medium grained rocks. In places the rocks are pegmatoidal and can form pipes and segregations. Later dolerite dykes intruded into faults. Detail on the Critical Zone relevant to the Moeijelijk Project is included in the Section 16. The region has been extensively prospected in recent times; however, little exploitation is currently taking place. The Middle Group and the Upper Group (UG), which also occur within the upper critical zone, stratigraphically above the LG, are not present in the Moeijelijk Project area Regional structure Dykes of a Karoo to post-karoo age occur in the region generally trending north-south and showing a positive magnetic polarity. The dykes are commonly vertical to sub-vertical steeply dipping towards the east. Dolerite dykes tend to intrude along existing fault lines and structural zones of weakness. Faulting is generally minimal, although some dykes in the region have a throw of up to 65m. 16. Local geological setting SR1.2A(i); SR4.1A(i-iv); SV2.5 The Moeijelijk Project is located in the Eastern Limb of the BC. The Moeijelijk Project is covered by recent sediments, with minimal outcrop of the underlying geology. The geology comprises essentially the pyroxenites of the Critical Zone, covered by recent sediments. The more resistant Main Zone forms a steep hill to the southwest of the Moeijelijk Project as illustrated in Figure 6. Figure 5: Schematic regional geology 55

20 Figure 6: Local geological map The chromitite layers, the target horizons, are confined to the Critical Zone and are subdivided into Lower, Middle, and Upper groups and the Moeijelijk Project focuses on the Lower Group (LG) chromitites, which occur within the pyroxenites of the Lower Critical Zone (LCZ). The LG contains seven chromitite layers, the MG four, and the UG two layers in the western BC and three layers in the eastern BC. Chromite mining in the region is typically focused on the LG-6 unit due to its favourable thickness and chemistry. The Moeijelijk Project focuses on the LG-6A, LG-6B and LG-6C, together referred to as the LG-6 Unit in this report. The subcrop of the LG-6 Unit is developed to the southwest of the property and is subdivided into the LG-6A, LG-6B and LG-6C, as illustrated in Figure 7. The LG-6 Unit is separated by pyroxenite partings. The LG-6 Unit is typically continuous along strike and down dip, with minor variation in chromitite layer width. Average width of the LG-6 Unit is approximately 2,69m. The LG-6 B is the thickest chromitite layer with an average width of 1,29m. The pyroxenite parting between the LG-6 A and the LG-6 B is typically less than 0,1m while the parting between the LG-6 B and the LG-6 C is thicker and varies between 0,51m and 1,16m. Dip is typically 20 to the west. Flattening and steepening of dip associated with potholes may disrupt the chromitite in some areas. Pyroxenite lenses and partings are expected as they are common in the region, however no evidence for them has been found on the Moeijelijk Project area through the drilling completed. These partings tend to dilute the chromitite layers. The development of mafic pegmatites disrupts the reef thickness and may cause difficulties in mine support. Mafic pegmatites are found on a small scale throughout the area although they can reach up to 100m in diameter. These small scale pegmatites are intrusions that cut across layering, are generally related to late stage structures and may dilate the chromitite layers or cause downwarping of surrounding layers resulting in marginal synclines. Dolerite dykes occur throughout the Moeijelijk project, commonly along faults and joints. The faults are generally small scale. Faults, dykes and other structural features are generally not identifiable from surface due to cover obscuring outcrop Deposit type and mineralisation The LG-6 layers each consist of chromite spinel, orthopyroxenite and minor silicates. The quality of chromitite varies with depth. Shallow and outcropping chromitite is typically friable and produces fines. Below this weathered zone, chromitite tends to be less friable and can produce lumpy ore. The general stratigraphic column for the Moeijelijk Project is given in Figure Historical Ownership SR1.3A(i); SV2.4 No historical mining or associated activities have been conducted on the Moeijelijk Project prior to the current exploration work being conducted. No mining or exploration companies conducted any work on the Moeijelijk Project prior to acquisition of the prospecting right by the Vendors in

21 18. Historical Exploration and Mining SR2.3A(i); SR2.5A(i); SR1.3A(i)(ii); SR2.3B(ii); SV2.4 No historical mining has been documented on the Moeijelijk Project. The only documented historical exploration is for adjacent projects including two percussion boreholes that were drilled into the sub-outcrop area near the southern boundary of the farm. Both boreholes were drilled into the LG-6 chromitite unit on farm Zwartkoppies 413KS (The Sefateng Project). The borehole numbers are SKP27 and SKP29. Mr. NA Bleeker, the geologist that supervised the exploration on farm Zwartkoppies 413KS in 2007, also explained that an outcrop of the LG-6 A, B and C chromitite layers is found near the western boundary of Moeijelijk 412KS. All borehole information obtained from the exploration completed on Zwartkoppies 413KS in 2007 is available. A generalised 1: geological map is also available from the Council for Geoscience. Figure 7: East-West sections over the Moeijelijk Project 57

22 Figure 8: Typical stratigraphic column and cross section 58

23 19. Recent Exploration SR2.1A(i); SR2.3A(i); SR2.3B(i); SR2.5A(i) Recent exploration refers to all exploration carried out since the Moeijelijk Project was acquired by Hlabirwa, in An aeromagnetic survey and diamond drillhole and reverse circulation drilling programmes have been undertaken. The results of the combined geophysical and drilling campaigns will be consolidated into a geological model once the acquisition transaction has been completed. Bauba Platinum plans to report a maiden Mineral Resource shortly thereafter. Photos of the Moeijelijk project illustrate the typical site in Figure 9. Data is currently managed by the Project Geologist, GPL van der Linde, in Excel. The Project Geologist is responsible for acquisition, capturing, validation, control and backup of the databases. No detailed verification or QA/QC is provided as there is no Exploration Result or Mineral Resource. When the maiden Mineral Resource is reported upon, the relevant QA/QC and data management will be discussed in detail. The initial objective of drilling was to gain an indication of the outcrop position, basic structure, continuity and tonnage of the LG-6 chromitite unit. Hlabirwa completed a number of percussion boreholes, eight to intersect the LG-6 unit at a depth of 25m and eight to intersect the LG-6 unit at a depth of 50m. Digital terrain contours with 5m intervals that were recorded by Photogramentura during an aeromagnetic survey are also available. The 5m contours provided by Photogramentura were compared to the 5m contours provided by the office of the Surveyor General in Mowbray, Cape Town. The two sets of terrain information were in precise agreement with each other, although it appeared that the Photogramentura information was slightly more detailed. The digital terrain model was thus created using the information provided by Photogramentura and would serve as the basis for the 3-D geological model to be developed. The interpretation of the aeromagnetic survey was done by Campbell and Johnson of GAP Geophysics in Johannesburg. 20. Mining SR5.4A(i) There is no mine plan for the Moeijelijk Project. 21. Mineral Processing SR5.5A(i); SR5.6 No mineral processing activities are being carried out at Bauba Platinum due to the exploration phase nature of the Moeijelijk Project. Metallurgical testwork will form part of the advanced exploration programme. The results of the testwork programme will inform the selection of the preferred process route and plant description. 22. Mineral Resource and Mineral Reserve Statement No Mineral Resources or Mineral Reserves are declared for the Moeijelijk Project. No previous Mineral Resource or Mineral Reserves have been declared on the Moeijelijk Project. Therefore, this is not applicable. Figure 9: Photos of the Moeijelijk Project site 59

24 23. Environmental Practices SR5.2A(i) Bauba Platinum has an approved EMP, closure plan and financial provision, with associated compliance reporting conditions contained within the Prospecting Right. Performance assessment reports detailing compliance with EMP management practices and requirements, in addition to the financial provisions for closure and rehabilitation, are provided in the annual prospecting report submitted to the DMR Environmental and social General disclosure The following activities were undertaken in the performance of this CPR: A discussion with Bauba Platinum as to an overview of the current environmental and social compliance status (including management practices) for the Moeijelijk Chromite Project; and A review of all relevant documentation, inclusive of licences, internal and external audits, where available Environmental and social permitting status Table 3: Environmental and Social Compliance Status The environmental and social compliance status in relation to the South African legislative requirements for the Moeijelijk Chromite Project are summarised in Table 3. Act, regulation or by-law Requirements Sectional requirements Permitting requirements Current compliance status MPRDA, 2002 (Act 28 of 2002) An EMP must be approved in terms of Section 39(4) of the MPRDA as a prerequisite to the commencement of the mining/exploration permit. Sections 39(1) and (2) of the MPRDA require that all applicants for reconnaissance permissions, prospecting rights or mining permits must conduct an EIA and submit an EMP. Prescriptive details are provided in Section 39(3) a-d. Regulations 49, 50, 51 and 52 detail the requirements for the contents and processes for scoping, EIA, EMP and EMPRs. Approval of submissions subject to the conditions stipulated in Section 39(4) of the MPRDA. Bauba Platinum has an approved EMP for the Moeijelijk Chromite Project, and submits annual compliance audit findings in the prospecting report to the DMR. Financial provision must be made to allow for closure and rehabilitation must be annually adjusted. Sections 41 to 47 of the MPRDA address legislative closure requirements. GNR 527 of the MPRDA addresses the financial provision for mine rehabilitation and closure and requires that the quantum of financial provision, to be approved by the Minister, must be based on the requirements of the approved EMP and shall include a detailed itemisation of all actual costs required for: premature closure regarding: the rehabilitation of the surface of the area; the prevention and management of pollution of the atmosphere; the prevention and management of pollution of water and the soil; the prevention of leakage of water and minerals between subsurface formations and the surface; decommissioning and final closure of the operation; and post closure management of residual and latent environmental impacts. Regulation 54(2) requires annual financial closure estimation and associated financial adjustment. Annual closure and rehabilitation estimation and associated financial provision Bauba Platinum has made financial provision for both scheduled and unscheduled closure of the prospecting operations at Moeijelijk. This provision is adjusted annually and submitted to the DMR. An approved SLP is required for permitting approval, with annual compliance reporting submission. Sections of GNR 527 of 2004 and 39(1) and (2) of the MPRDA dictate the requirements of submission, approval and reporting of the SLP Approval and annual reporting to the regional DMR office on compliance in compliance with S, of GNR 527 Current operations which are being undertaken in accordance with prospecting activities do not, as of yet, require an SLP. This will be a future requirement should the PR be converted to a Mining Right. 60

25 Act, regulation or by-law Requirements Sectional requirements Permitting requirements Current compliance status NEMA, 1998 (Act 107 of 1998) EIAs and EMPs are required as defined by listed activities set out under Section 24 of NEMA, Section 14 details the contents of an EMP, with Regulations 543, 544, 545 and 546 establishing the processes to be followed to obtain an environmental authorisation and the listed activities requiring authorisation. Current operations which are being undertaken in accordance with prospecting activities do not, as yet, require an Environmental Authorisation from the DEA. This will be a future requirement should the Prospecting Right be converted to a Mining Right. Section 28 addresses the duty of care and remediation of environmental damage. Section 28 details that all persons who cause, have caused or may cause significant pollution or degradation of the environment must take reasonable measures to prevent such pollution or degradation from occurring, continuing or recurring, or, in so far as such harm to the environment is authorised by law or cannot reasonably be avoided or stopped, to minimise and rectify such pollution or degradation of the environment. Bauba Platinum currently undertakes concurrent rehabilitation, and is compliant with Section 28 of the NEMA. NEM:AQA, 2004 (Act 39 of 2004) No listed activity in terms of the Act can take place without a licence. GN 1210 establishes national Ambient Air Quality Standards, and provides limits for SO 2, NO 2, PM 10, ozone, benzene, lead and CO. Atmospheric Emission Licence Current operations which are being undertaken in accordance with prospecting activities do not, as yet, require an AEL permit. This may be a future requirement should the Prospecting Right be converted to a Mining Right. NEM: WA Act, 2008 (Act 59 of 2008) A licence is required to establish and operate a waste disposal site, as defined by the listed activities within the Act. Chapter 5 of the Act provides for the licensing of waste management activities, which include storage, transfer, recycling, treatment and/or disposal of waste. Radioactive waste and mine residues have been excluded from the Act. Waste Management Licence Current operations which are being undertaken in accordance with prospecting activities do not, as yet, require an WML permit. This may be a future requirement should the Prospecting Right be converted to a Mining Right. NWA, 1998 (Act 36 of 1998) as amended A licence is required for the abstraction, storage, use, diversion, flow reduction and disposal of water and effluent. The NWA stipulates that a WUL is required for the abstraction, storage, use, diversion, flow reduction and disposal of water and effluent in terms of Section 21 of the Act. Water Use Licence Current operations which are being undertaken in accordance with prospecting activities do not, as yet, require a WULA. This may be a future requirement should the Prospecting Right be converted to a Mining Right Operational environmental management Exploration activities currently include mapping, sampling and reverse circulation core drilling. Bauba Platinum undertakes concurrent rehabilitation management practices for all exploration and drill holes. Bauba Platinum has made the following commitments in its environmental policy: Comply with relevant state and national legislation as a minimum; Ensure that management and reduction of environmental risks is an integral part of operations planning and long-term strategy; Develop, implement and monitor environmental management plans to achieve environmental targets; Set and meet environmental objectives and targets based on the prevention of pollution; Recognise and protect areas of special heritage and cultural value; Support and participate in community based environmental projects; and Maintain a close working relationship with government and other related industries to continually improve environmental management and performance. Regularly review and report on the environmental performance of the Company and ensure that this policy remains relevant to achieving its target of minimal impact to the environment. 61