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Developing the next major nickel project in Brazil

RESERVES AND RESOURCES

The Project has two principal mining centres; Araguaia Nickel South (‘ANS’) and Araguaia Nickel North (‘ANN’). ANS hosts seven deposits: Pequizeiro, Baião, Pequizeiro West, Jacutinga, Vila Oito East, Vila Oito West and Vila Oito, while ANN hosts the Vale do Sonhos deposit.

A number of phases of diamond drilling has been completed across the ANP commencing in 2010. Drilling at ANS has been undertaken by HZM and Teck, with drilling at ANN by Xstrata. HZM has been active on the ANS project since the initial discovery in 2010. Then HZM successfully completed the acquisition and integration of the Teck and Xstrata project areas, and has been the sole project operator since 2015. A total of 75,250 m of diamond drilling has been completed across 2,627 holes for the Project.

Mineral Resources

Snowden Mining and Industry Consultants (Snowden) were commissioned by Horizonte to produce Mineral Reserves, Mineral Resources and the Mining sections of the FS for the Project.

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

Mineral Resource estimates for the nickel laterite deposits under consideration for the FS are shown in the table below. The Measured Mineral Resource estimated at a cut-off grade of 0.90% Ni, is 18 Mt at a grade of 1.44% Ni. The Indicated Mineral Resource is 101 Mt at a grade of 1.25% Ni. This gives a combined Mineral Resource of 119 Mt at a grade of 1.27% Ni for Measured and Indicated Mineral Resources at a cut-off grade of 0.90% Ni (inclusive of Mineral Reserves).

Table 1.1 Mineral Resources for ANS and ANN as of February 2017 by material type (0.90% Ni cut-off)
Araguaia Category Material type Tonnage (kt) Contained Ni metal (kt) Ni Co Fe MgO SiO2 Al2O3 Cr2O3
(%) (%) (%) (%) (%) (%) (%)
Subtotal Measured Limonite 1,232 15 1.20 0.15 37.43 2.00 17.15 11.07 2.98
Transition 6,645 116 1.75 0.07 18.89 10.20 42.06 6.59 1.29
Saprolite 10,291 130 1.27 0.03 12.03 24.08 41.24 3.95 0.87
Total Measured All 18,168 261 1.44 0.05 16.26 17.51 39.91 5.40 1.17
Subtotal Indicated Limonite 19,244 216 1.12 0.12 36.22 2.40 20.46 9.61 2.65
Transition 30,917 439 1.42 0.07 21.38 11.26 38.95 5.37 1.51
Saprolite 51,008 610 1.18 0.03 11.83 25.79 40.59 3.16 0.85
Total Indicated All 101,169 1,264 1.25 0.06 19.39 16.90 36.26 5.06 1.39
Total Measured + Indicated All 119,337 1,525 1.27 0.06 18.91 16.99 36.81 5.11 1.36
Subtotal Inferred Limonite 2,751 30 1.08 0.10 34.92 3.04 22.84 9.23 2.50
Transition 4,771 62 1.30 0.07 21.23 11.04 39.09 5.62 1.40
Saprolite 5,398 62 1.15 0.03 11.80 24.36 41.81 3.69 0.82
Total Inferred All 12,920 154 1.19 0.06 20.21 14.90 36.77 5.58 1.39

Notes:

  1. Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability. All figures are rounded to reflect the relative accuracy of the estimate and have been used to derive subtotals, totals and weighted averages. Such calculations inherently involve a degree of rounding and consequently introduce a margin of error. Where these occur, Snowden does not consider them to be material.
  2. Mineral Resources are reported inclusive of Mineral Reserves.
  3. The reporting standard adopted for the reporting of the Mineral Resource estimate uses the terminology, definitions and guidelines given in the CIM Standards on Mineral Resources and Mineral Reserves (May 2014) as required by NI 43-101.
  4. Mineral Resources are reported on 100% basis for all Project areas.
  5. Snowden completed a site inspection of the deposit by Mr Andy Ross FAusIMM, an appropriate "independent qualified person" as such term is defined in NI 43-101.
  6. kt = thousand tonnes (metric).

Mineral Reserves

The Mineral Reserve was estimated by Snowden in accordance with CIM (2014) and JORC (2012) guidelines.

All economic Indicated Resources within the pit designs were classified as Probable Reserves and all Measured Resources at Pequizeiro (ANS) were classified as Proved Reserves (this classification was tested and supported by the trial mining program completed in this pit in 2017). Measured Resources at Vale dos Sonhos (ANN) were classified as Probable Reserves. A summary is provided in the table below. The Mineral Reserve of 27.2 Mt gives a life of mine of 28 years based on the annual ore throughput to the RKEF plant of 900,000 t/a.


Open pit Mineral Reserves reported as of October 2018

Category Ore (Mt) Ni (%) Fe (%) SiO2:MgO Al2O3 (%)
Proven 7.33 1.72 16.01 3.01 6.00
Probable 19.96 1.68 17.57 2.36 4.56
Total 27.29 1.69 17.15 2.52 4.94
Notes
  1. Cut-off varies by deposit depending mainly on haul distance to the plant but averages 1.03% Ni.
  2. Dilution was modelled as part of re-blocking, ore losses applied are 8%.
  3. Snowden completed a site inspection on three occasions between March 2016 and May 2017 by Mr Frank Blanchfield FAusIMM, an appropriate “independent qualified person” as such term is defined in NI 43-101.

Mining

Araguaia will use an open pit mining method, transporting its nickel-ore to a central processing plant. The open pits will be shallow, with a maximum depth of 30m and no blasting is required. Top soil will be separately stockpiled and mined areas will be rehabilitated.

The annual mining rate peaks at 3.5 Mt/a between production years 2 and 7 before dropping down to 3.0 Mt/a for the remainder of the Project.

The mine supplies high nickel grades in the early mine life, reaching 2% in production year 2. The Ni grade is above 1.8% for the majority of the first 10 years of production and reduces to average approximately 1.6% Ni for the remaining mine life.

As part of the FS a trial excavation programme has been successfully completed, this included mining 27,000 tonnes of material with all technical objectives met.



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