Mineral Reserves and Mineral Resources

Mineral Resources reported for the Project deposits, were prepared by an Independent Qualified Person as defined in NI 43-101. 

A total of 46,000 meters (1,786 holes) of core drilling have been completed to date on Araguaia South (referred to as HZMA in the PFS) and 28,860 meters (839 holes) of core drilling completed on the Vale dos Sonhos deposit in Araguaia North (referred to as GAP in the PFS). Of this a total of 40,330 meters (1,494 holes) from Araguaia South and 28,860 meters (839 holes) from Araguaia North were used in the Mineral Resource Estimation reported in the PFS.

Updated Mineral Resources for the Araguaia Project effective as at 30 September 2016 by material type (0.90% Ni cut-off grade)

Note: Totals may not add due to rounding. Mineral Resources are inclusive of Mineral Reserves. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.

Mineral Reserves reported for the Project deposits, which are included in the PFS were established by Snowden in accordance with the CIM Definition Standards using only Indicated and Measured Resources, under the supervision of an Independent Qualified Person as defined in NI 43-101.

A Mineral Reserve estimate of 24,646.6 kt (dry) at an average grade of 1.77% Ni was estimated. The detailed breakdown of the Mineral Reserve allocated by deposit is presented in the following table:

Mineral Reserves for the Araguaia Project effective as at September 30, 2016

A nickel spot price of US$12,000/tonne was used in the Mineral Reserve estimate. The Mineral Reserve estimate resulted in a marginal cut-off grade of 1.28% Ni.

Mining

Seven shallow open pits were designed for Araguaia South and one for Araguaia North through a process of pit optimisation using costs and process recoveries. All eight pits are designed using smoothed pit shells with the removal of small satellite pits through a standard process of pit optimisation, waste dump design and pit design. To minimise capital, the Base Case also assumes contractor mining using typical truck and excavator fleet which includes ore haulage to the plant. This fleet is supported by the usual array of support and ancillary equipment. Grade and mineralogy will be closely monitored in the mining process using close spaced grade control drilling ahead of mining.

High grade nickel feed is targeted in the early years of production. The average nickel grade of the feed to the plant is as follows:

• Years 1 to 5 — average grade 2.0% Ni
• Years 6 to 10 — average grade 1.9% Ni
• Years 11 to 28 — average grade 1.7% Ni

A number of processing constraints were applied to the schedule. These included a 13 month processing feed quantity ramp-up period, and specific process feed grade constraints throughout the life of the Project:

• Fe grade between 15.0% and 18.0%
• Al₂O₃ grade between 4.0% and 5.5%
• SiO₂/MgO ratio between 2.2 and 2.6

Araguaia Mine Profile

• Shallow open pit mining (max depth 25m)
  
  • 7 pits in South, 1 pit in North
  • 3–5 pits open at any given time
  • Do not expect explosives required
• Total 30 year schedule
  • 2 year pre-production
  • 28 year LOM
• Ramp-up over 13 months
• Contract mining