Submitted to: Mindoro Resources Limited

Transcription

1 PRELIMINARY ECONOMIC ASSESSMENT Agata Nickel Project Mindanao Philippines Submitted to: Mindoro Resources Limited REPORT Report Number R-Rev1 Distribution: Jon Dugdale, Mindoro Resources Limited Peter Geddes, Mindoro Resources Limited

2 1.0 TITLE PAGE Mindoro Resources Limited is evaluating the development of the Agata nickel laterite deposit in Northern Mindanao, Philippines. The Agata project site is about 47 km north northwest of Butuan City and 73 km southwest of Surigao City, Mindanao Island, Philippines. Independent Qualified Persons: Peter Onley, MBA, MSc, FAusIMM, CP, MAIG Principal Golder Associates is responsible for geology, Mineral Resource estimation, residue management, water management, and economic analysis. Tony Showell, B App Sc (Metallurgy) FAusIMM Principal Metallurgist Battery Limits Pty Ltd is responsible for metallurgy and process design. Effective Date: 29 March 2011 Report Number R-Rev1 Report No R-Rev1 i

3 2.0 TABLE OF CONTENTS 1.0 TITLE PAGE...i 2.0 TABLE OF CONTENTS...ii 3.0 SUMMARY General Preamble Authors Project Location Scope of Work Geology and Mineral Resource Economic Analysis Capital Costs Operating Costs Sensitivity Analysis Mining Operations Mining Schedule Conclusions Recommendations Processing and Plant Design Mineral Processing Background Plant Design Processing Technology Process Preparation Leach Plant Products Section Major Process Packages Infrastructure Residue Management Port Facilities Utilities Water Power Hydrogeology and Water Management Report No R-Rev1 ii

4 3.7.1 Hydrogeology Water Management Environment and Social Environment Community Engagement Occupational Health and Safety Conclusions and Recommendations Geological Setting Conclusions Recommendations Drilling Conclusions Sampling Method and Approach Conclusions Recommendations Sample Preparation and Security Conclusions Recommendations Data Verification Conclusions Mineral Resource and Mineral Reserve Estimates Conclusions Recommendations Metallurgy Conclusions Recommendations Residue Tailings Management Recommendations Environment Recommendations Community Engagement Recommendations Occupational Health and Safety Report No R-Rev1 iii

5 Recommendations INTRODUCTION Previous Studies Summary Resource Estimation Mine Plan Early Production Acid Leaching Options RELIANCE ON OTHER EXPERTS PROPERTY DESCRIPTION AND LOCATION Location Land Tenure ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY Accessibility Topography, Climate and Vegetation HISTORY GEOLOGICAL SETTING Geology DEPOSIT TYPES MINERALISATION EXPLORATION DRILLING Agata SAMPLING METHOD AND APPROACH Drill Sampling Density Determinations SAMPLE PREPARATION, ANALYSES AND SECURITY Analytical Laboratories Sampling and Analytical QAQC DATA VERIFICATION Independent Review ADJACENT PROPERTIES Report No R-Rev1 iv

6 18.0 MINERAL PROCESSING AND METALLURGICAL TESTING Introduction Testing at Enlin Stainless Steel Corporation Ore Samples Sizing Analyses Ore Slurry Thickening Atmospheric Leaching (AL) HPAL Testing Saprolite Neutralisation CCD Settling Iron Removal Nickel-Cobalt Precipitation Testing at SGS Lakefield Oretest (SGS) Testwork Samples Mineralogy Head Analyses Ore Scrubbing and Head Sizing Heap Leaching Amenability Testing Feed Mineralisation Settling Testwork High Pressure Acid Leach Testing Atmospheric Leach Testing Saprolite Neutralisation Testwork Combined HPAL, AL Slurry Saprolite Neutralisation Testwork AL Slurry Settling Testwork on Saprolite Neutralised Slurry Limestone Calcination and Activity MINERAL RESOURCE AND MINERAL RESERVE ESTIMATES Unfolding Data Preparation Grades Sample Length Geology Model Geology Interpretation Independent Review Report No R-Rev1 v

7 Exploratory Data Analysis Compositing Grade Capping Variography Density Block Model Estimation Validation of Block Models Resource Classification Selectivity, Mineralisation Loss and Dilution Assessment of Reasonable Prospects of Economic Extraction Mineral Resource Statement Mineral Reserve OTHER RELEVANT DATA AND INFORMATION Preliminary Hydrological and Hydrogeological Assessment Mining Plan General Mining Inventory Mining and Plant Feed Schedule Metallurgy Process Plant Introduction Process Selection Development of Process Design Criteria Preparation of Mineralisation High Pressure Acid Leaching Atmospheric Leaching Saprolite Neutralisation Counter-Current Decantation Metal Recovery Mass Balance Calculations Process Description Overview Leach Plant Report No R-Rev1 vi

8 Product Section Plant Services Plant and General Infrastructure Introduction Existing Regional Infrastructure Site Development Process Plant Site Power Supply Power Station Power Usage Summary Power Reticulation System voltage and frequency Water General Water Requirements Concept Design Water Reticulation Water Treatment Seawater Supply Port Bulk Liquid Handling Heavy Fuel Oil Diesel Fuel Bulk Solids Handling Bulk Sulphur Handling and Storage Bulk Limestone Handling and Storage Fuel Tank Farm Liquid and Solid Waste Management Waste Water Treatment Solid Municipal Waste Management Plant Process Control System Buildings Plant Site Buildings Report No R-Rev1 vii

9 Town/Village Access Roads Communications Overview Communications Infrastructure and Equipment Security and Fencing Residue Management Introduction Review of existing Information Residue Management Options Overview Engineering Design Criteria and Assumptions Candidate RSF Locations Cost Estimate Conclusions Preliminary Hydrological and Hydrogeological Assessment Water Management Plan Open Pit Dewatering Environment Summary Overview Environmental Baseline Information Permitting and Approvals Outstanding Environmental Concerns Community Engagement and Social Concerns Summary Performance Review Project Impacts and Community Expectation Community Engagement Environment Health and Safety Summary Overview Site EHS Report No R-Rev1 viii

10 21.0 INTERPRETATION AND CONCLUSIONS Geological Setting Drilling Sampling Method and Approach Sample Preparation and Security Data Verification Mineral Resource and Mineral Reserve Estimates Mining Metallurgy Economic Analysis RECOMMENDATIONS Geological Setting Sampling Method and Approach Sample Preparation, Analyses and Security Drilling Mineral Resources and Mineral Reserves Mining Metallurgy and Process Residue (Tailings) Management Environment Community Engagement Occupational Health and Safety Economic Analysis Risk REFERENCES DATE AND SIGNATURE ADDITIONAL REQUIREMENTS FOR TECHNICAL REPORTS ON DEVELOPMENT PROPERTIES AND PRODUCTION PROPERTIES Mining Operations Recoverability General HPAL Atmospheric Leaching Report No R-Rev1 ix

11 Saprolite Neutralisation Counter-Current Decantation Iron/Aluminium Removal Mixed Hydroxide Product Overall Recoveries Markets Mixed Hydroxide Product Contracts Environment Considerations Taxes Capital Cost Estimate Capital Cost Summary Scope of the Capital Cost Estimate Basis of the Capital Cost Estimates Capital Estimate Exclusions Operating Costs Operating Cost Summary Basis of the Agata Nickel Project Operating Cost Estimates Operating Cost Estimate Exclusions Economic Analysis Economic model input parameters Life of Mine Project Financials Sensitivity Analysis TABLES Table 3-1: Agata Deposit Laterite Mineral Resource (Ni ), September Table 3-3: Capital Cost Estimate for the Agata Nickel Project PEA... 4 Table 3-4: Operating Cost Estimate... 4 Table 3-5: Risk Assessment and Mitigation... 5 Table 3-6: Mining Inventory Estimate... 6 Table 3-7: Plant Feed Summary... 7 Table 3-8: Revised Design Parameters for PEA... 9 Table 3-9: Unit Rates Estimated Table 3-10: Estimated Daily Water Requirements Report No R-Rev1 x

12 Table 13-1: Summary of drilling campaigns Table 18-1: Mineralisation Sample Head Analyses Table 18-2: Limonite Sizing Results Table 18-3: Selected HPAL Test Results Table 18-4: HPAL Discharge Solution Assays Table 18-5: Selected Saprolite Neutralisation Test Results Table 18-6: Selected HPAL Test Results Table 18-7: Source of Metallurgical Test Samples Table 18-8: Head Analyses of Metallurgical Composites Table 18-9: Scrubbing Test Results Table 18-10: Agglomeration Test Results Table 18-11: Mineralisation Slurry Settling - Key Parameters Table 18-12: HPAL Test Results on Limonite Transition Mineralisation Samples Table 18-13: AL Tests on Saprolite Samples Table 18-14: AL Test Solution Composition Table 18-15: Saprolite Neutralisation Testing Table 18-16: Saprolite Neutralisation Test Results- AL Table 18-17: Settling Tests on Saprolite Neutralisation Slurry Table 19-1: Agata Deposit Laterite Resources (Ni ), September Table 20-1: Material Types Table 20-2: Mining Inventory Table 20-3: Plant Feed Targets Table 20-4: Ex-Pit Mined Summary Table 20-5: Mining Schedule Table 20-6: Plant Feed Summary Table 20-7: HPAL Design Criteria Table 20-8: AL Design Criteria Table 20-9: Saprolite Neutralisation Design Criteria Table 20-10: CCD Design Criteria Table 20-11: Power Summary Table 20-12: Water Consumption Summary Table 20-13: Summary of Initial and Deferred Capital Costs included in the Scoping Study Table 21-1: Summary of Financial Analysis Results Table 21-2: Operating Costs Table 22-1: Risk Assessment Table 25-1: Recoveries by Mineralisation Type Report No R-Rev1 xi

13 Table 25-2: Rehabilitation Costs Table 25-3: Capital Cost Estimate for the Agata Nickel Project PEA Table 25-4: Operating Cost Estimate for the Agata Nickel Project PEA Table 25-5: Capital Cost Estimates Table 25-6: Operating Cost Assumptions Table 25-7: Summary Cash Flow Table 25-8: Project Cash Flow Table 25-9: NPV USD m Sensitivity to Economic Assumptions FIGURES Figure 3-1: Sensitivity Analysis... 5 Figure 3-2: Mine Production Schedule... 7 Figure 3-3: Plant Feed and Material Type... 8 Figure 6-1: Site location of the Agata Nickel Project Figure 9-1: Agata Project Area (after Gifford, 2010) Figure 9-2: Agata laterite resource (After Mindoro, 2010) Figure 9-3: Local Geology Map of Northern area of the Agata deposit Project Area (from Gifford, 2010) Figure 9-4: Northern area of the Agata deposit Laterite Profile (After Mindoro, 2010) Figure 13-1: Drill hole plan showing Figure 13-2: Core drilling at Agata Project Figure 13-3: Core recovery from Agata Project Figure 18-1: Acid Bottle Roll Test Results Figure 18-2: Saprolite Neutralisation Test Results - HPAL/AL/SN Figure 19-1: Bedrock, Saprolite, and topography triangulations in cross-section (After Gifford, 2010) Figure 19-2: Probability plots showing Ni% distribution of LF, LA and LB samples within modelled Limonite zone Figure 19-3: Ni% and Mg% distributions for Bolder and Saprolite samples within SAP modelled domain Figure 20-1: Pit Extents Figure 20-2: Pit Areas & High Magnesium zones Figure 20-3: Mining Panels Figure 20-4: Mining Schedule Graphic Figure 20-5: Mining Volumes per Quarter Figure 20-6: Mine Production Schedule by Material Type Figure 20-7: Candidate Valley RSF Locations Figure 21-1: Sensitivity Analysis Figure 25-1: Operating Cost by Cost Centre Figure 25-2: Cumulative Cashflow Figure 25-3: Project Sensitivity Report No R-Rev1 xii

14 APPENDICES APPENDIX A Certificates of Qualified Persons APPENDIX B Consents of Qualified Persons Report No R-Rev1 xiii

15 3.0 SUMMARY 3.1 General Preamble MRL Gold Phils., Inc. is a 100% owned Philippine subsidiary of Mindoro Resources Ltd. (Mindoro), a company incorporated in Alberta, Canada and listed on the TSX Venture Exchange and the ASX. Mindoro is currently investigating the potential to develop its Agata nickel laterite deposit in Northern Mindanao, Philippines. A November 2010 Scoping Study performed by Boyd Willis Hydromet Consulting (BHWC) and Ausenco Vector for Mindoro concluded that the establishment of a hydrometallurgical processing plant to treat the ROM limonite and saprolite materials was viable assuming continued resource growth. This PEA Technical Report summarises the current development options and provides a preliminary economic assessment of the project Authors This PEA Technical Report is prepared by Golder Associates Pty Ltd (Golder) under the direction and supervision of Peter Onley, an independent qualified person with Golder Associates Pty Ltd and Tony Showell, an independent qualified person with Battery Limits Pty Ltd. Golder Associates Pty Ltd have reviewed the geology, mining, metallurgy, process design, residue and water management, environment, community engagement and occupational health and safety and economic analysis included in this PEA Technical Report. Peter Onley and Tony Showell as joint Qualified Persons have authorised the technical information detailed in this Preliminary Economic Assessment (PEA) Technical Report Project Location The Agata Project is located within the northern part of Agusan del Norte province in northeastern Mindanao, Republic of the Philippines. It lies within the Western Range approximately 10 kilometres south of Lake Mainit (Figure 6-1). The Agata Project falls within the political jurisdiction of the municipalities of Tubay, Santiago and Jabonga. The Agata Project is centred at E, 9 17 N Scope of Work Mindoro Resources Ltd (Mindoro) plans to develop the Agata Nickel Project in the Philippines. Golder Associates Pty Ltd (Golder) is requested to provide a cost estimate to prepare a Preliminary Economic Assessment report to conform to Canadian NI and Australian JORC (2004) standards. The scope of work provided by Jon Dugdale of Mindoro in s dated 18 January and 7 February 2011 is auditing and reviewing all relevant information and including the following documents to be provided by Mindoro: Agata Resource Report, (Mark Gifford and QG, September 2010) Scoping Study (Boyd Willis, September 2010) Additional acid leach metallurgy and impact on costs and feed proportions (limonite/saprolite, etc) prepared by Boyd Willis DSO Scoping Study (Peter Geddes) internal Mindoro report Mine and processing schedules based on preliminary modelling (Dallas Cox and Boyd Willis) Economic modelling of preferred project plan (Michael Conan-Davies) Metallurgical review will be undertaken by BatteryLimits Pty Ltd under Golder name for inclusion in the PEA. Report No R-Rev1 1

16 The PEA is a step towards starting the PFS after current exploration and Resource estimation is completed in The PEA will indentify significant issues and conceptual options for development of the Agata Project for evaluation in the PFS The studies provided by Mindoro will be reviewed to a preliminary and not technical audit level to identify possible key issues. The PEA will include a preliminary review, a project development concept based on Mindoro studies and data and recommendations for further work for the following: Exploration Geology, Resource Estimation and grade control Geotechnical Mining, mine planning and estimation of mining inventory for scheduling and scheduling Scoping study metallurgy, processing, additional acid leach metallurgy, test work and metallurgical reports completed since the scoping study Residue (Tailing) Management Water Management: Surface water and hydrogeology Environment Community Engagement Occupational Health and Safety Compliance with JORC and NI , governance and permitting, regulations and for mining, environment and OHS Review economic and sensitivity analysis prepared by Mindoro Significant issues and risk management Geology and Mineral Resource The Agata Nickel Project is based on a tropical nickel laterite typical of the Philippines. The Agata Nickel Project has estimated combined Measured and Indicated Resources of 32.6 Mt at 1.04% Ni, and an inferred resource of 1.7 Mt at 1.04% Ni for a combined t of nickel, as reported in Mindoro s NI compliant Mineral Resource estimate of 8 September 2010, using a cut-off grade of 0.5% Ni for limonite and 0.8% Ni for saprolite. The summary of the NI compliant Mineral Resource is presented in Table 3-1. Report No R-Rev1 2

17 Table 3-1: Agata Deposit Laterite Mineral Resource (Ni ), September 2010 kt (dry) Ni % Co % Fe % Al % MgO % SiO 2 % Measured Limonite Saprolite Sub-Total Indicated Limonite Measured and Indicated Saprolite Sub-Total Limonite Saprolite Total Inferred Limonite Saprolite Total Economic Analysis The PEA economic model prepared by Mindoro indicates a nickel project based on hydrometallurgical processing justifies further investigation. Mindoro has commenced a pre-feasibility study (PFS) on the Agata Nickel Project. An economic analysis using the discounted cashflow (DCF) methodology has been prepared based on the high pressure acid leach (HPAL) and atmospheric leaching (AL) and saprolite neutralisation (SN) hydrometallurgical process described in this report. The project has a net present value (NPV) of USD390 M at a 10% after tax discount rate. Based on the mining schedules, capital and operating costs and a long term nickel price of USD10 per pound. A summary of the PEA financial model is presented Table 3-2. The currency for all estimates is US dollars (USD) Table 3-2: Summary of Financial Analysis Results Nickel Price USD/lb USD8.50 USD10 USD12 NPV (10% discount rate) Post Tax USD M IRR Post Tax % 14% 19% 26% Sensitivity analysis also shows that the project is robust to changes in economic modelling assumptions. The analysis has identified that the project is most sensitive to factors which impact on revenue (nickel price, feed grade and recovery) followed by capital costs. The project is least sensitive to operating cost estimates Capital Costs The project costs are presented in Table 3-3 are estimated in February 2011 US dollar (USD) values. Report No R-Rev1 3

18 Table 3-3: Capital Cost Estimate for the Agata Nickel Project PEA Description Capital Costs (Million USD) Ore Preparation 29.5 Leach Section Products Section 10.1 Sulphuric Acid 92.8 Power Plant 48.0 Other Major Process Packages 7.5 Services and Utilities 26.5 Process Plant Infrastructure General Infrastructure 23.8 Total Direct Cost EPCM 62.8 Other Construction Services 58.8 Total Indirect Cost Direct + Indirect Cost Contingency Total Project Cost Project Cost, USD/annual lb Ni Operating Costs Operating cost estimates are presented in Table 3-4. Table 3-4: Operating Cost Estimate Average Annual USD M USD/lb Ni Mining Labour Sulphuric Acid Processing Utilities Maintenance G&A Marketing Indirects Total Operating Costs before by-products Cobalt by-product Credits 17.3 {0.45} Power by-product Credits 19.6 {0.51} Total Operating Costs after by-products Report No R-Rev1 4

19 3.2.3 Sensitivity Analysis Sensitivity analysis also shows that the project is robust to changes in economic modelling assumptions. The analysis has identified that the project is most sensitive to factors which impact on Revenue (nickel price, feed grade and recovery) followed by capital costs. The project is least sensitive to operating cost estimates. The relative sensitivity of the project to revenue, capital and operating cost estimates is illustrated in the sensitivity chart below. Figure 3-1: Sensitivity Analysis The sensitivity analysis undertaken on the financial model has identified revenue assumptions as the highest risk factor in the financial performance of the Agata Project. A summary of risks identified and strategy to mitigate risk is provided in Table 3-5 Table 3-5: Risk Assessment and Mitigation Revenue Risk Factor Commodity Price Exchange Rate Feed grade Recovery Royalties Capital Cost Exchange Rate Design Mitigant Robust project with significant operating margin Operating costs and Revenue denominated in USD self hedging Undertake additional drilling and resource modelling Mine Scheduling Ore pre-treatment Further metallurgical test work to confirm assumptions Trade-off analysis of acid consumption vs recovery Negotiate agreements with Federal, State & local jurisdictions Hedging of currency at time of purchase Undertake pre-feasibility and feasibility study Report No R-Rev1 5

20 Contingency Risk Factor Operating Cost Sulphuric Acid Price Sulphuric Acid consumption Power Price Labour costs Taxes & compensation Permitting & Approvals Mining Permit Land Access Mitigant Maintain a high level of contingency Installation of a sulphur/pyrite burning sulphuric acid plant which can use multiple sources of sulphur including Mindoro s own pyrite sourced from the Pan de Azucar Project Undertake further metallurgical studies and pilot plant testing Negotiation HoA for power off-take agreement Increased level of detail in manpower requirements and labour costs Negotiate agreements with Federal, State and local jurisdictions Company to continue with permitting and land access applications Golder recommend that the financial model is updated regularly as amended parameters and data comes to hand during the Pre-Feasibility Study. 3.3 Mining Operations Mining Schedule A preliminary mining and plant feed schedule referred to in this PEA as the mining inventory was developed for the first 15 years of operations. The mining inventory input to the mine production schedule (Table 3-6) is a subset of the Mineral Resource from the September 2010 NI estimate. The Mineral Resource was categorised into six material types according to iron grade in the limonite zone and magnesium grade in the saprolite zone for preparation of the mining inventory. The mining inventory includes Measured and Indicated Resources and approximately 5% of the mining inventory is Inferred Resources. No Mineral Reserve is estimated. The estimation of a mining inventory for input to a preliminary economic assessment is considered reasonable for a conceptual study. An open pit optimisation (Lerchs Grossman) evaluation was not completed to define the economic open pit limit. The pit shell used to develop the mining inventory was based on the lower the saprolite contact surface generated from available drill hole data. This method is considered reasonable for a conceptual study. An evaluation of economic cut-off grades and open pit limits is recommended as a further study. Table 3-6: Mining Inventory Estimate Mining Inventory Mbcm Mdmt Ni% Co% Fe% Mg% Al% AiO2% Ore Waste Total The pit shell was split into 63 mining panels generally 250 m 250 m in lateral extents. Three mining areas A, B and C were delineated based on geography and grade characterisation. This level of detail is considered adequate for a preliminary schedule for a conceptual study. The mining panels were scheduled in several iterations (over 60 quarterly periods commencing January 2014) and sequenced to generate a plant feed schedule (V9d) that maximised nickel production in the early Report No R-Rev1 6

21 years, but also maximised mineralisation feed to high pressure acid leach, saprolite neutralisation and Atmospheric Leach circuits. The mine production schedule by quarter and area is shown in Figure 3-2. Mining will be carried by open pit method using excavators, articulated dump trucks and ancillary support fleet. The mining schedule was smoothed over quarterly periods with mine production commencing at a rate of bcm per day, peaking in Year 10 at bcm per day. The average mine production rate over 15 years is bcm per day. Figure 3-2: Mine Production Schedule Table 3-7: Plant Feed Summary Item Total Limonite to HPAL Mdmt 9.5 Ni% 0.95 Saprolite (Low Mg) to HPAL Mdmt 4.7 Ni% 1.20 Saprolite (Medium Mg) to Atmospheric Leach Mdmt 6.0 Ni% 1.15 Saprolite (High Mg) to Saprolite Neutralisation Mdmt 5.2 Ni% 1.03 Plant Feed Mdmt 25.4 Ni% 1.06 Co% 0.06 Fe% 24.4 Mg% 11.0 Contained Metal Ni tonnes Co tonnes Recovered Metal Ni tonnes Co tonnes Report No R-Rev1 7

22 The schedule allows for the ramp-up of plant feed throughput over the first 3 years of operation to dmt per annum (Figure 3-3) which is maintained for the duration of the schedule. Plant feed is constrained by a limonite/saprolite ratio of 1:1.67 and a saprolite neutralisation/hpal ratio of Nickel metal production peaks at t per annum in Year 3. Figure 3-3: Plant Feed and Material Type Conclusions The mining inventory representing the estimated mill feed tonnage and quality includes Indicated and Inferred Resources. Approximately 5% of the mining inventory is classified as an Inferred Resource. No Measured Resource is currently reported in this PEA or previous Technical Reports documenting the Mineral Resource estimate. No Mineral Reserve estimate is reported in this PEA prepared as a conceptual level study. Mindoro has committed to proceeding with a PFS. The mineral inventory and scheduling are reasonable for the level of study. The equipment sizing used in the planning is appropriate for the size and style of operation and mining selectivity Recommendations Carry out fleet selection study based on version 9d schedule Carry out marginal cut-off grade study on material type categories based on March 2011 processing and financial models. Develop mining dilution and mineralisation loss criteria for application in future mining studies. Open pit optimisation to be run for future mine planning to improve delineate open pit deposit. Optimise mining and plant feed schedules with consideration to optimise stockpile balancing. Report No R-Rev1 8

23 3.4 Processing and Plant Design Mineral Processing Background A scoping study undertaken in 2010 examined three options for hydrometallurgical processing as follows: Base Case Separate leaching circuits for saprolite and limonite mineralisation followed by solution purification and metal refining. The design total nickel production in this option was 27,400 t/a. Increased Throughput Case (Also identified as Option 1) Similar to the Base Case with a larger throughput to produce 42,000 t/a nickel. Atmospheric Leaching Case (Also identified as Option 2) Saprolite leaching circuit only to produce 14,300 tpa of nickel contained in a mixed hydroxide product (MHP). This PEA includes a review of the 2010 Scoping Study and updated mine schedule and has incorporated changes to the process flowsheet based on metallurgical testwork results from the most recent testwork program. The key design feed and production parameters for the favoured option in the updated study, as adopted for the PEA, are presented in Table 3-8. Table 3-8: Revised Design Parameters for PEA Parameter Design Value for Year 3+ Limonite Mineralisation Feed Throughput tpa Grade Ni% 0.99 Saprolite Feed Co% Fe% 45.4 Mg% 1.06 Total Throughput tpa Low Mg Ore Ni% 1.27 Mg% Medium Mg Ore Ni% 1.22 Mg% High Mg Ore Ni% 1.07 Nickel Production Mg% 19.0 Total MHP Production wt/a dt/a Contained Nickel Production t/a M lb/a Contained Cobalt Production t/a Plant Design Processing Technology In the process plant, limonite mineralisation is treated by conventional high pressure acid leaching (HPAL) and saprolite mineralisation is treated by a parallel atmospheric leach (AL) circuit. The process design for the leach plant will be based largely on the hydrometallurgical route proven at Moa Bay in Cuba for 5 decades and at the Sumitomo/Nickel Asia operated Coral Bay Nickel Project (Coral Bay) in Report No R-Rev1 9

24 the Philippines since The leach flowsheet incorporates high pressure acid leaching and countercurrent decantation. Limonite and low magnesium saprolite mineralisation will be treated by conventional HPAL and medium magnesium saprolite mineralisation will be treated by a parallel atmospheric leach (AL) circuit. The PEA design throughput has been based on 1 Mtpa of mineralisation feed to HPAL (resulting in a HPAL circuit smaller in scale than that employed at Coral Bay). This was chosen because both autoclave trains at Coral Bay had very fast ramp-ups to full production. Autoclave throughput is based on 31% solids in the autoclave feed slurry (after direct steam heating). Additionally, the recent start of construction at the Taganito Nickel Project (a sister company of Coral Bay Nickel Company (CBNC)) in the Surigao District, also employing the HPAL process, is considered to be a major step towards launching the region into the ranks of globally important nickel laterite processing zones. A parallel atmospheric leaching circuit will treat about 38% of the saprolite mineralisation fed to the process. Atmospheric acid leaching is well established technology practised in many industries over several decades. Atmospheric Leaching of nickel laterites has gained recognition recently as an alternative to the high capital cost HPAL route, and was operated in parallel to the HPAL circuit at Ravensthorpe. The process is currently being investigated by Weda Bay Nickel (Eramet) in Indonesia, Berong Mining in the Philippines and BHP Billiton nickel projects to treat their high grade saprolitic material. An innovation in the proposed processing route will be the inclusion of saprolite neutralisation. This will involve pre-neutralisation of the residual free acid in the combined leach discharge streams using high magnesium saprolite ore. This process, performed at atmospheric pressure, will consume much of the free acid while recovering additional nickel and cobalt values from the saprolite ore. Neutralisation of the remaining acid will be achieved using limestone. The concept of saprolite neutralisation was first investigated for laterite ores from the Surigao district in testwork conducted in Recovery of 60 65% of the nickel and cobalt contained in the high magnesium saprolite mineralisation was achieved. In recent years much higher recoveries have been achieved in testwork for the Weda Bay (Indonesia), Sulawesi (Indonesia) and Mindoro (Philippines) nickel projects. Bench-scale testwork at SGS using Agata saprolite has demonstrated that recoveries of 83-89% are achievable. Higher recoveries may be possible and ongoing testwork on the Agata mineralisation may improve upon the PEA assumptions. After saprolite neutralisation, the pregnant solution will be recovered by conventional counter-current decantation (CCD), followed by limestone neutralisation of excess acid and precipitation of iron, aluminium and chromium, prior to metal recovery by mixed hydroxide product or precipitation (MHP). Metal recovery will be by a two-stage MHP circuit similar to that operated for several years at the Cawse Nickel Project (Western Australia) and more recently at Ravensthorpe Nickel Operation (Western Australia) Process Preparation The treatment plant includes separate circuits to treat limonite and saprolite ores. The limonite preparation circuit produces fully de-agglomerated limonite slurry for high pressure acid leaching (HPAL) and the saprolite circuit produces three types of ground saprolite slurry for HPAL, atmospheric leaching (AL) and saprolite neutralisation (SN). The limonite treatment plant comprises the following principal operations: primary crushing to <200 mm by roll sizer limonite de-agglomeration by wet rotary drum scrubbing and rejection of the coarse oversize fraction (>10 mm) by screening single stage, closed circuit ball milling to produce a ground limonite slurry HPAL feed slurry thickening. The saprolite treatment plant consists of the following principal operations: Report No R-Rev1 10

25 primary crushing to <200 mm by roll sizer single stage, closed circuit saprolite semi-autogenous grinding (SAG) milling to produce ground saprolite slurry storage tanks for three types of ground saprolite slurry: low magnesium saprolite, medium magnesium saprolite and high magnesium saprolite thickening of the medium magnesium saprolite and high magnesium saprolite slurries for delivery to atmospheric leaching and saprolite neutralisation Leach Plant HPAL feed is comprised of limonite and low magnesium saprolite slurries, which are combined in the required proportions in the HPAL feed thickener. The HPAL plant includes feed slurry heating, leaching of nickel and cobalt from limonite at high temperature (255 C) and pressure (4425 kpag), and autoclave discharge slurry pressure letdown. Atmospheric leach feed is comprised of medium magnesium saprolite slurry. In the atmospheric leach circuit nickel and cobalt are leached from saprolite at atmospheric conditions ( C and ambient pressure). Sulphuric acid is used as the lixiviant for both HPAL and atmospheric leaching. A recycle leach circuit utilises a small stream of sulphuric acid to re-dissolve nickel and cobalt precipitated in the downstream iron/aluminium removal and second stage MHP circuits. Discharge slurries from the HPAL, atmospheric leach and recycle leach circuits are combined and forwarded to the saprolite neutralisation circuit where the neutralising capacity of the high magnesium saprolite consumes some of the excess free acid. Additional nickel and cobalt are leached from high magnesium saprolite during this process. The resultant slurry flows to the CCD circuit, to separate and wash soluble nickel and cobalt from the leach residue solids. The recovered pregnant liquor is forwarded to two stages of iron/aluminium removal. In the first stage of iron/aluminium removal the majority of the remaining free acid in solution is neutralised with limestone slurry and most of the iron and some of the aluminium are precipitated. In the second stage of iron/aluminium removal the remaining iron and aluminium are precipitated. The pregnant liquor is separated from the precipitated solids by thickening prior to transfer to the MHP area. The thickener underflow slurry is directed to the recycle leach circuit for recovery of co-precipitated nickel and cobalt. The barren leach residue solids from the final stage of counter current decantation (CCD) washing along with barren solution from the MHP circuit report to final neutralisation circuit where most of the remaining metals in solution are precipitated. Treated residue is pumped to the residue storage facility (RSF) Products Section Nickel and cobalt are recovered as a mixed hydroxide precipitate (MHP). The virtually iron/aluminium-free pregnant leach solution (PLS) is forwarded to the first stage MHP reactors to precipitate the nickel and cobalt from the solution by the addition of magnesia slurry. The resulting precipitate contained in the slurry is thickened and forwarded to wash filtration where the precipitate is filtered for further dewatering and washed with demineralised water to displace the chlorides and other sea salts entrained with the precipitates. The filter cake is then repulped with demineralised water and filtered in a pressure filter to achieve the required product moisture specification. The MHP product is packaged in 2 t bulk bags and containerised for shipment and sale. The un-precipitated nickel and cobalt values remaining in solution after first stage MHP are recovered by lime precipitation in the second stage MHP reactors. The resulting precipitate is thickened and recycled back to the recycle leach area to re-dissolve the nickel and cobalt. Report No R-Rev1 11

26 Major Process Packages Major process packages include a sulphur-burning acid plant, a limestone slurrying plant, a lime kiln and lime slaking plant, a magnesia slurrying plant and a RSF. The sulphuric acid plant provides sulphuric acid for the leaching circuit and other process consumers, and high pressure steam for power generation. The acid plant products are up to 2700 t/d of 98.5% sulphuric acid and up to 152 t/h of steam. The limestone plant provides limestone in slurry form for neutralisation of acidic process liquors and crushed limestone for burnt lime production. The limestone plant consists of crushing and slurrying facilities. The lime plant provides lime in the form of milk-of-lime slurry for neutralisation of acidic process liquors and precipitation of nickel and cobalt in the second stage MHP circuit. The plant consists of a fuel-oil fired limestone calciner and lime slaking facilities. The magnesia slurrying plant provides magnesia slurry for the precipitation nickel and cobalt as mixed hydroxides in the first stage MHP circuit. The RSF area includes transport and storage facilities for process residue slurry. The impoundment area consists of a walled coastal valley located a short distance from the mine area. The neutralised tailings are pumped via a slurry pipeline to the RSF. 3.5 Infrastructure The provision of infrastructure is a significant part of the overall development of the project due to the greenfield nature of the proposed site. Existing infrastructure facilities are virtually non-existent in the immediate area of the proposed site except for an existing gravel public road and the exploration camp facilities. The facilities will be located predominantly in a coastal valley west of the mine site, as the topography is relatively flat compared to the steeper inland terrain. The infrastructure facilities to be provided for the project include: water supply and treatment power station and power reticulation port bulk materials handling fuel tank farm solid and liquid waste management plant control system plant site and service buildings and ancillary facilities accommodation village and facilities communications mobile equipment roads, and security services. Report No R-Rev1 12

27 3.5.1 Residue Management Golder has developed quantities for the following residue management approach: Management of residue generated in the first seven years in a valley RSF. Management of the remaining eight years of residue in the pit void, with the perimeter embankment raised as required to provide sufficient capacity. The cost for residue management has been based on unit rates adopted by Golder after a review of available information relating to similar projects in the Philippines. The sources of information include: Unit rates from our internal database, based on Contractor rates provided by our Manila office Unit rates estimated by Golder for a similar project Unit rates estimated by Ausenco Vector, provided by Mindoro Experience-based judgement from Golder personnel who have recently worked on Philippines-based projects. The unit rates adopted for this cost estimate are presented in the table below. Table 3-9: Unit Rates Estimated Item Unit Rate Clear and Grub USD0.50 per m 2 Liner System, including delivery and placement USD10.00 per m 2 Embankment Bulk Fill* USD10.00 per m 3 Liner Bedding Material USD12.50 per m 3 Excavation of Diversion Channel USD4.30 per m 3 * Including winning, hauling, placement, moisture conditioning and compaction Adopting these unit rates, the estimated costs are as follows: Capital Cost of Valley RSF = ~USD120 M This cost will be spent in Year 0 and the RSF provides residue management capacity for seven years or approximately 12.6 Mm 3. Deferred Capital Cost of In-pit RSF = ~USD133 M This cost will be spent in Years 6 and 7, ready for deposition in Year 8, and the RSF provides residue management capacity for an additional eight years or approximately ~14.4 Mm 3. Please note that the accuracy of the cost estimates presented in this PEA is about ±35%. A contingency amount of 40% would therefore typically be included at this level of study. The contingency has not been included in our cost estimate, as Mindoro has applied a contingency to the total capital cost estimate in the PEA. Our review of the Scoping Study indicates that the assumptions and approach appear to be reasonable, with the exception of selection of an above-ground RSF. Based on the survey provided, a suitable site for an above-ground RSF was not considered feasible within the extent of the survey provided. However, a valley RSF location was identified and costed to provide a comparison price. Based on our desktop study, it is recommended that a cost of USD120 M be adopted as the capital cost for residue management for the PEA. A further USD133 M should be allowed as deferred capital, to be spent during Years 6 and 7. Report No R-Rev1 13

28 3.5.2 Port Facilities The port will incorporate the following wharf facilities: the main berth accommodating: DWT liquid tankers for acid, heavy fuel oil and diesel fuel, DWT bulk cargo ships for sulphur and product despatch, and DWT barges a pipeline corridor and pumps for unloading liquid materials (diesel fuel, heavy fuel oil and acid) from the ships to storage tanks a 100 tonne crawler crane for loading and unloading containers admin office and warehouse. A heavy lift ramp is provided for unloading autoclaves and other heavy modules during construction. This ramp will be designed such that it can be utilised as a permanent facility for accessing heavy loads for construction for future expansion and/or for operations. 3.6 Utilities Water The scoping studies (Boyd Willis Hydromet Consulting, 2010 & Mindoro Resources, 2011), indicated that the main water requirements during the construction phase of the project and during mine operations and mine processing would be: Raw water for dust suppression and wash down Seawater for mineralisation slurrying Filtered raw water for general process plant use Raw and potable water for domestic use, and Demineralised water for steam generation and processing. The water requirements were estimated based on the process water balance and typical water demands. The estimated total daily water consumption for the Agata Nickel Project is summarised in Table Table 3-10: Estimated Daily Water Requirements Description Water usage (kl/d) Total Raw Water Filtered Water Demineralised Water Potable Water 100 Seawater The potential water sources include: Direct water abstraction and treatment of water from the Kalinawan River (referred to as the Tubay River in the scoping studies) Groundwater wells established in the alluvial aquifer of the Kalinawan Valley Groundwater wells established in fractured rock aquifers, and Direct abstraction and treatment of seawater with the intake situated in the port area. Report No R-Rev1 14

29 For the purposes of this study, we assumed that raw water will be sourced by means of direct abstraction of water from the Kalinawan River. The conceptual design for the water supply and major distribution system for this project has been divided into the following elements: Raw Water Pump station intake works at the Kalinawan River Pumping station at the Kalinawan River Pipeline from pumping station to raw water storage pond Raw water storage pond. Sea Water Pump station intake works at the proposed port site Pumping station at the proposed port site Pipeline from pumping station to seawater storage pond Seawater storage pond. The approximate capital cost associated with the water supply is about USD12.5 M (±50%) and includes supply and installation of the pump station intake works, pump station, pipeline and water storage facilities. It excludes power supply and reticulation as this has already been accounted for. Water Treatment The proposed raw water treatment system will produce three standards of quality: Filtered raw water for process and general plant use Potable water for human consumption and ablutions, and Demineralised water for boiler feed water and other process water requirements. A small water treatment plant will be required to supply potable water to meet the desirable drinking water standards recommended by the World Health Organisation (WHO) and national Department of Environment and Natural Resources (DENR) standards. The potable treatment system may include: Filtering to remove suspended solids Ultraviolet (UV) treatment to purify and disinfect the water from microbiological contaminants, and Chemical treatment such as chlorination to meet health requirements. Water treatment may also be required for the disposal of water to comply with the World Bank/International Finance Corporation (IFC) guidelines for marine discharge. A preliminary analysis of the water quality in the discharge liquor showed that the discharge water might be acceptable for discharge in the ocean (Boyd Willis Hydromet Consulting, 2010). For the purpose of the study, we assumed treatment would comprise only clarifiers before discharge into the ocean. The estimated costs associated with water treatment are: USD20 M for the filtered water, reverse osmosis (RO) plant required for demineralised water and potable water treatment plant (±100%), and USD9 M for the clarifier treatment of water prior to disposal into the ocean (±50%). Report No R-Rev1 15

30 3.6.2 Power The power station uses steam generators to provide electrical power for the operation of the process plant, services and utilities, as well as for the accommodation village and all other related infrastructure. High pressure steam is produced from two sources. The major source of high pressure steam is from waste heat boilers in the sulphuric acid plant. The secondary source of high pressure steam is from auxiliary boilers that will produce supplementary steam into the same header for the high pressure steam distribution system. The power station is designed to satisfy two main operating scenarios: generation of 30.9 MW of power, including 16.8 MW of power for normal plant operations, with 124 t/h of HP steam imported from the sulphuric acid plant provision of 7.8 MW of power and 16.3 t/h of process steam, to maintain leach plant operation, critical equipment in other areas, and the accommodation village during acid plant outages. The plant configuration comprises two 16 MW condensing steam turbine generators and two 25 t/h package boilers. The two boilers provide significant flexibility to meet varied steam demands. The selection of condensing turbines allows low pressure steam to be extracted for process use. In addition, for emergency conditions and the black start of the power station, there are two diesel powered generators located within the power station complex. These ex-construction generators will be of sufficient capacity for their intended long-term function. 3.7 Hydrogeology and Water Management Hydrogeology The Agata Project is located in a mountainous region with several creeks draining towards the Mindanao Sea on the western side and towards the Kalinawan Valley on the eastern side. The Kalinawan River is situated about 1 km east of the proposed mine area and flows in a southerly direction. Tumanda et al. (2004) report that the average discharge of the Kalinawan River is about 2 M m 3 /day (2000 ML/d) and more than adequate to meet project water requirements. The water quality of this river is very good (Coffey, 2008) with Total Suspended Solids (TSS) concentrations of about 2 mg/l and Total Dissolved Solids (TDS) concentrations of about 70 mg/l. Nutrient levels are low ranging between 0.2 to 1.2 mg/l nitrate. Lake Mainit is a large freshwater lake situated approximately 4 km north of the proposed mine area. The water quality of this lake is very good (Coffey, 2008) with TDS concentrations of about 80 mg/l and low nutrient concentrations. The groundwater potential in the mining region and port is probably poor. The geology is complex and the mine area is bound between two major strands of the Philippine Fault with one or more splays passing through the region. There are at least six different lithologies, each likely to have different aquifer characteristics. In the mining region, the laterites are developed over ultramafic rocks which lie along the Western Range. Groundwater is probably associated with fractured rock aquifers. These aquifers may have the potential to meet potable water supply but would probably not be sufficient for process water requirements Water Management Water associated with any aspect of the mining operation will be managed so that it would not have any detrimental impact on the environment and on mining operations. The water management plan would comprise: Sediment control structures required to capture any sediment-laden runoff from mine affected areas. This will avoid the release of suspended solids into the environment. The proposed sediment control Report No R-Rev1 16

31 structures would comprise earth embankment facilities to capture and store sediment-laden runoff and the release of clear water to the environment. Drains to divert non-impacted runoff from entering the mine workings; and Installation of buffer storage, pumping facilities and pipelines to ensure the site can cope with large rainfall events and subsequent flooding of the mine pits. The mine water management plan will also comprise drains to avoid downstream contamination of rivers, creeks and streams, provide facilities for the storage and disposal of low quality water and manage surface runoff from the process plant and other mine facilities. For the purposes of this study, we assumed that water management would include the following works: Sediment control structures Diversion channels and drains Flood protection earthworks Stormwater drainage systems, and In-pit pumps and pipeline. For the purposes of this PEA, it was assumed that the flood protection earthworks would form part of the mining operations and the stormwater drainage system would form part of the process plant infrastructure requirements. The estimated costs for the sediment control structures and diversion channels and drains is USD20 to 40 M. 3.8 Environment and Social Environment To date Mindoro has met environmental assessment requirements appropriately. Mindoro has also received two key environmental permits to operate. Mindoro now needs to focus on gaining the remaining environmental permits and ensuring all environmental permits apply to the new mine plan. Mindoro also should consider updating environmental information and establishing structured environmental management systems and documentation, as they are important components of meeting permitting requirements. Mindoro has undertaken baseline studies and impact assessments covering all relevant environmental aspects, however these studies were undertaken prior to development of the new 2010 mine plan. Golder reviewed summary information in the environmental impact statement (EIS) (Technotrix Consultancy Services Inc and Mediatrix Business Consultancy 2007) and concludes that studies were appropriate and reasonable Community Engagement Mindoro has demonstrated a comprehensive approach to community consultation and socio-economic impact studies to date as they have related to exploration activities. The existence of current relationships will only assist with the effectiveness of future programming as the project progresses towards feasibility studies and potential operations. The aim of the program appears well aligned to international standards for good practice engagement but no comment can be made on effectiveness until the program is implemented. Report No R-Rev1 17

32 3.8.3 Occupational Health and Safety Mindoro has recognised the importance of environment health and safety (EHS) at a corporate level and now needs to develop an EHS system on site as a matter of priority during all phases of project development. Mindoro is committed to EHS and oversees corporate actions through its corporate board EHS committee. In developing the Agata Nickel Project, Mindoro has identified the need to adhere to both local and international legislation and guidelines such as: World Bank Group Environmental, Health and Safety Standards for Mining including IFC Performance Standards Labour Code of the Philippines including occupational safety and health standards for all mining activities Sanitation Code of the Philippines. In addressing EHS requirements, Mindoro has committed to preparing a Health, Safety, Environment and Community Policy (HSEC) document jointly with the IFC. 3.9 Conclusions and Recommendations Geological Setting Conclusions Mindoro has a good understanding of geology and geomorphology controls on nickel mineralisation in the Agata region. The extent of the laterite, hence nickel mineralisation, is well defined by surface and outcrop mapping by Mindoro. The following items pose potential technical risks to the project: Transition material transition material may occur at the limonite and saprolite contact. In this style of deposit, it may occur over very short distances and thicknesses. Transition material will generally have poorer metallurgical properties than either pure limonite or saprolite. Variable and irregular contacts laterite deposits such as at AGATA DEPOSIT can be variable over short distances. Evidence from costean mapping indicates the potential for a high degree of variation in the limonite and saprolite surface, which may have an impact on mining technique, mining rates, mineralisation selectivity, and process recovery. Presence of boulders in similar deposits elsewhere in the region, poorly weathered boulders have a significant impact on recovery of saprolite ore. Definition of saprock Mindoro define saprock as less intensely weathered saprolite typically with lower nickel grade. In reality, the identification of saprock is by 0.4% Ni grade cut-off. This approach is consistent with industry norms. The nature of this transition from saprolite to saprock results in a highly irregular surface, which may have an impact on mining, mineralisation selectivity, and resource recovery Recommendations Metallurgical test work programs should attempt to identify preferred process streams for transition material. This might include defining parameters such as magnesium and/or iron cut-off grades for each process stream. The nature of contacts between limonite, saprolite, and saprock requires greater understanding. Feasibility programs should attempt to characterise the very short-scale (mining scale) irregularity through one or more of the following: Report No R-Rev1 18

33 Close-spaced (5 5 m) drilling programs Long (>20 m) and deep (~5 m) trenches in several orientations Geophysical surveys such as ground penetrating radar (GPR) Small-scale (~50 50m) trial mine The presence, frequency, and extent of boulders in the saprolite horizon also require better definitions. Another component of the feasibility study might include conditional simulation studies to assess potential mineralisation loss and dilution due to boulders and irregular contacts Drilling Conclusions Drilling techniques are industry standard and Golder considers them appropriate for nickel laterite deposits. Core recovery is good and procedures for recording depth and hole location are industry standard Sampling Method and Approach Conclusions Drilling, drill sampling and logging procedures are well documented and industry standard. Golder considers them to be appropriate for nickel laterite deposits. Mindoro also has QAQC systems in place that indicate good quality sampling and assaying. Regular independent verification and audits confirm good compliance with procedures and continuous improvement to methods and protocols. It is Golder s opinion that there are insufficient density measurements to qualify any part of the resource as Measured. Based on our experience, the dry bulk density values for limonite may be too high given the high moisture content and may impact on tonnages reported for Mineral Resources. Similarly, the preferential selection of competent core in saprolite may cause an over statement of saprolite density. However, it does not appear that Mindoro allows any density variation for boulders, which will be higher density than weathered saprolite Recommendations Mindoro should maintain the high standard sampling and QAQC protocols and systems currently in place for all future drilling and assaying programs. Golder recommends increasing the coverage of bulk density sampling. Sample sizes should be as large as practically possible. If Mindoro dig any pits similar to previous density sampling programs, consider measuring volume and weight of the total material from the pit. Mindoro may wish to investigate alternative density measurement methods such as downhole geophysical methods Sample Preparation and Security Conclusions Drilling, drill sampling and logging procedures are well documented and industry standard. Golder considers them as appropriate for nickel laterite deposits. Mindoro also has QAQC systems in place that indicate good quality sampling and assaying. Regular independent verification and audits confirm good compliance with procedures and continuous improvement to methods and protocols. Report No R-Rev1 19

34 Recommendations Mindoro should maintain the high standard sampling and QAQC protocols and systems currently in place for all future drilling and assaying programs. Mindoro should consider developing a suite of matrix-matched standard reference samples from AGATA DEPOSIT sample reject material to monitor the quality of future drilling and assaying programs Data Verification Conclusions Golder has not undertaken any independent data verification Mineral Resource and Mineral Reserve Estimates Conclusions The approach taken to build the geology is standard industry practice. It balances and validates subjective geological logging of drill samples with geochemistry to determine the position of lithology contacts. More than 10% of the modelled saprolite domain is consisted of boulder. This may present mining recovery and metallurgical recovery issues. The search parameters used for estimation are reasonable. The basis for the resource classification used by QG with classes defined by drill spacing is considered by Golder to be reasonable. Further drilling density assessment will be beneficial to the project progression. No Mineral Reserves are estimated in this PEA Recommendations Golder recommends further investigation about the nature of the limonite/saprolite contact. Priority 1 Occurrences of boulder and their associated grades in the saprolite modelled area needs to be further investigated and characterised. Golder believes that presence of boulder within the saprolite layer will present mining recovery and metallurgical recovery issues. Boulder has presently been mixed with saprolite in the current model and there is no indication of amount or grade of such material. It is recommended that conditional simulation studies be carried out. The simulation studies should include the simulation of the likelihood of intersecting boulder runs of various lengths within the saprolite. This will help characterise the risk of recovering saprolite for both mining and metallurgical purposes. Priority 2 Investigate the possibility of separating LF, LA and LB horizons for domaining purposes. Golder notes a lack of use of high grade cutting or high grade restraining. It is recommended that an assessment of high grade outliers be carried out prior to interpolation for the PFS. Investigate possibility of modelling variograms using unfolding techniques. Use variogram maps and directional variography to identify and model orientations of continuity. The 3D integrity of the variogram models need to be assessed to determine whether the models provide a satisfactory fit in other directions. Perform assessment of the smoothing effect associated with the current block model. Report No R-Rev1 20

35 Perform drilling grid analysis to better guide the PFS and DFS studies. Assessment of the uncertainty inherent in the geological model needs to be investigated. Priority 3 Investigate possibility of using m block size to better align with current drill spacing Metallurgy Conclusions Two metallurgical testwork programs have been conducted on mineralisation samples from the Agata deposit. The most recent program of work conducted at SGS Lakefield in Perth has shown that: Limonite mineralisation is amenable to processing by HPAL and has fast leaching kinetics with approximately 97-99% of the nickel extracted within 20 minutes of leaching time. Saprolite mineralisation is amenable to AL with favourable extractions of over 95% Ni in four hours. Other metallurgical characteristics are considered to be typical of tropical nickel-cobalt laterite mineralisation deposits. Further detailed programs of metallurgical testwork including locked cycle and continuous testing, as well as variability testing, should be undertaken in the next phase of testwork Recommendations Metallurgical testwork undertaken to date has been of a scoping nature. More detailed programs of work are required as part of the Feasibility Studies planned for the project. The work should include: Additional bench scale testwork on representative composite samples based on the mine schedule. Comprehensive leach variability testwork using samples from a range spatial pit locations, mineralisation types and grades throughout the deposit. This should include both HPAL and AL testing for the relevant mineralisation types, as well as slurry characterisation. Further evaluation for upgrading of limonite by large scale scrubbing tests and continuous scrubbing piloting. Continuous testwork and piloting of the total proposed circuit with recycling of intermediate streams. It is important that blending of composite samples for piloting reflects the amount of each mineralisation type in the deposit, including the three classifications of saprolite Residue Tailings Management Recommendations Our review of the Scoping Study indicates that the assumptions and approach appear to be reasonable, with the exception of selection of an above-ground RSF. Based on the survey provided, a suitable site for an above-ground RSF was not considered feasible within the extent of the survey provided. However, a valley RSF location was identified and costed to provide a comparison price. Based on our desktop study, it is recommended that an operating cost of USD10.49 per dry tonne of tailings, inclusive of a 25% contingency, be adopted for the PEA. Assuming a 15 year mine life at 1.6 Mtpa, plus a 12.5% contingency, the estimated cost for residue management is estimated to be USD284 M. The capital cost of the residue management is USD253 M excluding the 12.5% contingency summarised above. Mindoro is applying a global 30% contingency on all capital costs. Report No R-Rev1 21

36 3.17 Environment Recommendations Golder considers Mindoro s environmental actions should focus on obtaining outstanding environmental permits. Key factors are likely to be upgrading site environmental information and corporate environmental management systems. Golder recommends: Permitting and Approvals Reviewing the Philippine permitting and approvals process with respect to the new mine plan. Reviewing the existing environmental information against the applicable World Bank standards and identify gaps. Developing an environmental assessment program to address knowledge gaps in meeting both local and international environmental requirements. Undertaking the necessary assessments and updating environmental approval documentation accordingly. Environmental Management Completing an EMP for exploration activities that will provide the basis for a construction and subsequently operations EMP. Establishing an EMS that is upgraded as the project ramps up. The EMS need not be complex at this stage of project development but should refer to all relevant environmental management aspects Community Engagement Recommendations Golder recommends that more emphasis be placed on communicating the negative impacts of an operating mine, and associated environmental and social issues, particularly where those environmental impacts will directly affect current livelihoods and lifestyles. Achieving Free, Prior and Informed Consultation(s) (FPIC) for operations will require evidence that indigenous people understand the potential negative impacts as well as potential benefits of the entire project. This means involving stakeholders in information about the detailed design, operations and environmental impacts as a matter of course. Golder understands there is a particular challenge in the Philippines to reach vulnerable or less powerful groups, where community leaders and more privileged persons can sometimes dominate the attention of proponents. Environmental and social impact assessment should also seek and incorporate community feedback as part of the assessment and mitigation process. The key element of this process will be providing feedback to stakeholders who have been consulted and responding to their concerns in a detailed and effective way. Golder emphasises the limitations of this assessment as a preliminary desktop assessment and strongly recommends a comprehensive audit be conducted to accurately assess and characterise Mindoro s social performance to IFC standard. The scope for such an audit would include field assessments, interviews and a thorough analysis of documentation and reporting Occupational Health and Safety Recommendations We recommend a staged approach to the establishment of an EHS system that can be reviewed, updated and expanded as the project develops. The following core elements should be developed and implemented to assist in the management of key EHS risks for the project: Report No R-Rev1 22

37 Health and Safety Policy Fitness for Work Policy, including travel medicine and malaria risk Site Access and Control Procedures, including site induction, security and travel arrangements Hazard and Risk Management Procedure Incident Reporting and Investigation Procedure Site Health and Safety Plan Emergency Management Plan. These EHS components could be developed as standalone documents and form the basis of an EHS system. We recommend a project hazard workshop be held to inform and develop the scope of the EHS system and to ensure that the key risks are captured and systems are developed to manage them. Report No R-Rev1 23

38 4.0 INTRODUCTION Mindoro proposes to develop the Agata Nickel Project. The nickel laterite mineralisation will be mined by conventional strip mining and hauled to the plant at the coast. The process design is a combination of high pressure acid leach (HPAL), agitated tank atmospheric leach (AL) and saprolite neutralisation (SN) processing, producing a mixed hydroxide product (MHP). This PEA report identifies recommendations for development of the project to undertake a PFS. Mindoro has begun activities including metallurgical test work and resource exploration to support the PFS. 4.1 Previous Studies Summary The following Technical Reports were provided by Mindoro: Agata Resource Report, (Mark Gifford and QG, September 2010). Agata Nickel Project Scoping Study (Boyd Willis, September 2010) Additional acid leach metallurgy and impact on costs and feed proportions (limonite/saprolite, etc) prepared by Boyd Willis DSO Scoping Study (Peter Geddes) internal Mindoro report Mine and processing schedules based on preliminary modelling (Dallas Cox and Boyd Willis) Economic modelling of preferred project plan (Michael Conan-Davies). All references to dollars in this report are in United States Dollars (USD or US$) Resource Estimation The Agata Nickel Project has estimated combined Measured and Indicated Resource of 32.6 Mt at 1.04% Ni, and an Inferred Resource of 1.7 Mt at 1.04% Ni for a combined t of nickel, as reported in Mindoro s NI compliant Mineral Resource estimate of 8 September 2010, using a cut-off grade of 0.5% Ni for limonite and 0.8% Ni for saprolite. The summary of the NI compliant Mineral Resource is presented in Table Total metal contents in the reported resources represent metal in the ground and have not been adjusted for metallurgical recoveries and other factors which will be considered in a later study. Mineral Resources which are not Mineral Reserves do not have demonstrated economic viability. The estimate of Mineral Resources may be materially affected by environmental, permitting, legal, title, taxation, socio-political, marketing or other relevant issues Mine Plan A preliminary mining and plant feed schedule was developed for the Agata Nickel Project for the first 15 years of operations based on the September 2010 Mineral Resource (Cox, 2011). The mine plan estimates a mining inventory and schedule for feed to hydro-metallurgical process as contemplated in this PEA Early Production Direct Shipping Operation A conceptual level study into a direct shipping operation (DSO) of higher grade zones within the Agata resource was also considered as part of the PEA. However, due to the relatively low margins and current market uncertainty associated with DSO. Mindoro is not planning to pursue a stand-alone DSO at this stage. Golder will not consider this concept further in this report and it has not been included in the economic evaluation section of this PEA Report. Report No R-Rev1 24

39 Thermal Upgrading Concept Study Mindoro is examining the potential for thermal upgrading to enhance the value of the shipped product. An October 2010 Concept Study by Hatch Associates investigated thermal upgrading options to produce a value-added DSO product. Unprocessed laterite contains 30-45% moisture. Thermal upgrading is the process of removing moisture from the material, improving blending and handling properties and, most importantly, dramatically reducing the shipping cost, which in combination allows achievement of a premium price over DSO. Further upgrade of the nickel content can be achieved through optional process enhancements. Work is ongoing on this concept. Golder has not considered this further and it is not included in the economic section of this PEA report Acid Leaching Options An acid leaching study undertaken for Mindoro by Ausenco Vector (Vector, 2010) and Gifford (2010) for Mindoro evaluated three development options: Base Case a major integrated high pressure acid leach (HPAL), atmospheric leaching (AL) and saprolite neutralisation (SN) process. This option employs an autoclave of 4.7 metres internal diameter (m ID). The nickel will be recovered by direct solvent extraction (DSX) followed by Electrowinning (EW) to produce a Ni-cathode product. The base case is designed to produce tpa nickel as Ni-cathode. Option 1 a scale-up of the base case which employs the maximum HPAL autoclave size to date (5.4 m ID) as per the Ambatovy Nickel autoclaves in Madagascar. The nickel production for this option is increased to tpa nickel as Ni-cathode. Option 2 AL of saprolitic materials only. The nickel will be recovered by hydroxide precipitation producing an intermediate mixed hydroxide precipitate (MHP) product. The design capacity for this option is tpa nickel contained in MHP. The acid leaching study (Vector, 2010) provided this PEA processing options at ±30-35% accuracy and identified the accompanying issues such as environmental and technological risks. The process plant costs for the three options (with the exception of the refinery area for the Base Case and Option 1) were developed from detailed estimates for similar nickel projects and locations. The applicable data were adjusted for flow or equipment capacity and currency movements. The refinery area of the Base Case and Option 1 were costed separately by Canopean Pty Ltd. This PEA for the Agata Project was prepared for Mindoro by Golder in. The study is based on the scoping study (Mindoro, 2010) and additional work undertaken by Mindoro in resource estimation, mining, metallurgy and process design based on a modified base case processing plan producing 18,000 tpa nickel in mixed hydroxide product (MHP). Golder reviewed previous studies and completed scoping level assessment of the requirements for residue management, water, environment, health and safety and Personal Inspection by Qualified Persons Peter Onley, Golder Principal, visited the principal prospects in Agusan del Norte including the Agata Project from 23 May to 28 May 2010 specifically for the purpose of preparing an Independent Geologist s Report dated October 2010 Report Number R-Rev2. Tony Showell, Principal Metallurgist Battery Limits has not visited the Agata Site. Mr Showell has reviewed the metallurgy and process design prepared by Boyd Willis, Process Consultant Hydrometallurgy at Boyd Willis Hydromet Consulting for Mindoro. Mr Willis most recent visit to the Agata nickel laterite exploration sites located in Northern Mindanao, Philippines was in, for the purpose of identifying potential plant, port, infrastructure and tailings deposition sites for the recently commenced PFS. Report No R-Rev1 25

40 5.0 RELIANCE ON OTHER EXPERTS Jon Dugdale, B.Sc.(Hons), MAusIMM President, CEO, and Director of Mindoro Resources Limited is responsible for direction of Agata exploration and development studies. Tony Climie B.Sc.(Hons), P.Geol COO and Exploration Director of Mindoro Resources Limited is responsible for direction of exploration. Sia Khosrowshahi PhD MSc BSc CPG MAusIMM Principal, Golder Associates completed a review of geology and Mineral Resource Estimation. Dallas Cox, BE (Min) MAusIMM Principal Consultant Crystal Sun Consulting is responsible for mine design and planning. Mr Cox s most recent visit to the Agata nickel laterite exploration sites located in Northern Mindanao, Philippines was in April John MacIsaac MBA BE(Mining) MAusIMM Principal Mining Engineer Golder Associates completed a review of mine design and planning. His most recent visit to the Agata and Bolobolo nickel laterite exploration sites from 9 to 12 December Boyd Willis B App Sc (App Chem), MAusIMM Process Consultant Hydrometallurgy at Boyd Willis Hydromet Consulting is responsible for metallurgy and process design. Peter Chapman BEng BCom CPEng MIEAust Associate and Senior Tailings Engineer Golder Associates completed a review of residue management. Jan Vermaak PhD BSc (Hons) Member, International Mine Water Association, Member, International Association of Hydrogeologists, Associate and Senior Hydrogeologist Golder Associates completed a review of hydrogeology and hydrology. Rob Jessop, BSc, MSc, PhD Senior Ecological Scientist Golder Associates completed a review of environment, occupational health and safety and community engagement. Chris de Guingand, Fellow Certified Practicing Accountants (FCPA) Principal, Mineral Commerce Services Pty. Ltd, Melbourne is responsible for market analysis. Michael Conan-Davies BSc.(Hons) MSc.(Min Econ) MAusIMM, Director of MC-D Geo Pty Ltd prepared the economic modelling on behalf of Mindoro Resources Limited. Report No R-Rev1 26

41 6.0 PROPERTY DESCRIPTION AND LOCATION 6.1 Location The Agata Projects are located within the northern part of Agusan del Norte province in northeastern Mindanao, Republic of the Philippines. It lies within the Western Range approximately 10 kilometres south of Lake Mainit (Figure 6-1). The Agata Project falls within the political jurisdiction of the municipalities of Tubay, Santiago and Jabonga. The Agata Project is centred at E, 9 17 N. Figure 6-1: Site location of the Agata Nickel Project 6.2 Land Tenure The Agata Project is secured by MPSA XIII and Exploration Permit EP XIII registered to Minimax and Estrella Bautista respectively. Application has also been made for the Agata Extension EPA- 107-XIII to the south and east of the Agata MPSA. MPSA XIII was approved on 26 May 1999 and has been reduced from 99 to 66 blocks covering an area of 4995 ha. The fourth two-year exploration period on the tenement was granted on 19 June On 20 May 2008, an Environmental Compliance Certificate (ECC) was issued by the DENR to Mindoro for nickel laterite mineral production covering 600 ha within the Agata MPSA Contract area, including both the Northern area of the Agata deposit and Agata South tenements. In February 2005, the Philippine Supreme Court granted 100% foreign ownership of the mineral tenement under the Financial and Technical Assistance Agreement (FTAA). There are no known environmental liabilities other than those imposed by the Philippine Mining Act of Report No R-Rev1 27

42 The Agata-Bautista Exploration Permit EP XIII covers an area of ha. The EP was approved on 2 October 2006 and application was made for the first renewal on 29 September This was granted on 23 June 2010 and will expire on 22 June Mindoro s interests in the tenements are held by way of agreements with the original tenement holders. Mindoro entered into a Memorandum of Understanding (MOA) with Minimax on 19 January 1997 and Minimax assigned all its rights in the MOA to Mindoro on 27 June Under the terms of the MOA Mindoro has earned a 75% interests in the Agata, Tapian Main, and Tapian San Francisco and the Extension Projects (tenements acquired after the finalisation of the MOA) in the Surigao Mineral District. Mindoro has a further option to acquire an additional 25% direct and indirect participating interest. There are no dwellings within the Agata Project deposit area. Most local villages are populated by nonindigenous peoples but there are some indigenous peoples that live in the surrounding areas both within and close by the MPSA (Sitio Coro, EMorgado, La Paz, Santiago, and Tagmamarkay). Report No R-Rev1 28

43 7.0 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY 7.1 Accessibility The Agata Project is located approximately 10 km south of Lake Mainit and 47 km north northwest of Butuan City in Agusan del Norte province, on the island of Mindanao. The site is accessible from either Surigao City or Butuan City via the Pan Philippine Highway which runs parallel to the length of the Agata MPSA, just outside the eastern boundary. A minor road crosses the northern portion of the MPSA area, near the Kalinawan River. Access is gained either by leaving the highway at Bangonay and then along 10 km of partly paved roads to E. Morgado or alternatively by leaving the highway at Santiago and then by 1.5 km of municipal road to La Paz. The latter route requires crossing the Kalinawan River by pump boat to a landing immediately below the project field exploration office. The northern part of the tenement is accessible on foot from E Morgado (approximately 1.5 km). Both Surigao City and Butuan City are major regional centres served by daily jet services from Manila and provide a broad range of services and facilities. 7.2 Topography, Climate and Vegetation The Agata Project is located on the Western Range which runs north northwest parallel to the coast of the Mindanao Sea to the west. The Kalinawan River to the east drains south from Lake Mainit. The western part of the area is rugged with a maximum elevation of 528 m above sea level. The western area has steep slopes and deeply-incised valleys while the floodplain of Kalinawan River to the east is generally flat with an elevation of less than 30 m. Within the project area, the nickel laterite is developed on a broad ridge bounded to the east and west by steep to very steep slopes incised by gullies and ravines. Elevations on the plateau range from 200 to 320 m where nickeliferous laterite is widespread. Climate in the area is wet tropical with no dry season and experiences months with very pronounced rainfall. Climatological Records from 1981 to 2000 show that peak rainfall months are from October to February. The highest mean monthly rainfall is 308 mm during January and the lowest mean monthly rainfall is mm during May while mean annual rainfall is 2027 mm. The plateau on which the laterite is developed was formerly rainforest. Since being logged it is now bracken dominated open grassland with sparse seedlings and saplings of planted species. A few secondary growth trees line the streams along the lower slopes. The floodplain of Kalinawan River is planted with tropical agricultural crops such as rice, corn and bananas. Report No R-Rev1 29

44 8.0 HISTORY The earliest recognised geological work done within the area is mostly from government-related projects including: The Regional Geological Reconnaissance of Northern Agusan reported the presence of gold claims in the region (Teves et al. 1951). Geologists from the former Bureau of Mines and Geosciences Regional Office in Surigao documented the results of regional mapping in the Jagupit Quadrangle. The United Nations Development Program (UNDP, 1982) conducted regional geological mapping at 1: scale and collected stream sediment samples over Northern Agusan. The UNDP report of 1984 described the geological evolution of this region and included a detailed stratigraphic column for the Agusan del Norte region. La Playa Mining Corporation, financed by a German company in the late 1970s, explored within the Agata Project area for chromiferrous laterite developed over weathered ultramafic rocks. There were five (5) test pits dug in the area. In 1987, Minimax conducted reconnaissance and detailed mapping and sampling. Geological mapping at 1:1000 scale was undertaken in the high-grading localities, and an aerial photographic survey was conducted and interpreted. Mindoro established a mining agreement with Minimax in January 1997, and commenced exploration in the same year. Report No R-Rev1 30

45 9.0 GEOLOGICAL SETTING 9.1 Geology The dominant structural feature in the regional is the Philippine Rift Fault, a major regional structure that extends for 1200 km in a north northwesterly direction over the length of the Philippines from southern Mindanao to northern Luzon. The fault is located approximately 200 km west of the Philippine Subduction System which dips west under the Philippines landmass and provides the main source of Tertiary volcanism and copper and gold mineralisation. It is also the key feature in the development of physiography. There is a close spatial and genetic association between epithermal precious metals and porphyry deposits. Typically, mineralisation is associated with Pliocene to Pleistocene igneous intrusions developed along splay structures to the main fault zone. Primary mineral deposits in the region are dominated by structurally controlled epithermal gold and porphyry copper-gold deposits. Tropical weathering of ultramafic rocks in the basement sequence has resulted in the development of lateritic nickel deposits. While Mindoro continues to explore for copper and gold that activity will not be discussed further in this report. The basement sequence comprises Cretaceous greenschist metamorphic rocks overthrust by Cretaceous Pangulanganan Basalts which themselves are overthrust by Humandum Serpentinite, probably during the Cretaceous. Laterite developed on the Humandum Serpentinite forms the major source of the nickel laterite sequence. The Humandum Serpentinite is overlain by Upper Eocene Mabanog Formation limestone and clastic sediments and Oligocene and Miocene volcanic rocks including conglomeratic andesite, pillow basalt and limestones. Intrusive events associated with the volcanism during this period resulted in the emplacement of plutons and stocks that are associated with porphyry copper-gold and precious metal epithermal mineralisation in the region. Geological mapping in the project area showed favourable development of laterite on the plateau where drilling by Mindoro has focused. Where the topography is steeper, the laterite tends to be thinner. Mindoro recognises two geomorphic features influencing laterite formation with consequent nickel enrichment. The eastern part of the mineralisation is developed on an area of moderate relief and laterite is thinner and contains boulders suggesting transport. The western laterite occurs in an area of low relief resulting in a thick, well developed profile with higher grade mineralisation. Report No R-Rev1 31

46 Figure 9-1: Agata Project Area (after Gifford, 2010) Figure 9-2: Agata laterite resource (After Mindoro, 2010) Report No R-Rev1 32

47 Figure 9-3: Local Geology Map of Northern area of the Agata deposit Project Area (from Gifford, 2010) Report No R-Rev1 33

48 Figure 9-4: Northern area of the Agata deposit Laterite Profile (After Mindoro, 2010) Report No R-Rev1 34

49 10.0 DEPOSIT TYPES The Agata Nickel Project is based on a single nickel laterite resource type that is typical of laterites developed on utramafic rocks in a tropical weathering environment. The nearest analogues to Agata are located on the east coast of Surigao del Norte at Taganito, Hinatuan and Nonoc. Other significant Philippine analogues includes the Coral Bay Operation on Palawan Island in the western Philippines operated by Sumitomo Mining & Metal Corporation. Other world class nickel laterite deposits that are analogous to Agata are located in New Caledonia, Indonesia and Papua New Guinea. Report No R-Rev1 35

50 11.0 MINERALISATION Nickel laterite deposits have developed over the ultramafic rocks. The mineralisation extends over about 520 ha within the tenements. The largest of the laterite areas is developed over the central ultramafic body. About 80% of the nickel laterite in the Agata Project has been tested by drilling to date. Nickel laterites are the products of intense chemical weathering of ultramafic rocks. Silica and other elements are leached from the rock resulting in the concentration of iron, nickel, chrome and cobalt from the parent rock into the weathering profile. Laterites form preferentially in stable terrains in the presence of wet tropical climates. Typical laterite is zoned parallel to the weathering surface. The uppermost horizon is classified as ferruginous laterite underlain by the limonitic zone (both are iron rich hematite, goethite, limonite and clay) which is again underlain by saprolite (magnesium rich clays). The interface between the fresh rock and the saprolite zone is classified as saprolitic rock or saprock and is characterised by the presence of garnierite. For the Agata Project drilling program, the horizons are classified according to nickel and iron content as follows: Ferruginous laterite <0.80% Ni, 30% Fe% Limonite 0.80% Ni, 30% Fe% Saprolite 0.80% Ni, <30% Fe% Saprolitic Rock <0.80% Ni, <30% Fe%. Reconnaissance geological mapping originally outlined an area of laterite covering approximately 600 ha. The southern part of the Agata deposit is the subject of Minimax-Mindoro-Delta agreement. Delta carried out a resource delineation program in the southern area in A regional mapping program was then carried out in 2008 to determine the potential nickel laterite areas throughout the tenement. Further potential for nickel laterite mineralisation was recognised on the adjacent Tapian Main, Tapian SF and Mat-I tenements. Report No R-Rev1 36

51 12.0 EXPLORATION La Playa Mining Corporation mapped the Agata area and dug test pits while exploring for chromiferous laterite beginning in La Playa subsequently withdrew as the mineralisation was not considered economic at that time. Minimax Corporation took up the tenements between 1996 and 1999 and Mindoro established a mining agreement with Minimax in January 1997 and began exploration later that year concentrating on the copper and gold potential. Discovery of lateritic nickel mineralisation within the northern part of the Agata deposit occurred in the early 1990s with grades confirmed by the development of test pits in Exploration of the Agata nickel laterite began in 2004 with Taganito Mining Corporation granted the non-exclusive right to assess the nickel laterite potential of the project. Results were encouraging with surface samples collected from an area of about 300 ha within a more extensive area of nickel laterite mineralisation returning assays up to 2.09%, with most of the values exceeding 0.5%. Mindoro signed an MOU with Queensland Nickel Phils. Inc. (QNPH), a subsidiary of BHP Billiton Ltd (BHPB) to allow QPNH to conduct exploration on the property. Reconnaissance drilling began in 2006 initially at a spacing of 200 m by 200 m later infilled to 100 m grid spacing. A total of 660 m were drilled in 35 holes over an area of approximately 80 ha, however, QNPH subsequently withdrew from the joint venture. Regional mapping indicated additional potential for nickel laterite mineralisation on the adjacent Tapian Main, Tapian SF and Mat-I tenements. Reconnaissance auger drilling indicated several areas warranting follow-up drilling to establish potential Mineral Resources. This evaluation drilling formed the basis of the exploration targets for the Regional Exploration Target of 50 to 70 Mt at a grade of 0.9% to 1.2% Ni. Report No R-Rev1 37

52 13.0 DRILLING 13.1 Agata The following information is summarised from Gifford, 2010 and Mindoro, In the northern part of the Agata deposit drilling is concentrated over about eighty (80) percent of the interpreted nickel laterite extent (Figure 13-1). Figure 13-1: Drill hole plan showing Mindoro has carried out exploration drilling on a progressively smaller drill pattern using small mobile open hole NQ coring rigs (Figure 13-2). Recovery from these drill rigs is high, with losses generally occurring due to changes in the hardness of the drilled material causing disruption at the bit face (Figure 13-3). The major mineralisation zone is generally a softer material and losses within the mineralisation zones have been minimal at all stages of the drilling programs. Report No R-Rev1 38

53 Figure 13-2: Core drilling at Agata Project Figure 13-3: Core recovery from Agata Project Table 13-1 provides summary of various drilling campaigns. Report No R-Rev1 39

54 Mindoro surveys all drill hole collars using a Nikon Total Station DTM-332. The survey reference grid is PRS 92 or WGS 84 with local control from five (5) certified National Mapping and Resource Information Authority benchmarks. Topographic baseline is 51 m RL with approximately survey points providing definition for Digital Terrain Models (DTMs). Table 13-1: Summary of drilling campaigns Drilling Campaign No. Holes Purpose BHP Billiton (2006) 35 Regional Mindoro Phase 1 (2007) 100 DSO Mindoro Phase 2 (2007/8) 48 Better define mineralisation and extend Mindoro Phase 3 (2008) 225 Drill out greater part of Northern area of the Agata deposit Mindoro Phase 4 (2010) 147 To achieve greater accuracy on resource estimate Report No R-Rev1 40

55 14.0 SAMPLING METHOD AND APPROACH The following information is summarised from Gifford, 2010 and Mindoro, Drill Sampling The majority of data in the resource database is from core drilling. During drilling Mindoro provide close supervision of contract drillers and diligently record core recovery, core run, laterite horizons, degree of weathering, boulder size, and colour for all sample intervals. On completion of logging, a geologist marks the core for sampling typically at one metre downhole intervals with sample lengths adjusted for changes in lithology and laterite horizon. Minimum sample length is 0.7 m and maximum is two metres. Mindoro has used slightly different sampling techniques for the different programs: Mindoro Phase 1 whole core samples. Mindoro Phase 2 split core samples where technicians crush the core using a pick, mix the crushed product thoroughly, and quarter the sample pile. The technicians then bag two opposite quarters for assaying with the remainder retained. Mindoro Phase 3 and 4 Technicians split the core in half using a spatula or core saw and bag half the core for despatch to the assay laboratory. In all cases, the technicians label all samples and residual material with hole identification, sample number, and sample interval and secure all sample bags firmly. Mindoro have modified sampling methods and QAQC procedures following regular audits and reviews by independent consultants and industry experts. All drilling and sampling is under the close supervision of Mindoro s Exploration Manager Density Determinations Mindoro collected the majority of samples for dry bulk density determination from test pits. Mindoro collected 30 samples from 15 test pits for the ferruginous laterite horizon; 37 samples from 19 pits for limonite; and 17 pit samples from 6 pits for saprolite. In addition, Mindoro also collected and tested 19 core samples from the saprolite zone. On-site bulk density determinations came from large samples ranging in volume from m 3 to 0.08 m 3 collected from twenty test pits distributed around the drilling area. For the bulk samples, Mindoro measured volume, wet weight, and dry weight. For the drill cores, Mindoro selected relatively solid, less compressed portions of mm lengths of core. Drill holes are spatially distributed and samples coated in paraffin wax to preserve the moisture. Mindoro dispatched these samples to McPhar Laboratories who use the water displacement method for density determinations. Moisture content averages from approximately 20 to 25% in saprolite to 30% in limonite. Mindoro report dry bulk density averages of approximately 1.2 and 1.45 t/m 3 for limonite and saprolite respectively. Report No R-Rev1 41

56 15.0 SAMPLE PREPARATION, ANALYSES AND SECURITY 15.1 Analytical Laboratories McPhar Geoservices (Phil) Incorporated (McPhar) has been the primary laboratory for the Agata Project drilling and assaying programs. McPhar are an ISO accredited laboratory based in Manila. McPhar s sample preparation and assay flow sheet follows standard industry methods. McPhar analyse each sample for nickel, cobalt, iron, magnesium, and aluminium by dissolving a 25 g charge with a two acid digest followed by an Atomic Absorption Spectroscopy (AAS) finish. McPhar also analyse silica and some samples for phosphorous using a gravimetric process Sampling and Analytical QAQC Quality Assurance (QA) is the system and set of procedures used to ensure that the sampling and assay results are of high quality. Quality Control (QC) is the data used to prove the results of sampling, sample preparation, and chemical analyses are fit for purpose. At Agata, Mindoro has stringent quality control and assurance programs in place, which include: Check samples Repeats of coarse rejects Repeat assays of pulp rejects Insertion of standard (certified) reference samples (standards) with each batch of samples. Mindoro sourced 12 types of standards from Geostats Pty Ltd of Australia covering a range of nickel grades from 0.11% to 2% Pulp repeat assays by an umpire laboratory, Intertek Phils (Intertek). Independent reports of QAQC results show check samples and assays all correlate well with original results and variations are within acceptable limits (Gifford, 2010). Gifford, 2000 notes for the two standards, which most closely match Agata samples, McPhar and Intertek consistently underestimate iron content by approximately 3% of the certified value. Full details of results are available in Gifford, Report No R-Rev1 42

57 16.0 DATA VERIFICATION 16.1 Independent Review Mindoro has commissioned an independently review of data for NI Resource reporting. Gifford (2010) reports verification and validation of electronic data matched original Mindoro information, assay certificates, and visual inspection of core samples. Gifford also reports independent analyses of 12 field duplicate samples by pre-2010 resource practitioners had excellent correlation against original assay results. Report No R-Rev1 43

58 17.0 ADJACENT PROPERTIES The Surigao peninsula in northeastern Mindanao, where the Agata project is located, is a significant mining district of the Philippines. There are four commercially significant nickel laterite resources, including Taganito, Cagdianao, Hinatuan and Nonocs. There are also other known but undeveloped nickel laterite resources in the area. Nickel laterite has been mapped beyond the immediate boundaries of Mindoro Tenements. These occurrences may be of future interest to Mindoro but are not contemplated or provided for in the current PEA. In addition both Mindoro and other companies have interests in epithermal gold and porphyry copper-gold projects in the area. Report No R-Rev1 44

59 18.0 MINERAL PROCESSING AND METALLURGICAL TESTING 18.1 Introduction The first phase of metallurgical testing of mineralisation from the Agata nickel deposit was performed by metallurgical laboratory and consultants Enlin Stainless Steel Corporation (ESSC) in Golder was advised that the ESSC Manila Laboratory is not a certified laboratory. The ESSC bench scale testwork program included AL, HPAL, saprolite neutralisation, limestone neutralisation, iron removal and MHP. The available reports by ESSC were found to be lacking test details in some areas. A more comprehensive bench scale program was completed by SGS Lakefield Oretest (ISO 9001:2008 Certified) in Perth in 2010/2011. This program included mineralogy, beneficiation (scrubbing), slurry settling, AL, HPAL, saprolite neutralisation and counter current decantation (CCD) settling on composites of different mineralisation types from the deposit, as well as limestone testing Testing at Enlin Stainless Steel Corporation Ore Samples Six mineralisation samples were tested in the ESSC testing program. The head analyses for the six samples are summarised in Table Table 18-1: Mineralisation Sample Head Analyses Sample Ni % Fe % Co % Mg % Mn % Cr % Samples 1 to 4 were clearly limonite as evidenced by high iron grades of 46 to 50% Fe, and low magnesium grades in the range 0.69 to 0.83% Mg. Sample 5 is transitional material and Sample 6 represents high Mg saprolite Sizing Analyses Size analysis was performed on a limonite sample. The results are presented in Table Table 18-2: Limonite Sizing Results Mesh Mass % Ni % Fe % Co % Mg % Mn % Cr % Al % Ca % The results on the limonite sample showed relatively even distribution of nickel across the size range tested, and ESSC concluded that there was little potential for beneficiation. Report No R-Rev1 45

60 Ore Slurry Thickening ESSC conducted a thickening test on an unidentified mineralisation sample and reported that 50% w/w solids was achieved in just three minutes. It was also concluded by ESSC that flocculation was not required. These results are considered to be uncharacteristic of typical nickel laterite ore, but insufficient test data was published by ESSC to permit a review of procedures and calculations Atmospheric Leaching (AL) No detailed results from the AL testwork program were presented by ESSC. The covering report by ESSC indicated that 90% nickel extraction was obtained from saprolite mineralisation at an acid dosage of 900 kg/t HPAL Testing A range of tests were performed by ESSC to investigate the effects of temperature, acid to ratio, and residence time, on the performance in HPAL. Representative HPAL test results are summarised Table Table 18-3: Selected HPAL Test Results Temp C Duration mins Acid:Ore kg/t Extraction % Ni Fe Co Reported HPAL discharge solution assays are presented in Table Table 18-4: HPAL Discharge Solution Assays Sample Solution Concentration g/l Ni Fe Co Mn Mg Mean These results are considered to be fairly typical of a limonite HPAL solution and thus provide some confidence in the experimental methods applied Saprolite Neutralisation Partial neutralisation of HPAL discharge slurry by the addition of saprolite mineralisation was tested by ESSC. Unfortunately some critical details of this testwork were not reported. These include: the initial and terminal acid concentrations are not stated saprolite dosage was reported in grams per 800 ml of HPAL solution, with no indication of how much limonite mineralisation was leached to produce the HPAL solution. Report No R-Rev1 46

61 The information reported by ESSC suggested that satisfactory metal recoveries from saprolite mineralisation can be achieved in saprolite neutralisation. Representative test results are summarised in Table Table 18-5: Selected Saprolite Neutralisation Test Results Duration min Temp. C % Extraction from Saprolite Ni Fe Co Mg Mn Terminal acidity was reported to be in the range ph Higher extractions may have been achievable if a higher terminal acidity of approximately 5-10 g/l was targeted CCD Settling Settling tests were performed on slurry samples produced during the saprolite neutralisation testwork, however only flocculant rates and settling times were reported. No underflow density data was presented in the ESSC report Iron Removal Iron removal tests were performed by ph adjustment using limestone. The results of testwork at 85 C are presented in Table Table 18-6: Selected HPAL Test Results Final ph Elemental Concentration in Product Liquor (g/l) Fe Al Cr Ni Co Mn Mg The results were considered to compare well with data from other nickel laterite projects. Reconciliations indicated nickel and cobalt co-precipitation of % at ph 3 rising to % at ph Nickel-Cobalt Precipitation Precipitation of mixed nickel-cobalt hydroxides was tested using both sodium hydroxide (NaOH) and magnesia (MgO). ESSC concluded that: the optimum ph for precipitation of mixed hydroxides using sodium hydroxide is ph the optimum ph for precipitation of mixed hydroxides using magnesia is ph two stages of precipitation are required to achieve a satisfactory nickel grade in the product. Report No R-Rev1 47

62 18.3 Testing at SGS Lakefield Oretest (SGS) A program of metallurgical testwork was undertaken in 2010 to investigate the metallurgical characteristics of Agata mineralisation samples. The work was undertaken at the SGS Lakefield (ISO 9001:2008 Certified) metallurgical laboratory in Perth, Western Australia Testwork Samples The samples were sourced as intervals from the walls of three metallurgical test pits located to target three mineralisation types. The intervals used, and test pit identifications, are presented in Table The samples were blended in a manner to target elemental composite grades similar to that of global resource values, especially those elements influencing leaching properties such as iron and magnesium. Table 18-7: Source of Metallurgical Test Samples Location Zone Pail No ID/Pit Interval m Weight kg Total Weight kg AGL 281 Limonite AGL 373 Transition AGL 300 Saprolite Three composites were initially prepared and the composites were identified as limonite, transition and saprolite. In the proposed operations it is planned to treat transition mineralisation with limonite mineralisation in HPAL processing. A fourth composite was therefore prepared as a blend of limonite and transition ore, and was identified in testwork as limonite transition (L/T) blend. The L/T blend sample was mixed in the ratio of 95% limonite and 5% saprolite. Drill samples from the nearby Payong Payong limestone deposit were evaluated by SGS. Two samples identified as Agata LS-01 and Agata LS-02 were received by SGS. The two samples were blended to form a limestone composite sample for testwork Mineralogy Mineralogical examinations of size fractions from the limonite and saprolite composites were undertaken by SGS South Africa. A subsample of each composite was screened into four size fractions (+212 µm down to -38 µm) for examination. The main aim of the work was to investigate mineral liberation and Ni-deportment in the samples. The investigations included qualitative X-ray Diffraction (XRD) analysis; chemical analysis; electron microprobe analysis of the mineral phases present; and QEMSCAN BMA and PMA analyses. Some observations from the work on the limonite sample fractions were: The mineralisation is predominantly of made up of quartz, chromite and Fe-hydroxides. The amount of quartz in size fractions decreases with decreasing screen size. Almost all of the quartz is rimmed by Fe-hydroxides. The amount of chromite decreases with decreasing screen size. The chromite is mostly well liberated. Report No R-Rev1 48

63 The amount of Fe-hydroxides in screen fractions increases with decreasing screen size. The Fe-hydroxides are well liberated in the -75 µm fractions but relatively poorly in the +75 µm fractions. Most of the unliberated Fe-hydroxides in the +75 µm fractions are intergrown with Mn-wad, magnetite-hematite and/or contain silicate inclusions. Most of the nickel is hosted by the Fe-hydroxides. The Mn-wad in limonite is poorly liberated and is closely associated with the Fe-hydroxides. The Mn-wad contains significant nickel. Some observations from the work on the saprolite sample fractions were: The saprolite size fractions consist primarily of altered serpentine and saponite clay (an alteration product of serpentine) The Mg:Si ratios of the serpentine and saponite are on average 1.1 and 0.9 respectively as the Mg is leached from the serpentine during alteration The Fe-hydroxides present in the fractions are poorly liberated in the serpentine Approximately 50-60% of the serpentine is liberated. The saponite is mostly well liberated. Unliberated saponite is mostly associated with Fe-hydroxides as rims. The serpentine is nickel rich The mineralogical work suggests that moderate upgrading may be achieved by rejection of quartz in coarse fractions. Removal of chromite in coarse fractions by magnetic separation was suggested by SGS. SGS also considered that the saprolite sample would be amenable to atmospheric sulphuric acid leaching as none of the fractions were observed to contain excessive Fe oxide/hydroxides or a high Fe-content Head Analyses Head analyses were conducted on the four samples. The samples were subjected to a four acid digest and metal elemental compositions determined by ICP-MS. Analyses for Si and Cr were determined by X-Ray Fluorescence (XRF). The analytical results are presented in Table Table 18-8: Head Analyses of Metallurgical Composites Ni % Co % Al % Mg % Si % Cr % Ca % Fe % Mn % Limonite Saprolite Transition L/T Blend The results are considered to be typical of tropical nickel-cobalt laterite deposits. The sample blends were prepared with the main objective of achieving similar grades to the scoping study mine schedule in species significant to leach chemistry, particularly iron, magnesium and aluminium. The nickel grade in the limonite sample was determined to be 1.32% Ni and is approximately 30% higher than the limonite nickel grade in the current planned mine schedules. The saprolite sample is similar in nickel and iron grade to that reported in the proposed mine schedules, but the test sample is significantly lower in magnesium. Further variability work is recommended to examine effect of head grade and elemental variations on extraction and metallurgical performance. Report No R-Rev1 49

64 Ore Scrubbing and Head Sizing A sub-sample of each composite was lightly scrubbed to assist in removing Fe-hydroxides from silica particles, and then wet screened to examine potential for mineralisation beneficiation by sizing. Scrubbing was achieved by soaking a 10 kg subsample of mineralisation in water overnight and then bottle rolling the slurry for one hour prior to wet screening. The mass, grade and metal recovery in wet screening for a reject screen size of 0.25 mm is summarised in Table Table 18-9: Scrubbing Test Results Sample Limonite Transition Fraction Mass Nickel Cobalt Magnesium % Grade % Ni Distrib % Grade % Co Distrib % Grade % Mg Distrib % mm Feed mm Feed The limonite and transition sample test results showed that some upgrading of nickel could be achieved by rejection of coarse fractions. The upgrading of nickel was accompanied by rejection of magnesium. Cobalt showed a poorer response than nickel. Further large scale scrubbing testwork should be undertaken in the next phase of testwork. Saprolite mineralisation showed no potential for upgrading by beneficiation from scrubbing and sizing Heap Leaching Amenability Testing Agglomeration, percolation and bottle roll acid leaching testwork was conducted on a saprolite sample crushed to finer than 25 mm to evaluate amenability to heap leaching. The agglomeration tests were conducted in a cement mixer with varying additions of concentrated sulphuric acid. Agglomerates were then cured for three days in columns and flooded. After a 48 hour soak period, the mineralisation height slump and column percolation maximum drain rate were determined. Results are presented in Table Table 18-10: Agglomeration Test Results Agglomeration Acid kg/t Slump % Drain Rate L/m 2 /h The results showed that acid additions over 100 kg/t resulted in low drainage rates. The response of mineralisation samples to acid heap leach conditions was investigated by acid bottle roll leaching of 3 kg sub-samples prepared by agglomeration at 50 kg/t acid. The tests were conducted at 30% solids and varying target free-acid concentrations in leach over a period of 50 days. The nickel extraction results with leach time for each target acidity are presented graphically in Figure Report No R-Rev1 50

65 Figure 18-1: Acid Bottle Roll Test Results High nickel extractions ranging from 90 to 99% were achieved, but at very high acid addition requirements of 887 to 985 kg acid/ tonne of ore. Both metal extraction and acid consumption increased as target acidity was increased from 25 to 50 g/l Feed Mineralisation Settling Testwork Settling testwork was undertaken on the limonite transition and saprolite samples to investigate requirements for thickening of leach feed. A flocculant screening program was first undertaken resulting in selection of Magnafloc 10 for the settling trials. The settling tests were conducted in 2 metre high raked columns. The key test parameters and test results are presented in Table Table 18-11: Mineralisation Slurry Settling - Key Parameters Parameter Limonite Saprolite Initial Density % Solids Final Density (24 h) % Solids Floc Dosage g/t Thickener Requirement 25% Solids m 2 /tonne/day % Solids m 2 /tonne/day % Solids m 2 /tonne/day The settling tests showed that a slurry density of over 40% solids for limonite mineralisation and over 35% solids for saprolite mineralisation could be achieved with flocculant additions in the range 150 to 200 g/t. Thickener unit area requirements are high at around 0.6 m 2 /tonne/day. Report No R-Rev1 51

66 High Pressure Acid Leach Testing HPAL leaching tests were conducted on the limonite transition composite sample at varying acid additions to examine extraction response with retention time and acid addition. All tests were conducted with slurry made up to 29% solids with a mix of seawater and fresh tap water blended in a ratio of 1.33 of sea to fresh. The target water blend was established by BWHC modelling in METSIM and reflects mineralisation slurrying using seawater adjusted for the impact of mineralisation moisture and process dilution by gland water, screen sprays, flocculant make-up water and condensation of live steam during slurry heating. All tests were conducted in a mechanically stirred laboratory batch autoclave at a temperature of 255 C. Acid addition rates varied between 276 and 351 kg/t. Some key results from the testwork program are presented in Table Table 18-12: HPAL Test Results on Limonite Transition Mineralisation Samples Acid Addition Overpress ure Time Free Acid ORP Extraction kg/t Air, kpa Mins g/l mv Ni% Co% The results show that the mineralisation exhibits very fast leaching kinetics with approximately 97-99% of the nickel, and 95-96% of the cobalt, extracted within 20 minutes of leaching time. Free acid levels at the end of the tests amounted to approximately g/l for acid additions ranging between 276 and 351 kg/t. Ferrous iron concentrations were generally high (up to 9.6 g/l) but with air overpressure in the autoclave the ferrous iron concentration in leach solution was decreased to 4.7 g/l. In a later HPAL test, HPAL.08, conducted as part of the integrated HPAL/AL/SN test SN.03, higher air overpressure (500 kpa) resulted in a ferrous iron concentration of just 270 mg/l. Report No R-Rev1 52

67 Atmospheric Leach Testing AL tests were conducted on saprolite samples in stirred vessels at 95 C and at acid addition rates from 850 to 1000 kg per tonne of feed mineralisation. The samples were prepared using a sea water/fresh water mix in the ratio 3.8:1. The water blend was established by modelling in METSIM and reflects mineralisation slurrying using seawater adjusted for the impact of mineralisation moisture and process dilution by gland water, screen sprays and flocculant make-up water. The results of the atmospheric AL tests are presented in Table Table 18-13: AL Tests on Saprolite Samples Acid Addition Time Free Acid ORP Extraction Kg/t Mins g/l mv Ni% Co% The results indicated favourable leaching kinetics with four hour extractions of around 94 to 98% for nickel and 88 to 94% for cobalt. Final free acid concentrations ranged between 17 and 39 g/l. Solution composition at the terminal 240 minutes leach with an acid addition of 850 kg/t is presented in Table Table 18-14: AL Test Solution Composition Solution Concentration g/l Ni Co Al Mg Fe Fe (II) Report No R-Rev1 53

68 Ferric and ferrous iron concentrations were shown to significantly increase with increasing acid additions. Magnesium concentrations were very high at g/l Saprolite Neutralisation Testwork Combined HPAL, AL Slurry A combined leach pulp for the saprolite neutralisation testwork was prepared from two separate leach tests as follows: AL test on saprolite sample at a pulp density of 35% w/w for 240 minutes at a temperature of 90 C HPAL test on a sample of L/T blend sample for a leach time of 30 min at an acid addition of 350 kg/t and temperature of 255 C and a density of 29% w/w. Saprolite mineralisation for neutralisation was added to sub-samples from the combined pulp in varying ratios. In each test the slurry was agitated for six hours and subsamples taken to monitor solution acidity and elemental concentrations, as well as solids samples to monitor metal extraction. Results from saprolite neutralisation are summarised in Table Table 18-15: Saprolite Neutralisation Testing Ratio L/T:Sap:SN Sap Saprolite Addition kg/t acid Residual Free Acid g/l Total Fe g/l Dissolution 1.00:0.79: :0.79: :0.79: :0.79: :0.79: :0.79: Ni Mg A scoping test (SN.01), during which saprolite mineralisation was progressively added in the SN step to establish the optimal conditions for subsequent confirmatory tests, produced the first four test results shown in Figure The last two tests (SN.02 and SN.03) were confirmatory tests in which all of the SN feed mineralisation was added at the beginning. The confirmatory tests showed that neutralisation of a combined HPAL and AL pulp with saprolite mineralisation resulted in the dissolution of 83-89% of the nickel and 78-87% of the cobalt contained in the neutralising saprolite. Concentrations of total iron in solution decreased with residual free acid due to precipitation of sodium jarosite, a benefit of using seawater for mineralisation slurrying. Final ferrous concentrations ranged from 1.1 to 4.5 g/l. The kinetics of the neutralisation reactions for the test at a ratio of 1.00:0.79:0.36 (L/T:Sap:SN Sap) are plotted in Figure Report No R-Rev1 54

69 % Extraction Ni Ext (%) Mg Ext % Free Acid g/l Fe Total g/l Time (mins) g/l Figure 18-2: Saprolite Neutralisation Test Results - HPAL/AL/SN The reported test results show a high extraction of nickel from saprolite sample used in neutralisation Saprolite Neutralisation Testwork AL Slurry AL tests were undertaken to provide a pulp for saprolite neutralisation at a pulp density of 35% w/w for 240 minutes. Subsamples of the leached pulp were neutralised with varying ratios of saprolite. In each test the slurry was agitated for six hours and subsamples taken to monitor solution acidity and elemental concentrations, as well as solids samples to monitor metal extraction. The results of the AL saprolite neutralisation tests are presented in Table Table 18-16: Saprolite Neutralisation Test Results- AL Saprolite Ratio AL:SN Saprolite Addition kg/t Residual Free Acid g/l Total Fe g/l Ni Dissolution % 1.00: : : : : Mg Approximately 70-84% of nickel and cobalt was leached from the saprolite mineralisation used in neutralisation at a residual acid concentration of 4-8 g/l Settling Testwork on Saprolite Neutralised Slurry Settling testwork was undertaken on the pulp from the saprolite neutralisation testing to investigate slurry thickening characteristics. Tests were conducted in two metre high raked columns. Flocculant used in the testing was Magnafloc 10. Tests were conducted on both HPAL/AL/SN pulp and AL/SN pulp, Table Report No R-Rev1 55

70 Table 18-17: Settling Tests on Saprolite Neutralisation Slurry Sample Flocculant Dose g/t Settled Underflow Pulp Density (% w/w) Thickener Unit Area Requirement (m 2 /t/d) SN.02 Final Diluted to 4% Solids SN.03 Final Diluted to 4% Solids The settling tests showed that a slurry density of 38-40% solids can be achieved for tests with flocculant additions in the range g/t. Settling testwork on the AL neutralised pulp showed lower densities and higher thickener requirements than that for HPAL/AL Limestone Calcination and Activity Drill samples from the limestone deposit at the mine lease were obtained for testwork and a composite sample prepared. A sub-sample of the limestone was crushed to size -25 mm +9 mm and then calcined in a furnace at 1050 C for varying residence times from 30 to 120 minutes. The mass loss of sample was monitored, and the available lime determined. The test results showed that after 60 minutes the mass loss was 44% with an available lime of 92%. The neutralising capacity of the lime was reported at 1.26 t acid/ t hydrated lime. A test on a sub-sample of limestone was undertaken to investigate the neutralisation activity. Tests were undertaken by neutralising a 48 g/l sulphuric acid solution with staged additions of dry ground limestone and ph monitoring. The neutralising capacity of the limestone was reported at 0.94 t acid/ t limestone. Report No R-Rev1 56

71 19.0 MINERAL RESOURCE AND MINERAL RESERVE ESTIMATES The Mineral Resource estimation was completed by Mike Job, Principal Consultant for Quantitative Group (QG) of Fremantle, West Australia. The geological modelling uses a set of points at the contacts of the various layers in each drill hole. These points are triangulated into a surface wireframe to generate the geological model The approach used by QG is to distinguish the limonite layer (LIM) from the saprolite (SAP) layer by the lower magnesium values in the LIM. The SAP to Bedrock (BED) contact was identified by using nickel assay data (generally less than 0.4% Ni) and geological logging. Additional control points were inserted at interpreted locations in-between drill holes in order maintain geological consistency and to account for drill holes finishing before hitting bedrock. The main geology zones modelled are limonite (LIM), saprolite (SAP) and bedrock (BED) Unfolding To assist in proper grade interpolation, the Datamine dynamic search feature was used which allows the orientation of the search neighbourhood ellipse to be defined separately for each block (in this instance, the variogram was also rotated to align with the search, but this does not always need to occur) Data Preparation Grades The following grades are estimated in the resource modelling process: Ni%, Co%, Fe%, SiO 2 %, Mg%, and Al 2 O 3 % Sample Length The drilling database for the Agata deposit provided to Golder contains a range of sample intervals, with approximately 78% of intervals assayed for nickel being less than or equal to 1 m length, 21% on 1 to 2 m length, with the remainder greater than 2 m length. The long samples appear to be predominantly in bedrock material Geology Model Geology Interpretation Gifford, 2010 describes the interpretation process. The abrupt change in geochemistry between limonite and saprolite and the grade decrease from saprolite to bedrock provide the position of these surfaces on each drill hole. The resource analyst used these points in Datamine software to create a triangulated surface of the contacts across the deposit area. These triangulations then become limits for coding cells in the Resource block model. Report No R-Rev1 57

72 Figure 19-1: Bedrock, Saprolite, and topography triangulations in cross-section (After Gifford, 2010) 19.4 Independent Review Exploratory Data Analysis Domaining The geological modelling was used as the input for creating domains for estimation purposes. Interpolation of the various assay elements was done separately for: LIM SAP. Physical or chemical attributes were not estimated for the Bedrock layers. Statistical Analysis Statistical analysis has been carried out by QG on the final drill composited data. This involved generating univariate statistics and histograms. Golder composited the data to 1 m downhole and flagged the composite data to the saprolite and bedrock wireframe surfaces provided. Analysis of cumulative log probability plots of Ni% within the modelled LIM domain shows a difference in lithologies codes of LF, LA and LB horizons. Analysis of Figure 19-2 indicates that the Ni% distribution is somewhat different for the three limonite zones. Fe, Al and Mg show some differences too. Ni% distribution within the modelled SAP domain also shows two distinct populations. One associated with general saprolite material and one associated with boulders. Figure 19-3 provides probability plots of Ni% and Mg% for boulder and saprolite samples within the modelled SAP domain. The Ni% grade is much lower grade for the boulder and with much elevated Mg% than the saprolite material. The relationship between various elements was also examined for the composited data by plotting various scatter diagrams. A moderate positive relationship is noted between Ni% and Fe%. The relationship for Ni% and Mg% is also moderate to strong negative. Mg% increase sharply as the Ni% decreases. Report No R-Rev1 58

73 Figure 19-2: Probability plots showing Ni% distribution of LF, LA and LB samples within modelled Limonite zone Figure 19-3: Ni% and Mg% distributions for Bolder and Saprolite samples within SAP modelled domain Compositing The first part of any resource estimation is to ensure that all data are defined at the same support. Given the raw sample length distribution, the use of 1 m composites for the interpolation process is reasonable. This is also supported by the narrow geometry of some of the geological layers. Splitting of the larger intervals (i.e. 22% of the data) may tend to artificially understate the true variability of the data, by creating 1 m composites that have the same grades. However, as the majority of the large composites sit between 1 m and 2 m in length the impact is expected to be minimal. Report No R-Rev1 59

74 Due to the geometry and position of the some of the regolith horizons, the use of 1 m composites is acceptable. Preparation of the composite map files for grade estimation has been carried out in a diligent manner Grade Capping No outlier or high grade cutting was used Variography Variography was undertaken to provide parameters for Ordinary Kriging grade estimation. QG modelled variograms for all the major elements (Ni%, Co%, Fe%, SiO 2 %, Mg% and Al 2 O 3 %) based on 1 m composites. Nugget effects in the QG variogram models used for estimation appear to be low and reasonable, with overall ranges of influence of the order of 100 m. QG observed consistent spatial trends between the variables. The variography has assumed an isotropic behaviour in horizontal direction with an omni-directional variogram representing both major and semi-major axis. This reflects variography by QG which indicated that there was not anisotropy in the horizontal plane. The directional variograms were not presented by QG to demonstrate that the isotropy assumption was valid. Unlike estimation approach which uses local dip and dip direction (unfolding) the variography has been done horizontally Density Density sampling and determination completed by Mindoro is discussed in Section It is Golder s opinion that there are insufficient density measurements to qualify any part of the resource as Measured. Based on our experience, the dry bulk density values for limonite may be too high given the high moisture content. Similarly, the preferential selection of competent core in saprolite may cause an over statement of saprolite density. However, it does not appear that Mindoro allowed any density variation for boulders, which will be higher density than weathered saprolite Block Model Estimation The Mineral Resource for Agata was estimated using Ordinary Kriging (OK) which is based on variogram parameters that provide the parameters for the spatial continuity. The interpolation of grade was constrained to the geological modelling domains. The domains confining the composited samples were defined using Datamine wireframe triangulations developed for the limonite and saprolite domains. The geology is assigned into blocks of size 20 m 20 m 1 m. The estimation is based on 1 m composited data into these blocks. The grid drilling is nominally 25 m 25 m, 50 m 50 m, 100 m 100 m or larger. In this context a block size of 25 m 25 m would be a better option to keep the drill holes uniformly distributed into the blocks. This however is not expected to alter the final outcome. Grade interpolation by OK was implemented using hard boundary conditions for each of the estimation domains. The search ellipses were oriented according to the local dip and dip direction using the Datamine dynamic search feature. The process of estimation involved three passes. The search distance was doubled for each pass to enable estimation of more blocks into the block model. Implementation of passes for each layer was the same and systematic, with a normal search. A maximum of 40 samples was used for the first and second estimation pass, reducing to 20 for the third pass. Overall the search parameters are reasonable. No outlier or high grade cutting was used. Report No R-Rev1 60

75 Validation of Block Models The 2010 documentation contains statistical and swath plot checks to demonstrate the validity of the resource model. Overall, these validations are well-presented and demonstrate that the model behaves reasonably Resource Classification The procedure adopted by QG to define reporting classes is primarily by the density of drilling. For the majority part of the deposit comprising m or m drilling the model is classified as an Indicated Resource. The only areas of Inferred Resources are around the steep-sided creek systems, where the drilling is on a broader pattern and the laterite horizons thin out. A small amount of Measured Resources has also been introduced where drilling approaches to m density Selectivity, Mineralisation Loss and Dilution No assessment of the block model smoothing is evident in the 2010 documentation. This is necessary as the estimation always incorporates a smoothing effect to account for the change of volume from sample to blocks. The question that need to be addressed if this level of smoothing is a desirable level to account for potential dilution and mineralisation losses based on the expected mining selectivity. The success of the resource model at Agata will to a large extent be dependent on the accuracy of the geological model produced. Therefore the uncertainty inherent in the geological model also needs to be investigated. Golder believes that presence of boulders within the saprolite layer will present mining recovery and metallurgical recovery issues. Boulder has presently been mixed with saprolite in the current model and there is no indication of amount or grade of such material. Golder recommends the evaluation of the saprolite mining recovery using a conditional simulation model with appropriate transfer function Assessment of Reasonable Prospects of Economic Extraction 19.9 Mineral Resource Statement The Agata Nickel Project has estimated combined Measured and Indicated Resources of Mt at 1.04% Ni, and an inferred resource of 1.68 Mt at 1.04% Ni for a combined t of nickel, as reported in Mindoro s NI compliant Mineral Resource estimate of 8 September 2010, using a cut-off grade of 0.5% Ni for limonite and 0.8% Ni for saprolite. The summary of the NI compliant Mineral Resource is presented in Figure Report No R-Rev1 61

76 Table 19-1: Agata Deposit Laterite Resources (Ni ), September 2010 kt (dry) Ni % Co % Fe % Al % MgO % SiO 2 % Measured Limonite Saprolite Sub-Total Indicated Limonite Measured and Indicated Saprolite Sub-Total Limonite Saprolite Total Inferred Limonite Saprolite Total Total metal contents in the reported resources represent metal in the ground and have not been adjusted for metallurgical recoveries and other factors which will be considered in a later study. Mineral Resources which are not Mineral Reserves do not have demonstrated economic viability. The estimate of Mineral Resources may be materially affected by environmental, permitting, legal, title, taxation, socio-political, marketing or other relevant issues Mineral Reserve The mining inventory representing the estimated mill feed tonnage and quality includes Indicated and Inferred Resources. Approximately 5% of the mining inventory is classified as an Inferred Resource. No Measured Resource is currently reported in this PEA or previous Technical Reports documenting the Mineral Resource estimate. No Mineral Reserve estimate is reported in this PEA prepared as a conceptual level study. Mindoro has committed to proceeding with a PFS. Report No R-Rev1 62

77 20.0 OTHER RELEVANT DATA AND INFORMATION 20.1 Preliminary Hydrological and Hydrogeological Assessment The Western Range is located in a mountainous region with several creeks draining towards the Mindanao Sea on the western side and towards the Kalinawan Valley on the eastern side. The Kalinawan River (referred to as the Tubay River in previous studies) is situated about 1 km east of the proposed mine area and flows in a southerly direction. Tumanda et al. (2004) report that the average discharge of the Kalinawan River is about 2 M m 3 /day (2000 ML/d) and more than adequate to meet project water requirements. The water quality of this river is very good (Coffey, 2008) with Total Suspended Solids (TSS) concentrations of about 2 mg/l and Total Dissolved Solids (TDS) concentrations of about 70 mg/l. Nutrient levels are low ranging between 0.2 to 1.2 mg/l nitrate. Lake Mainit is a large freshwater lake situated approximately 4 km north of the proposed mine area. The water quality of this lake is very good (Coffey, 2008) with TDS concentrations of about 80 mg/l and low nutrient concentrations. There is no information on the groundwater potential in the region from previous studies. Groundwater does occur in (probably shallow) alluvial sediments in the Kalinawan Valley. Groundwater is being used for mostly domestic Process Plant 20.2 Mining Plan General The mining inventory and methodology used to develop the Agata Nickel Project Mining and Plant Feed for a hydro-metallurgical process. Schedule V9d.was prepared by Dallas Cox (2011) Principal Consultant Crystal Sun Consulting Limited for Mindoro Scheduling was carried out using three phases and 63 mining panels (approximately 250 m by 250 m). Approximately 5% of the mining inventory is categorised as Inferred Resource but is only mined towards the end of the scheduled periods. Golder considers the impact of the Inferred Resources in the schedule to be not material. Golder recommends future estimates of mining inventories include only Mineral Resources classified as Measured and Indicated or Mineral Reserves if estimated. Excessive stockpile build-up in the latter half of the schedule was flagged by Cox (2011) as an issue to be addressed in future studies. The high quantities of stockpile and rehandling of mineral inventory for plant feed result in higher mining costs. Further mining scheduling is recommended to optimise balancing of grades and quantities to the plant. The present schedule is acceptable for a conceptual study Mining Inventory The Mineral Resource defined by the NI Technical report (September 2010) was the used as a basis to generate a mining inventory. The cut-off grades used to define mineralisation in the mineral inventory were 0.5 Ni% and 0.8 Ni% for limonite and saprolite, respectively. These are arbitrary cut-offs in line with the resource estimate cut-off grades. A "pit base" was generated using the "Base of Saprolite" contact. Future pit design work will incorporate final ramps and batters/berms where necessary (Figure 20-1). Nickel mineralisation in the lower part of the mineralisation profile, namely saprock and boulder saprolite categories, were excluded from the resource base. The mining inventory of 26.1 M dmt represents a 76% of the Mineral Resource of 34.1 M dmt. Report No R-Rev1 63

78 The methods used to delineate the likely open pit extent are considered reasonable. Figure 20-1: Pit Extents The pit was divided into three areas/phases (Figure 20-2) partly based on mineralisation categorisation and to obtain early nickel production. Report No R-Rev1 64

79 Figure 20-2: Pit Areas & High Magnesium zones The Mining Inventory was categorised into six Material types based on Iron Grade (in limonite) and Magnesium grade (in saprolite) as shown in Table Table 20-1: Material Types Material Description Material Code Fe% Mg% % Limonite % Saprolite % Total Limonite High Iron HFE >47 35% - 13% Limonite Medium Iron MFE % - 14% Limonite Low Iron LFE <43 26% - 9% Saprolite Low Magnesium LMG <16-28% 18% Saprolite Medium Magnesium MMG % 23% Saprolite High Magnesium HMG > % 23% 100% 100% 100% Figure 20-3 shows the mining panels used for scheduling. Report No R-Rev1 65

80 Figure 20-3: Mining Panels The Mining Inventory is summarised in Table Table 20-2: Mining Inventory Mining Inventory kbcm kdmt Ni% Co% Fe% Mg% Al% SiO2% Limonite Saprolite Subtotal WASTE TOTAL Moisture contents of 31.7% and 20.6% for limonite and saprolite respectively were used for equipment estimation purposes Mining and Plant Feed Schedule The primary goal of the schedule was to deliver the highest grade nickel mineralisation to the plant in the early years of operation and maintain a balanced feed of material stream feed to the respective HPAL, SN and AL circuits. The mining schedule (V9d) in general meets both plant feed and mining considerations (Table 20-3). However it generates excessive stockpile build-up from Year 6. This issue needs to be addressed in future scheduling studies. Report No R-Rev1 66

81 Table 20-3: Plant Feed Targets Plant Feed/Mined Targets Version 9d Material Code Kdmt/Year Limonite to HPAL HFE, MFE, LFE 670 Saprolite to HPAL LMG 335 Subtotal Saprolite to Atmospheric Leach (AL) MMG 425 Saprolite to Saprolite Neutralisation (SN) HMG 356 TOTAL SN : HPAL ratio 0.35 Limonite: Saprolite ratio 1: 1.67 Limonite kdmt 670 Saprolite kdmt Figure 20-4 illustrates the mining panels that are grouped as either fully or partially mined in each three year period for the current life of mine (LOM) 15 years of operations. There is a requirement to mine from several areas concurrently in order to provide a balanced mineralisation feed to the plant, and to minimise stockpile rehandle. Figure 20-4: Mining Schedule Graphic Table 20-4 gives the summary of mined material in both dmt and bcm. Report No R-Rev1 67

82 Table 20-4: Ex-Pit Mined Summary Mining Inventory Mbcm 19.1 Mdmt 26.1 Waste Mbcm 5.2 Mdmt 8.3 Totals Mbcm 24.3 Mdmt 34.4 Mindoro has assumed that mining will be carried by tonne hydraulic excavators loading tonne payload articulated dump trucks. Life of Mine production rate averages bcm per day, ramping up from bcm/day in the first year and peaking at bcm per day in Year 10. Figure 20-5 provides a summary of material mined by area on a quarterly basis. Figure 20-5: Mining Volumes per Quarter The mine production by mineralisation type over the life of the project and the resultant feed grade (Ni%) to the process plant that forms the basis of the financial evaluation is illustrated in Figure Report No R-Rev1 68

83 Mine Production DMT 3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000, ,000 0 %Ni in DMT 1.40% 1.20% 1.00% 0.80% 0.60% 0.40% 0.20% - Low Mg saprolite Mid Mg Saprolite Hi Mg Saprolite Waste Mined Limonite to HPAL HPAL Feed Grade Figure 20-6: Mine Production Schedule by Material Type Table 20-5 shows the mining schedule by year. Report No R-Rev1 69

84 Table 20-5: Mining Schedule Mining Summary TOTAL ORE kbcm , kdmt kwmt WASTE kbcm kdmt kwmt TOTAL kbcm kdmt kwmt Strip ratio v:v Production rate bcm/day Report No R-Rev1 70

85 Table 20-6 shows the total plant feed by material to the process circuit. Plant recovery for nickel and cobalt has been assumed to be 90.8% and 91.7% respectively. The plant feed is approximately 700 kdmt less than the mining inventory due to material on stockpile being unable to be scheduled to meet grade targets. Table 20-6: Plant Feed Summary PLANT FEED SUMMARY TOTAL Limonite to HPAL kdmt Ni % 0.95 Co % 0.11 Fe % 45.6 Mg% 1.2 Saprolite LMG to HPAL kdmt Ni % 1.20 Co % 0.03 Fe % 14.2 Mg% 14.1 Saprolite MMG to AL kdmt Ni % 1.15 Co % 0.03 Fe % 11.6 Mg% 17.1 Saprolite HMG to SN kdmt Ni % 1.03 Co % 0.02 Fe % 9.7 Mg% 19.1 Plant Feed kdmt Ni % 1.06 Co % 0.06 Fe % 24.4 Mg% 11.0 Contained Metal Ni tonnes Co tonnes Recovered Metal Ni tonnes Co tonnes Golder considers the estimation of the mineral inventory and scheduling reasonable Metallurgy Two metallurgical testwork programs have been conducted on samples from the Agata deposit. The most recent program of work conducted at SGS Lakefield in Perth has shown that: Limonite mineralisation is amenable to processing by HPAL and has fast leaching kinetics with approximately 97-99% of the nickel extracted within 20 minutes of leaching time. Saprolite mineralisation is amenable to AL with favorable extractions of over 95% Ni in four hours. Report No R-Rev1 71

86 Other metallurgical characteristics are considered to be typical of tropical nickel-cobalt laterite mineralisation deposits The metallurgical testwork undertaken to date is considered to be of a scoping nature only. More detailed programs of work are required as part of the planned project Feasibility Studies. It is recommended that future work programs include: Additional bench scale testwork on representative composite samples based on the latest mine schedules. Comprehensive leach variability testwork using samples from a range of spatial pit locations, mineralisation types and grades throughout the deposit. This should include both HPAL and AL testing for the relevant mineralisation types, as well as slurry characterisation. Further evaluation for upgrading of limonite by large scale scrubbing tests and continuous scrubbing piloting. Continuous testwork and piloting of the total proposed circuit with recycling of intermediate streams. It is important that blending of composite samples for piloting reflects the amount of each mineralisation type in the planned mine schedule Process Plant Introduction A Scoping Study to evaluate hydrometallurgical processing of the limonite and saprolite mineralisation types from the Agata deposit was issued in The processing aspects of the Scoping Study were jointly undertaken by Boyd Willis Hydromet Consulting (BWHC) and engineering company Ausenco Vector, under management of BHWC. The Scoping Study evaluated a number of options for the project involving HPAL and AL. In 2011 BHWC has undertaken further process and engineering studies as part of this PEA based on a preferred option involving parallel HPAL and AL circuits Process Selection Limonite and low magnesium grade saprolite mineralisation will be treated in a dedicated HPAL circuit. The process design for the HPAL leach plant is based largely on the hydrometallurgical route proven at Moa Bay in Cuba for five decades, and at the Sumitomo/Nickel Asia operated Coral Bay Nickel Project (Coral Bay) in the Philippines since Medium grade magnesium saprolite mineralisation will be treated in a parallel AL circuit. The AL circuit option has recently gained recognition as an alternative to the high capital cost HPAL route. An AL circuit was operated by BHP Billiton at their Ravensthorpe operations. The process is currently being investigated by Weda Bay Nickel (Eramet) in Indonesia, Berong Mining in the Philippines and BHP Billiton nickel projects to treat their high grade saprolite mineralisation types. An innovation in the Agata proposed processing route will be the inclusion of saprolite neutralisation (SN). This will involve pre-neutralisation of the residual free acid in the combined leach discharge streams using high magnesium saprolite ore. This process, performed at atmospheric pressure, will consume much of the free acid while recovering additional nickel and cobalt values from the saprolite ore. Neutralisation of the remaining acid will be achieved using limestone. After SN, the pregnant solution will be recovered by conventional counter-current decantation (CCD), followed by limestone neutralisation of excess acid and precipitation of iron, aluminium and chromium, prior to metal recovery. Report No R-Rev1 72

87 Metal recovery will be by a two-stage MHP circuit similar to that operated for several years at the Cawse Nickel Project (Western Australia) and more recently at Ravensthorpe Nickel Operation (Western Australia). The MHP will be exported Development of Process Design Criteria Preparation of Mineralisation Separate mineralisation preparation facilities are proposed for limonite and saprolite mineralisation types. The slurry settling tests at SGS demonstrated that limonite could be settled to 40% solids and saprolite to 34-36% solids. Testwork at SGS included preliminary scrubbing and screening. This work demonstrated that scrubbing a sample of limonite/transition mineralisation blend followed by screening at mm would recover about 90% of the nickel while rejecting 18-19% of the total mass, 36-38% of the silica and 37-40% of the magnesium. Based on these results additional equipment has been included in the design to allow for de-agglomeration (scrubbing/screening) to potentially liberate nickel bearing fines from barren coarse material, however no upgrade or rejection has been included in the PEA mass balance High Pressure Acid Leaching Design criteria for the HPAL section was selected from the SGS test results, supplemented where necessary by metallurgical response data typical for South East Asian nickel laterites. The key design parameters adopted from the SGS testwork are summarised in Table Table 20-7: HPAL Design Criteria Criteria SGS Results Selected Value Residence Time (min) Temperature ( C) Acid Addition (kg/t ore) * Residual Free Acid (g/l H 2 SO 4 ) ** Extractions (%): Ni Co Mg Terminal Concs (g/l): Fe(III) Al < * calculated using METSIM, includes impact of low magnesium saprolite in HPAL feed ** to better deal with higher Mg grade resulting from inclusion of low magnesium saprolite in HPAL feed Atmospheric Leaching Design criteria for the HPAL section was selected from the SGS results, supplemented where necessary by metallurgical response data typical for South East Asian nickel laterites. The key design parameters adopted from the SGS testwork are summarised in Table Report No R-Rev1 73

88 Table 20-8: AL Design Criteria Criteria SGS Results Selected Value Residence Time (h) 4 4 Temperature ( C) Acid Addition (kg/t ore) * Residual Free Acid (g/l H 2 SO 4 ) Extractions (%): Ni Co Fe Al Mg * calculated using METSIM, based on processing medium magnesium saprolite Saprolite Neutralisation Design criteria for the SN section was selected from the SGS results, supplemented where necessary by metallurgical response data typical for South East Asian nickel laterites. The key design parameters adopted from the SGS testwork are summarised in Table Table 20-9: Saprolite Neutralisation Design Criteria Criteria SGS Results Selected Value Residence Time (h) 6 6 Temperature ( C) Residual Free Acid (g/l H 2 SO 4 ) Extractions (%): Ni Co Terminal Concs (g/l): Fe(III) Al Counter-Current Decantation Design criteria have been assumed based on the metallurgical response of similar South East Asian laterites and are summarised in the following table. Table 20-10: CCD Design Criteria Criteria SGS Results Selected Value Number of CCDs - 7 * Underflow % solids CCD-1 Flocculant Dosage (g/t solids) Thickener unit area (m 2 /t/d) Soluble Ni recovery across CCD train (%) * based on METSIM modelling to achieve <1% soluble nickel loss across CCD circuit Metal Recovery No testing of the hydrometallurgical process downstream of the CCD circuit was performed in the scoping study testwork program at SGS. The recovery of nickel and cobalt to MHP in downstream processing has been operated at Cawse and Ravensthorpe, and extensively piloted for several other projects including Report No R-Rev1 74

89 Ramu, Marlborough and Wingellina. Design criteria for the downstream processing steps were selected from database information for these projects Mass Balance Calculations The process flowsheets, process design criteria and the testwork data from the SGS metallurgical testwork program were used to develop a process mass and energy balance. The simulation software used for the PEA process model was METSIM, and the model was developed by BWHC. The METSIM model was developed using the selected flowsheet, including the major equipment items. METSIM employs a comprehensive component database, including detailed thermodynamic properties, to balance the mass and energy flows, and to simulate the performance of a full scale operating plant. The inputs into the model included: plant feed tonnages head grades chemical reactions and reaction extents reagent composition and utilisation operating conditions (temperature, pressure, etc). The objective of the METSIM model was to generate: mass balance energy balance reagent consumptions product tonnages waste/effluent quantities. The METSIM model generated stream mass and volume flows, which were used in developing the capital and operating cost estimates Process Description Overview The processing plant consists of the following operations: Leach Plant: Preparation of Mineralisation High Pressure Acid Leach Atmospheric Leach Recycle Leach Saprolite Neutralisation CCD Circuit Iron/Aluminium Removal Stages 1 and 2 Final Neutralisation Stages 1 and 2. Report No R-Rev1 75

90 Product Section: Mixed Hydroxide Precipitation Stages 1 and 2. Process Services: Sulphur Handling Sulphuric Acid Plant Limestone Plant Lime Plant Reagent Preparation Leach Plant The mineralisation treatment plant includes separate circuits to treat limonite and saprolite ores. The limonite mineralisation preparation circuit produces de-agglomerated limonite slurry for HPAL and the saprolite circuit produces three types of ground saprolite slurry for HPAL, AL and SN. The limonite mineralisation treatment plant comprises the following principal operations: primary crushing to <200 mm by roll sizer limonite de-agglomeration by wet rotary drum scrubbing and rejection of the coarse oversize fraction (>10 mm) by screening single stage, closed circuit ball milling to produce a ground limonite slurry HPAL feed slurry thickening. The saprolite mineralisation treatment plant consists of the following principal operations: primary crushing to <200 mm by roll sizer single stage, closed circuit saprolite SAG milling to produce ground saprolite slurry storage tanks for three types of ground saprolite slurry: low magnesium saprolite, medium magnesium saprolite and high magnesium saprolite thickening of the medium magnesium saprolite and high magnesium saprolite slurries for delivery to atmospheric leaching and saprolite neutralisation. HPAL feed comprises limonite and low magnesium saprolite mineralisation slurries, which are combined in the required proportions in the HPAL feed thickener. The HPAL plant includes feed slurry heating, leaching of nickel and cobalt from limonite mineralisation at high temperature (255 C) and pressure (4425 kpag), and autoclave discharge slurry pressure letdown. Atmospheric leach feed comprise medium magnesium saprolite slurry. In the atmospheric leach circuit nickel and cobalt are leached from saprolite mineralisation at atmospheric conditions ( C and ambient pressure). Sulphuric acid is used as the lixiviant for both HPAL and atmospheric leaching. The HPAL circuit maximises heat recovery by recycling steam flashed during depressurisation of the slurry back to the preheat circuit. A recycle leach circuit uses a small stream of sulphuric acid to re-dissolve nickel and cobalt precipitated in the downstream iron/aluminium removal and second stage MHP circuits. Discharge slurries from the HPAL, atmospheric leach and recycle leach circuits are combined and forwarded to the saprolite neutralisation circuit where the neutralising capacity of the high magnesium saprolite mineralisation consumes some of the excess free acid. Additional nickel and cobalt are leached from high magnesium saprolite during this Report No R-Rev1 76

91 process. The resultant slurry flows to a seven-stage CCD circuit, to separate and wash soluble nickel and cobalt from the leach residue solids. The recovered pregnant liquor (CCD-1 overflow) is forwarded to two stages of iron/aluminium removal. In the first stage of iron/aluminium removal the majority of the remaining free acid in solution is neutralised with limestone slurry and most of the ferric iron and some of the aluminium in solution are precipitated. The product slurry is thickened and the precipitated solids are directed to CCD-3 for recovery of soluble nickel and cobalt across the back half of the CCD circuit. In the second stage of iron/aluminium removal the remaining iron and aluminium are precipitated. The pregnant liquor is separated from the precipitated solids by thickening prior to transfer to the MHP area. Some nickel and cobalt are co-precipitated so the thickener underflow slurry is directed to the recycle leach circuit for recovery of the metal values. The barren leach residue solids from the final stage of CCD washing along with barren solution from the MHP circuit report to final neutralisation (FN) circuit where limestone and lime slurries are added sequentially to raise the ph of the slurry and precipitate most of the remaining metals from solution. An air stream is used as an oxidant in this process to aid manganese precipitation. The discharge slurry is thickened and the clear overflow solution is returned to the CCD circuit as wash water. Treated residue is pumped, at about 30% solids content, through an approximately 6 km long slurry pipeline to the residue storage facility (RSF). At the RSF, the residue is hydraulically deposited behind the retaining wall. Consolidation of residue over time produces a decant liquor which is returned via a decant pipeline to the process plant. The excess RSF decant is discharged to ocean outflow and is closely monitored to ensure compliance with the environmental discharge standards Product Section The virtually iron/aluminium-free pregnant leach solution (PLS) is forwarded to the first stage MHP reactors to precipitate the nickel and cobalt from the solution by the addition of magnesia slurry. The resulting precipitate contained in the slurry is subsequently directed to thickening. A portion for the thickener underflow slurry is recycled as seed to the first stage MHP reactors and the balance is forwarded to wash filtration. In wash filtration, the precipitate is filtered for further dewatering and washed with demineralised water to displace the chlorides and other sea salts entrained with the precipitates. The filter cake is then repulped with demineralised water and filtered in a pressure filter to achieve the required product moisture specification. The MHP product is packaged in 2 t bulk bags and stored in standard 6 m containers for shipment and sale. The un-precipitated nickel and cobalt values present in the first stage MHP thickener overflow are further recovered by lime precipitation in the second stage MHP reactors. The resulting precipitate is thickened and recycled back to the recycle leach area to re-dissolve the nickel and cobalt Plant Services Major process packages include a sulphur-burning acid plant, a limestone slurrying plant, a lime kiln and lime slaking plant, a magnesia slurrying plant and a residue storage facility. The sulphuric acid plant provides sulphuric acid for the leaching circuit and other process consumers, and high pressure steam for power generation. The acid plant products are up to 2700 t/d of 98.5% sulphuric acid and up to 152 t/h of HP steam. The limestone plant provides limestone in slurry form for neutralisation of acidic process liquors and crushed limestone for burnt lime production. The limestone plant consists of crushing and slurrying facilities. The limestone slurry at 30% solids is pumped to the process plant via a limestone slurry ring main. The lime plant provides lime in the form of milk-of-lime slurry for neutralisation of acidic process liquors and precipitation of nickel and cobalt in the second stage MHP circuit. The plant consists of a fuel-oil fired limestone calciner and lime slaking facilities. The milk-of-lime is pumped to the process plant via a ring main. Report No R-Rev1 77

92 The magnesia slurrying plant provides magnesia slurry for the precipitation nickel and cobalt as mixed hydroxides in the first stage MHP circuit. The magnesia slurry is pumped into the MHP reactors under dosage control Plant and General Infrastructure Introduction The provision of infrastructure is a significant part of the overall development of the project due to the green field nature of the proposed site. Existing infrastructure facilities are virtually non-existent in the immediate area of the proposed site except for an existing gravel public road and the exploration camp facilities. Key factors affecting the layout of infrastructure for the project include: the location of the mineralisation bodies the site topography access to site for equipment, operating personnel and reagents the position of the industrial and port sites. The facilities will be located predominantly in a coastal valley west of the mine site, as the topography is relatively flat compared to the steeper inland terrain. The infrastructure facilities to be provided for the project include: water supply and treatment power station and power reticulation port bulk materials handling fuel tank farm solid and liquid waste management plant control system plant site and service buildings and ancillary facilities accommodation village and facilities communications mobile equipment roads security Existing Regional Infrastructure A substantial population base exists within a short distance of the project area. The municipalities of Santiago and Jabonga, located within 10 km of the project area, each have populations of around people. Situated about 35 km by road to the south, Cabadbaran City has a population of over Report No R-Rev1 78

93 Butuan City, located about 65 km by road to the south, has a population of approximately , and Surigao City, located about 80 km by road to the north, has a population of approximately Facilities and services in Cabadbaran City include: hospital (Cabadbaran District Hospital) rescue service (Rescue 085) fire station police station electrical utility (ANECO: Agusan del Norte Electric Cooperative) elementary and high schools university (a campus of Caraga State University) Site Development Process Plant Site The process plant site is proposed to be located on a coastal site to the southwest of the mine site. The advantages of this location are: It has excellent access to the port facilities and the sea. It largely avoids land currently under agriculture. It provides an opportunity to locate the plant at a level above any likely tsunami effect created by seismic activity. It provides a platform to locate very heavy plant items on a cut bench therefore reducing foundation costs and potential impacts of differential settlement. The site is proposed to be located about 200 m inland in order to place the heavier plant on solid ground at an elevation of m above MSL. The process plant pad will be approximately 650 m in length and 400 m in width in a north south orientation. Some of the lighter plant equipment will be located in fill areas. Surface drainage is directed from a central elevated part of the site towards the northeast. Vehicle access to and from the plant site is from the north. The plant site will be cleared of all vegetation, tree roots grubbed and topsoil stripped from the site will be stored in stockpiles for later reuse as topsoil on the completed earthworks. Cut material shifted from the more elevated areas of the plant site will be used as fill in the lower areas of the plant site and in the port area to meet a minimum plant floor level above MSL. This cut to fill construction will include nearby facilities such as: mineralisation stockpile areas, port facilities areas, process plant offices, laboratories and control room pads Power Supply Power Station The power station uses steam generators to provide electrical power for the operation of the process plant, services and utilities, as well as for the accommodation village and all other related infrastructure. High pressure steam is produced from two sources. The major source of high pressure steam is from waste heat boilers in the sulphuric acid plant. The secondary source of high pressure steam is from auxiliary boilers that will produce supplementary steam into the same header for the high pressure steam distribution system. Report No R-Rev1 79

94 The power station is designed to satisfy two main operating scenarios: generation of 30.9 MW of power, including 16.8 MW of power for normal plant operations, with 124 t/h of HP steam imported from the sulphuric acid plant provision of 7.8 MW of power and 16.3 t/h of process steam, to maintain leach plant operation, critical equipment in other areas, and the accommodation village during acid plant outages. The plant configuration comprises two 16 MW condensing steam turbine generators and two 25 t/h package boilers. The two boilers provide significant flexibility to meet varied steam demands. The selection of condensing turbines allows low pressure steam to be extracted for process use. In addition, for emergency conditions and the black start of the power station, there are two diesel powered generators located within the power station complex. These ex-construction generators will be of sufficient capacity for their intended long-term function. Electric power will be generated at 13.8 kv 60 Hz with the generators connected to a main distribution substation for supply to the various process and infrastructure substations. The substations will contain switch gear, transformers and motor control centres for the connected loads Power Usage Summary The estimated power requirements for the project are summarised in Table Table 20-11: Power Summary Project Area Connected Power (MW) Absorbed Power (MW) Preparation Plant Leach Plant Product Section Major Process Packages Process Services and Utilities Plant Infrastructure General Infrastructure Allowances Total Power Reticulation The power station complex will contain the Main High Voltage Distribution Room from which will originate the feeders to all areas of the facility. High voltage distribution from the power station main switchboard will be via 13.8 kv cable. For major load centres within the process plant area the cables will go to the relative step down transformers for local distribution. For sites remote to the process plant, the cables will be connected to open wire 13.8 kv overhead transmission lines once they are outside the plant area. These areas include the accommodation facilities/camp, river water supply and similar areas. The transmission lines generally follow either roads or service corridors to the respective load centres. Ex-construction generators will be used at the mine site and at the limestone quarry. Report No R-Rev1 80

95 System voltage and frequency System voltages and frequency shall be as follows: 13.8 kv, 3 phase, 60 Hz, 3 wire supply shall be used for Primary Distribution from 13.8 kv Main Switchgear at Power Plant 4.16 kv, 3 phase, 60 Hz, 3 wire supply shall be used for selected applications 460 V, 3 phase, 60 Hz, 3 wire supply shall be used for distribution to motor control centres and related loads 220 V, 3 phase, 60 Hz, 4 wire, shall be used for lighting panel boards 220 V, 3 phase, 60 Hz, 4 wire, shall be used for receptacle panel boards, and miscellaneous single-phase loads 220/110 V, 3 phase, 60 Hz, 4 wire, or 110 V, 1 phase 60 Hz, shall be used for critical duty, Uninterruptible Power Supply (UPS) loads 24 V DC, 2 wire, shall be used for motor control circuitry. In general, utilisation voltages for motors shall be as follows: motors less than 350 kw: 460 V, three-phase, 60 Hz motors 350 kw and less than 1500 kw: 4.16 kv, three-phase, 60 Hz motors kw and larger: 13.8 kv, three-phase, 60 Hz. Motors will be direct on line (DOL) system Water General The project has significant water requirements for mining, processing and other uses. The main water requirements are: raw water for dust suppression seawater for ore slurrying filtered raw water for general process plant use potable water for domestic use demineralised water for steam generation and processing. Seawater and river water sources were identified as two potential water supply sources for this Project. Coffey 1 ( Consulting Services for the Conduct of Preliminary Baseline Environmental Studies, Volume 3: Water ) established that there was ample fresh water available from the Kalinawan River system, approximately 4 km to the northeast of the process plant site. The Water Supply system will consist of the following: main raw water supply to the process plant, port area and accommodation facilities seawater supply to the process plant. Report No R-Rev1 81

96 Water Requirements The water requirements were estimated based on the process water balance and typical potable water demands. The total raw water requirement has been assessed at approximately 9330 kl per day. For design purposes, an additional 15% allowance was added to this flow requirement. The overall water consumption for the project is summarised in the following table. Table 20-12: Water Consumption Summary Water Quality Daily Consumption (kl) Total raw water Filtered water Demineralised water Potable water 100 Seawater Concept Design The conceptual design for the water supply and major distribution system for this Project has been divided into the following elements: pump station intake works at the Kalinawan River major pumping station at the Kalinawan River pipeline from pumping station to raw water storage pond raw water storage pond pipeline from storage pond to process plant and water treatment plant balance tanks Water Reticulation The water reticulation system will provide water for the following uses: filtered raw water, potable water, demineralised water and firewater. Treated water will be reticulated throughout the site including to the process plant, port and accommodation facilities Water Treatment The water treatment system produces water to three water quality standards: filtered raw water for process and general plant use including gland seal water, cooling water and fire water potable water for human consumption and ablutions demineralised water for boiler feed water and other process water requirements. The primary source of water supply will be the Kalinawan River. The Coffey report states that the river water quality is generally good, with little suspended solids and turbidity. The proposed treatment consists of the following processes: coagulation/settlement for treatment of filtered raw water Report No R-Rev1 82

97 R.O. for demineralised water chlorination treatment for potable water. The water treatment plant will be located on a designated site at the south of the process plant Seawater Supply Seawater for the process plant is harvested near the wharf. The water is screened and then pumped from a pumping station near the barge loading area to the sea water storage tank for distribution. Most of the seawater is used for ore preparation and in the HPAL vent scrubber Port The wharf is located on the northeastern side of the plant area. The water depths beyond 50 m offshore are unknown at this stage as well as the seabed geotechnical properties. Assumptions have been made for the design and cost estimate for the underwater structures/foundations. The main wharf measures approximately 500 m 35 m. Concrete caissons foundation type will be used in shallow water and steel tubular piles in deeper water. The estimate has allowed for piles with maximum length of 40 m. The following wharf facilities provide the functional requirements of port operations: the main berth accommodating: DWT liquid tankers for acid, heavy fuel oil and diesel fuel, DWT bulk cargo ships for sulphur and product despatch, and DWT barges pipeline corridor and pumps for unloading liquid materials (diesel fuel, heavy fuel oil and acid) from the ships to storage tanks a 100 t crawler crane for loading and unloading containers admin office and warehouse. A heavy lift ramp is provided for unloading autoclaves, at up to 700 t, and other heavy modules during construction. This ramp will be designed such that it can be utilised as a permanent facility for accessing heavy loads for construction for future expansion and/or for operations. An access road, with maximum slope 6% and a road width of 6 m, accommodates multi-wheeler trailers with due allowance to minimise curves Bulk Liquid Handling The quantities of petroleum products to be consumed by the mining and process operations are sufficiently large to make bulk tankers the most cost effective solution. The main storage area will be located at the port with service (day) tanks located at the process plant and the mine sites, etc. Supply is from either within the Philippines or from Singapore, and it is anticipated that vessels will be DWT. Products that will be delivered by these vessels are heavy fuel oil (power generation, lime kiln) and diesel fuel (mobile equipment fleet, etc) Heavy Fuel Oil Heavy fuel oil (HFO) will be pumped ashore by the ship s on-board pumps through a flexible hose to the wharf product piping contained in a gallery on the back of the wharf. Product will be metered during delivery to bunded storage tanks located onshore adjacent to the wharf. The HFO will be pumped from the port storage tanks to the process plant day tank at the rate of 25 m 3 /hr using pumps situated adjacent to the port tanks. A stand-by pump will be provided in case of a breakdown. Report No R-Rev1 83

98 Diesel Fuel Diesel Fuel will be pumped ashore by the ship s on-board pumps through a flexible hose to the wharf product piping contained in a gallery on the back of the wharf. Product will be metered during delivery to bunded storage tanks located onshore adjacent to the wharf. Diesel fuel will be pumped from the port storage tanks to the day storage tanks at the vehicle refueling facilities adjacent to the process plant at the rate of 25 m 3 /h using pumps situated adjacent to the port tanks. Stand-by pumps will be provided in case of a breakdown. A road tanker loading facility will be located adjacent to the port storage tank farm. Diesel fuel will then be transported to mine site day storage tanks. At these facilities the tanker will be unloaded into the day tank using flexible hoses between tanker and unloading pump manifold. At the mine site fuelling facilities, diesel fuel will be independently pumped from day storage tank to heavy and light vehicle fuel dispensing equipment according to the required demand. A marine fuelling facility will be located at the barge unloading wharf where provision is made to meter and control refuelling of marine vessels such as the tugs and line boats. It may be possible for this facility to be gravity fed from the port storage tanks Bulk Solids Handling Bulk Sulphur Handling and Storage Bulk prilled sulphur will be delivered in geared Handymax vessels ( DWT), and will be unloaded using the ships gear and mechanical grabs of 7.5 m 3 capacity. The grabs will discharge to rubber tyred hoppers at the wharf. The hoppers will incorporate a variable speed belt feeder discharging to cross-wharf conveyors. The cross-wharf conveyors will also be mounted on rubber tyres. Sulphur will be transported by a wharf conveyor and transfer conveyor to a radial stacker that will discharge to a rectangular stockpile of t capacity. The stockpile will be located close to the port area. Sulphur will be reclaimed from the stockpile by front-end loader for feed to the plant Bulk Limestone Handling and Storage Limestone will be quarried from a deposit regional to the process plant. Limestone will be delivered by quarry trucks to a ROM hopper adjacent to the quarry. The ROM hopper will incorporate a fixed grizzly and a hydraulic rock breaker mounted on the hopper at the grizzly level for secondary breakage of any oversize material delivered to the ROM hopper. Limestone will then be trucked from the ROM hopper to the process plant site for further crushing and processing. For details of this process, please refer to the Process Description section of this report Fuel Tank Farm The main storage area will be located at the port with service (day) tanks located at the process plant and the mine sites, etc. The size of the storage required is governed by the size of the bulk ships which are readily available for charter. It is anticipated that vessels would be up to DWT. Products that would be delivered by these vessels are Heavy Fuel Oil (power generation, lime kiln) and diesel fuel (mining fleet and mobile equipment fuelling). The storage tank capacities are sized on the basis of the compartment volumes of the sea tankers likely to be used to deliver bulk liquids and the need to have service storage at the site to cover any interruption to supply. This interruption could be in the form of a delay in the arrival of a tanker to a break down or failure in the transfer pumping system. The storage tanks will be located on-shore, adjacent to the wharf facilities. Report No R-Rev1 84

99 Tanks will be fabricated from mild steel and placed inside separate earth bunds at the port and mine sites, and inside bunding appropriate to the location in the process plant. The size of tanks at the process plant and mine site is based on daily consumption estimates Liquid and Solid Waste Management Waste Water Treatment In order to meet the appropriate environmental standards for the disposal of sewage effluent from the facility, it is proposed to construct a centralised sewage reticulation system to cater for the administration centre, change house and other buildings. A packaged sewage treatment plant to handle domestic type waste water will be installed. As the service buildings are scattered over a wide area it may not be practical to connect some of the more remote buildings with only one or two toilets to the central sewage reticulation system. In these cases septic tanks with transpiration beds to absorb the partially treated effluent would be provided. Alternatively the septic tanks could be increased in size to form holding tanks and the influent could be pumped out to a tanker and carted on a daily basis to the main sewage treatment plant for further processing Solid Municipal Waste Management Infrastructure facilities will be developed to provide for the disposal of solid wastes generated by the process plant and the accommodation village facilities and construction camp, in separate sites. These solid waste disposal facilities will most likely be located in a remote valley close to the mine area. They will be provided with secure access to ensure safe and efficient operation and storage Plant Process Control System The process control system is a vital element in achieving safety of personnel and plant as well as efficiency and reliability of plant operation. It will be designed to maximise the operability and availability of the respective operating areas, while minimising the operator intervention required to control the plant. However, in accordance with normal operating procedures, sufficient full time operators are still required to handle potential plant upsets. All plant devices are to be operated and controlled from a single Central Control Room (CCR) by Operator Interface Stations (OIS) via a Distributed Control System (DCS). All interlocking and sequencing will be performed by the DCS. The DCS will be capable of upward data integration to a Management Information System (MIS) and a Maintenance Management System (MMS). A secure internet connection will also be included to allow remote plant monitoring. Sufficient measuring devices are to be installed to enable the operator to have a total view of the plant. This will allow the operator to control all aspects of the plant, such that faults and hazardous occurrences can be detected and monitored, and the consequences minimised. The parts of the processing plant supplied as vendor packaged equipment are, in some cases, essentially stand-alone and may be controlled locally by the vendor supplied control panel. The stand alone control systems will form part of and be supervised by the plant control system. Control of the entire plant is possible from the CCR, which is interconnected via a dual redundant fibre-optic data highway to substations and field auxiliary rooms located around the plant. A telemetry system for monitoring of remote sites (i.e. the residue storage facility) is integrated with the plant DCS system. Each control room operator works on a control panel of multiple OISs. An additional OIS is provided for engineering activities and can be used as an operator station in the event of an emergency. The control panels are adjacent to each other to allow efficient interaction of the operators. Each panel is capable of controlling all areas of the plant, but will typically display the control screens for only part of the plant. The CCR is to be located in the leach plant to allow a high interaction between the control room operator and the field operators in this area. The control room operators will be in communication with the field operators chiefly by hand held radios. Closed circuit television (CCTV) will be installed to allow the control room Report No R-Rev1 85

100 operators to visually monitor critical equipment. The field operators will perform all other visual equipment monitoring. The system provides fully redundant main processor modules operating in parallel. The processor units operate independently from each other and any failure detected during internal diagnostic routines will not degrade operation of the system. Failure of any one of these processors will cause the system to switch over to the back-up module and an alarm to be initiated. Communications between different modules on the DCS network will be via a dual redundant data highway. Communications between the substation/field auxiliary rooms control system modules will be via a dual redundant fibre optic network. The DCS controller electronics will be supported by a UPS which will provide 30 minutes of continuous operations in the event of a power system failure. As the exception to this rule several large equipment items and package plants such as the power station, water treatment plant, HPAL feed pumps and process filters may be supplied with their own PCS/PLC control equipment. These vendor-supplied systems will form part of, and be supervised by, the plant control system and shall be supplied in accordance with the project selection requirements and design criteria. Suitable graphic/control group displays will be configured on the OISs in the DCS to monitor the operating conditions on each of the above packages. Interlocking between these packages and other process equipment will be performed by the plant control system. All motors shall have a MANUAL/LOCAL condition reported on the DCS and some motors shall have AUTO/MANUAL selection on the DCS. An emergency bus will supply the emergency lighting distribution boards, UPSs, critical plant instruments (including the DCS) and critical equipment such as thickener rake mechanisms, the autoclave agitator seal water system and certain utilities Buildings Plant Site Buildings A number of buildings will be constructed at the plant site to support operational activities. Below is the list of buildings and infrastructures: Main Admin Office Building two-storey building Canteen, Clinic and Change House two-storey building Workshop Spare Parts Storage Building Product Storage Building Laboratory Process Control Room Chemical Storage Building Bulk Limestone Storage Shelter Bulk Sulphur Storage Shelter. Office, canteen, clinic and change house, and laboratory buildings will be reinforced concrete structure with brick walling and corrugated metal sheet roofing. Report No R-Rev1 86

101 Workshop, storage, shelter buildings will be steel framed structures with corrugated metal sheet walling and roofing. Foundations will be reinforced concrete spread footings with a maximum depth of 1.5 m from ground level. No allowance has been applied for pile foundation. The estimate has allowed for furniture, kitchen/laundry equipment and mechanical equipment such as overhead crane at the workshop, HVAC, pumps, etc Town/Village A town/village will be built as the main accommodation facilities to support plant operations. The village has been designed to accommodate approximately 50% of the project workforce, with the balance of the personnel commuting to site daily from local towns. The accommodation village is located about 1 km from the plant area. A dedicated access road will connect the village and plant. The town consists of the following: four units at 14 personnel expatriate/senior staff accommodation four units at 10 personnel national staff accommodation six units at 48 personnel non-staff accommodation 300-seat mess hall and kitchen emergency clinic building can accommodate four patients laundry building general storage building admin building recreation hall Indoor Sport Hall to accommodate table tennis and badminton outdoor sport fields comprise of three lawn tennis courts, one football field, two volley ball/basket ball fields sewage treatment plant complete with catch basin two generators: silent type at 750 kva complete with 5000 L diesel day tanks. All buildings at the town/village will be constructed from reinforced concrete structure, brick walling and corrugated metal sheet roofing. Foundations will be reinforced concrete spread footings with max depth of 1.0 m from ground level. No allowance has been made for pile foundations. The cost estimate has allowed some assumptions as below: a water supply pipeline, 1000 m long 150 nominal bore (NB), to transport potable water from the plant allowances for culverts crossing the internal road at the town landscaping furniture, kitchen/laundry equipment and general mechanical equipment, e.g. pumps, High Voltage AC (HVAC), etc. Report No R-Rev1 87

102 Access Roads Access roads are provided to link various coastal infrastructure facilities with the process plant site. These facilities include the permanent accommodation facilities and construction camps, port, construction industrial area, water and sewerage treatment plants, limestone quarry, waste tips, etc. The site access roads will consist of a 6 m wide unsealed crushed rock pavement (i.e. 4 m wide travel lane with 2 m wide shoulder allowance). The maximum grades will be limited to 1:8 (12.5%) to allow truck access for maintenance purposes Communications Overview Communications are vital for both the construction and the operation of a large plant such as that proposed for the Agata Nickel Project. The key focus of this stage of the study has been to produce an estimate for a solution that will provide a good compromise between functionality and cost. The proposed communications system integrates telephone, facsimile, UHF radio and computer data requirements on a VSAT satellite circuit linked to the public network. For mobile communications, a multi-channel trunked radio system will provide mobile voice communication. A broadband cable will be provided to link the plant area into the main system Communications Infrastructure and Equipment The scope of the project communications includes: voice communications, both fixed and mobile data communications including network infrastructure and hardware desktop hardware and software (excludes business software and hardware for sulphuric acid plant, etc) security video system satellite television for the permanent accommodation facilities Security and Fencing Chain link fencing complete with security posts at access gates will be installed at the perimeter of process plant site, village, port, mine camp, mine industrial area and magazine-explosive storage area. A concrete wall fence will also be installed at the magazine-explosive storage area for blast containment. The fences shall be constructed from: posts: galvanised steel pipe 75 mm 2 m high, at 3 m spacing galvanised steel chain link 50 mm diamond mesh three lines of galvanised barbed wire on top of fence post-bracing: galvanised steel pipe 50 mm with 45 angle, to be installed at corners or at 12 m spacing for straight fence foundation: reinforced concrete with minimum 0.5 m post-embedment gates shall be made of the same material as the fence, and may be either swing or slide operated. Report No R-Rev1 88

103 20.6 Residue Management Introduction As part of the PEA review, Golder has reviewed the sections of the Agata Nickel Project Scoping Study (Boyd, USVC RevC, 2010) that relate to residue management. This section presents the results of our review and provides a revised cost estimate, based on option to store the first seven years of residue generated by the process plant in a valley located to the southwest of the main pit, with subsequent storage in an above-ground facility located within the pit footprint Review of existing Information A review of the residue management section of the Scoping Study, presented in: Process Plant Description Base Case and Option 1, Residue Storage Facility Process Plant Description Option 2, Residue Storage Facility Capital Costs, Table 9-1 and Table 9-2 Capital Costs, Residue Storage Facility and Site Development Costs Environmental and Social, Solid Residue Storage Information relating to residue management is also referenced in other sections. The pertinent information resulting from the review, with commentary from Golder, is presented below. A representative residue sample was not available and hence, the physical properties were assumed based on the authors previous experience. Physical testing of the residue was recommended by the authors of the Scoping Study. This approach is reasonable for this level of study. Two alternatives were considered for the RSF: a valley RSF located in the coastal range or above-ground impoundments constructed on level ground to the east of the project area. The authors indicate that further work is required to identify suitable valleys and hence, the above-ground impoundment was costed for the study. Golder has carried out a desktop study to identify candidate valley RSF locations (see Section ). A retaining structure was designed for the first eight years of operation, with future expansions allowed for as deferred capital. The tailings would be delivered at 23% solids through a 5 km pipeline, with hydraulic deposition into the above-ground RSF. This approach seems reasonable provided that sufficient level ground is available for the above-ground RSF. No figures or drawings were available for review. It is assumed that the RSF is raised in the downstream direction. The RSF proposed for Option 2 is consistent with the Base Case and Option 1. This approach appears reasonable for this level of study. The costs associated with the RSF were based on earthworks data provided by Mindoro and estimates prepared by Ausenco Vector for a similar project in Northern Philippines. The RSF cost was developed assuming three phases of development. This approach appears reasonable. Earthworks data were not available for review, however, costs were included in Tables 9-1 and 9-2 and are reproduced in Table Report No R-Rev1 89

104 The phases presented in Table 9-2 are not consistent with the phases presented in Section of the Scoping Study. The RSF is acknowledged as being one of the higher risk components of mining. The authors indicated that the RSF should be designed to conventional tailings standards, should make a provision for water management and should include other engineering controls such as a liner (geomembrane and/or compacted clay), leachate collection systems to minimise hydraulic head on the liner, subsurface drains beneath the liner to address groundwater upwelling and aggressive surface water controls to divert flows from the TSF. The inclusion of a liner will be dependent on the environmental compliance criteria for the project and the points of measurements. However, it appears reasonable to include provision for a liner at this level of study. A leachate collection system and subsurface drains are supported by Golder. It is agreed that surface water management will be critical to the success of the project. Incident rainfall, non-diverted surface water and supernatant water will be treated prior to discharge into the ocean. This approach is reasonable, provided that sufficient studies are carried out to assess the feasibility. Costs for the RSF estimated in the scoping study (2010) are presented in Table Table 20-13: Summary of Initial and Deferred Capital Costs included in the Scoping Study Phase of RSF Development Estimated Cost from Scoping Study Phase 1 USD Phase 2 USD Phase 3 USD Phase 4 (Base Case and Option 1 only) USD Total USD There was no specific information relating to the capacity of this RSF. Assuming a mine life of 20 years (reference Section of the Scoping Study) and assuming a tailings tonnage of 1.6 Mtpa (estimated based on the solids deposition rate per day presented in Appendix 1.3) the cost per dry tonne of residue is estimated to be USD2.79. This cost per dry tonne of residue appears to be on the low end for residue management in the Philippines. No allowance for discounting using a net present value approach has been included in this calculation Residue Management Options Overview As part of our review, Golder carried out a desktop study to identify candidate locations for the RSF. The initial focus was to identify the level ground location referenced in the Scoping Study, to allow the earthworks volumes to be estimated and a meaningful cost comparison to be made. Candidate locations for a valley-fill RSF were also considered Engineering Design Criteria and Assumptions The following information and assumptions were used in the desktop study. The currently available topographic survey represents the extent of the available leases and candidate RSF locations are required to be within this extent Report No R-Rev1 90

105 The facility will lined with a geomembrane or similar A leachate collection system and subsurface drainage system will be required Surface water diversion structures will be required A 5 m freeboard has been allowed for management of supernatant water and stored incident rainfall / runoff The tailings beaches have been assumed to be horizontal There are no constraints (e.g. wildlife reserves, townships, etc.) within the area covered by the topographic survey Approximately 1.6 Mt of tailings will be generated annually for 15 years (provided by Boyd Willis Hydromet Consulting via on 22 February 2011) An allowance of 12.5% in addition to the above tonnage is recommended to account for possible increases in plant through-put (provided by Boyd Willis Hydromet Consulting via on 22 February 2011) The tailings will achieve a dry density of about 1 t/m 3 in the longer term, indicating that a total volume of 27 Mm 3 is required to be stored The mined out pit will initially not be available for storage of residue due to scheduling constraints Based on the above information, candidate RSF locations were identified within the extents of the survey Candidate RSF Locations The candidate valley RSF locations identified in the desktop study are presented in Figure Report No R-Rev1 91

106 Figure 20-7: Candidate Valley RSF Locations For each valley location, the storage capacity and embankment fill volume is presented in Figure Construction of an above-ground RSF located within the pit footprint has also been identified as an option. A review of these options indicates that a combination of Option A and an above-ground RSF located within the pit footprint would be required to meet the capacity requirements. This combination is considered to be economically attractive as it makes use of already disturbed ground, after the mining operations have ceased. For the purposes of this study, a cost estimate has been prepared for this combination. Key aspects of this option include: There will be a need to install surface water diversion measures to reduce the volume of water to be managed on the valley RSF The proposed haul road alignment will need to be revised to allowed the RSF embankments to be raised to a sufficient elevation to provide the target storage capacity The footprint area of the valley TSF will need to be cleared, grubbed and prepared for installation of a subsurface drains, followed by a liner Water from the RSFs is assumed to be treated and discharged to the ocean (the costs for this are assumed to be addressed elsewhere) Report No R-Rev1 92

107 It should be noted that due to the proximity of the river and the slope of the existing topography, a level ground RSF was not considered to be feasible. The available space was insufficient to construct an embankment in three phases (downstream) and provide the required storage capacity. Consequently, the costs associated with an above-ground RSF have been estimated assuming that a location with an area of ~150 ha is available in other locations Cost Estimate Golder has developed quantities for the following residue management approach: Management of residue generated in the first seven years in a valley RSF Management of the remaining eight years of residue in the pit void, with the perimeter embankment raised as required to provide sufficient capacity. The cost for residue management has been based on unit rates adopted by Golder after a review of available information relating to similar projects in the Philippines. The sources of information include: Unit rates from our internal database, based on Contractor rates provided by our Manilla office Unit rates estimated by Golder for a similar project near Mindoro Unit rates estimated by Ausenco Vector, provided by Mindoro Experience-based judgement from Golder personnel who have recently worked on Philippines-based projects. The unit rates adopted for this cost estimate are presented in the table below. Item Unit Rate Clear and Grub USD0.50 per m 2 Liner System, including delivery and placement USD10.00 per m 2 Embankment Bulk Fill* USD10.00 per m 3 Liner Bedding Material USD12.50 per m 3 Excavation of Diversion Channel USD4.30 per m 3 * Including winning, hauling, placement, moisture conditioning and compaction Adopting these unit rates, the estimated costs are as follows: Capital Cost of Valley RSF = ~USD120 M This cost will be spent in Year 0 and the RSF provides residue management capacity for seven years or approximately 12.6 Mm 3. Deferred Capital Cost of In-pit RSF = ~USD133 M This cost will be spent in Years 6 and 7, ready for deposition in Year 8, and the RSF provides residue management capacity for an additional eight years or approximately ~14.4 Mm 3. Please note that the accuracy of the cost estimates presented in this memorandum is about ±35%. A contingency amount of 40% would therefore typically be included at this level of study. The contingency has not been included in our cost estimate, as Mindoro has advised that a contingency will be applied to the total capital cost estimate in the Preliminary Economic Assessment Conclusions Our review of the Scoping Study indicates that the assumptions and approach appear to be reasonable, with the exception of selection of an above-ground RSF. Based on the survey provided, a suitable site for an Report No R-Rev1 93

108 above-ground RSF was not considered feasible within the extent of the survey provided. However, a valley RSF location was identified and costed to provide a comparison price. Based on our desktop study, it is recommended that a cost of USD120 M be adopted as the capital cost for residue management for the PEA. A further USD133 M should be allowed as deferred capital, to be spent during Years 6 and 7. If a suitable location for an above-ground RSF is identified, the cost of residue management could be reduced Preliminary Hydrological and Hydrogeological Assessment The Agata Project is located in a mountainous region with several creeks draining towards the Mindanao Sea on the western side and towards the Kalinawan Valley on the eastern side. The Kalinawan River (referred to as the Toubay River in previous studies) is situated about 1 km east of the proposed mine area and flows in a southerly direction. Tumanda et al. (2004) report that the average discharge of the Kalinawan River is about 2 M m 3 /day (2000 ML/d) and more than adequate to meet project water requirements. The water quality of this river is very good (Coffey, 2008) with Total Suspended Solids (TSS) concentrations of about 2 mg/l and Total Dissolved Solids (TDS) concentrations of about 70 mg/l. Nutrient levels are low ranging between 0.2 to 1.2 mg/l nitrate. Lake Mainit is a large freshwater lake situated approximately 4 km north of the proposed mine area. The water quality of this lake is very good (Coffey, 2008) with TDS concentrations of about 80 mg/l and low nutrient concentrations. There is no information on the groundwater potential in the region from previous studies. Groundwater does occur in (probably shallow) alluvial sediments in the Kalinawan Valley. Groundwater is being used for mostly domestic purposes, but there is no known large scale use of groundwater (e.g. for irrigation). The groundwater resource potential should be further assessed if it is considered for a water supply. The groundwater potential in the mining region and port is probably poor. The geology is complex and the mine area is bound between two major strands of the Philippine Fault with one or more splays passing through the region. There are at least six different lithologies, each likely to have different aquifer characteristics. In the mining region, the laterites are developed over ultramafic rocks which lie along the Western Range. Groundwater is probably associated with fractured rock aquifers. These aquifers may have the potential to meet potable water supply but would probably not be sufficient for process water requirements Water Management Plan Water associated with any aspect of the mining operation will be managed so that it would not have any detrimental impact on the environment and on mining operations. The water management plan would comprise: Sediment control structures required to capture any sediment-laden runoff from mine affected areas. This will avoid the release of suspended solids into the environment. The proposed sediment control structures would comprise earth embankment facilities to capture and store sediment-laden runoff and the release of clear water to the environment. Drains to divert non-impacted runoff from entering the mine workings. Installation of buffer storage, pumping facilities and pipelines to ensure the site can cope with large rainfall events and subsequent flooding of the mine pits. The mine water management plan will also comprise drains to avoid downstream contamination of rivers, creeks and streams, provide facilities for the storage and disposal of low quality water and manage surface runoff from the process plant and other mine facilities. Report No R-Rev1 94

109 For the purposes of this study, we assumed that water management would include the following works: Sediment control structures Diversion channels and drains Flood protection earthworks Stormwater drainage systems, and In-pit pumps and pipeline. For the purposes of this study, we assumed that the flood protection earthworks would form part of the mining operations and the stormwater drainage system would form part of the process plant infrastructure requirements. The estimated costs for the sediment control structures and diversion channels and drains is USD20 to 40 M Open Pit Dewatering No information on dewatering requirements has been found from previous studies. Dewatering requirements depend on the depth of the proposed open pits and the depth to groundwater. During the exploration program, none of the shallow laterite drilling holes encountered groundwater. In deeper holes, groundwater was encountered at about 40 m depth. A study carried out in the region indicates that deeper groundwater depths range between 38 m to 55 m (Tokyo Institute of Technology, 2010). Mining the limonite and saprolite resources may require the open pits to be dewatered. This might entail dewatering from in-pit sumps or from in-pit and perimeter dewatering bores. Dewatering requirements, if necessary, should be reassessed during the pre-feasibility study, once the pre-feasibility mine plan is available and more information about the depth to groundwater is obtained. For the purpose of this study, as dewatering is not likely, costs associated with dewatering have not been included. Surface water management is described in Section Environment Summary To date Mindoro appears to have met environmental assessment requirements appropriately. Mindoro has also received two key environmental permits to operate. Mindoro now needs to focus on gaining the remaining environmental permits and ensuring all environmental permits apply to the new mine plan. Mindoro also should consider updating environmental information and establishing structured environmental management systems and documentation, as they are important components of meeting permitting requirements Overview Mindoro is committed to environment, health and safety (EHS) and oversees corporate actions through its corporate board EHS committee. Mindoro has committed to develop the Agata Nickel Project in accordance with the International Finance Corporation Performance Standards on Social and Environmental Sustainability, and the requirements under Philippine law. In response to this commitment, Mindoro is to develop a Health, Safety, Environment and Community Policy (HSEC) document jointly with the IFC. Mindoro has also agreed to prepare an Environmental and Social Action Plan to cover all HSEC aspects related to exploration activities, feasibility work and potential future Report No R-Rev1 95

110 mine development. In addition, Mindoro, has announced it is developing an Environmental Management System (EMS) with the IFC s assistance to adequately manage, plan and document the environmental issues relating to their activities in the Philippines. In reviewing Mindoro s environmental actions to date relevant to the Agata Nickel Project, Golder reviewed Company documents including the following: a series of independent technical reports on the Agata Nickel Project scoping study since September 2008 (Willis and Gifford, 2010). A site reconnaissance to view environmental aspects was not undertaken Environmental Baseline Information Mindoro has undertaken baseline studies and impact assessments covering all relevant environmental aspects, however these studies were undertaken prior to development of the new 2010 mine plan. Golder reviewed summary information in the environmental impact statement (EIS) (Technotrix Consultancy Services Inc and Mediatrix Business Consultancy 2007) and concludes that studies were appropriate and reasonable Permitting and Approvals The permitting and approvals process has been well described (Mindoro Resources Ltd 2011) and the following two key approvals for the Agata Project have been approved by the Department of Environmental and Natural Resources: Mineral Production Sharing Agreement (MPSA) Environmental Compliance Certificate (ECC). The Director of the Mines and Geosciences Bureau also requires the following environmental documentation to be submitted and approved before operations may commence: Environmental protection and enhancement program (EPEP) Social development and management program (SDMP) Final mine rehabilitation and decommissioning plan (FMRDP). Several other permits relating to port construction, water use and waste management are required that have an environmental component. A social and environmental impact assessment that meets IFC standards has also yet to be completed Outstanding Environmental Concerns The key environmental concern for the ongoing development of the Agata Project is being awarded the outstanding permits and approvals, and ensuring the existing permits apply to the updated mine plan, i.e. to not only directly ship mineralisation offshore but also to process mineralisation on site in a purpose-built facility. Updated information addressing the following will be necessary: the specifications, location, and inputs and outputs of the processing facility the environmental effects of the processing operation on both terrestrial and aquatic (including marine) environments feasible management options for the environmental effects ongoing environmental management systems. Report No R-Rev1 96

111 A second environmental concern is the apparent lack of completed environmental management documentation and a systematic approach to environmental management. Environmental management plans for all exploration, construction and operational activities should either be completed or in preparation, in parallel with an integrated environmental management system (EIS). Even a simplistic EIS at this stage of project development should refer to all permitting aspects, information and documentation requirements, roles and responsibilities, site monitoring, compliance requirements and environmental health and safety Community Engagement and Social Concerns Summary Mindoro has demonstrated a comprehensive approach to community consultation and socio-economic impact studies to date as they have related to exploration activities. The existence of current relationships will assist with the effectiveness of future programming as the project progresses towards feasibility studies and potential operations. The aim of the program appears well aligned to international standards for good practice engagement but no comment can be made on effectiveness until the program is implemented Performance Review A Golder desktop assessment of community engagement and social programs indicates that Mindoro has: engaged with the projects near neighbours understands the views of community stakeholders provides information about the project and anticipated impacts for communities supports community needs for education, health and other development needs engages with and seek free and prior informed consent (FPIC) from appropriate indigenous people conducts socio-economic impact studies. The approach is consistent with international standards. Work in this area has been assigned to a Community Relations and Development Department (ComRel). Some of the key methods Mindoro has employed include: Regular Information, Communication and Education (ICE) campaigns, delivering information to stakeholders about exploration activities, environmental impacts and mitigations. The establishment of a Community Technical Working Group (CTWG), which includes community representation and acts as an advisory group for technical matters relating to the project and community development initiatives. Social development programs aimed at local schools, computer literacy, health improvements and the empowerment of women. Indigenous people have been engaged in a FPIC program including fieldworks and received benefits including capacity building training. A socio-economic profiling study has identified barangays (villages) likely to be impacted by a mining project and highlighted potential impacts on those populations (Coffey, 2009) Project Impacts and Community Expectation While the approach so far has been active and measurable against international standards, Mindoro will be aware the move towards feasibility studies and construction of an operating nickel mine will present new challenges for maintaining the company s record of achievements in this area. Some of the expected impacts of this work will include: Report No R-Rev1 97

112 resettlement requirements (Golder understands some resettlement and land acquisition discussions have taken place) impacts on marine ecology (fisheries) changes to livelihood and lifestyle of communities changes to local habitats impacts on Indigenous people. These issues need to be considered in the context of current community expectations which are likely to include: financial compensation for land and resettlement high levels of local employment ongoing provision of community services such as for health and education. Mindoro has publicly discussed a five-year program to implement programs aimed at community information, capacity building, livelihood, infrastructure, education, health, safety and tourism ( The challenge will be for the company to develop an achievable plan for implementing these programs and communicate realistic outcomes to stakeholders Community Engagement A desktop assessment of community engagement and social programs currently underway in connection with the Agata Project was based on documents provided by Mindoro. The material reviewed for this assessment indicates Mindoro has: engaged with the projects near neighbours understands the views of community stakeholders provides information about the project and anticipated impacts for communities supports community needs for education, health and other development needs engaged with and seek free and prior informed consent (FPIC) from appropriate indigenous people for exploration and mining work conducts socio-economic impact studies (profiling studies commenced). The approach is consistent with international standards including the International Finance Corporation s Stakeholder Engagement: A Good Practice Handbook for Companies Doing Business in Emerging Markets (IFC, 2007) and the International Council on Mining & Metals Good Practice Guide: Indigenous Peoples and Mining (2010). Both authorities recommend early and effective stakeholder engagement, particularly involving those who will be directly affected by a project. All available written information about Mindoro s approach to community engagement shows recognition of these principles, which has been steadily building into a series of tangible outcomes through the project s exploration phase. Work in this area has been assigned to a Community Relations and Development Department (ComRel). Some of the key methods Mindoro has employed include: Regular Information, Communication and Education (ICE) campaigns, delivering information to stakeholders about exploration activities, environmental impacts and mitigations. Report No R-Rev1 98

113 The establishment of a Community Technical Working Group (CTWG), which includes community representation and acts as an advisory group for technical matters relating to the project and community development initiatives. Social development programs aimed at local schools, computer literacy, provision of health services and the empowerment of women. Indigenous people have been engaged in a FPIC program including fieldworks and received benefits including employment and capacity building training. A socio-economic profiling study has identified barangays (villages) likely to be impacted by a mining project and highlighted potential impacts on those populations (Coffey, 2009) Environment Health and Safety Summary Mindoro has recognised the importance of environment health and safety (EHS) at a corporate level and now needs to develop an EHS system on site as a matter of priority during all phases of project development Overview Mindoro is committed to EHS and oversees corporate actions through its corporate board EHS committee. In developing the Agata Nickel Project, Mindoro has identified the need to adhere to both local and international legislation and guidelines such as: World Bank Group Environmental, Health and Safety Standards for Mining Labour Code of the Philippines including occupational safety and health standards for all mining activities Sanitation Code of the Philippines. In addressing EHS requirements, Mindoro has committed to preparing a Health, Safety, Environment and Community Policy (HSEC) document jointly with the International Finance Corporation Site EHS No Mindoro EHS documentation was seen for this PEA and we understand that significant improvement in the implementation of EHS standards could be made on site. Golder therefore recommends that upgrading EHS standards on site is considered a priority. Recommendations to improve EHS performance are proposed in Section Report No R-Rev1 99

114 21.0 INTERPRETATION AND CONCLUSIONS 21.1 Geological Setting Mindoro has a good understanding of geology and geomorphology controls on nickel mineralisation in the Agata deposit. The extent of the laterite and hence the nickel mineralisation is well defined by surface and outcrop mapping and drilling by Mindoro.. The following items pose potential technical risks to the project: Transition material transition material may occur at the limonite and saprolite contact. In this style of deposit, it may occur over very short distances and thicknesses. Transition material will generally have poorer metallurgical properties than either pure limonite or saprolite. Variable and irregular contacts laterite deposits such as at Agata deposit can be variable over short distances. Evidence from costean mapping (Figure 9-4) indicates the potential for a high degree of variation in the limonite and saprolite surface, which may have an impact on mining technique, mining rates, mineralisation selectivity, and process recovery. Presence of boulders in similar deposits elsewhere in the region, poorly weathered boulders have a significant impact on recovery of saprolite ore. Definition of saprock Mindoro define saprock as less intensely weathered saprolite typically with lower nickel grade. In reality, the identification of saprock is by 0.4% Ni grade cut-off. This approach is consistent with industry norms. The nature of this transition from saprolite to saprock results in a highly irregular surface, which may have an impact on mining, mineralisation selectivity, and resource recovery Drilling Drilling techniques are industry standard and Golder considers them appropriate for nickel laterite deposits. Core recovery is good and procedures for recording depth and hole location are industry standard Sampling Method and Approach Drilling, drill sampling and logging procedures are well documented and industry standard. Golder considers them to be appropriate for nickel laterite deposits. Mindoro also has QAQC systems in place that indicate good quality sampling and assaying. Regular independent verification and audits confirm good compliance with procedures and continuous improvement to methods and protocols. It is Golder s opinion that there are insufficient density measurements to qualify any part of the resource as Measured. Based on our experience, the dry bulk density values for limonite may be too high given the high moisture content and may impact on tonnages reported for Mineral Resources. Similarly, the preferential selection of competent core in saprolite may cause an over statement of saprolite density. However, it does not appear that Mindoro allows any density variation for boulders, which will be higher density than weathered saprolite Sample Preparation and Security Drilling, drill sampling and logging procedures are well documented and industry standard. Golder considers them as appropriate for nickel laterite deposits. Report No R-Rev1 100

115 Mindoro also has QAQC systems in place that indicate good quality sampling and assaying. Regular independent verification and audits confirm good compliance with procedures and continuous improvement to methods and protocols Data Verification Golder has not undertaken any independent data verification Mineral Resource and Mineral Reserve Estimates Mineral Resource The approach taken to build the geology is standard industry practice. It balances and validates subjective geological logging of drill samples with geochemistry to determine the position of lithology contacts. The simplified connection of limonite/saprolite contact points in drill holes may understate irregularity and variation in the contact. This may result in understatement of mineralisation volume and overstate lateral continuity of mineralisation. While limonite and saprolite domaining as a whole is a valid starting point, various other lithologies within these show distinct and different statistical behaviour. These include LF, LA and LB lithology codes within limonite and boulder domains versus saprolite within the saprolite modelled domain. Bivariate relationships between Ni% and other elements in the modelled saprolite domain suggest a sharp increase in Mg% as the Ni% grades are reduced. The relationship is positive with Fe% data. More than 10% of the modelled saprolite Domain is consisted of boulder. This may present mining recovery and metallurgical recovery issues. Due to the geometry and position of the some of the regolith horizons, the use of 1 m composites is acceptable. Preparation of the composite map files for grade estimation has been carried out in a diligent manner. Interpretation of the nugget variance used in variography for the purpose of estimation is acceptable. The omni-directional variograms used by QG for variography are based on the assumption of isotropy. This approach is an approximation and does not necessarily provide an accurate reflection of local directions of continuity or the spatial nature of the variability. Further work in defining local spatial variability may provide local improvements in the estimations. Globally this will have a minimal impact on estimates and the risk on the reserves will be low. Although the drill hole spacing is quite variable, for the purposes of a resource estimate model the block sizes chosen are acceptable for reasonable local estimation quality and to control the smoothing effect. The drill hole spacing is generally sufficient to characterise the grade-tonnage curve of 20 m 20 m 1 m blocks for most domains. Use of the Datamine dynamic search feature which equates to a process of unfolding is supportable by Golder. The search parameters used for estimation are reasonable. Estimates of block grade for most variables in the block model show good conformance to the data average grade. The swath plot model validation indicates acceptable conformance of the OK estimated grade to the composited data for most elements and domains. The basis for the resource classification used by QG with classes defined by drill spacing is considered by Golder to be reasonable. Further drilling density assessment will be beneficial to the project progression. Report No R-Rev1 101

116 The small undercall in Fe and slight overcall in Ni grades represent a minor risk item. Mineral Reserve The mining inventory representing the estimated mill feed tonnage and quality includes Indicated and Inferred Resources. Approximately 5% of the mining inventory is classified as an Inferred Resource. No Measured Resource is currently reported in this PEA or previous Technical Reports documenting the Mineral Resource estimate. No Mineral Reserve estimate is reported in this PEA prepared as a conceptual level study. Mindoro has committed to proceeding with a PFS Mining The mineral inventory and scheduling are reasonable for the level of study. Approximately 700 kdmt remained on stockpile due to inability to schedule and meets grade requirements at the plant. The equipment sizing used in the planning is appropriate for the size and style of operation and mining selectivity Metallurgy Two metallurgical testwork programs have been conducted on mineralisation samples from the Agata deposit. The most recent program of work conducted at SGS Lakefield in Perth has shown that: Limonite mineralisation is amenable to processing by HPAL and has fast leaching kinetics with approximately 97-99% of the nickel extracted within 20 minutes of leaching time. Saprolite mineralisation is amenable to AL with favourable extractions of over 95% Ni in four hours. Other metallurgical characteristics are considered to be typical of tropical nickel-cobalt laterite mineralisation deposits. Further detailed programs of metallurgical testwork including locked cycle and continuous testing, as well as variability testing, should be undertaken in the next phase of testwork Economic Analysis An economic analysis using the discounted cashflow (DCF) methodology has been prepared based on the HPAL and AL and SN hydrometallurgical process described in this report. Based on the mining schedules, capital and operating costs documented in this PEA and a long term nickel price of USD10 per pound, the project has a NPV of USD390 M at a 10% after tax discount rate. Based on these results Mindoro indicates it will proceed with further study towards development. A summary of the PEA financial model results after taxation and excluding financing is presented in Table Table 21-1: Summary of Financial Analysis Results Nickel Price USD/lb USD8.50 USD10 USD12 NPV (10% discount rate) USD M IRR % 14% 19% 26% Operating costs estimates are summarised in Table Report No R-Rev1 102

117 Table 21-2: Operating Costs Average Annual USD M USD/lb Ni Mining Labour Sulphuric Acid Processing Utilities Maintenance G&A Marketing Indirects Total Operating Costs before by-products Cobalt by-product Credits 17.3 {0.45} Power by-product Credits 19.6 {0.51} Total Operating Costs after by-products Sensitivity analysis shows that the project is robust to changes in the economic modelling assumptions. The analysis has identified that the project is most sensitive to factors which impact on revenue (nickel price, feed grade and recovery) followed by capital costs. The project is least sensitive to operating cost estimates. The relative sensitivity of the project to revenue, capital and operating cost estimates is illustrated in the sensitivity chart Figure Figure 21-1: Sensitivity Analysis Report No R-Rev1 103

118 22.0 RECOMMENDATIONS 22.1 Geological Setting The nature of contacts between limonite, saprolite, and saprock requires greater understanding. Feasibility programs should attempt to characterise the very short-scale (mining scale) irregularity through one or more of the following: Close-spaced (5 5 m) drilling programs Long (>20 m) and deep (~5 m) trenches in several orientations Geophysical surveys such as ground penetrating radar (GPR) Small-scale (~50 50 m) trial mine The presence, frequency, and extent of boulders in the saprolite horizon also require better definitions. Another component of the feasibility study might include conditional simulation studies to assess potential mineralisation loss and dilution due to boulders and irregular contacts Sampling Method and Approach Mindoro should maintain the high standard sampling and QAQC protocols and systems currently in place for all future drilling and assaying programs. Golder recommends increasing the coverage of bulk density sampling. Sample sizes should be as large as practically possible. If Mindoro dig any pits similar to previous density sampling programs, consider measuring volume and weight of the total material from the pit. Mindoro may wish to investigate alternative density measurement methods such as downhole geophysical methods Sample Preparation, Analyses and Security Mindoro should maintain the high standard sampling and QAQC protocols and systems currently in place for all future drilling and assaying programs. Mindoro should consider developing a suite of matrix-matched standard reference samples from Agata Project sample reject material to monitor the quality of future drilling and assaying programs Drilling Mindoro should maintain the same standard of drilling for future resource definition programs Mineral Resources and Mineral Reserves Mineral Resources Golder recommends further investigation about the nature of the limonite/saprolite contact. Priority 1 Occurrences of boulder and their associated grades in the saprolite modelled area needs to be further investigated and characterised. Golder believes that presence of boulder within the saprolite layer will present mining recovery and metallurgical recovery issues. Boulder has presently been mixed with saprolite in the current model and there is no indication of amount or grade of such material. It is recommended that conditional simulation studies be carried out. The simulation studies should include the simulation of the likelihood of intersecting boulder runs of various lengths within the saprolite. This will help characterise the risk of recovering saprolite for both mining and metallurgical purposes. Report No R-Rev1 104

119 Priority 2 Investigate the possibility of separating LF, LA and LB horizons for domaining purposes. Golder notes a lack of use of high grade cutting or high grade restraining. It is recommended that an assessment of high grade outliers be carried out prior to interpolation for the PFS. Investigate possibility of modelling variograms using unfolding techniques. Use variogram maps and directional variography to identify and model orientations of continuity. The 3D integrity of the variogram models need to be assessed to determine whether the models provide a satisfactory fit in other directions. Perform assessment of the smoothing effect associated with the current block model. Perform drilling grid analysis to better guide the PFS and DFS studies. Assessment of the uncertainty inherent in the geological model needs to be investigated. Priority 3 Investigate possibility of using m block size to better align with current drill spacing. Mineral Reserves Mindoro will work towards estimating a Mineral Reserve in the PFS Mining Carry out fleet selection study based on Version 9d schedule Carry out marginal cut-off grade study on Material type categories based on March 2011 processing and financial models Develop mining dilution and mineralisation loss criteria for application in future mining studies Run Pit Optimisation to be run for future planning to better delineate open pit deposit Optimise Mining and Plant Feed schedules with consideration to Stockpile balancing Metallurgy and Process Metallurgical testwork undertaken to date has been of a scoping nature. More detailed programs of work are required as part of the Feasibility Studies planned for the project. The work should include: Metallurgical test work programs should attempt to identify preferred process streams for transition material. This might include defining parameters such as magnesium and/or iron cut-off grades for each process stream. Additional bench scale testwork on representative composite samples based on the latest mine schedules. Comprehensive leach variability testwork using samples from a range spatial pit locations, mineralisation types and grades throughout the deposit. This should include both HPAL and AL testing for the relevant mineralisation types, as well as slurry characterisation. Further evaluation for upgrading of limonite by large scale scrubbing tests and continuous scrubbing piloting. Report No R-Rev1 105

120 Continuous testwork and piloting of the total proposed circuit with recycling of intermediate streams. It is important that blending of composite samples for piloting reflects the amount of each mineralisation type in the deposit, including the three classifications of saprolite Residue (Tailings) Management Our review of the Scoping Study indicates that the assumptions and approach appear to be reasonable, with the exception of selection of an above-ground RSF. Based on the survey provided, a suitable site for an above-ground RSF was not considered feasible within the extent of the survey provided. However, a valley RSF location was identified and costed to provide a comparison price. Based on our desktop study, it is recommended that an operating cost of USD10.49 per dry tonne of tailings, inclusive of a 25% contingency, be adopted for the PEA. Assuming a 15 year mine life at 1.6 Mtpa, plus a 12.5% contingency, the estimated cost for residue management is estimated to be USD284 M. The capital cost of the residue management is USD253 M excluding the 12.5% contingency summarised above. Mindoro is applying a global 30% contingency on all capital costs. If a suitable location for an above-ground RSF is identified, the cost per dry tonne of tailings could be reduced Environment Golder considers Mindoro s environmental actions should focus on obtaining outstanding environmental permits. Key factors are likely to be upgrading site environmental information and corporate environmental management systems. Golder recommends: Permitting and Approvals Reviewing the Philippine permitting and approvals process with respect to the new mine plan. Reviewing the existing environmental information against the applicable World Bank standards and identify gaps. Developing an environmental assessment program to address knowledge gaps in meeting both local and international environmental requirements. Undertaking the necessary assessments and updating environmental approval documentation accordingly. Environmental Management Completing an EMP for exploration activities that will provide the basis for a construction and subsequently operations EMP. Establishing an EMS that is upgraded as the project ramps up. The EMS need not be complex at this stage of project development but should refer to all relevant environmental management aspects Community Engagement Golder recommends that more emphasis be placed on communicating the negative impacts of an operating mine, and associated environmental and social issues, particularly where those environmental impacts will directly affect current livelihoods and lifestyles. Achieving FPIC for operations will require evidence that indigenous people understand the potential negative impacts as well as potential benefits of the entire project. This means involving stakeholders in information about the detailed design, operations and environmental impacts as a matter of course. Golder understands there is a particular challenge in the Philippines to reach vulnerable or less powerful groups, where community leaders and more privileged persons can sometimes dominate the attention of proponents. Report No R-Rev1 106

121 Environmental and social impact assessment should also seek and incorporate community feedback as part of the assessment and mitigation process. The key element of this process will be providing feedback to stakeholders who have been consulted and responding to their concerns in a detailed and effective way. Golder emphasises the limitations of this assessment as a preliminary desktop assessment and strongly recommends a comprehensive audit be conducted to accurately assess and characterise Mindoro s social performance to IFC standard. The scope for such an audit would include field assessments, interviews and a thorough analysis of documentation and reporting Occupational Health and Safety We recommend a staged approach to the establishment of an EHS system that can be reviewed, updated and expanded as the project develops. The following core elements should be developed and implemented to assist in the management of key EHS risks for the project: Health and Safety Policy Fitness for Work Policy, including travel medicine and malaria risk Site Access and Control Procedures, including site induction, security and travel arrangements Hazard and Risk Management Procedure Incident Reporting and Investigation Procedure Site Health and Safety Plan Emergency Management Plan. These EHS components could be developed as standalone documents and form the basis of an EHS system. We recommend a project hazard workshop be held to inform and develop the scope of the EHS system and to ensure that the key risks are captured and systems are developed to manage them Economic Analysis Golder recommend that the financial model is updated regularly as amended parameters and data comes to hand during the Pre-Feasibility Study Risk Summarised in Table 22-1 are key risk factors and strategies to mitigate risk that may impact on the results of the economic assessment. The sensitivity analysis undertaken on the financial model has identified revenue assumptions as the highest risk factor in the financial performance of the Agata Project. Report No R-Rev1 107

122 Table 22-1: Risk Assessment Revenue Risk Factor Commodity Price Exchange Rate Feed grade Recovery Royalties Capital Cost Exchange Rate Design Contingency Operating Cost Sulphuric Acid Price Sulphuric Acid consumption Power Price Labour costs Taxes & compensation Permitting & Approvals Mining Permit Land Access Mitigant Robust project with significant operating margin Operating costs and Revenue denominated in USD self hedging Undertake additional drilling and resource modelling Mine Scheduling Ore pre-treatment Further metallurgical test work to confirm assumptions Trade-off analysis of acid consumption vs. recovery Negotiate agreements with Federal, State & local jurisdictions Hedging of currency at time of purchase Undertake pre-feasibility and feasibility study Maintain a high level of contingency Installation of a sulphur/pyrite burning sulphuric acid plant which can use multiple sources of sulphur including Mindoro s own pyrite source from the Pan de Azucar Project Undertake further metallurgical studies and pilot plant testing Negotiation HoA for power off-take agreement Increased level of detail in manpower requirements and labour costs Negotiate agreements with Federal, State and local jurisdictions Company to continue with permitting and land access applications Report No R-Rev1 108

123 23.0 REFERENCES Boyd Willis Hydromet Consulting, Technical Report on the Agata Nickel Project Scoping Study, November Coffey Philippines Inc., Consulting Services for the Conduct of Preliminary Baseline Environmental Studies, Volume 3. Water, Project Ref. E , September Cox, D. (2011) Agata Nickel Project Mining and Plant Feed Schedule Prepared for Mindoro Resources Limited Project _MRL Reference V9d Date 24 March 2011 Revision 2 Mindoro Resources Ltd, Scoping Study: Agata Project Direct Shipping Ore, Draft Report, February Tokyo Institute Technology, Use of GIS for Groundwater Development Potential: Characterisation of Agusan del Norte, Philippines, JASID 11 th Spring Conference, June Tumanda, et al, Limnological and Water Quality Assessment of Lake Mainit, Mindanao State University Naawan. World Bank, Philippines Environments Monitor 2003, The World Bank Group, December 2003, Willis, B and Gifford, MG Technical report on the Agata Nickel Project scoping study. Unpublished report prepared for Mindoro Resources Ltd. Boyd Willis Hydromet Consulting, Sandgate, Queensland. 166 p. + attachments. Technotrix Consultancy Services Inc and Mediatrix Business Consultancy An environmental impact assessment for the proposed Agata Nickelferrous Laterite Mining Project. Unpublished report for Mindoro Gold Phils. Inc. Technotrix Consultancy Services Inc, Manila and Mediatrix Business Consultancy, Manila. Coffey Philippines Inc Consultancy services for the conduct of preliminary baseline environmental studies. Unpublished report for Mindoro Gold Phils. Inc. Coffey Philippines Inc, Manila. Ausenco Vector 2010 Agata Nickel Project scoping study. Unpublished report for Mindoro Gold Phils. Inc. Ausenco Vector. Mindoro Resources Ltd Scoping study Agata Project Direct shipping ore. Unpublished report. Mindoro Resources Ltd, Edmonton, Canada. 60 p. Consulting Services for the Conduct of Preliminary Baseline Environmental Studies Volume 4. Socioeconomic Profile, Coffey Philippines Inc, Technical Report on the Agata Nickel Project Scoping Study, Boyd Willis Hydromet Consulting, Community Relations and Development: Surigao District Projects, Mindoro Gold Philippines Inc, accessed at on 6 April, A Summary Overview of Mindoro Gold Philippines Inc, Mindoro Gold Philippines Inc, accessed at on 6 April, Working Hand in Hand with Local Communities, Mindoro Gold Philippines Inc, accessed at on 6 April, SGS Lakefield Oretest, March 2011, Agata Nickel Bench Scale Metallurgical Testwork Job Report No R-Rev1 109

124 24.0 DATE AND SIGNATURE Independent Qualified Persons: Peter Onley, MBA, MSc, FAusIMM, CP, MAIG Principal Golder Associates is responsible for geology, Mineral Resource estimation, residue management, water management, and economic analysis. Tony Showell, B App Sc (Metallurgy) FAusIMM Principal Metallurgist Battery Limits Pty Ltd is responsible for metallurgy and process design. Effective Date: 29 March 2011 Antony Showell Peter Onley Principal Consulting Metallurgist Principal Report No R-Rev1 110

125 25.0 ADDITIONAL REQUIREMENTS FOR TECHNICAL REPORTS ON DEVELOPMENT PROPERTIES AND PRODUCTION PROPERTIES 25.1 Mining Operations Mindoro has assumed that mining will be carried by tonne hydraulic excavators loading tonne payload articulated dump trucks. Life of Mine production rate averages bcm per day, ramping up from bcm/day in the first year and peaking at bcm per day in Year 10. Details of the mining plan are provided in Section Recoverability General This PEA is based on process design criteria developed from testwork performed by SGS in Perth and mass balance information developed by BWHC using METSIM software. Where the results of the SGS testwork were not adequately reported, data from actual operations and metallurgical test programs for similar South East Asian laterite ores has been used to augment the available information. The SGS data has been used to guide the selection of the most applicable data from other nickel laterite projects. Readers are cautioned that the sample sizes were limited and may not be representative of the deposit HPAL SGS reported HPAL extractions of approximately 98% of the nickel and 95-96% of the cobalt from limonitic material within 20 minutes at a leaching temperature of 255 C. 98% nickel extraction and 96% cobalt extraction, at 30 minutes HPAL residence time, were adopted for the PEA, based on the SGS data. This was considered conservative given that the testwork indicated 98% nickel extraction was achieved in less than 20 minutes. The selected nickel extraction is also comparable to similar South East Asian limonite ores. The SGS test results indicated that an acid addition rate of about 325 kg/t mineralisation was required, however for the PEA some low magnesium saprolite mineralisation has been included in HPAL, and METSIM modelling estimated a higher acid demand of 430 kg/t for the PEA Atmospheric Leaching SGS reported >97% nickel extraction and >93% cobalt extraction in AL, at acid addition rates of kg/t ore, at a leaching temperature of 95 C. 97% nickel extraction and 93% cobalt extraction, at four hours residence time, were adopted for the PEA, based on the SGS data. Based on feeding medium magnesium grade saprolite to AL, METSIM modelling estimated an acid demand of 960 kg/t for the PEA Saprolite Neutralisation High nickel extraction from the saprolite mineralisation fed to SN is an important facet of the project economics. SGS reported SN nickel extractions in the range 79-89% and cobalt extractions of 79-93%, with residual free acid concentrations of 6-16 g/l, for a residence time of 6 hours. A confirmatory test produced extractions of 84% for nickel and 78% for cobalt, and these have been adopted for the PEA Counter-Current Decantation The CCD circuit has been modelled in detail in METSIM. Based on SGS testwork data the SN discharge slurry can be settled to 40% w/w solids. A declining mixing efficiency was used in the model, from 98% in CCD 1 to 92% in CCD 7. The modelling demonstrated that 7 CCDs were required to achieve a 99% recovery of soluble nickel from the feed slurry, at a wash ratio of 2.2 m 3 per tonne of solids in CCD 7 underflow. The underflow % solids has by far the greatest influence on the overall recovery Iron/Aluminium Removal Iron/Aluminium Removal was not tested at SGS. In Stage 1 Iron/Aluminium Removal a nickel recovery of 99.5% has been assumed for the PEA based on the metallurgical response of similar South East Asian laterites. For Stage 2 Iron/Aluminium Removal a 3.0% co-precipitation of nickel has been assumed for the Report No R-Rev1 111

126 PEA, however the resulting solids are treated in the Recycle Leach circuit where 95% of the contained nickel is recovered, hence the net loss of nickel in stage 2 is less than 0.2% Mixed Hydroxide Product The MHP process was not tested at SGS. In MHP Stage 1 a residual nickel concentration in solution of 200 mg/l has been assumed for the PEA based on the typical metallurgical response for hydroxide precipitation using magnesium hydroxide. The remaining nickel in solution is recovered by precipitation using lime in MHP Stage 2, and the resulting solids are treated in the Recycle Leach circuit where 95% of the contained nickel is recovered, hence the net loss of nickel in MHP is minimal. For MHP Stage 2 a residual nickel concentration in barren solution of 5 mg/l has been assumed for the PEA, based on similar flowsheets Overall Recoveries The estimated predicted overall metal recoveries from mineralisation for nickel and cobalt are 92.0% and 90.5% respectively. Recoveries from individual mineralisation types are summarised in the following table: Table 25-1: Recoveries by Mineralisation Type Ore Type Nickel (%) Cobalt (%) Limonite Low Mg Saprolite Med Mg Saprolite High Mg Saprolite Overall Readers are cautioned that the above predicted recoveries are based on batch bench scale tests on samples of limited representivity. The predicted recovery data presented above will need to be confirmed in later stages of process development by testing with more representative samples. This will need to include including continuous testwork and piloting of the full process circuit including recycle streams Markets Mixed Hydroxide Product Intermediate products of nickel are widely traded for processing in various refineries around the world. In the processing of laterite mineralisation using hydrometallurgical methods there are a variety of processes which can produce different intermediate products depending on the reagents used. The MHP product to be produced in the Agata Project is accepted as a suitable feed for a number of refineries. Mindoro is aware that the Jinchuan and the Votorantim s refinery in Sao Paolo in Brazil are prepared to accept the MHP product. The world market for nickel exceeds 1.6 Mtpa and over 60% of this is in China, Korea and Japan. There is also expected to be substantial growth in demand for nickel containing products in India. The estimated production of the project is less than 2% of world demand. There should no difficulty in placing this output in nearby Asian growth regions with an appropriate offtake partner. Mindoro will agree the required product specification with the preferred take-off partner. Mindoro will arrange to place its output with one or more refining companies which may not include the companies identified above. There is no reason to expect that this production cannot be sold at the estimated terms. Recent negotiations for sale of these products has resulted in metal payments for 75-80% of the nickel content and between 40-45% of the cobalt content. This has been on the basis that the product is sold on a CIF basis to the customer s port of delivery. Report No R-Rev1 112

127 The packaging in 2 tonne bags has been preferred with the aim to pack 10 bags into each 6 m container. As the likely customer is to be in China the cost of transport is expected to range between USD per container from main port in Mindanao. It should not be necessary to purchase containers as these will be supplied by the shipping company employed to transport the product to market. Forward prices for nickel are subject to continued review. The most authoritative summary of forecast prices is that published in the Metal Bulletin (April 2011). This confirms that prices around USD10 per lb are expected to prevail over the next four years. This price represents a fair assessment of prices that can be expected over the life of the project. Cobalt has a less established market and a price USD17 per lb is the middle of the likely price ranges for this metal. As it is largely a by-product metal it can be subject to sudden price changes however its demand is in sophisticated end uses which are not price sensitive. We confirm that this price is in the likely forecast range Contracts Mindoro has not concluded any contracts as at the date of this PEA regarding any of the following items: the terms of mining, concentrating, smelting, refining, transportation, handling, sales and hedging and forward sales contracts or arrangements. Regarding the pre-feasibility study for the Agata Nickel Project, Ausenco Services Pty Ltd (Ausenco) has been awarded the contract to complete the process plant and utilities engineering study and Ausenco-Vector, also part of the Ausenco group, has been awarded the infrastructure and environment part of the study Environment Considerations Mine Rehabilitation and Closure Mindoro are required, under Chapter XVIII of the Republic of Philippines Department of Environment and Natural Resources Administrative Order Number 96-40, to provide funds for mine rehabilitation and closure. Table 25-2 outlines the various monetary funds that Mindoro must contribute to. Table 25-2: Rehabilitation Costs Responsibility Description Status Mine Rehabilitation Cash Fund Mine Closure Fund Monitoring Trust Fund Mine Waste & Tailings Reserve fund 10% of the total amount needed to implement the Environmental Protection and Enhancement Program or 5 M PhP whichever is the lower Estimated mine closure cost A replenishable amount of PhP , utilised by a multi-partite monitoring team 0.05 PhP per tonne of mine waste produced and 0.1 PhP/tonne of mill tailings. Incorporated in Operating Costs USD contributed over 6 years contributed to the fund Incorporated in Operating Costs Mindoro has included the estimated cost of rehabilitation as shown in Table 25-2 in the economic evaluation. The funds are to ensure that mining activities are managed in a technically, financially, culturally and environmentally responsible manner to promote the general welfare of the country, and at the same time, to ensure that planning for mine rehabilitation and closure is integrated into every stage of mining operation. Mindoro will need to develop mine rehabilitation and closure plans throughout the life of mine with increasingly more accurate detail as the project moves towards the end of mining activities. Similarly Mindoro will need to ensure it has available funds to undertake the necessary rehabilitation and closure works in compliance with the regulatory requirements. Report No R-Rev1 113

128 25.6 Taxes Income Tax: Life of mine income tax paid by the Agata Project is estimated at USD510 M. The detailed financial model has been calculated on an after tax basis which includes the following: Philippines corporate tax rate 30% Tax Holiday 4 years from first production. A conservative position has been taken on tax depreciation in which all capital is depreciated over the operating life of the plant. No provision has been made for accelerated depreciation which may be available to projects in the Philippines. Royalties: Royalties paid on gross project revenue total over the life of mine USD156 M. The estimate is based on the following: Local Government Business Tax 2.0% Indigenous Persons tax 1.5% Capital Cost Estimate Capital Cost Summary The capital cost estimate for the proposed flow sheet was prepared by BWHC and is presented in Table The project costs are presented in February 2011 US dollar (USD) values. Where applicable, the following foreign exchange rates are used in developing these estimates: USD 1.0 = AUD 1.00 USD 1.0 = PHP USD 1.0 = Euro 0.73 Table 25-3: Capital Cost Estimate for the Agata Nickel Project PEA Description Capital Costs (Million USD) Ore Preparation 29.5 Leach Section Products Section 10.1 Sulphuric Acid 92.8 Power Plant 48.0 Other Major Process Packages 7.5 Services and Utilities 26.5 Process Plant Infrastructure General Infrastructure 23.8 Total Direct Cost EPCM 62.8 Other Construction Services 58.8 Total Indirect Cost Report No R-Rev1 114

129 Description Capital Costs (Million USD) Direct + Indirect Cost Contingency Sub-Total Project Cost Pre-development 12.0 Total Project Cost Project Cost, USD/annual lb Ni 23 The pre-development cost estimate of USD12 M was omitted A deferred capital amount of USD21.1 M per annum is allocated after year 6 for expansion of the residue storage facilities. The capital cost estimates are developed using the factored estimating techniques. Where applicable, an equipment scale-up/down and cost escalation is applied. Two factored estimating approaches are used in the study estimates: the model driven approach, which is applied to the direct costs and the approach that factors the facility cost from the total equipment cost, which is applied to the project indirect costs. The accuracy of the capital cost estimates are aimed at ±35% Scope of the Capital Cost Estimate The scope of the Agata Nickel Project direct costs estimate includes the capital for the following: process plant including mineralisation preparation, leach plant section and products section major process packages such as the sulphuric acid plant, acid storage facility, limestone and lime plants and reagents preparation utilities and services including water supply and treatment, power plant, power and air supply, plant control system and mobile equipment process plant infrastructure including site development, process plant buildings, port facility, residue storage facility and unloading and storage facilities at the process plant general infrastructure including roads, workforce accommodation and communications facilities. The indirect cost includes the following costs: EPCM and vendor supervision construction facilities construction camp and operating expenses mobile equipment operating costs first fills spares other construction services contingency. Report No R-Rev1 115

130 Basis of the Capital Cost Estimates The process plant costs were developed from similar nickel projects and locations compiled in the Ausenco Vector and BWHC databases. The applicable data were adjusted for flow or equipment capacity and currency movements. The sulphuric acid plant cost was based on a recent pricing from a western supplier for a nickel laterite project in the Philippines. Other major packages such as the power plant and auxiliary boilers, the limestone and lime plant were all based on a recent vendor quotation for a similar nickel project. The residue storage facility cost was based on costing calculations by Golder, adjusted to allow for staged construction of the storage area/s. The infrastructure costs were based on a nickel project in the Surigao area that has recently commenced construction. The indirect costs were prepared on the basis of a project management team being retained to perform the services of engineering, procurement of major equipment and management of construction. A contingency of 30% has been applied to direct costs. The contingency reflects the state of development of the project, and allows a margin for changes to the process and equipment selection and sizing where specific design criteria are not yet available Capital Estimate Exclusions The following items have not been included in the capital estimate developed for the Project: owner s costs mobile mining equipment capital costs are assumed to be included in the contract mining rates duties and taxes for equipment technology and license fees and ongoing project support EPCM assistance following introduction of feed to the plant, during commissioning and ramp up an estimate of the working capital is included in the economic analysis. Pre-feasibility and feasibility study costs are estimated totalling USD12 M are included in the capital estimate but were omitted from the economic analysis Operating Costs Operating Cost Summary Operating costs have been developed for each year of operation based on the projected project ramp-up. Year 3 is considered to represent full nameplate production. Annualised nickel grades are based on the mine production schedule (Cox 2011). Table 25-4 details the operating cost data for the PEA flow sheet after ramp-up in Year 3. Estimated costs are presented in February 2011 US dollar (USD) values. For Year 3 onwards (full nameplate capacity), the project operating costs are USD106 M per annum or USD2.61 per pound of nickel (excluding cobalt credits). The main operating cost items are sulphuric acid production, processing costs, and mining and haulage (in order). Operating costs (per pound of nickel) are higher in Years 1 and 2 of production due to lower metal production during project ramp-up, particularly Year 1 of the project. Report No R-Rev1 116

131 Table 25-4: Operating Cost Estimate for the Agata Nickel Project PEA Average Annual USD M USD/lb Ni Mining Labour Sulphuric Acid Processing Utilities Maintenance G&A Marketing Indirects Total Operating Costs before by-products Cobalt by-product Credits* 17.3 {0.45} Power by-product Credits 19.6 {0.51} Total Operating Costs after by-products * Assumes a cobalt price of USD18/lb (12-month low) and 50% payable for cobalt contained in mixed hydroxides. The accuracy of the operating cost estimate is considered to be ±35%. More power is generated from acid plant surplus steam than the project requires. Approximately MWh per year of power is available for export to the grid. Mindanao is experiencing a power shortage and power costs are high, with diesel generator cost recoveries at PhP 7 9/kWh and long-term costs forecast to be PhP 12 15/kWh. After applying a credit of PhP 8/kWh (USD186/MWh) for power exported to the grid, the operating cost reduces to USD1.65/lb nickel for Year 3 onwards. Readers should note that the unit operating costs presented above are low in comparison with available published information from some nickel laterite operations in production. The relatively low cost of the proposed operations will need to be confirmed in more detailed studies Basis of the Agata Nickel Project Operating Cost Estimates The operating cost estimate is based on the process mass and energy balances developed in METSIM. The significant exchange rates used in the development of this estimate are: USD 1.0 = AUD 1.00 USD 1.0 = PHP 44 USD 1.0 = Euro 0.73 Operating costs were developed for six areas: mining and haulage labour consumables maintenance materials contract expenses administration and general expenses. Report No R-Rev1 117

132 The key inputs to the operating cost development were as follows: mining and haulage costs of USD8.50 per wet tonne of ore, developed by Mindoro manning levels were evaluated for each project area and labour rates at different salary levels, including on-costs, were sourced from a database of Philippine based HR consultant s data reagent and consumables quantities were based on the process mass and energy balances and unit pricing was sourced from both budget pricing or from data for recent projects the costs of maintenance consumables, which are replacement parts necessary to maintain equipment, were estimated using historical ratios for similar scale plants based on the installed equipment costs contract expenses were estimated for a range of services provided to the project on a contract basis, including: product transport and insurance, contract maintenance, periodic metallurgical testing and consultants fees in areas such as safety and training administration and general expenses were estimated for a range of miscellaneous expenses associated with providing services to the project, including: insurances, safety equipment and training, medical costs, community relations, vehicle operating costs, environmental costs, human relations costs, telecommunications costs, business travel, Manila and Butuan City office costs Operating Cost Estimate Exclusions There are a number of costs that have been excluded from the operating cost estimate for this PEA. These are outlined below: sustaining capital costs are included in the capital cost some government charges as yet undefined royalties as yet undefined corporate head offices duties, customs or other imposts Economic Analysis A financial model of the preferred development option has been prepared and the results are presented on an after tax and before finance basis in constant June 2011 US dollars. The model has been prepared on a stand-alone basis and contains no head-office or external sources of revenue or costs. Revenues and costs are estimated in US dollars converted from local currency where applicable at the rate of 44 Philippine peso to 1 USD. The final cashflow, NPV discounted at 10% and IRR are presented in Section Economic model input parameters The financial model is based on the preferred development case put forward by Mindoro and following model parameters: An HPAL, AL and Saprolite neutralisation hydrometallurgical plant processing 1.8 Mtpa of limonite and saprolite mineralisation to produce a nominal t of nickel in mixed hydroxide product (MHP). A pre-production and construction period of 34 month to allow sufficient time for permitting, detailed engineering and finance/due diligence. A mining schedule, estimated on a quarterly basis which optimises the use of current resource. Plant feed not processed is stockpiled. Report No R-Rev1 118

133 Limonite and saprolite are blended to meet the nickel and magnesium specifications required by the process plant. An on-site sulphuric acid plant will produce all the acid required. Surplus heat will be used to drive steam turbines. Surplus power generated will be sold into the local grid. No DSO or thermally upgraded limonite product is produced or sold. 5% of the mineral inventory scheduled as plant feed and included in the economic assessment is Inferred Resources. Capital Costs Life of mine capital costs for the process plant are based on the estimates provided by BWHS, Golder and Mindoro and summarised in Table Table 25-5: Capital Cost Estimates Item USDM Pre-development 12.0 Direct development costs Indirect capital costs % Total installed capital Sustaining capital (Plant & infrastructure) 83.5 Sustaining capital (Residue infrastructure) Total capital expenditure The pre-development estimated costs of USD12.0 M was omitted from the economic analysis. Pre-development costs include additional metallurgical drilling and testing, completion of the pre-feasibility and feasibility study. Direct development costs include all the process plant packages, acid plant, power station, residue storage and general site infrastructure. Indirect development costs include EPCM and construction services, temporary construction facilities and commissioning costs. A further 30% contingency is applied to all the installed capital costs. The total installed capital cost including pre-development is USD906 M. Sustaining capital cost equivalent to 1% of the direct installed capital is incurred annually. In addition, following 6 years of production, additional expenditure on tailing retention of approximately USD21.1 M per annum is incurred thereafter for a Life of Mine tailing retention cost of USD253m as estimated by Golders. Excluded from the capital cost estimate is mining fleet which is assumed to be contracted. Also excluded are owner s costs, Value Added Tax (VAT) and import duties as the company. Key assumptions which drive the operating costs are summarised in Table Report No R-Rev1 119

134 Table 25-6: Operating Cost Assumptions Process Throughput DMT per annum 1.8 M Nickel Recovery 92% Mining Cost USD per WMT 5 No. of Staff No. 630 Average Salary USD pa Acid Consumption kg/t ore 470 Sulphur Price USD/t delivered 80 Fuel Oil USD/t 470 Electricity Price USD/MWh 186 General & Admin Cost (excl. Labour) USD pa 4.6 M Contract mining operating costs have been estimated from similar nickel laterite mining operations in the Philippines. The mining cost is inclusive of fleet hire, labour cost, waste mining, stockpile rehandle, and haulage costs. Plant consumable costs have been determined on the basis of unit consumption rates as determined in metallurgical tests and reagent/consumable costs obtained from suppliers as at February Fixed, general and administration costs have been estimated on the basis of comparable Philippines operations and other nickel laterite operations. Indirect costs refer to compensation and land access. The changing operating cost over the life of mine expressed in USD per tonne of nickel in MHP produced is shown in Figure The gradual rise in operating cost per tonne of nickel produced is a function of the falling grade. USD / t Ni 8,000 Operating Cost 7,000 6,000 5,000 4,000 3,000 2,000 G&A Indirects MAINT LABOUR MINING PROCESSING 1,000 - ACID Figure 25-1: Operating Cost by Cost Centre Report No R-Rev1 120

135 Life of Mine Project Financials The summary cashflows after tax and before financing for the Agata Project are summarised in Table Table 25-7: Summary Cash Flow LOM USD M Average Annual USD M Revenue Capital Expenditure ( ) N/A Operating Expenditure ( ) ( 81 ) Tax Paid ( 511 ) ( 41 ) Free Cashflow NPV (10%) 390 IRR 19% Payback 5.2 years The USD12 M pre-development capital is not included in the economic analysis. A chart illustrating the cumulative cashflow of the project is shown in Figure USD million 2000 Cumulative Cashflow Total CapEx - Excl VAT Cumulative cashflow Figure 25-2: Cumulative Cashflow Report No R-Rev1 121

136 Table 25-8: Project Cash Flow Cashflow USD M Year Ending LOM Cash Received from Debtors Cash Paid for Capital Expenditure Cash Paid for Operating Expenditure ( 844 ) ( 56 ) ( 6 ) ( 6 ) ( 6 ) ( 6 ) ( 6 ) ( 16 ) ( 27 ) ( 27 ) ( 27 ) ( 27 ) ( 27 ) ( 27 ) ( 27 ) ( 19 ) ( ) ( 0 ) ( 0 ) ( 1 ) ( 66 ) ( 74 ) ( 78 ) ( 81 ) ( 81 ) ( 80 ) ( 81 ) ( 81 ) ( 84 ) ( 83 ) ( 81 ) ( 80 ) ( 80 ) ( 81 ) ( 58 ) ( ) Tax Paid ( 54 ) ( 55 ) ( 54 ) ( 52 ) ( 48 ) ( 45 ) ( 45 ) ( 46 ) ( 47 ) ( 44 ) ( 22 ) ( 511 ) Total Free Cash Flow ( 0 ) ( 0 ) ( 845 ) NPV IRR 19% Report No R-Rev1 122

137 Sensitivity Analysis Sensitivity analysis on the financial model shows that the project is robust to changes in modelling assumptions and has identified that the project is most sensitive to factors which impact revenue (nickel price, feed grade and recovery) followed by capital costs. The relative sensitivity of the project to revenue, capital and operating cost estimates is illustrated in Figure 25-3 and Table 25-9 below. Figure 25-3: Project Sensitivity Table 25-9: NPV USD m Sensitivity to Economic Assumptions Nickel Price Sulphur Price Power Price PhP/k w Report No R-Rev1 123

138 APPENDIX A Certificates of Qualified Persons Report No R-Rev1

139 CERTIFICATE OF QUALIFIED PERSON I, Peter Onley, do hereby certify that: I am a graduate of the University of Exeter, United Kingdom, with a Bachelor of Science degree, with Honours, in Geology in 1969 and a graduate of Leeds University United Kingdom with a Master of Science in Engineering Geology and Geotechnics in 1970 and a graduate of University of Western Australia, Australia, with a Master of Business Administration degree in I have continually practiced the profession of geologist since I am a Fellow and Chartered Professional of The Australasian Institute of Mining and Metallurgy. I am a Principal of Golder Associates Pty Ltd, the Australian operating company of the Golder Group of companies, a consulting firm specialising in all aspects of earth engineering, geoscience, hydrology and the environment. I am employed at 1 Havelock Street, West Perth, Western Australia I have worked continuously in the minerals industry for over 40 years, and have extensive exploration experience in a variety of commodities including precious metals, base metals, cupriferous and ferrous metals, uranium and alumina. I have been a consultant for the past 25 years. I am a member of the AusIMM Geoscience Committee and a member of the Western Australian Geological Survey Liaison Committee which meets to consider and provide commentary on the activities of the Western Australian Geological Survey. I have read the definition of qualified person as set out in National Instrument ( NI ) and certify that by reason of my education, affiliation with a professional association (as defined in NI ) and past relevant work experience, I fulfil the requirements to be a qualified person for the purpose of NI I am the lead author for this report dated entitled Preliminary Economic Assessment, Agata Nickel Project Mindanao Philippines (The Technical Report) and am responsible for the entire report and take overall responsibility for the report with the exception of Section 0, 20.3, 20.4, 21.8, 22.7 and I have visited the Agata Nickel site most recently in May I have no personal knowledge, as of the date of this Certificate, of any material fact or change, which is not reflected in this report, the omission to disclose that would make this report misleading. As of the date of this Certificate, to the best of my knowledge, information and belief, the Technical Report contains all scientific and technical information that is required to be disclosed to make the Technical Report not misleading. Neither I, nor any affiliated entity of mine is at present, or under an agreement, arrangement or understanding expects to become, an insider, associate, affiliated entity or employee of Mindoro Resources Limited, and/or any associated or affiliated entities. I am independent (as defined by Section 1.5 of NI43-101) of Mindoro Resources Limited. I have read the NI and Form F1 and the Preliminary Evaluation Assessment Report has been prepared in compliance with that instrument and form. Signature Report No R-Rev1

140 CERTIFICATE OF QUALIFIED PERSON I, Antony Showell, do hereby certify that: I am a graduate from Adelaide University, Australia, with a Bachelor of Applied Science degree in Metallurgy in I have practiced my profession of metallurgist for 38 years since graduation. I am a Fellow of The Australasian Institute of Mining and Metallurgy. I am currently Principal of Tony Showell and Associates Pty Ltd, and I am also Principal Consulting Metallurgist of BatteryLimits Pty Ltd, 5/162 Colin St, West Perth, Australia. Prior to my current positions I was Manager Optimisation for the engineering company GRD Minproc Ltd for two years, and before that Principal Consultant and Operations Manager of the metallurgical consultancy Normet Pty Ltd for 13 years. My relevant experience with respect to the Agata Nickel Project includes 13 years with nickel-cobalt laterite processing at Queensland Nickel Yabulu, as well as operational and consulting roles at Bulong Nickel, Murrin Murrin, Cawse Nickel, Marlborough Nickel, Ravensthorpe Nickel and other nickel-cobalt laterite projects. I have read the definition of qualified person as set out in National Instrument ( NI ) and certify that by reason of my education, affiliation with a professional association (as defined in NI ) and past relevant work experience, I fulfil the requirements to be a qualified person for the purpose of NI I have prepared and/or reviewed Sections 0, 20.3, 20.4, 21.8, 22.7 and 25.2 of the technical report titled Preliminary Economic Assessment Agata Nickel Project. I have not visited the Agata Project site but in view of my experience on other projects, and the preliminary nature of the processing aspects of the project, then I consider I fulfil the requirements to be a qualified person for the purpose of NI I have no personal knowledge, as of the date of this Certificate, of any material fact or change, which is not reflected in this report, the omission to disclose that would make this report misleading. Neither I, nor any affiliated entity of mine is at present, or under an agreement, arrangement or understanding expects to become, an insider, associate, affiliated entity or employee Mindoro Resources Ltd and/or any associated or affiliated entities. I have read the NI and Form F1, and CIM Standards on Mineral Resources and Reserves, and have prepared the technical report in compliance with NI and Form F1. Signature Report No R-Rev1

141 APPENDIX B Consents of Qualified Persons Report No R-Rev1

142 17 Project No Toronto Stock Exchange Ontario Securities Commission CONSENT OF AUTHOR Dear Sirs TO: Toronto Stock Exchange Ontario Securities Commission I, Peter George Onley MBA, MSc, BSc(Hons), FAusIMM, CP, am a gualified person as defined in National Instrument and was responsible for the overall preparation of the report entitled Preliminary Economic Assessment, Agata Nickel Project Mindanao Philippines and dated for Mindoro Resources Limited (the Technical Report ). I do hereby consent to the filing, with the regulatory authorities referred to above, of the Technical Report and to the written disclosure of the Technical Report Dated 17. GOLDER ASSOCIATES PTY LTD Peter Onley Principal m:\jobs410\mining\ _mindoro_pea\correspondenceout\current drafts\qp consent.docx Golder Associates Pty Ltd Level 3, 1 Havelock Street, West Perth, Western Australia 6005, Australia (PO Box 1914, West Perth WA 6872) Tel: Fax: Golder Associates: Operations in Africa, Asia, Australasia, Europe, North America and South America A.B.N Golder, Golder Associates and the GA globe design are trademarks of Golder Associates Corporation.

143 17 Toronto Stock Exchange Ontario Securities Commission CONSENT OF AUTHOR Dear Sirs TO: Toronto Stock Exchange Ontario Securities Commission I, Antony Hague Showell B App Sc, FAusIMM, am a gualified person as defined in National Instrument and was responsible for the preparation and review of the metallurgy and processing sections of the report entitled Preliminary Economic Assessment, Agata Nickel Project Mindanao Philippines and dated for Mindoro Resources Limited (the Technical Report ). I do hereby consent to the filing, with the regulatory authorities referred to above, of the Technical Report and to the written disclosure of the Technical Report BATTERY LIMITS PTY LTD Tony Showell Principal Consulting Metallurgist

144 Golder Associates Pty Ltd Level 3, 1 Havelock Street West Perth, Western Australia 6005 Australia T: