a competent persons report on the tantalus...

Report Prepared by

SRK Exploration Services Ltd ES7520

A COMPETENT PERSONS REPORT ON THE TANTALUS PROJECT, NORTHERN MADAGASCAR

Prepared For

Tantalus Rare Earths AG

Tantalus CPR – Details

20130121_ES7520_SRKES_Tantalus CPR_Final_English.docx

SRK ES Legal Entity: SRK Exploration Services Ltd

SRK ES Address: 12 St Andrew‟s Crescent Cardiff

CF10 3DD.

Date: 21/01/2013

Project Number:

SRK ES Project Manager: James Gilbertson Principle Exploration Geologist/Director

Client Legal Entity: Tantalus Rare Earths AG

Client Address: Company No. HRB 201757 TANTALUS RARE EARTHS AG

Nördliche Münchner Str. 16 82031 Grünwald

Germany Version: 24/01/2012 13:25

COPYRIGHT AND DISCLAIMER

Copyright (and any other applicable intellectual property rights) in this document and any

accompanying data or models is reserved by SRK Exploration Services Limited ("SRK ES") and

is protected by international copyright and other laws. The use of this document is strictly subject

to terms licensed by SRK ES to its client as the recipient of this Proposal and unless otherwise

agreed by SRK ES, this does not grant rights to any third party. This document may not be

reproduced or circulated in the public domain (in whole or in part) or in any edited, abridged or

otherwise amended form unless expressly agreed by SRK ES. This document may not be

utilised or relied upon for any purpose other than that for which it is stated within and SRK ES

shall not be liable for any loss or damage caused by such use or reliance.

SRK ES respects the general confidentiality of its clients‟ confidential information whether formally

agreed with clients or not. See the attached Terms and Conditions as included in the

Commercial Appendices contain mutual confidentiality obligations upon SRK ES and the Client.

The contents of this Proposal should be treated as confidential by the Client. The Client may not

release the technical and pricing information contained in this Proposal or any other documents

submitted by SRK ES to the Client, or otherwise make it available to any third party without the

express written consent of SRK ES.

© SRK Exploration Services Ltd 2013

Tantalus CPR – Executive Summary

Registered Address: 21 Gold Tops, City and County of Newport, NP20 4PG,

Wales, United Kingdom. SRK Exploration Services Ltd Reg No 04929472 (England and Wales)

Group Offices: Africa Asia

Australia Europe

North America South America

A COMPETENT PERSONS REPORT ON THE TANTALUS PROJECT, NORTHERN MADAGASCAR – EXECUTIVE SUMMARY

1. BACKGROUND Tantalus Rare Earths AG (“Tantalus”) commissioned SRK Exploration Services Limited (“SRK

ES”) and SRK Consulting (UK) Limited (“SRK (UK)”) to prepare an independent Competent

Persons Report (“CPR”) and Australasian Joint Ore Reserves Committee (JORC)-compliant

Mineral Resource Estimate on its rare earth element (“REE”) project in northern Madagascar.

The Tantalus project encompasses 300 km2 and is an advanced-stage exploration project

focussed on delineating and developing a large regolith-hosted ion adsorption-type REE

deposit. The project currently includes five principal prospects (Ampasibitika, Ambaliha,

Befitina, Caldera and Ampasibitika South) and is 100% owned by Tantalus. Planned activities

intend to focus on the exploration and delineation of the regolith-hosted REE mineralisation in

order to expand the existing Mineral Resource, improve its classification and work towards a

feasibility study. Mine development and production are the ultimate objectives of the project.

SRK ES considers that the Tantalus project has sufficient technical merit to justify the

proposed programme and associated expenditures.

The Mineral Resource statement has been prepared using the guidelines and terminology

specified in The Australasian Code for Reporting of Exploration Results, Mineral Resources

and Ore Reserves, (the JORC Code) by Mr Martin Pittuck (MIMMM) a Director and Corporate

Consultant Resource Geology at SRK (UK) who is a Competent Person as defined by the

JORC Code.

2. LOCATION The Tantalus project is located on the Ampasindava Peninsula on the northwest coast of

Madagascar, approximately 500 km north of the capital city Antananarivo. It is situated 14°

south of the Equator and experiences a sub-tropical climate with an average annual

temperature of greater than 25°C and rainfall exceeding 2000 mm per year.

3. GEOLOGICAL SETTING The Tantalus project encompasses a large part of a Tertiary igneous complex that has

intruded older Jurassic sediments. The Jurassic sediments are dominated by mudstones that

are interbedded with sandstones, marls and minor limestone. The Ambohimirahavavy

complex is approximately 20 km in length, up to 8 km in width and includes REE-bearing

peralkaline intrusives. Aside from localised skarn development adjacent to some of the

intrusive rocks, the sediments are un-metamorphosed.

The bedrock is largely obscured by regolith that has developed due to the weathering of the

underlying rock in the presence of elevated temperatures and rainfall. The regolith comprises

distinct zones, the principal subdivision of which is pedolith and saprolith. Based upon the

available drilling data, the thickness of the regolith in the project area averages approximately

13.5 m, but has attained thicknesses of more than 40 m.

4. MINERALISATION The type of deposit being delineated comprises regolith-hosted ion adsorption-type REE

mineralisation. This type of mineralisation forms due to the weathering of REE-enriched

SRK Exploration Services Limited Tantalus CPR –Executive Summary


Page ii of iv

source rocks, the liberation and mobilisation of the REEs and their preferential adsorption

onto the surfaces of clay minerals. This type of deposit is well known in China where it

accounts for a significant proportion of REE production. What is particularly significant about

regolith-hosted ion adsorption-type REE mineralisation is that it typically contains a high

proportion of heavy rare earth elements (HREE), is comparatively easy to process (compared

to bedrock mineralisation) and is associated with low levels of radioactivity.

5. EXPLORATION Exploration activities completed by Tantalus have included a helicopter-borne magnetic and

radiometric surveys, outcrop and stream sediment sampling, pitting, trenching, window

sampling and core drilling.

Core drilling was completed at the Ampasibitika prospect to test the REE mineralisation within

both the bedrock (peralkaline granitic dykes and sills) and regolith. A total of 277 holes were

drilled at 50 m intervals on lines 100 m apart. A much smaller core drilling programme

comprising 20 holes was also completed in part of the Caldera prospect to test the REE

mineralisation within the bedrock (volcanic breccia) and overlying regolith.

The majority of recent work has focussed on the excavation of pits that cover substantial

areas on 100 m by 200 m, 200 m by 200 m and 500 m by 500 m grids. For safety reasons,

the pits are not excavated deeper than 10 m. To date more than 1000 pits have been

excavated, logged and sampled and supplementary data including density and moisture

measurements recorded.

A mobile percussive window sampler was successfully tested on-site to expedite the regolith

sampling. An additional four units have been purchased and will be utilised in the forthcoming

field season. Whilst the window samplers will not entirely replace pitting, they will enable

much faster sample collection and have reduced environmental impact.

6. METALLURGICAL ASPECTS SRK ES believes that the scope and nature of mineralogical and metallurgical testwork

undertaken to date is appropriate for the developmental stage of the project and the

declaration of an Inferred Mineral Resource.

The REEs in the ferruginous material responded to physical concentration via the host

minerals, however at this stage no testwork has been undertaken to determine the potential to

extract the REEs from the host minerals. Being “hard rock” hosted minerals; SRK ES expects

that the extraction of the REEs from the ferruginous material will require the complete

breakdown of the host minerals. This is the approach typically required for such REE

occurrences.

Testwork conducted on the saprolith samples has demonstrated that high recoveries can be

obtained for most of the REEs of interest. Further work will be required, to optimize the

parameters for leaching, and to develop the next aspects of a processing flowsheet for these

minerals, namely precipitation with a view to further purification and separation. At this stage,

it seems likely that the next major processing challenge will be to upgrade the REEs from

what appears likely to be relatively low concentrations even after precipitation from the leach

solution.

SRK ES recommends that a “solubility test” is included as part of any future exploration assay

protocol. Such a test would mirror the procedure used in the University of Toronto work, and

enable an estimate of the soluble (i.e. ion-exchange hosted) REEs present in each sample



Page iii of iv

submitted for assay as part of the exploration programme. Incorporating such a procedure

into the exploration programme will provide valuable information as to the variability in the

proportion of REEs in the deposit that are readily extractible, both across the lateral extent of

the orebody, and more particularly, with depth.

7. MINERAL RESOURCE ESTIMATE The results of Tantalus Quality Assurance / Quality Control (QAQC) samples show that a

sufficient level of confidence can be attributed to the geochemical results used in the Mineral

Resource estimate.

SRK has produced a gridded seam model of the topography, the lower contact of the pedolith

and the lower contact of saprolith (or base of pit where bedrock was not intersected). A

geostatistical study enabled Ordinary Kriging to be applied for grade interpolation. Outlier

values were capped in most domains. Values were extrapolated no more than one sample

spacing outside the sampled area. Grades were estimated into a 50 m by 50 m by 1 m block

model which was visually and statistically validated against original sample data. Densities

were based on average wet density measurements corrected for moisture content. Average

dry densities range between 1.0 t/m3 and 1.2 t/m

3, which is considered normal for this type of

material.

8. MINERAL RESOURCE STATEMENT An Inferred Mineral Resource has been classified as of January 2011. Since then a further

10,555 further samples have been assayed and therefore holding the potential that this

resource can be increase in both its size and classification. Further understanding of the

project's topography, mineralogical domaining, metallurgical characteristics, cut-off grade as

well as laboratory performance, should also aid in achieving a higher classification for the

Tantalus resource.

The table below gives SRK UK‟s independent statement of Mineral Resources assuming non-

selective mining therefore using a zero cut-off grade. The estimate is dated 16th December

2011.

Prospect Category Material Thickness (m) Tonnage (Mt) TREO (%) TREO (kt)

Ampasibitika Inferred

Pedolith 6 10 0.09 9

Saprolith 5 6 0.10 6

SUB-TOTAL 11 17 0.09 15

Befitina Inferred

Pedolith 4 13 0.06 9


SUB-TOTAL 7 32 0.08 25

Caldera + Ampasibitika South Inferred

Pedolith 2 29 0.07 20


SUB-TOTAL 7 81 0.08 64

All prospects Inferred Pedolith 3 52 0.07 38


TOTAL Inferred TOTAL 8 130 0.08 104

The Total Rare Earth Oxide (TREO) grade represents the sum of:



Page iv of iv

• Light Rare Earth Oxides (LREO) = La2O3 + Ce2O3 + Pr2O3 + Nd2O3 + Sm2O3; and

• Heavy Rare Earth Oxides (HREO) including yttrium = Eu2O3 + Gd2O3 + Tb2O3 +

Dy2O3 + Ho2O3 + Er2O3 + Tm2O3 + Yb2O3 + Lu2O3 + Y2O3.

The average HREO proportion of the TREO is 19% and the average uranium and thorium

oxide values are approximately 12 ppm and 57 ppm respectively.

The data quality, basic model domaining, resultant average grades, low radioactivity and the

assumption of low-cost extraction are considered reasonable to support the estimation of an

Inferred Mineral Resource which inherently assumes that there are reasonable prospects for

eventual economic extraction, albeit at a relatively low confidence. Further work is required to

advance all aspects of the resource and an economic extraction plan.

The quantity and grade of the Inferred Mineral Resources are, by definition, uncertain in

nature and there has been insufficient exploration to define Indicated or Measured Mineral

Resources. To the best of SRK UK‟s knowledge, the Mineral Resource Estimate is not

affected by any known environmental, permitting, legal, title, taxation, socio-political,

marketing, or other relevant issues.

9. RESOURCE POTENTIAL The resource is currently restricted to areas covered by pits and drillholes spaced at 200 m by

200 m or less and where results are available. The estimate is based on assay data available

as of 28th November 2010.

In addition to continuing with the excavation of pits and window sampling, SRK ES

recommends the identification of those pits which did not encounter bedrock and

supplementing them with twin window samples or drillholes to bedrock. This would add to the

model thickness and increase the resource accordingly.

Providing the full thickness of the regolith is intersected and the 200 m by 200 m sampling

grid expands to encompass the entire Ambohimirahavavy igneous complex, SRK ES

considers the resource potential in the medium term to be at least four times the current

resource with similar grades. There is considerable additional potential in the rest of the

project area in the longer term.

To assist in this further development SRK ES have made a number of recommendations

namely to make more use of the window samplers, to complete a programme of twining a

number of the pits with the window sampler to ensure repeatability, commissioning a full

LIDAR survey to ensure that the topography, including incised valleys and streams, are

adequately represented and address all current concerns with the QAQC results; the later will

require the round robin testing of the in-house standards currently being used. However, the

most important recommendations revolve around development of the latter stages of the

proposed process flowsheet along with securing a pilot plant programme.

Tantalus CPR – Table of Contents


Page i

Table of Contents

1 INTRODUCTION ................................................................................................. 7

2 TANTALUS RARE EARTHS AG ........................................................................ 7

2.1 Company Description .......................................................................................................... 7

2.2 Company Board Members .................................................................................................. 8

2.3 Company Strategy .............................................................................................................. 9

3 THE TANTALUS PROJECT.............................................................................. 10

3.1 Introduction ....................................................................................................................... 10

3.2 Location, Access and Infrastructure .................................................................................. 10

3.3 Physiography, Climate and Environment ........................................................................... 14

3.4 Permitting ......................................................................................................................... 15

4 COUNTRY PROFILE ......................................................................................... 16

4.1 Introduction ....................................................................................................................... 16

4.1.1 Geography .............................................................................................................. 16

4.1.2 Politics .................................................................................................................... 16

4.1.3 Security .................................................................................................................. 17

4.1.4 Economy ................................................................................................................ 17

4.2 Mining Industry in Madagascar.......................................................................................... 19

4.2.1 Mining and Exploration Companies ......................................................................... 20

4.3 Exploration and Mining Permitting ..................................................................................... 21

4.4 Environmental Regulations ............................................................................................... 24

4.5 Labour Legislation ............................................................................................................ 25

4.6 Taxation ........................................................................................................................... 25

5 GEOLOGICAL SETTING AND MINERALISATION .......................................... 26

5.1 Regional Geological Setting .............................................................................................. 26

5.2 Local Geological Setting ................................................................................................... 26

5.2.1 Lithology ................................................................................................................. 26

5.2.2 Structures ............................................................................................................... 32

5.2.3 Regolith .................................................................................................................. 34

5.3 Rare Earth Elements and Rare Metals .............................................................................. 36

5.4 Mineralisation Types ......................................................................................................... 38

5.4.1 Introduction ............................................................................................................. 38

5.4.2 Bedrock hosted REE mineralisation ........................................................................ 38

5.4.3 Regolith hosted REE mineralisation ........................................................................ 40

5.5 Mineralisation Model ......................................................................................................... 42

5.5.1 Summary Description .............................................................................................. 42

5.5.2 Commodities ........................................................................................................... 43

5.5.3 Geological Characteristics ....................................................................................... 43

5.5.4 Mineralisation Characteristics .................................................................................. 43



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5.5.5 Exploration Characteristics ...................................................................................... 44

5.5.6 Economic Characteristics ........................................................................................ 44

6 EXPLORATION AND RESULTS ....................................................................... 46

6.1 Historical Exploration and Results ..................................................................................... 46

6.1.1 Colonial Exploration ................................................................................................ 46

6.1.2 Soviet Exploration ................................................................................................... 46

6.2 Contemporary Exploration and Results ............................................................................. 47

6.2.1 Stream and beach sediment sampling ..................................................................... 47

6.2.2 Bulk Sampling ......................................................................................................... 47

6.2.3 Airborne Geophysical Surveys ................................................................................ 47

6.2.4 Outcrop Sampling ................................................................................................... 48

6.2.5 Soil Sampling .......................................................................................................... 52

6.2.6 Trenching................................................................................................................ 53

6.2.7 Core Drilling ............................................................................................................ 56

6.2.8 Pitting ..................................................................................................................... 59

6.2.9 Window Sampling ................................................................................................... 61

6.3 SRK ES Comments .......................................................................................................... 63

7 SAMPLE PREPARATION, ANALYSIS QUALITY ASSURANCE AND QUALITY CONTROL ......................................................................................................... 63

7.1 Sample preparation and analysis ...................................................................................... 63

7.1.1 Drill core samples - bedrock intersections ............................................................... 63

7.1.2 Drill core samples - regolith intersections ................................................................ 63

7.1.3 Pit and window samples .......................................................................................... 64

7.1.4 ALS Chemex - South Africa..................................................................................... 65

7.1.5 ALS Chemex - Vancouver ....................................................................................... 65

7.2 Sample Quality Assurance and Quality Control (QAQC) .................................................... 65

7.2.1 Standards ............................................................................................................... 65

7.2.2 Blanks..................................................................................................................... 68

7.2.3 Duplicates ............................................................................................................... 69

7.2.4 Umpire Laboratory .................................................................................................. 70

7.2.5 Topographical Data ................................................................................................. 70

7.2.6 Data verification ...................................................................................................... 70

7.2.7 SRK ES Comments ................................................................................................ 71

8 MINERALOGICAL AND METALLURGICAL TESTWORK ............................... 72

8.1 Historical Testwork ........................................................................................................... 72

8.1.1 Soviet Mineralogical Testwork ................................................................................. 72

8.1.2 Soviet Metallurgical Testwork .................................................................................. 73

8.2 Contemporary Testwork .................................................................................................... 73

8.2.1 Contemporary Mineralogical Testwork .................................................................... 73

8.2.2 Contemporary Metallurgical Testwork ..................................................................... 75



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8.3 SRK ES Comments .......................................................................................................... 87

9 MINERAL RESOURCE ESTIMATE .................................................................. 88

9.1 Introduction ....................................................................................................................... 88

9.2 Available Data .................................................................................................................. 88

9.3 Statistical Analysis - Raw Data .......................................................................................... 88

9.3.1 Scatterplots ............................................................................................................. 91

9.3.2 Downhole/down-pit Variability ................................................................................. 91

9.4 Geological Modelling and Domaining ................................................................................ 91

9.4.1 Gridded Surfaces .................................................................................................... 92

9.4.2 Chosen Domains .................................................................................................... 92

9.5 Statistical Analysis - Domained Data ................................................................................. 92

9.5.1 Compositing ............................................................................................................ 92

9.5.2 Domain Histograms ................................................................................................ 93

9.5.3 High Grade Capping ............................................................................................... 94

9.5.4 Domain Statistics .................................................................................................... 94

9.6 Density Analysis ............................................................................................................... 97

9.7 Geostatistical study ........................................................................................................... 98

9.7.1 Variography ............................................................................................................ 98

9.8 Block Model Frameworks ................................................................................................ 102

9.9 Grade Interpolation ......................................................................................................... 102

9.9.1 Search Ellipse Parameters .................................................................................... 102

9.9.2 Dynamic Anisotropy .............................................................................................. 103

9.9.3 Visual Validation ................................................................................................... 104

9.9.4 Global mean grade comparison............................................................................. 106

9.9.5 Validation slices .................................................................................................... 108

9.10 Mineral Resource Classification ...................................................................................... 112

9.10.1 Mineral Resource Definitions................................................................................. 112

9.11 Classification applied to the Tantalus Deposit.................................................................. 113

9.11.1 Introduction ........................................................................................................... 113

9.11.2 Geological Complexity .......................................................................................... 113

9.11.3 Quality of the Data used in the Estimation ............................................................. 113

9.11.4 Results of the Geostatistical Analysis .................................................................... 113

9.11.5 Quality of the Estimated Block Model .................................................................... 113

9.11.6 Results of Classification ........................................................................................ 114

9.12 Mineral Resource Statement ........................................................................................... 116

9.13 Grade-Tonnage Curves .................................................................................................. 118

9.14 Regolith Exploration Prospects ....................................................................................... 119

10 DEVELOPMENT STRATEGY AND EXPLORATION PROGRAMME ............. 121

10.1 Introduction ..................................................................................................................... 121



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10.2 Project Development Strategy ......................................................................................... 121

10.2.1 Planned Exploration Programme ........................................................................... 121

10.3 SRK ES Comments ........................................................................................................ 125

11 RISKS AND OPPORTUNITIES ....................................................................... 126

11.1 Introduction ..................................................................................................................... 126

11.2 General Risks and Opportunities ..................................................................................... 126

11.3 Asset Specific Risks and Opportunities ........................................................................... 126

12 CONCLUSIONS AND RECOMMENDATIONS ............................................... 128

13 GLOSSARY OF TERMS ................................................................................. 130

14 REFERENCES ................................................................................................ 137

REPORT DISTRIBUTION RECORD ..................................................................... 140

List of Tables Table 3-1 Coordinates for the Tantalus project (local Laborde projection) ................................ 13 Table 4-1 Licence fees in Ariary (MGA) per unit square (as of 2011) ....................................... 23 Table 5-1 Rare Earth Elements and their uses ........................................................................ 37 Table 5-2 Speciality metals found on the Tantalus project and their uses ................................ 37 Table 5-3 Summary of the regolith sample results from the Tantalus project ........................... 45 Table 6-1 Exploration completed as part of the Soviet Geological Mission (after OMNIS-SM,

1989; 1990; 1992b; 1992c; 1992d; 1992e) .............................................................. 47 Table 6-2 Fugro „Mini bulk sample‟ results .............................................................................. 47 Table 6-3 Summary of the Tantalus outcrop sample results .................................................... 52 Table 6-4 Summary of the Tantalus soil sample results ........................................................... 53 Table 6-5 Summary of the Tantalus trench sample results ...................................................... 56 Table 6-6 Summary of the Tantalus pit parameters ................................................................. 59 Table 6-7 Summary of the Tantalus regolith sample results..................................................... 62 Table 8-1 Summary of the XRD results for sample TANT2-477067 ......................................... 74 Table 8-2 Summary of the XRD results for sample I679066 - I679069 ..................................... 75 Table 8-3 Microprobe and ICP-MS results for sample TANT2-477069 ..................................... 76 Table 8-4 Summary of the samples provided to the University of Toronto ................................ 77 Table 8-5 University of Toronto sample descriptions and aqua regia digestion results ............. 79 Table 8-6 Total Rare Earth Oxide (TREO) results (as wt. %) ................................................... 79 Table 8-7 Relative Rare Earth Oxide (REO) results (as wt. %) ................................................ 80 Table 8-8 REE extraction levels (as % Extraction) both as individual REE and Total REE,

respectively, based on solids analysis (0.5M (NH4)2SO4, 60 min, 22°C, S/L = 1/2, pH ~ 5.4) ...................................................................................................................... 81

Table 8-9 % REE Extraction during leaching with 1M NaCl ..................................................... 83 Table 8-10 % REE Extraction during leaching with simulated seawater (0.48M Na) .................. 84 Table 8-11 Two-stage leaching for MC3 (22°C, 60 min, S/L = 1/2) ............................................ 86 Table 9-1 Available drillhole and pitting data (as of 28

th November 2011) ................................ 88

Table 9-2 Statistics per weathered lithology ............................................................................ 90 Table 9-3 Domain Statistics for the Ampasibitika prospect ...................................................... 95 Table 9-4 Domain Statistics for the Befitina prospect............................................................... 96 Table 9-5 Domain Statistics for the Caldera and Ampasibitika South prospects ....................... 97 Table 9-6 Density values used for tonnage reporting ............................................................... 98 Table 9-7 Variography Results .............................................................................................. 101 Table 9-8 Block Model Framework ........................................................................................ 102 Table 9-9 Search ellipse parameters ..................................................................................... 103 Table 9-10 Comparison of block and sample mean grades ..................................................... 106 Table 9-11 Mineral Resource Statement Part 1 ....................................................................... 117 Table 9-12 Mineral Resource Statement Part 2: Individual REO Grades ................................. 117 Table 10-1 Exploration project expenditures for 2013-2014 ..................................................... 124



Page v

Table 10-2 Other related expenditures for 2013-2014 ............................................................. 124

List of Figures Figure 3-1 Map showing the prospects of the Tantalus project ................................................. 11 Figure 3-2 Map showing the location of the Tantalus project .................................................... 12 Figure 3-3 Photograph of the Ankatafa field camp .................................................................... 14 Figure 3-4 Photograph of the Ambohimirahavavy igneous complex caldera.............................. 14 Figure 3-5 Photograph of a general view of the eastern part of the Tantalus project ................. 15 Figure 5-1 Map showing the simplified geological setting of north-western Madagascar (after

Ganzeev and Grechischev, 2003) ........................................................................... 27 Figure 5-2 Map showing the geological interpretation for the Tantalus project area (after

Earthmaps Consulting, 2003) .................................................................................. 28 Figure 5-3 Map showing the geological setting for the Tantalus project area (after BGS-USGS,

2008) ...................................................................................................................... 29 Figure 5-4 Schematic cross-section of the Ambohimirahavavy igneous complex (modified from

OMNIS-SM, 1992) .................................................................................................. 31 Figure 5-5 Photograph of an outcrop of peralkaline granite (fasibitkite) in concact with surround

host rocks ............................................................................................................... 32 Figure 5-6 Map showing interpreted structural setting for the Tantalus project area (after

Earthmaps Consulting, 2009) .................................................................................. 33 Figure 5-7 Schematic cross-section of the Tantalus project regolith profile ............................... 34 Figure 6-1 Map showing the radiometric Ternary imagery for the Tantalus project (after

Earthmaps Consulting, 2009) .................................................................................. 49 Figure 6-2 Map showing the magnetic total field reduced to pole imagery for the Tantalus project

(after Earthmaps Consulting, 2009) ......................................................................... 50 Figure 6-3 Map showing the locations of the Tantalus outcrop and soil samples ....................... 51 Figure 6-4 Map showing the locations of the Tantalus trenches and drillholes .......................... 54 Figure 6-5 Photograph of the Versadrill Kmb.4km drill rig in operation ...................................... 57 Figure 6-6 Photograph of a typical exploration pit ..................................................................... 59 Figure 6-7 Map showing the locations of the Tantalus pit and window sampler holes ................ 60 Figure 6-8 Photograph of a window sampler in operation ......................................................... 61 Figure 7-1 Tantalus Standard 1: TREO (ppm) .......................................................................... 66 Figure 7-2 Tantalus Standard 1: ZrO2 (ppm) ............................................................................ 67 Figure 7-3 Tantalus Standard 2: TREO (ppm) .......................................................................... 67 Figure 7-4 Tantalus Standard 2: ZrO2 (ppm) ............................................................................ 68 Figure 7-5 Tantalus Blank material ........................................................................................... 69 Figure 7-6 Original vs. Duplicate TREO (ppm) assays .............................................................. 70 Figure 8-1 REE extraction levels for (NH4)2SO4 leaching .......................................................... 82 Figure 8-2 REE extraction levels for NaCl leaching .................................................................. 83 Figure 8-3 REE extraction levels for Simulated Seawater leaching ........................................... 85 Figure 9-1 TREO% histograms by zone ................................................................................... 94 Figure 9-2 TREO Variograms ................................................................................................. 100 Figure 9-3 Ampasibitika prospect cross-section showing visual validation of TREO% block

grades and TREO% sample grades ...................................................................... 104 Figure 9-4 Befitina prospect cross-section showing visual validation of TREO% block grades and

TREO% sample grades ........................................................................................ 105 Figure 9-5 Caldera and Ampasibitika South prospects cross-section showing visual validation of

TREO% block grades and TREO% sample grades ............................................... 105 Figure 9-6 Ampasibitika prospect Zone 1 northing validation plot – TREO% ........................... 109 Figure 9-7 Ampasibitika prospect Zone 2 northing validation plot – TREO% ........................... 109 Figure 9-8 Befitina prospect Zone 1 northing validation plot – TREO% ................................... 110 Figure 9-9 Befitina prospect Zone 2 northing validation plot – TREO% ................................... 110 Figure 9-10 Caldera and Ampasibitika South Zone 1 easting validation plot – TREO% ............. 111 Figure 9-11 Caldera and Ampasibitika South Zone 2 easting validation plot – TREO% ............. 111 Figure 9-12 Ampasibitika prospect regolith mineralisation ........................................................ 114 Figure 9-13 Befitina prospect regolith mineralisation ................................................................ 115 Figure 9-14 Caldera and Ampasibitika prospects regolith mineralisation ................................... 116 Figure 9-15 Ampasibitika prospect TREO% grade-tonnage curve ............................................ 118 Figure 9-16 Befitina prospect TREO% grade-tonnage curve .................................................... 118



Page vi

Figure 9-17 Caldera and Ampasibitika South TREO% grade-tonnage curve ............................. 119

SRK Exploration Services Ltd

12 St Andrew’s Crescent

Cardiff

CF10 3DD

Tel : +44 29 20 23 32 33

Fax : +44 29 20 23 3211

[email protected]

www.srkexploration.com

Registered Address: 21 Gold Tops, City and County of Newport, NP20 4PG,

Wales, United Kingdom. SRK Exploration Services Ltd Reg No 04929472 (England and Wales)

Group Offices: Africa Asia

Australia Europe

North America South America

A COMPETENT PERSONS REPORT ON THE TANTALUS PROJECT, NORTHERN MADAGASCAR

FILE REF: SRKES_ES7520_TantalusCPR_20130111_Combine.docx

1 INTRODUCTION

Tantalus Rare Earths AG (“Tantalus” or “the Company”) commissioned SRK Exploration

Services Limited (“SRK ES”) and SRK Consulting (UK) Limited (“SRK (UK)”) to prepare an

independent Competent Persons Report (“CPR”) and an Australasian Joint Ore Reserves

Committee (“JORC”) compliant Mineral Resource Estimate (“MRE”) on its rare earth element

(“REE”) Tantalus project in northern Madagascar.

SRK ES is an associate company of the international group holding company, SRK

Consulting (Global) Limited (the “SRK Group”). The technical aspects of this CPR are based

upon unpublished historical and contemporary technical reports, results and mapping,

published technical reports and mapping, the Internet, conversations with Tantalus personnel

and two field visits to the Tantalus project. All of the utilised material sources are cited in the

CPR and fully referenced in the References section.

The initial field visit occurred between the 3rd

and 10th of December 2010 and was completed

by Mr James Gilbertson a Project Manager and Principal Exploration Geologist at SRK ES

and Mr Jon Russill a Exploration Geologist at SRK ES. The visit and the preceding work

resulted in an earlier CPR (SRK ES, 2011). The second visit occurred between the 16th and

22nd

of August 2011 and was completed by Mr Nick O‟Reilly an Associate Senior Exploration

Geologist at SRK ES.

To facilitate the Mineral Resource Estimate component of the CPR two field visits were

completed by SRK (UK) also an associate company of the SRK Group. The initial visit

occurred between the 16th and 22

nd of August 2011, completed by Mr Benjamin Lepley

Consultant Resource Geology currently with SRK (Sweden), as part of the SRK ES visit. The

second visit occurred between the 2nd

and 4th of December 2011 and was completed by Mr

Martin Pittuck (MIMMM) a Director and Corporate Consultant Resource Geology at SRK (UK)

and is a Competent Person as defined by the JORC Code.

2 TANTALUS RARE EARTHS AG

2.1 Company Description

Tantalus Rare Earths AG (“Tantalus”) is a public company incorporated in Germany and

located in Grunwald, München (company number HRB 201757). Tantalus controls the

Tantalus project through its 100% subsidiary Tantalum Holding Ltd (Mauritius) which in turn

holds 100% in Tantalum Rare Earth SARL (Madagascar). Tantalus is managed through its

board of Juergen Schillinger the Chief Executive Officer (CEO) and David Rigoll the Chief

SRK Exploration Services Limited Tantalus CPR – Main Report


Page 8

Operating Officer (COO), with additional support from a Supervisory Board.

Aside from the Tantalus project described in this report, SRK ES has been informed that

neither Tantalus nor any of the subsidiary companies have any other material assets held

through holdings in Direct Subsidiaries, Indirect Subsidiaries, Joint Ventures (Direct and

Indirect) or Associate Companies (Direct and Indirect).

2.2 Company Board Members

The following are members of the Management and Supervisory Boards for Tantalus.

Juergen Schillinger worked at Union Investment GmbH until 2011 as Head of the Style

Team and Senior Portfolio Manager and is considered to be one of the leading asset

managers in Europe. Over the past 10 years he has been instrumental in the success of

numerous equity portfolio management projects. Over the course of his career he has been

recognised by various organisations, including Standard and Poor‟s Rating Services (S&P)

and Feri AG, for his successful fund management and sustainable investment approach. He

has directly or indirectly managed an investment volume of more than EUR 7 Billion.

David Rigoll spent the first part of his career working in investment banking and broking in

Australia, Asia and London, with a particular emphasis on mining. Through 2004/2005 he

located and secured various iron ore and petroleum exploration projects. In 2006 he identified

a critical shortage of rare metals and rare earth elements and began a search for an

appropriate project which could provide accessible deposits of high grade resources for metal

supply. In 2008 he located and began development work on the Tantalus project.

Professor. Dr. Ernst A. Brugger the Chairman of the Supervisory Board, is president of the

board of directors of BHP Brugger and Partners Ltd, and founding partner and member of the

board of directors of BHP Brugger, Hanser and Partners Holding Ltd. He started his

professional career as head of “Regional Problems in Switzerland” a Swiss National Fund

national research programme. From 1981 onwards he lectured at the University of Zurich,

where he is still a part-time professor. Over the last 25 years he has consulted to businesses

and institutions in Europe, Latin America, Africa and Asia. From 1986 to 1996, he was

managing director and delegate of the board of directors of FUNDES (Fundacion para el

Desarrollo Sostenible), a private institution promoting small enterprises in Latin America. He is

currently the chairman of the board of directors of SV Group AG, Blue Orchard Finance and

Precious Woods Holding, Tantalus as well as a board member of several companies. As

founder of The Sustainability Forum Zurich (TSF) he is actively engaged in the

implementation of long-term strategy, corporate responsibility, sustainability and good

governance in business and politics.

Jack Lifton the Deputy Chairman of the Supervisory Board, is a consultant, author and

lecturer on the market fundamentals of nonferrous strategic metals. He was educated as a

physical chemist, specialising in high-temperature metallurgy. Mr Lifton has over 45 years‟

experience in the global OEM automotive, heavy equipment, electrical and electronic, mining,

smelting, and refining industries. His background includes the sourcing, manufacturing and

sales of platinum group metal products, rare earths compounds and ceramic specialties used

to make catalytic converters, oxygen sensors, batteries and fuel cells. Currently he is a due-

diligence consultant for institutional investors looking into opportunities where rare and

technology metals availability are a factor in determining the probability of commercial

success of a metals-related venture. He is a Founding Principal of Technology Metals



Page 9

Research LLC and a Senior Fellow of the Institute for the Analysis of Global Security.

Ian Hannam a member of the Supervisory Board, is an investment banker and expert in

capital markets. He has worked on nearly 300 transactions and book-running deals in more

than 40 different countries in a career spanning 30 years. He helped build the capital markets

businesses at Salomon Brothers and J.P. Morgan. Since 1997 he has advised on the listing of

twelve large companies in London, six of which joined the FTSE 100 index. In April 2012 he

resigned from his position as global chairman of J.P. Morgan Capital Markets.

Thomas Hoyer a member of the Supervisory Board, is the CEO of Ruukki Group. He was a

member of the Board of Ruukki Group between October 2008 and April 2010 and was re-

elected at the Annual General Meeting in May 2011. Hoyer joined Ruukki in 2009 as CEO of

the now divested wood processing division. During his tenure he turned around the division

and sold five subsidiaries valued at over EUR 100 million. In October 2010 he was promoted

to Group Chief Financial Officer (CFO) and in May 2011 to Group CEO. Prior to joining

Ruukki, he held a number of senior management positions in portfolio management, private

equity and finance at Allianz, Bank am Bellevue, Invision and Aldata Solution.

Ulrich Krauskopf a member of the Supervisory Board, is the president and managing partner

at Metal Resources US. Metals Resources is a market leader in managing the global flow of

industrial metals. They are a leading provider of a wide range of metals solutions to industrial

clients worldwide. Prior to founding Metal Resources US, Mr Krauskopf held a number of

senior management and partner positions in metal trading, mining and consulting at ELG

Haniel Trading Corp., Lazarus Metal Resources Group NY, Metallgesellschaft Frankfurt AG

and Metallgesellschaft Corp. New York.

Ben Paton a member of the Supervisory Board, is an investment management professional.

He worked for Fidelity Investments in London for 13 years where he specialised in equity

investment. Between 2004 and 2008 he was the lead fund manager for the Fidelity

International Smaller Companies Fund, a US mutual fund which significantly outperformed its

benchmark.

2.3 Company Strategy

A JORC complaint Inferred Mineral Resource Estimate was completed by SRK (UK) in

January 2012 following an intensive pitting, drilling and sampling programme of the Tantalus

project (Section 9 of this report). The ongoing company strategy by Tantalus is to focus on the

exploration and delineation of the identified regolith-hosted ion adsorption-type REE

mineralisation in order to expand the existing Mineral Resource, improve its classification and

work towards a feasibility study. Mine development and production are the ultimate objectives

of the Tantalus project.

In the medium-term, Tantalus intends to significantly increase the existing Mineral Resource

and improve its classification to Reserve status through a comprehensive and systematic

programme. This expansion will develop concurrently with refinements to the metallurgical

processing aspects to ensure unified development of the project.

Tantalus ultimately aim to become an important rare earth element producer. The size and

type of deposit at the Tantalus project is considered by the Company to support this aim and

is possibly the only major regolith-hosted ion adsorption-type REE resource outside of China.

Furthermore, the mineralisation is potentially amenable to comparatively inexpensive strip



Page 10

mining adding to the economic potential of the project as a whole

Tantalus was originally listed on the Frankfurt Stock Exchange. However due to recent

changes in the listing requirements the Company decided to transfer to the Düsseldorf Stock

Exchange. These changes have affected many companies, but the decision to transfer is

considered by the Board to ultimately be a positive move for Tantalus because it will occupy

the highest attainable level outside of a primary exchange. The significantly higher

transparency requirements of the Düsseldorf Stock Exchange will also facilitate a potential

listing on a primary exchange. Furthermore, Tantalus recently and successfully placed a

convertible bond of 4.7 Million Euros in order to secure funding for the project.

3 THE TANTALUS PROJECT

3.1 Introduction

The Tantalus project encompasses 300 km2 and is an advanced-stage exploration project

focussed on delineating and developing a large regolith-hosted ion adsorption-type REE

deposit. The project currently includes five principal prospects (Ampasibitika, Ambaliha,

Befitina, Caldera and Ampasibitika South) that were largely delineated on the basis of

historical exploration and airborne geophysical anomalies (Figure 3-1).

The project area has been subject to various exploration activities including stream and beach

sediment sampling, bulk sampling, an airborne geophysical survey (both magnetic and

radiometric surveys), outcrop sampling, soil sampling, core drilling, trenching, pitting, window

sampling and a JORC-compliant Resource estimate.

Planned activities intend to focus on the exploration and delineation of the regolith-hosted

REE mineralisation in order to expand the existing Mineral Resource, improve its

classification and work towards a feasibility study. Mine development and production are the

ultimate objectives of the project.

3.2 Location, Access and Infrastructure

The Tantalus project is located in the eastern part of the Ampasindava Peninsula,

Antsiranana Province on the northwest coast of Madagascar, approximately 500 km north of

Madagascar‟s capital city Antananarivo (Figure 3-2). The nearest major town and

administrative centre of the region is called Ambanja and is located some 30 km to the

northeast of the project area.

The coordinates of the geographic centre (centroid) of the project area in Universal

Transverse Mercator (UTM), WGS 84, Zone 38 South are 191457 mE, 8467897 mN. The

coordinates in WGS 84, latitude and longitude are -13.8421, 48.1459 and in the local Laborde

coordinate system are 584898 (X), 1358752 (Y). The complete set of coordinates for the

Tantalus project area are provided in Table 3-1.



Page 11

Figure 3-1 Map showing the prospects of the Tantalus project



Page 12

Figure 3-2 Map showing the location of the Tantalus project



Page 13

Table 3-1 Coordinates for the Tantalus project (local Laborde projection)

Point X Y Point X Y

A 575000 1362500 L 585000 1355000

B 582500 1362500 M 592500 1355000

C 582500 1357500 N 590000 1355000

D 585000 1357500 O 590000 1352500

E 592500 1365000 P 585000 1352500

F 592500 1367500 Q 585000 1347500

G 587500 1367500 R 582500 1347500

H 587500 1372500 S 582500 1345000

I 575000 1372500 T 590000 1345000

J 595000 1365000 U 590000 1350000

K 595000 1355000 V 592500 1350000

The nearest international airport to the project area is Fascene, located on the island of Nosy

Be (Figure 3-2). Airlines that currently operate include Air Madagascar, Air Austral and Air

Italy with destinations including Antananarivo, La Reunion, Johannesburg, Milan and Rome.

Access from Nosy Be to the project area is by boat and Tantalus has its own craft for this

purpose. The travel time from Madirokely in the southwest of Nosy Be to the project area is

approximately 50 minutes, corresponding to a distance of approximately 40 kilometres.

Road access to the project area requires the use of a 4x4 vehicle along a purpose-built track

that connects to the main Route Nationale 6 (N6) highway approximately 30 km southwest of

Ambanja. The main highway intersects the project area in two locations (Figure 3-2).

Vehicular access around the project area is limited to a few dirt tracks. These are passable

using 4x4 vehicles only and even then it can be difficult during the wet season. Most access

around the project area is on foot.

Ambanja represents the logistical centre of the region with infrastructure that includes a

hospital, banks, restaurants, hotels and courier services, and so forth. There is only very

limited infrastructure within the project area, comprising a semi-permanent field camp that has

been constructed on the coast near the village of Ankatafa and includes tents, kitchens,

generators, bathrooms and a small workshop (Figure 3-3).

Mobile telephone networks are available in parts of the project area and at the camp, but

signal reception is sporadic and weak. Internet access is only possible through the mobile

network.



Page 14

Figure 3-3 Photograph of the Ankatafa field camp

3.3 Physiography, Climate and Environment

The majority of the project area is relatively rugged with elevations ranging from sea-level to

713 m with the highest elevations found in the northwest of the project area. The rugged

terrain can make access to certain parts of the project area problematic, particularly in the wet

season. The most characteristic physiographical feature in the project area is a 6 km wide,

circular caldera which corresponds to the southeast part of the Ambohimirahavavy igneous

complex (Figure 3-4).

Figure 3-4 Photograph of the Ambohimirahavavy igneous complex caldera

The climate in Madagascar can be broadly divided into two distinct seasons: a dry season

and a wet season. The dry season typically occurs between April and October and the wet

season from November to March. The rainy season is generally very wet and accompanied

by high temperatures on account of the eastern trade winds and cyclonic influence. Typically



Page 15

the weather is warm all year round due to the country‟s position astride the Tropic of

Capricorn. However western coastal areas can become very hot during the summer dry

season. Annual rainfalls are more than 3000 mm in the eastern coastal plains, around

1500 mm in the central plateau and less than 500 mm in the western coastal plains.

The Tantalus project area is associated with an average annual temperature of greater than

25°C and rainfall exceeding 2000 mm per year, conditions that are conducive to the

weathering of the bedrock and the formation of regolith.

The majority of the project area is covered by secondary vegetation including bamboo,

traveller‟s palms and other species. The original primary forest is restricted to a few mountain

tops and a small area in the extreme northwest. Original primary forest covers less than

20 km2 of the 300 km

2 project area. Therefore, environmental legislation protecting these

areas does not restrict exploration activities in the vast majority of the project area. Shallow

tidal areas in bays in the coastal areas are covered by mangroves.

Slash and burn agriculture is very common throughout much of the permit area, increasingly

evident as areas of barren ground (Figure 3-5).

Figure 3-5 Photograph of a general view of the eastern part of the Tantalus project

3.4 Permitting

The Tantalus project comprises one exploration licence (grant PR 6698) made up of 768

contiguous 625 m by 625 m unit blocks that encompass a total area of 300 km2. The permit is

currently granted as a Permis de Recherche (research permit), or PR, which grants the

exclusive right for prospecting and research. The permit is valid until April 2013 and can be

renewed twice, each for a period of three years.

The permit was originally held by Calibra Resources and Engineers Madagascar SARL and

was subsequently acquired by Zebu Metals Limited in January 2008. Tantalus assumed

100% ownership of the permit in October 2009.



Page 16

4 COUNTRY PROFILE

4.1 Introduction

4.1.1 Geography

The Republic of Madagascar is located approximately 420 km east of Mozambique off the

coast of Africa in the Indian Ocean. It is the world's fourth largest island and covers an area of

approximately 590,000 km2, extending over 1600 km from north to south and some 800 km

east to west. Its population is approximately 21 million people. The capital and largest city is

Antananarivo, often abbreviated and referred to as Tana.

The indigenous inhabitants of Madagascar fall into two main groups: those of largely Malayo-

Indonesian descent and those principally of African descent. There are also small numbers of

expatriate French and Asians. The official languages are Malagasy (a language of Indonesian

origin), French and English. Over 50% of the people follow traditional religious beliefs: about

40% are Christian (equally divided between Roman Catholics and Protestants) and 7% are

Muslim.

The national currency is the Ariary (MGA) which was reintroduced to replace the colonial

Malagasy Franc (MGF). The Ariary is on a fixed exchange with the Malagasy Franc at 1 MGA

to 5 MGF. Prices are still commonly quoted in both currencies. Madagascar is one of the

poorest countries in the world, with annual per capita income of approximately USD 260. A

total of 70% of the population are classified in poverty with half of all children malnourished.

4.1.2 Politics

Madagascar held its second presidential election under the 1992 Constitution in 1996,

following the impeachment of then President Albert Zafy earlier that year. The election was

accepted widely as free and fair and the winner, former Second Republic President Didier

Ratsiraka, took office in February 1997. Post 1997 Ratsiraka and his party, the Association for

the Rebirth of Madagascar (AREMA), consolidated power and greatly weakened the

previously strong non-AREMA parties.

Although power remains formally divided between the President, his Prime Minister, the

Cabinet, and a bicameral legislature (Senate and National Assembly), the 1998 revision of the

Constitution significantly strengthened the presidency, weakened the National Assembly, and

gave the President the power to name one-third of the Senators. Indirect Senate elections

held in March 1997 were considered to be generally free and fair, with mayors and provincial

councils electing two-thirds of the new Senators, nearly all from AREMA.

In December 2001 presidential elections were held. However the results were disputed and a

winner was not named by year's end. Most of the institutions provided for in the revised

Constitution, including autonomous provincial Governments, were established during the year

but their organisation and funding were also uncertain at year's end.

After the end of the 2002 political crisis, the new President Marc Ravalomanana began many

reform projects, forcefully advocating "rapid and durable development" and the launching of a

battle against corruption. In December 2002, legislative elections gave his newly formed

Tiako-I-Madagasikara (I Love Madagascar) Party a commanding majority in the National

Assembly. In November 2003 municipal elections were conducted freely, returning a majority

of supporters of the President, but also significant numbers of independent and regional

opposition figures.



Page 17

In 2004 as part of the new Government, the President replaced provincial governors with

appointed PDS‟s (Presidents des Delegations Speciales). Subsequent legislation established

a structure of 22 regions to decentralise administration. Financing and specific powers for the

regional administrations remained to be clarified.

Despite being re-elected in 2006, Ravalomanana's Government was forcibly removed in

March 2009 in a militarily-backed uprising lead by Andry Rajoelina. Rajoelina formed a High

Transitional Authority of which he became the self-appointed Transitional Head of State. In

November 2010, a referendum was held to update the constitution.

Following the 2009 uprising and due to ensuing political, social and economic problems, the

South African Development Community (SADC), with the participation of the leaders of South

Africa, Botswana and Zambia, has been engaged in the mediation process.

On the 17th September 2011 it introduced a roadmap comprising numerous incentives to

improve Madagascar‟s democratic and humanitarian performance, to facilitate a political

truce, and to reintroduce Madagascar back into the international community. The roadmap is

recognised and has been well-received by the international community. One of the conditions

stipulated in the roadmap was that an interim Government would be formed with Rajoelina as

President, even though this was strongly contested by many opposition parties. The roadmap

also gives the Head of State the power to appoint a Prime Minister and stipulates that every

exiled person who opposed the Government is free to return to their home state. This means

the likes of former President Ravalomanana is permitted to return to Madagascar and re-enter

national politics as a member of the opposition. Howeve, several attempts on his part to do so

have been thwarted. The main priority of the roadmap is to facilitate free elections and

Madagascar is tentatively scheduled to hold presidential elections on the 8th May 2013.

4.1.3 Security

The State Secretary of the Ministry of Interior for Public Security and the national police,

which are under the State Secretary, are responsible for law and order in urban areas. The

Ministry of Armed Forces oversees the army, the air force, the navy, and the gendarmerie.

The gendarmerie has primary responsibility for security except in major cities and is assisted

in some areas by regular army units in operations against bandit gangs and cattle thieves.

After a number of years of decline, the military force has stabilised at approximately 22,000

troops, including the gendarmerie.

Village-level law enforcement groups enforce local traditional laws called "dina," particularly in

areas where the Government's presence is weak. There continues to be occasional reports

that police, gendarmes and dina authorities have committed human rights abuses.

4.1.4 Economy

The economy relies heavily on agriculture and fisheries. Shrimp is the leading export.

Agricultural exports grew 5.2% with vanilla, coffee, cloves and pepper registering increases.

Textiles were another major export. The smuggling of vanilla, gold and precious stones and

cattle rustling continue to be major concerns. Overall economic performance has improved in

recent years, but around 50% of the population remain in poverty and foreign assistance

remains a major source of national income.

After discarding socialist economic policies in the mid-1990s, Madagascar has followed a

World Bank- and IMF-led policy of privatisation and liberalisation. This strategy placed the

country on a slow and steady growth path from an extremely low level. Agriculture, including



Page 18

fishing and forestry, is a mainstay of the economy, accounting for more than one quarter of

GDP and employing 80% of the population. Exports of apparel have boomed in recent years

primarily due to duty-free access to the US. However Madagascar's failure to comply with the

requirements of the African Growth and Opportunity Act (AGOA) led to the termination of the

country's duty-free access in January 2010.

Deforestation and erosion, aggravated by the use of firewood as the primary source of fuel,

are serious concerns.

Former President Ravalomanana worked aggressively to revive the economy following the

2002 political crisis, which triggered a 12% drop in GDP that year. The current political crisis

which began in early 2009 has dealt additional blows to the economy. Tourism dropped more

than 50% in 2009, compared with the previous year. The real growth rate was 7% in 2008,

but fell to minus 1% in 2009, attributed to the political crisis that occurred earlier in the year.

In 2011, the overall economy grew an estimated 0.6%, only slightly more than it did in 2010

(0.5%). It was mainly driven by the secondary (up 2.7% from 2010) and tertiary (up 2.1%

from 2011) sector industries. The primary sector shrank by 2.3% because of poor agricultural

output resulting from insufficient rainfall and several hurricanes.

Mining remained one of the economy‟s principal strengths and extractive industries grew an

impressive 25.9%. The secondary sector‟s best performers were beverages, paper and food-

processing and in the tertiary sector banking, telecommunications and transport, supported by

tourism, which recovered in 2011 with a 14.8 % rise in visitors (from 196,052 compared to

225,055 in 2010).

Overall investment fell to 14.9% of GDP in 2011 from 18.8% in 2010 as a result of less

development aid and the end of the building and installation phases of several large mining

projects. In real terms, the drop was 11.2% and also affected public and private investment

(down 8% and 12% respectively). Total consumption by volume was slightly up (1.1%) but

private consumption rose slightly more (1.2%) than public (0.7%). Total consumption was

93% of GDP, down 2.7 percentage points from 2010, mainly because of private consumption

dropping from 86.3% of GDP to 83.6%. Public consumption was steady at 9.5% of GDP

(compared to 9.4% in 2010).

A combination of the roadmap agreement and activities in the mining sector are anticipated to

increase growth by an estimated 2.4% in 2012 and 4.5% in 2013. Foreign aid (which funded

70% of Government investment) partially resumed in 2012. If the elections occur as planned

and without dispute, more aid could return in 2013 and with it an improved business climate

for the private sector.

It is anticipated that mining will be the chief engine of growth in 2012 and 2013, with

production starting at Madagascar‟s largest mine at Ambatovy. The tertiary sector should

benefit from revived tourism. Agricultural production will remain modest in 2012 and 2013

because of low rainfall and frequent hurricanes. Total investment was expected to grow 2.2%

in 2012 (14.5% of GDP), and is expected to grow 8.6% (14.4%) in 2013. With spending on

elections in 2012 estimated at MGA 45 billion (Madagascar Ariary) or USD 22.5 million and

after the economy has returned to normal in 2013, total consumption by volume should grow

4.1% in 2013 to reach 93.7% of GDP.



Page 19

4.2 Mining Industry in Madagascar

Madagascar has good potential to discover and develop new deposits for a range of

commodities, although its mining industry is underdeveloped. It is noted for its production of

good quality chemical and metallurgical grade chromite, high-grade crystalline flake graphite

and mica, and has an abundance of semiprecious stone deposits. The island has other large

deposits containing gold, nickel-cobalt, heavy mineral sands (titanium), bauxite, copper, lead,

manganese, platinum, zinc, zirconium, coal and petroleum products.

In line with its overall policy defined in 1998 in the Document Cadre de Politique Economique

(DCPE), the five-year Mining Sector Reform Project (MSRP), led in part by the World Bank

Group, assisted the Government in setting up a legal and regulatory framework conducive to

private investment in the area of mineral resources with the aim of attracting large-scale

mining projects. Another key objective was to shift the role of the State from operator to

regulator and promoter of sustainable minerals development. Many of the World's economic

development agencies such as USAID, International Monetary Fund and World Bank Group

committed significant investments and resources to improve the sector.

Reforms, supported by the MSRP, include:

(i) a new Mining Code and its regulations, which have established an adequate legal

and regulatory framework to attract private investment into mining, including

environmental regulations for mining, published jointly by the Ministry of Environment

and the Ministry of Energy and Mines;

(ii) a special law for large-scale mining investments, defining an attractive special

investment regime for mining in Madagascar, and providing for a fair share of

revenues between the central and provincial Governments and the private sector; and

(iii) improved governance through the establishment of the Mining Cadastre, a non-

discretionary and transparent system to grant, manage and cancel mining permits.

According to the most recent United States Geological Survey (USGS) Minerals Yearbook for

Madagascar (USGS, 2012), in 2010 Madagascar accounted for about 3% of world ilmenite

production. The country was also one of the world‟s top-ranked sapphire producers in early

2008. However, in March 2008 gemstone production decreased precipitously because of the

Government‟s ban on rough gemstone exports. Madagascar‟s significance to the world

gemstone industry was unclear at the end of 2010. Other domestically significant minerals

produced included chromite and ornamental stones.

Despite the recent political situation there are still a sizeable number of foreign exploration

and mining companies that have a presence in Madagascar. In 2010 (the date of the latest

available figures), the mining sector grew by an estimated 121% (USGS, 2012). Furthermore,

the companies operating in Madagascar appear to be involved with a variety of commodities,

a testimony to the diversity of the country‟s perceived mineral wealth.

With regards mineral production, in 2010 the production of mica increased by 478%; agate by

an estimated 300%; quartz by 291%; zircon by an estimated 81%; ilmenite by 79%; rutile by

an estimated 78%; labradorite by an estimated 32%; limestone and marble by an estimated

13% each; cement by an estimated 11% and graphite by 10%. Madagascar is also a

recognised gold producer with major artisanal activity in various parts of the country.



Page 20

4.2.1 Mining and Exploration Companies

Mining companies include Rio Tinto, who commenced exploitation at the QMM minerals

sands project in southeast Madagascar in 2009. The project is located near to the coastal

town of Fort Dauphin and has a production target of 2.2 Mt of ilmenite per year. Rio Tinto

owns 80% of the operation and the Government of Madagascar owns the rest

(www.riotintomadagascar.com).

The Canadian company Sherritt International is developing a nickel and cobalt operation at

Ambatovy, approximately 80 km east of Antananarivo. It is professed to be one of the world‟s

largest nickel mines, tentatively producing 60,000 t of nickel per year and with a mine life of

27 years. The mine commenced operation in July 2010. Annual design capacity is for 60,000 t

of nickel and 5,600 t of cobalt. Sherritt owns 40% of project with Japan's Sumitomo Corp and

South Korea's state-run Korea Resources with 27.5%, and Canada's SNC Lavalin Group with

5% (www.sherritt.mg).

The South African company Exxaro completed a pre-feasibility study in 2009 and confirmed a

large reserve of smelter-grade ilmenite between Toliara and Marombe in southwest

Madagascar. A bankable feasibility study for the deposit is still underway (www.exxaro.com).

The Australian company Red Island Minerals delineated a 180 Mt coal resource in the Sakoa

area, southwest Madagascar. The project was recently acquired by the Thai company

Petroleum Authority of Thailand. Mine development is underway leading to production in 2014

(www.pttplc.com).

The Australian company Lemur Resources is a thermal coal exploration and development

company with assets in Madagascar. Lemur is the 100% shareholder of Coal of Madagascar

Limited which is the 99% Shareholder of the Malagasy registered company, Coal Mining

Madagascar SARL ("CMM"). CMM has an interest in seven mining permits located in the

Imaloto Coal Basin and work is currently focussed on the Imaloto coal project with an Inferred

JORC resource of 176.6 Mt (www.lemurresources.com).

The Canadian company Energizer Resources (Energizer) is actively developing its Molo

graphite project in southern Madagascar as part of a joint venture with Australian company

Malagasy Minerals. Energizer has a 75% ownership interest and is the operator of the project.

It recently completed its resource drilling programme consisting of 47 holes, totalling 9246 m.

Energizer will reportedly release an NI 43-101 compliant resource that will be followed by the

release of a Preliminary Economic Assessment study (www.energizerresources.com and

www.malagasyminerals.com).

The Australian company Aziana has been actively exploring for gold and bauxite since 2006

in various properties throughout Madagascar (www.aziana.com.au).

The UK company Jubilee Platinum is exploring for platinum approximately 160 km southwest

of Antananarivo. Exploration is focussed on a layered mafic-ultramafic intrusive and the

company is planning to advance the project with additional drilling (www.jubileeplatinum.com).

The Canadian company Majescor Resources was actively exploring the historical Besakoa

volcanogenic massive sulphide (VMS) deposit in south-western Madagascar

(www.sunridgegold.com).



Page 21

Other companies exploring in Madagascar include:

Austral Resources - zircon, western Madagascar (www.austral-resources.com);

Cline Mining - iron, eastern Madagascar (www.clinemining.com);

Diamond Fields International - lateritic nickel, central Madagascar

(www.diamondfields.com);

L P Hill - uranium and thorium, southern Madagascar (www.lphill.com.au);

Prom Resources - gold, central and south-western Madagascar

(www.promresources.com);

UMC Energy - uranium, western Madagascar (www.umc-energy.com); and

Zamarat Mining - gold, Madagascar (www.zamaratmining.com).

In summary there are some significant projects at advanced or development stages in

Madagascar and there appears to be a willingness for foreign companies to invest in large

projects. This has no doubt been helped by the recent reforms of the Malagasy Mining Code.

However the main factors contributing to the underdevelopment in the mining sector include

the need for major infrastructure upgrades, its poor electrical power distribution systems,

under-funded health and education facilities, difficulties in reforming the economy and dealing

with chronic malnutrition, deforestation, land erosion and population growth.

4.3 Exploration and Mining Permitting

In 1999 the Malagasy Government approved a Mining Code (Law No 99-022 of 30th August

1999), with a view to simplifying the country‟s mining sector and making it more transparent. It

was also intended to eradicate conflicts and improve the management of mining licences.

The code put all investors on the same basis, irrespective of their origin or their capital

ownership. It took into account the new constitutional provisions with regard to the

decentralisation of administrative services, and is in conformity with the concern to preserve

the environment and conduct mining activity in a better socio-economic climate.

The code induced the creation of the Mining Cadastre Registry (BCMM) in 2000, which

established and maintains the updated public registry of mining leases. The fundamental

basis for the granting of licences is the „first come, first served‟ principle. Discretionary

procedures and discrimination were abolished in the granting of mining leases. Reasonable

and progressive fees were established to discourage speculation.

All mining licences provide exclusive rights for all commodities inside the mining lease area,

with guaranteed security of tenure during the transition from exploration to mining. The free

commercialisation of the products is guaranteed, as well as the reduction of custom duties for

imported equipment and goods for exploration and mining. The „liquidity‟ of mining

investments was improved by liberalising the transfer of mining rights through leasing,

mortgage and other transactions.

The code was slightly modified in 2005 (Law 2005-021) in order to introduce some

adjustments based on experience cumulated during the practical application of the Law since

its approval. These amendments do not affect the basic principles and concepts which

inspired the 1999 Act.

The monitoring and control of mining activities, as well as the implementation of the mining



Page 22

code, is the responsibility of the Direction of Mines and Geology (DMG). The DMG comprises

the Service of Mines, the Service of Geology, the National Laboratory of Mines and Geology

and the Mining Inspectorate.

The Institute of Gemmology of Madagascar (IGM) is a Ministry of Mines and Energy Project,

financed by the World Bank with assistance from USAID. The IGM‟s goals are to enable mine

owners to improve their knowledge of precious stones and to provide training in lapidary to

reinforce the capabilities of small lapidaries. It will also provide certification for gemstones

destined for export.

Mineral exploration and mining permits may only be held by Malagasy nationals or companies

domiciled in Madagascar. Such companies may have foreign owners and directors. Minerals

are the property of the State and subject to modest royalties.

The BCMM grants mineral licences based on the payment of a fixed mining administration

fee, calculated on standard surface unit areas of 625 m by 625 m, and the submission of an

environmental commitment plan. Four main categories of mineral licences are available in

Madagascar for exploration and mining, as shown below:

1. Exclusive Authorisation to Reserve a Prospect (AERP)

• Confers on the holder the exclusive right to prospect within the perimeter

• Maximum area 38,400 unit squares (approximately 15,000 km2)

• Duration of validity is 3 months maximum

• Useful for initial appraisal prior to the application of a PR or PE Licence

2. Exploration Licences (PR)

• Confers on the holder the exclusive right to explore within the licence perimeter


• Duration is 5 years, renewable twice for 3 years each time

3. Mining Licences (PE)

• Confers on the holder the exclusive right to undertake mining, prospecting and

exploration activities within the licence perimeter


• Duration is 40 years, renewable once or more for 20 years each

4. Small-scale Mining Licences (PRE)

• Confers on its holder the exclusive right to undertake at the same time prospecting,

exploration and mining within the licence perimeter

• Maximum area 256 unit squares (approximately 100 km2) distributed over at least four

separate blocks

• Duration is 8 years, renewable for four years each time

PRE, PR and PE licences are transferrable rights which can be leased and mortgaged. The

base rate used for the calculation of mining administration fees per unit square (625 m by

625 m) is revised annually, according to the value change of the Malagasy Ariary with regard

to the special drawing right of the International Monetary Fund. Table 4-1 provides a summary

of the annual fees for mineral licences.



Page 23

Table 4-1 Licence fees in Ariary (MGA) per unit square (as of 2011)

Small-scale Mining Licence (PRE*) Exploration Licence (PR) Mining Licence (PE**)

Year MGA Year MGA Year MGA

1 6400 1 32000 1 95800

2 6400 2 32000 2 95800

3 19200 3 63900 3 138400

4 19200 4 63900 4 138400

5 38300 5 85200 5 181000

6 38300 6 85200 6 181000

7 38300 7 127800 7 234200

8 38300 8 127800 8 234200

9 44700 9 170300 9 276800

10 44700 10 170300 10 276800

11+ 51100 11+ 170300 11+ 340700 *From the 12

th year the base rate of calculation is that of the 11

th year

** From the 81st year the base rate of calculation is that of the 80

th year

Licence renewal fees for PR and PRE are MGA 19,700 per licence and MGA 1,900 per unit square

The first sale of extracted products is subject to a mining royalty equivalent to 0.60%, and a

rebate to 1.40% of their value.

The Large Scale Mining Law (LGIM) (Law 2001-031) was created to promote large-scale

mining in Madagascar and to confine exploitation to technically and financially qualified

operators. The LGIM grants a special regime to operators that invest above the pre-set

eligibility threshold of approximately USD 25 Million. The main advantages of the law are as

follows:

Taxation

o Temporary exemption of the minimum collection to IBS

o Application of reduced rates (IBS, IRCM, TP, TFT, IFPB)

o Additional deductions of IBS

o VAT exemption for importation of items, goods and equipment

o Depreciable particular elements

o Deduction on real basis (TP, TFT)

Exchanges

o Freedom of conversion to the market rates

o Current operations transfer into simple declaration

o Accounts in currencies in Madagascar and abroad

Customs

o Exemption from customs duties for definite admission to the importation of

items, goods and equipment

o Temporary admission with fees and taxes suspended for items mentioned in

the generic list

o Possibility to set up a special office for imports and exports business



Page 24

Legal

o For processed mining products, 50% deduction on their value for the tax

calculation of the mining royalty

o Guarantee of the rights of ownership

o Guarantee not to expropriate/nationalise

o Guarantee of free movement and marketing of the mining products

The Committee of Large-scale Mining Investments (CGIM) is responsible for the follow-up

and supervision of the large-scale mining operators. It is managed by the General Secretary

of the Ministry of Energy and Mines. The committee is also the negotiator on behalf of the

investors.

4.4 Environmental Regulations

Biodiversity conservation in Madagascar is a world priority due to the number and variety of

indigenous flora and fauna that exist in the country and the high potential for degradation.

Madagascar is considered by some NGOs as one of the three places in the world where

biodiversity conservation should be given the highest priority, resulting in the recommendation

that the environmental impacts are assessed and mediated at all levels of exploration work.

Investment in conservation and environmental protection is therefore a priority. Madagascar‟s

flora and fauna are threatened by environmental degradation to such an extent that it is likely

that several species risk extinction before they have even been discovered.

A set of detailed regulations has been developed based on the environmental framework law

and sector-specific legislation. The key aspects of the legislations are as follows:

Environment Charter No 90-033 (21st

December 1990)

Public or private investment projects that are liable to affect the environment should be the

subject of an impact study, considering the technical nature and the extent of the

aforementioned projects and the sensibility of the established environment.

Decree on the Compliance of Investments with Environmental Management (MEClE) No

99-954 (15th

December 1999)

This decree governs the environmental impact study (EIE) assessment procedures, as well as

the Environmental Commitment programmes (PREE), for exploration activities and small-

scale mining.

The Mining Code (No 99-022, August 1999) and its Regulations (No 2000-170, 15th

May

2000)

The preparation of an environmental impact study and an environmental management plan,

including the preparation for mine closure and the rehabilitation of the site, are prior conditions

for all mining projects. No exploration or mining activities can start without prior approval by

the relevant environmental authorities, as per the regulations on environmental protection and

the commitments contained in the environmental impact study. All prospecting, research and

exploitation works are banned within natural reserves and protected areas.

Mines-Environment Joint Inter-Ministerial Order, No 12032/2000 (6th

November 2000)

This sets the regulation of the mining sector as far as environment protection is concerned,

and defines and specifies central and provincial procedures and modes on the PREE file



Page 25

examination. Furthermore, consistent with the worldwide interest of wildlife protection in

Madagascar, the Government created „biodiversity corridors‟ in 2003 in order to include the

more critical and sensitive zones in the protected areas network. Presently the Ministry of

Energy and Mines and the Ministry of Environment, through the Joint Commission for Water

and Forest are making efforts to harmonise the needs and necessities of the mining and

environmental sectors.

Tantalus possesses the required environmental permits to conduct exploration activities on

the licence and employ a full time environmental scientist to ensure that the physical impact of

the activities is kept to a minimum. The project area itself has had environmental restriction to

exploration and mining lifted for all but a very small fraction to the far west of the exploration

licence but the preparation of an environmental impact study, and an environmental

management plan, including the preparation for mine closure and the rehabilitation of the site

remain prior conditions for all mining activities. No mining activities can start (and this will

eventually apply also to detailed exploration, i.e. trial mining) without prior approval by the

relevant environmental authorities, as per the regulations on environmental protection and the

commitments contained in the environmental impact study. All prospecting, research and

exploitation works are banned within natural reserves and protected areas.

4.5 Labour Legislation

Most union members hold office jobs or work in industry. Popular and extensive trade unions

include the Fédération des Syndicats des Travailleurs de Madagascar, the Sendika

Kristianina Malagasy (Christian Confederation of Malagasy Trade Unions) and the Union des

Syndicats Autonomes de Madagascar.

4.6 Taxation

Tax revenue is derived mainly from trade taxes, taxes on domestic goods and services, and

tax applied to corporate income and profit; income derived from property tax is the least

significant. Tax collection and revenue are generally quite centralised and tax evasion

remains a significant problem in Madagascar. At the beginning of the 21st Century the

proportion of Madagascar‟s income derived from tax revenue was quite low and increasing

revenue in order to reduce Madagascar‟s on-going dependence on aid remained an important

goal.

Indirect taxes produce much more revenue than direct taxes. The most important indirect

taxes are import duties (ranging from 0% to 25%), a value-added tax (20%), customs fees

(0% to 25%), and consumption taxes (from 0% to 10%). Import licences are not necessary

and exports have been liberalised. Direct taxation consists of a graduated personal income

tax with a maximum rate of 35%, a corporate profits tax at a flat rate of 35% and a tax on

income from transferable capital.



Page 26

5 GEOLOGICAL SETTING AND MINERALISATION

5.1 Regional Geological Setting

North-western Madagascar is dominated by Mesozoic sediments that were deposited in a

predominantly marine environment and include mudstone, siltstone, limestone, sandstone

and marl.

In the late Cenozoic, the central and northern parts of Madagascar were subject to uplift and

rifting that resulted in the development of horst and graben structures. This extensional

regime was also accompanied by intra-continental volcanism and the emplacement of

numerous igneous complexes, including several that occurred along a roughly linear

southeast-northwest trending zone between the Nosy Be archipelago and Antongil Bay. The

chronology of the emplacement of the igneous complexes is poorly constrained, but thought

to have occurred between the Eocene and Late Miocene (Ganzeev and Grechishchev, 2003

and Melluso, et al., 2007).

The igneous rocks are very diverse and range in composition from mafic-ultramafic (olivine

melilitite, olivine nephelinite, basanite, tephrite, alkali basalt and hawaiite) to intermediate

(tephritic phonolite and phonolite) to acidic (quartz trachyte and rhyolite).

In the region of interest the igneous rocks form part of what is called the Ampasindava alkali-

bearing province that predominantly occupies the Ampasindava peninsula (Figure 5-1). The

Ampasindava igneous rocks occur as massifs and include alkali syenite, foid syenite, alkali

granite, gabbro, alkali trachyte, phololite, rhyolite and volcanic breccia. One of these massifs

is called the Ambohimirahavavy igneous complex and occurs almost entirely within the

Tantalus project area.

5.2 Local Geological Setting

5.2.1 Lithology

The Tantalus project area is underlain by Jurassic sediments into which the

Ambohimirahavavy igneous complex has intruded. The Jurassic Isalo Group sediments are

dominated by mudstones and siltstones that are interbedded with sandstones, marls and

minor limestone. They comprise an estimated thickness of approximately 2500 m and dip

westwards between 5° and 30° (Ganzeev and Grechishchev, 2003). Aside from localised

skarn development adjacent to some of the intrusive rocks, the sediments are un-

metamorphosed.

The crudely oval Tertiary Ambohimirahavavy igneous complex is approximately 20 km in

length, up to 8 km in width, elongated in a southeast-northwest orientation and encompasses

an area of approximately 150 km2. The complex consists of two arcuate intrusions comprising

predominantly syenites known as the Ampasibitika intrusion in the southeast and the

Tsarabariabe intrusion in the northwest. These intrusions are characterised by central

depressions that are interpreted to be calderas and include volcanic rocks of predominantly

trachyte composition. Several smaller intrusions (several hundreds of metres across) of alkali

granite and alkali quartz syenite occur within the complex.



Page 27

Figure 5-1 Map showing the simplified geological setting of north-western Madagascar (after Ganzeev and Grechischev, 2003)

Based upon an interpretation of available geophysical data (airborne magnetic survey and

radiometric survey), the Ampasibitika intrusion is near-circular with a diameter of 7.2 km

(Earthmaps Consulting, 2009). Magnetic data shows that it has a well-defined outer rim of

magnetic syenite and an inner, almost circular, core of non-magnetic granite/rhyolite and

syenite. The magnetic syenite is more resistant to weathering and forms high terrain, while

the non-magnetic granite and syenite are more susceptible to weathering and form low terrain

in the centre of the intrusion. The exception is a small central rhyolite pipe which forms a cone

of high terrain in the centre of the intrusion. However the rhyolite cannot be distinguished from

the non-magnetic granite and syenite in the magnetic or radiometric survey data.

The Tsarabariabe intrusion is much larger and more complex than the Ampasibitika intrusion.

It measures approximately 8 km by 12 km and consists of several different intrusions of which

at least four can be discerned in the geophysical data. Within the Tsarabariabe intrusion the

correlation of magnetic syenite and higher topographic terrain still broadly hold. However it is

less consistent than in the Ampasibitika intrusion. The intrusive centre mapped as strongly

magnetic syenite occupies low topographic terrain, as do the much smaller, strongly magnetic

syenites northeast of the igneous complex.

Together with the Ampasibitika intrusion a total of seven distinct intrusives have been

interpreted from the geophysical data (Figure 5-2). The published 1:100,000 scale geological

map for the Tantalus project area is provided in Figure 5-3.

N



Page 28

Figure 5-2 Map showing the geological interpretation for the Tantalus project area (after Earthmaps Consulting, 2003)



Page 29

Figure 5-3 Map showing the geological setting for the Tantalus project area (after BGS-USGS, 2008)



Page 30

Associated with and often bounding the igneous complex are a variety of dykes and sills that

have also intruded the Isalo sediments. These have compositions that include trachyte,

microsyenite, trachyphonolite and granite. The peralkaline granitic varieties, locally termed

fasibitikite (Lacroix, 1922), are particularly significant from an economic perspective as they

contain rare earth elements and other “rare metal“ mineralisation, including tantalum (Ta),

niobium (Nb), zirconium (Zr), hafnium (Hf), gallium (Ga), uranium (U), thorium (Th) and tin

(Sn).

The peralkaline granitic dykes and sills are best exposed between the Joja and Ankobabe

Rivers in the vicinity of Ampasibitika village where they have been delineated over an area

approximately 300 m wide and intermittently up to 8 km along strike. The southeast-northwest

strike of the dykes and sills corresponds to the contact of a large semi-circular alkali-syenite

intrusion (the Ampasibitika intrusion). This contact dips westward approximately 40° and

obliquely cuts the adjacent sedimentary rocks (Figure 5-4). All of the Ambohimirahavavy

igneous complex syenites are coarse-grained to pegmatitic and composed of idiomorphic

microperthite K-feldspar and strongly xenomorphic subalkalic amphibole.

The mineralised peralkaline granitic intrusives generally dip between 15° and 55° towards the

igneous complex and their thicknesses range from a few millimetres to over 15 m, although

are more typically between 0.1 m and 2.5 m thick. The dykes and sills often have quite

complex morphologies with pinches, swells and branches and have zonal internal structures.

They can occur as a series of stacked intrusives but in places they are observed to be

anastomosing and with very erratic orientations, having followed pre-existing discontinuities in

the country rock. Where the intrusives have intruded calcareous country rocks there is

localised skarn development, but where they have intruded other types of sedimentary rock

no alteration is evident. Intrusion into larger trachyte bodies has resulted in localised and

weak fenitisation.

Recent laboratory studies completed by the University of Toulouse have confirmed that the

primary magmatic assemblage within the peralkaline granitic dykes and sills includes alkali

feldspar, arfvedsonite (a variety of sodium amphibole), aegirine (a variety of clinopyroxene)

and quartz (Estrade, 2011a). Identified accessory minerals include chevkinite, eudialyte,

monazite, pyrochlore and zircon. Field studies identified three textural varieties of peralkaline

granite: fine-grained, banded and pegmatitic, with the latter including large arfvedsonite

crystals up to 20 cm in length.

During the SRK ES and SRK (UK) field visits, boulders of peralkaline granite were observed

widely distributed around the project area (Figure 5-5). However it was also noted that the

peralkaline granitic rocks are clearly more resistant to weathering compared to the enclosing

sediments as the latter were rarely seen. As a result of this differential weathering and the

redistribution of peralkaline granitic boulders down slope due to mass movement, there is a

risk that the width and distribution of the in-situ dykes and sills could be overestimated if

based on surface information alone and this risk must be considered while assessing previous

exploration results.



Page 31

Figure 5-4 Schematic cross-section of the Ambohimirahavavy igneous complex (modified from OMNIS-SM, 1992)



Page 32

Figure 5-5 Photograph of an outcrop of peralkaline granite (fasibitkite) in concact with surround host rocks

5.2.2 Structures

The most comprehensive account of the structural setting of the project area is provided by

the interpretation of the available geophysical survey data (Earthmaps Consulting, 2009).

The Ambohimirahavavy igneous complex is affected by numerous structures (Figure 5-6).

Both arcuate and concentric structures are evident and help to define the individual circular to

sub-circular Ampasibitika and Tsarabariabe intrusive centres.

The most conspicuous structural feature is a 1.5 km to 2.5 km wide southeast-northwest

trending fault zone which cuts across the north-eastern margin of the Tsarabariabe intrusion

and through the Ampasibitika intrusion, hereafter called the Ankobabe Fault Zone (named

after a nearby village). This fault zone is characterised by numerous sub-parallel major and

minor faults clearly evident from the disruption and termination of magnetic and radiometric

anomalies. This is most notable in the north-western rim of the Ampasibitika intrusion where

the characteristic circular magnetic anomaly is in places completely obliterated. This may be

due to alteration associated with the fault zone, or due to the intrusion of non-magnetic

granites and syenites along the fault zone. Notably, the Ankobabe Fault Zone is also evident

in topographical data where drainages have preferentially eroded southeast-northwest

oriented incisions.

The geophysical survey data interpretation indicates that the Ankobabe Fault Zone is

probably an old and deep-seated structure that pre-dates the intrusion of the

Ambohimirahavavy igneous complex. It is therefore likely that it dictated the position of the

igneous complex and may have been active during and possibly after emplacement. Several

significant fault zones splay off the Ankobabe Fault Zone in an east-west orientation with

similar disruption to the magnetic outer rim of the Ampasibitika intrusion.

Importantly, the magnetic survey data also suggest the existence of ring faults along the edge

of the Ampasibitika intrusion particularly to the north, east, south and southwest. It is these

structures that may host or influence the location of the mineralised peralkaline granitic dykes

and sills.



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Figure 5-6 Map showing interpreted structural setting for the Tantalus project area (after Earthmaps Consulting, 2009)



Page 34

5.2.3 Regolith

Within the Tantalus project area, bedrock is largely obscured by regolith. Regolith is the term

used to describe the weathered material that occurs above un-weathered bedrock and its

formation is due to many different factors including climate, bedrock composition and

structure, the rate of weathering, the rate of erosion, tectonic history and anthropogenic

activity. Climate arguably represents the most important factor. With regolith formation

augmented by the presence of elevated temperature and rainfall. In north-western

Madagascar the climatic conditions are particularly conducive to the formation of regolith with

average temperatures greater than 25°C and rainfall exceeding 2000 mm per year.

If conditions are favourable, the regolith can develop into a generally predictable profile that

includes several distinct subdivisions, each with its own physical and chemical characteristics.

Because of the favourable conditions, the Tantalus project area includes a well-developed

regolith profile that includes the majority of recognised subdivisions (Figure 5-7).

Figure 5-7 Schematic cross-section of the Tantalus project regolith profile

The two primary subdivisions are the pedolith and the saprolith. The pedolith can include both

residual in-situ weathering products, in which all traces of the original bedrock textures and

fabrics have been destroyed, and transported material such as alluvium, colluvium and

aeolian deposits. Secondary subdivisions of the pedolith, from the surface downwards,

include soil, a ferruginous zone, a mottled zone and a pallid zone.



Page 35

Soil is difficult to define because it is used in so many different contexts by many different

sectors, including agriculturalists, engineers and soil scientists. In the Tantalus project area

soil is characterised by a generally thin layer, less than 0.5 m thick, of typically brown,

unconsolidated, soft, homogenous material that often contains organic matter (leaves, plant

roots, etc.). The most practicable way of visually differentiating soil from the underlying

ferruginous zone is by colour, because it contains comparatively less iron, and by the

presence of organic matter.

The ferruginous zone is characterised by the accumulation of iron and aluminium oxides, the

former of which is responsible for its typical red colour. The ferruginous zone can have

varying consistency ranging from being unconsolidated through to lithified, with the latter often

referred to as ferricrete or duricrust. In the Tantalus project area the ferruginous zone typically

comprises variable thicknesses of orange-red, soft to hard, homogenous, iron-oxide rich

material. Lithified ferricrete or duricrust is characteristically absent in the project area and this

is attributed to the persistence of the rainfall and the lack of dehydration of the upper sections

of the regolith profile.

The mottled zone is texturally characterised by the localised concentration of iron oxides as

spots, blotches and streaks, commonly broadly rounded in outline but with diffuse boundaries.

The intensity of mottling tends to decrease with depth and represents the transition with the

underlying pallid zone. It is generally accepted that the mottled zone forms by weathering at

or about a fluctuating water table. In the Tantalus project area the mottled zone varies in

thickness and where present is usually orange-red in colour and easily distinguished by its

textural heterogeneity (mottling).

The pallid zone is also often referred to as the plasmic or arenose zone. The term pallid has

been adopted in the context of the Tantalus project because it more explicitly describes this

part of the profile (“lacking colour”) and eliminates the genetic implications of the other two

terms (the term plasmic is often used to describe this section of the profile above quartz-poor

rocks, and arenose is used to describe it above quartz-rich rocks).

The pallid zone represents the transition between the mottled zone and saprolite and as its

name suggests it is typically pale in colour due to a low iron-oxide and higher clay content. In

the Tantalus project area, the pallid zone varies in thickness and is characterised by light,

buff-coloured, firm to hard, homogenous clay-dominant material. The absence of mottling and

a primary fabric (for example, bedding, foliation, etc.) is considered to represent the best way

of visually differentiating it from the overlying mottled zone and underlying saprolite

respectively.

The saprolith comprises bedrock that is highly weathered, but where primary rock fabrics such

as bedding, foliation, etc., are still preserved. It typically comprises two subdivisions namely

saprolite and saprock. Saprolite is weathered rock in which at least twenty percent and

possibly all weatherable primary minerals have been either pseudomorphically replaced or

dissolved to leave voids. Saprock is typically defined as rock that is partially weathered where

less than twenty percent of weatherable minerals have been replaced.

Despite these subdivisions, it should be noted that the regolith profile is gradational in nature

and as a consequence it is inherently difficult to subdivide. Colour and texture variations

represent the best ways of subdividing and logging the regolith profile in the field.



Page 36

Whilst the regolith profile is vertically predictable, it is not uncommon for subdivisions to be

absent due to weathering variations or erosion and truncation. Furthermore, whilst the regolith

comprises predominantly residual, in-situ material, parts of the pedolith can be transported.

Evidence for displaced material include abrupt changes in the subdivisions (rather than being

gradational), the presence of cobbles or boulders that are significantly less weathered than

the surrounding unconsolidated material and slip surfaces.

In the Tantalus project area, parts of the Ampasibitika prospect are associated with steep

slope gradients and regolith material that has been displaced from higher ground due to slope

instability. Based upon the available drilling data, the thickness of the regolith in the Tantalus

project area averages approximately 13.5 m, but has attained thicknesses of greater than

40 m.

X-Ray Diffraction (XRD) analysis of samples from the ferruginous zone identified iron and

aluminium-rich minerals including hematite (Fe2O3), goethite (FeO(OH)) and gibbsite

(Al(OH)3). Clay minerals include kaolinite and illite. XRD analysis of the underlying more clay-

dominant sections of the regolith profile identified lower amounts of iron and aluminium

minerals and greater amounts of clay minerals including kaolinite, illite and smectite.

5.3 Rare Earth Elements and Rare Metals

The rare earth elements (REE), sometimes referred to as the rare earth metals, are a group of

17 chemically similar metallic elements that include the lanthanides, scandium and yttrium

(BGS, 2010). The lanthanides are elements with atomic numbers 57 to 71 and comprise

lanthanum (La), cerium (Ce), praseodymium (Pr), neodymium (Nd), promethium (Pm),

samarium (Sm), europium (Eu), gadolinium (Gd), terbium (Tb), dysprosium (Dy), holmium

(Ho), erbium (Er), thulium (Tm), ytterbium (Yb) and lutetium (Lu). Scandium (Sc) and yttrium

(Y) are considered REE as they have similar chemical properties to the lanthanides.

The term rare earth is actually a misnomer arising from the rarity of the minerals from which

the rare earth elements were originally isolated from rather than the elements themselves.

Rare earth elements are actually relatively plentiful in the Earth‟s crust and have an overall

crustal abundance greater than silver (BGS, 2010).

The rare earth elements are commonly divided into light rare earth elements (LREE) and

heavy rare earth elements (HREE) on the basis in their atomic numbers. However, the formal

definition of what constitutes LREE or HREE is not consistent. In the context of this report,

and consistent with the majority of published definitions, LREE include rare earth elements

with atomic numbers between 57 and 62 (i.e. La, Ce, Pr, Nd, Pm and Sm) plus Sc. HREE

include rare earth elements with an atomic number of 63 or greater (i.e. Eu, Gd, Tb, Dy, Ho,

Er, Th, Yb and Lu) plus Y.

Rare earth elements do not occur naturally as metallic elements, they occur in a range of

minerals that include carbonates, halides, oxides and phosphates. A total of approximately

200 REE minerals have been identified.

Demand for REEs has increased dramatically in recent years because of their wide and

diverse use in high-technology applications. However, the global production and supply of

REEs comes from only a few sources with China producing more than 95% of the World‟s

supply (USGS, 2011). Because of China‟s decision to restrict exports of REEs, industrialised

countries are concerned about supply shortages and REE prices have been increasing.



Page 37

Specific applications for the individual rare earth elements are provided in Table 5-1.

Table 5-1 Rare Earth Elements and their uses

Element Symbol Atomic No. Usages

Light REE

Lanthanum La 57 Glass, flint, hydrogen storage, batteries, camera lenses, catalysts

Cerium Ce 58 Polishing, glass/ceramic colouration, catalysts

Praseodymium Pr 59 Magnets, lasers, lighting, glass/ceramic colouration, flint

Neodymium Nd 60 Magnets, lasers, glass/ceramic colouration, ceramic capacitors

Samarium Sm 62 Magnets, lasers, neutron capture, masers

Heavy REE

Europium Eu 63 Red and blue phosphors (TV colour), lasers, mercury-vapour lamps

Gadolinium Gd 64 Magnets, glass, lasers, x-ray tubes, computer memory, neutron capture

Terbium Tb 65 Green phosphors, lasers, fluorescent lamps

Dysprosium Dy 66 Magnets, lasers

Holmium Ho 67 Lasers

Erbium Er 68 Lasers, vanadium steel

Thulium Tm 69 Portable x-ray machines

Ytterbium Yb 70 Infrared lasers, reducing agent

Lutetium Lu 71 PET Scan detectors, glass

Yttrium Y 39 Lasers, superconductors, microwave filters

Other rare or speciality metals include the likes of tantalum (Ta), niobium (Nb), zirconium (Zr),

hafnium (Hf) and gallium (Ga), all of which occur in the Tantalus project area and are

important for high-technology applications. Specific applications for the rare, speciality metals

found in the Tantalus project area are provided in Table 5-2.

Table 5-2 Speciality metals found on the Tantalus project and their uses

Element Symbol Atomic No. Usages

Tantalum Ta 73 Capacitors in electronic equipment, alloys

Niobium Nb 41 Alloys, superconductors

Zirconium Zr 40 Corrosion-resistant alloys, ceramic coatings, furnaces

Hafnium Hf 73 Filaments, electodes, superalloys

Gallium Ga 31 Semiconductors, alloys, fuel cells



Page 38

5.4 Mineralisation Types

5.4.1 Introduction

The Tantalus project includes both bedrock and regolith-hosted REE and other related rare

metal mineralisation. More specifically, bedrock mineralisation is host by peralkaline rocks of

the Ambohimirahavavy igneous complex and ion adsorption clay-type REE mineralisation

occurs within the overlying regolith profile.

5.4.2 Bedrock hosted REE mineralisation

Alkaline igneous rocks are the main source of rare earth elements and in general terms they

are defined as rocks that are deficient in silicon (Si) relative to sodium (Na), potassium (K)

and calcium (Ca). This means they typically contain Na- and K-bearing minerals such as the

felspathoids, alkali pyroxenes and amphiboles not commonly found in other rock types (BGS,

2010). Alkaline rocks can be further classified as peralkaline if they have a higher proportion

of Na and K than aluminium (Al), i.e. Na2O + K2O > Al2O3. Importantly, alkaline igneous rocks

are typically characterised by enrichment in rare earth elements and other metals including

niobium, tantalum, thorium, titanium, uranium and zirconium.

Examples of alkaline igneous REE deposits include Bokan Mountain, USA; Thor Lake,

Strange Lake and Kipawa Lake in Canada; Kola Peninsula, Russia; and Ilímaussaq,

Greenland (USGS, 2011).

Tectonically, alkaline igneous rocks are general associated with intra-continental rift and fault

systems and can be preferentially emplaced along these structures. Mineralogically, they

contain a variety of REE minerals that include REE-bearing carbonates, phosphates or

fluorates, for example, allanite, apatite, bastnäsite, eudialyte, gadolinite, monazite, xenotime

and zircon.

The origin of the rare earth elements is crystallisation through magmatic processes, but

enrichment may also occur because of precipitation of minerals from a magmatic

hydrothermal solution or redistribute of magmatic rare earth elements by the hydrothermal

fluid (USGS, 2011). Alteration halos can develop around some alkaline intrusions derived

from alkali-rich hydrothermal fluids.

Exploration for alkaline igneous REE deposits includes the application of geological,

geochemical and geophysical methods. Because of the physical properties of several of the

elements associated with this type of mineralisation, geophysical surveys methods are

particularly useful for regional identification. The presence of thorium and uranium, and often

the presence of potassic alteration, makes radiometric surveying particularly applicable.

Radiometric methods measure the naturally emitted gamma radiation derived from three

radioactive elements (potassium, uranium, and thorium) which occur in soils and rocks within

the upper 0.3 m to 0.5 m of the surface. Because of the comparatively unique mineralogy of

alkaline igneous rocks, geochemical sampling also provides a useful method of identification

beneath areas covered by regolith.

The Ambohimirahavavy igneous complex is associated with a variety of mineralised rocks that

are enriched in REEs and other rare metals. These most prevalently occur within peralkaline

granitic dykes and sills, locally and historically termed fasibitikite. However, the more

fractionated parts of the complex and other types of intrusions also have high contents of

REE, Nb and Zr (Ganzeev and Grechishchev, 2003).



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Work completed on the peralkaline granitic dykes and sills by Ganzeev and Grechishchev

(2003) identified that the areas to the north and south of the Ampasibitika study area were

more enriched in REE and rare metals. This was attributed to a vertical zonation of the

mineralisation with the central area being much more deeply eroded than those to the north

and south. It was also observed that the distribution of the mineralisation within individual

intrusives was also zoned and corresponding to textural variations with higher grades

associated with intrusive margins and finer grain sizes that the coarser-grained to pegmatitic

interiors of some intrusives.

The main REE and rare metal minerals identified by Ganzeev and Grechishchev (2003)

include chevkinite, eudialyte, monazite, pyrochlore (including a columbitised variety), thorite,

and zircon. REEs, tantalum and niobium are mainly concentrated in pyrochlore. Besides

pyrochlore, REE are also concentrated in zircon, eudialyte, chevkinite and monazite. REE and

rare metal mineralisation results were variable with Total Rare Earth Oxide (TREO) = 0.1% to

4% (averaging 0.6%), Ta2O5 = 0.01% to 0.1% (averaging 0.037%), Nb2O5 = 0.1% to 1%

(averaging 0.34%) and ZrO2 = 0.21% to 3.84% (averaging 2.31%).

Based upon recent research completed by the University of Toulouse, the mineralisation in

the peralkaline granitic dykes and sills is confirmed as disseminated chevkinite, eudialyte,

monazite, pyrochlore and zircon (Estrade, 2011a; 2011b). Research relating to the mineralogy

of the skarns occurring at the contact between the peralkaline granitic intrusives and

limestone was also completed. This established that the skarns are associated with

secondary hydrothermal mineralisation comprising REE fluoro-carbonates after Na-pyroxenes

(bastnäsite, synchisite, parisite and intermediate phases), titanite, pyrochlore and

pseudomorphs of zircon (Ca-zirconosilicates gittinsite-zektzerite). Gangue minerals

associated with the skarn mineralisation include quartz, calcite, fluorite and iron-oxides.

It was concluded that the primary mineralisation in the peralkaline granitic dykes and sills

formed by crystallisation directly from magma enriched in REEs and other rare metals, and

that the secondary replacement phases were transported by hydrothermal solutions (Estrade,

2012). Given the presence of fluorine-bearing minerals in the skarn assemblage, it is

considered likely that the REEs and other rare metals were transported in the hydrothermal

fluid by fluorine-complexing. Interaction of the fluid with the calcareous country rock caused

fluorite precipitation and subsequent local decrease in REE and rare metal solubility, causing

their precipitation.

In summary, the main rare earth elements and other rare metals identified in association with

the Ambohimirahavavy igneous complex to date include:

Chevkinite (Ca,Ce,Th)4(Fe,Mn)2(Ti,Fe)3Si4O22

Baddeleyite ZrO2

Bastnäsite (Ce,La)(F/CO3)

Columbite FeNb2O6

Eudialyte Na15Ca6(Fe,Mn)3Zr3SiO

Gagarinite NaCaY(F,Cl)6

Microlite (Ca,Na)2Ta2O6(O,OH,F)

Monazite (Ce,La,Nd,Th)PO4

Parisite Ca(Ce,La)2(CO3)3F2



Page 40

Pyrochlore (Ca,Na)2Nb2O6(O,OH,F)

Synchisite CaCe(CO3)2F

Xenotime YPO4

Zircon (Zr,Hf)SiO4

Most of the minerals are fine-grained, less than 1 mm, with only subordinate coarse-grained

phases as zirconium-hafnium-REE, eudialyte and zircon. Niobium and tantalum mineralisation

mainly occur in association with pyrochlore and columbite.

The REE and rare metal mineralisation is associated with an elevated radiometric response,

with gamma-activity of 80 μr/h to 1,450 μr/h (averaging 300 μr/h), relative to an estimated

background of 25 μr/h to 40 μr/h. A direct correlation between the content in niobium

pentoxide and the gamma radioactivity has been established (correlation coefficient = + 0.69).

This geophysical characteristic means that radiometric methods are well suited for further

exploration in the area. However, even though the mineralisation is associated with

anomalous radioactivity, the overall uranium and thorium content of the in-situ bedrock (based

upon the available geochemical results) is relatively low and averages 12 ppm U3O8 and 57

ppm ThO2. These concentrations are not considered to pose any environmental or

anthropogenic risks.

5.4.3 Regolith hosted REE mineralisation

During 2009, it was recognised that the regolith overlying the Ambohimirahavavy igneous

complex was also mineralised with REEs and that this material may be similar to the ion

adsorption clay-type REE mineralisation exploited in China. Subsequent independent

testwork has confirmed the presence of REEs that are ionically-adsorbed onto clay minerals

and that are amenable to leaching and the recovery of REEs.

The Chinese ion adsorption clay-type REE mineralisation was first identified in the late 1960‟s

(Chi and Tian, 2008). There are reportedly more than 200 deposits with 90% of them

occurring in the southern provinces, principally Jiangxi, Hunan, Guang Dong, Guang Xi and

Fujian (Bao and Zhao, 2008). The reason for this apparent geographical control are the

climatic conditions required to weather the bedrock to form the regolith host material

(generally a sub-tropical environment south of 28°N with warm, humid conditions and rainfall

exceeding 1500 mm per year).

Ion adsorption REE mineralisation can be summarised as REEs that are mainly adsorbed

onto the surfaces of clay minerals in the form of hydrated ions or hydroxyl-hydrated ions.

These ions are derived from bedrock-hosted REE mineralisation that has been weathered

resulting in the liberation and mobilisation of the REEs.

Most of the exploited Chinese deposits are formed from the weathering of highly evolved

Mesozoic granites, but some have also developed from the weathering of other rock types

including volcanics and lamprophyre. The main REE bearing accessory minerals in the

Chinese source rocks are allanite, bastnäsite, doverite, gadolinite, monazite, parisite and

xenotime. Accessory minerals contain the majority of the REEs (more than 70%) with the

remaining percentage occurring within rock-forming minerals (Bao and Zhao, 2008).



Page 41

The regolith material hosting the Chinese deposits typically ranges in thickness between 8 m

and 10 m thick (Chi and Tian, 2008). In the available literature, the regolith profile is

simplistically described as consisting of an upper soil zone (2 m to 5 m thick), an underlying

weathered zone (5 m to 30 m thick) and lower sub-weathered zone (5 m to 8 m thick). Further

subdivisions are noted as including pedolith, ferruginous, mottled clay and rock fragment

zones (Zuoping and Chuanxian, 1996).

The two fundamental controls on the formation of ion adsorption REE mineralisation are the

availability of an REE-enriched source rock and in-situ sub-tropical weathering conditions that

enable the liberation and mobilisation of the REEs and their preferential adsorption onto the

surfaces of clay minerals. In the Chinese deposits, 60% to 90% of the REEs are adsorbed

onto kaolinite with other clay minerals including montmorillonite and halloysite (Chi and Tian,

2008). Approximately 10% of the REEs occur as mineral phases in the form of bastnäsite,

monazite and xenotime. REE mobilisation and accumulation in the regolith profile appears to

be controlled by the mineralogy of the REE-enriched source rocks, specifically the type,

abundance, distribution and stability of the primary REE minerals during weathering.

REE fractionation is directly proportional to the intensity of weathering and REE content

typically increases with depth and then decreases approaching the un-weathered bedrock.

The REE content of the regolith is generally two to four times greater than the underlying

bedrock, but has been reported as being up to seven times greater (Zuoping and Chuanxian,

1996).

Exploration

There is very little documented information on the methods used to explore for ion adsorption-

REE mineralisation in China. The principal methods appear to be visual identification of

mineralised material and recognition of favourable geomorphological features. Given that the

REEs are not discernible with the naked eye, visual identification of mineralised material

involves the colour of the regolith. For example, yellow, pale-red or white coloured material

(Chi and Tian, 2008). Geomorphologically, favourable accumulations of regolith are best

developed where the topography is gentle and denudation rates are low. REE enrichment is

also apparently greater on ridges and elevated features than in gullies.

Deposit Size and Economics

Ion adsorption REE mineralisation is characteristically low-grade. The Chinese deposits

generally contain between 0.05% and 0.35% / 500 ppm and 3,500 ppm TREO, but there is

considerable variability in grade even within the same deposit. Grades of greater than 0.05% /

500 ppm TREO in the presence of sufficient volumes are typically considered to be economic

(Bao and Zhao, 2008). Exploited grades as low as 0.01% / 100 ppm TREO are also reported

(Orris and Grauch, 2002).

Individual deposits are relatively small and typically range in size from 1500 to 12,000 t TREO

(Orris and Grauch, 2002). Annual production is reportedly approximately 10,000 t TREO per

year (Bao and Zhao, 2008) and proven reserves in the order of 1.48 Mt TREO (Chi and Tian,

2008).

Ion adsorption REE deposits are economically important because they contain a significant

proportion of rarer and more valuable HREEs compared with other types of REE

mineralisation. For example, bedrock-hosted deposits such as Mountain Pass in the USA and



Page 42

Bayan Obu in China contain a much higher proportion of LREEs. Ion adsorption REE deposits

are also considered favourable because they are associated with low levels of radioactivity

and are simpler and less expensive to exploit compared with their bedrock counterparts.

However, this style of mining has also been known to course significant environmental

damage, particularly in southern China.

Processing

Ion adsorption REE deposits can only be exploited chemically. Exploitation of the Chinese

deposits involves batch, heap and in-situ leaching of the ionic material using either sodium

chloride or ammonium sulphate with recoveries reportedly ranging from 40% to 99% (Orris

and Grauch, 2002).

Summary

The regolith material in the Tantalus project area has many similarities to the material in

southern China: both developed in a sub-tropical environment with warm, humid conditions

and significant rainfall; they have comparable thicknesses; both have variable but similar REE

grades that generally increase with depth and are associated with an increased proportion of

HREE; both contain “ionic clays” that adsorb REEs and, as with the Chinese examples, the

Tantalus Project has, from preliminary testwork shown that it may be amenable to leaching

using comparatively inert solutions in order to recover the REEs; and both are associated with

only low levels of radioactivity.

It is difficult to make comparisons between the source rocks and the actual regolith profiles

due to the lack of available data. Similarly, it is difficult to compare the mineralogy of the

mineralisation in the regolith profile due to insufficient data.

5.5 Mineralisation Model

Tantalus is focussed on the exploration, delineation and ultimately exploitation of regolith-

hosted REE mineralisation analogous to the ion adsorption REE mineralisation found in

China. This section provides a summary of the current mineralisation model. However, it

should be noted that like all correctly applied models parts of it are tentative in nature and will

develop as the project advances.

5.5.1 Summary Description

The Tantalus project area is underlain by the Ambohimirahavavy igneous complex that

encompasses an area of approximately 150 km2. Significantly, it includes alkaline and

peralkaline rocks that are mineralised with REE and other rare metals (including tantalum,

niobium and zirconium).

The presence of a favourable sub-tropical climate has resulted in the development of

widespread regolith. Based upon the available drilling data, the thickness of the regolith

averages approximately 13.5 m, but has attained thicknesses of greater than 40 m. The

regolith profile is well-developed and comprises recognised subdivisions that include soil,

ferruginous, mottled and pallid zones, saprolite and saprock. The distribution of REE

mineralisation within the regolith profile is erratic, but generally increases with depth.

Preliminary mineralogical and metallurgical testwork has confirmed the presence of REEs that

are ionically-adsorbed onto clay minerals. The testwork has also proven that the REEs can be

recovered using comparatively inert solutions that include sodium chloride and ammonium

sulphate.



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5.5.2 Commodities

The REEs (La, Ce, Pr, Nd, Sm, Eu, Gd, Tb, Dy, Ho, Er, Th, Yb, Lu plus Sc and Y) and

potentially the rare metals Ta, Nb, Zr, Hf and Ga.

5.5.3 Geological Characteristics

The REE-enriched source rocks of the Ambohimirahavavy igneous complex were emplaced

as a result of intra-continental extension that induced rifting and related volcanism. The main

source rocks are alkaline and peralkaline granitic dykes and sills (locally and historically

termed fasibitikite), but also includes the more fractionated parts of the complex. Major

southeast-northwest structures appear to have imposed a fundamental control on the location

of the complex.

Subordinate structures may have influenced the location of the mineralised dykes and sills

and acted as preferential pathways for post-intrusive hydrothermal fluids. The mineralised

source rocks were subject to intense weathering due to the sub-tropical climate (average

temperatures of higher than 25°C and rainfall exceeding 2000 mm per year) that resulted in

the development of widespread and typically thick regolith.

5.5.4 Mineralisation Characteristics

Geometrically the regolith profile in the Tantalus project area ranges in thickness from 0 m to

more than 40 m. Based upon the available drilling data, the average thickness is

approximately 13.5 m. The profile is well-developed and includes recognised subdivisions.

The two primary subdivisions are the pedolith and the saprolith. Secondary subdivisions of the

pedolith (from the surface downwards) include soil, a ferruginous zone, a mottled zone and a

pallid zone. Secondary subdivisions of the saprolith include saprolite and saprock.

The entire regolith profile contains REE mineralisation, but its distribution is typically quite

erratic. Despite this, general trends are present with REE content typically increasing with

depth and then decreases approaching the un-weathered bedrock. This trend also

corresponds to the enrichment of HREEs relative to LREEs with depth.

Primary magmatic mineralisation in the peralkaline granitic dykes and sills includes chevkinite,

eudialyte, monazite, pyrochlore, thorite, and zircon. Secondary hydrothermal mineralisation

within calcareous rocks adjacent to the intrusions as skarns includes REE fluoro-carbonates

(bastnäsite, synchisite, parisite and intermediate phases), titanite, pyrochlore and Ca-zircono-

silicates (gittinsite-zektzerite). Secondary mineralisation within the regolith profile includes

ionically-adsorbed REEs and relict accessory minerals including baddeleyite, eudialyte,

pyrochlore and zircon. Gangue minerals within the regolith profile include gibbsite, goethite,

hematite, illite, kaolinite, mica, quartz and smectite.

Potassic alteration halos can develop around some of the REE-enriched alkaline intrusions,

caused by the permeation of alkali-rich hydrothermal fluids. The extent and intensity of the

alteration is poorly constrained, but may represent a characteristic that can be identified using

the available radiometric data where the source rocks are not overly concealed.

The two fundamental controls on the formation of ion adsorption REE mineralisation are the

availability of an REE-enriched source rock and in-situ sub-tropical weathering conditions that

enable the liberation and mobilisation of the REEs and their preferential adsorption onto the



Page 44

surfaces of clay minerals. Both of these essential components are present in the Tantalus

project area.

5.5.5 Exploration Characteristics

The thickness of the regolith profile is fundamentally important given that this affects the

volume of material available to host REE mineralisation. Erosion and truncation of the regolith

profile due to drainage and steep slope gradients obviously have a detrimental effect on the

completeness of the regolith profile. Therefore, geomorphological studies using aerial

photography, satellite imagery and field mapping will facilitate the identification of areas

favouring the accumulation of regolith material.

Geochemically the primary REE-enriched source rocks are distinct because of the

comparatively unique combination of elements they contain. The apparent enrichment of Ce

in the upper sections of the regolith profile (particularly the ferruginous zone) has already

been considered as part of the soil sampling programmes completed to date and may be

utilised to identify more localised and higher concentrations of regolith-hosted REE

mineralisation.

Whilst mineralised regolith material is not geophysically distinct, some of the REE-enriched

source rocks are due to the presence of uranium- and thorium-bearing accessory minerals.

This characteristic will be further utilised using the available airborne and ground radiometric

data to help identify particularly favourable source rocks (where they are not overly

concealed).

As a related aside, the overall uranium and thorium content of the regolith material (based

upon the available geochemical results from pits, window sampling holes and core drillholes)

is relatively low and averages just 12 ppm U3O8 and 57 ppm ThO2 These concentrations are

not considered to pose any environmental or anthropogenic risks.

It is anticipated that clay (and other) minerals in the regolith profile can be identified and

discriminated using infrared spectrometry. Given that clay type and ionic exchange capacity

are related properties, this method may provide an effective means of mapping the ionic

character of the regolith profile.

Several sources have described the colour of the regolith as an important guide to

mineralisation. This has not yet been established in the Tantalus project area, but it stands to

reason that paler-coloured zones are more clay-rich than orange to red-coloured zones that

contain more iron.

5.5.6 Economic Characteristics

The available regolith results for the Tantalus project area (as derived from the available

pitting, window sampling and core drilling sampling), are summarised in Table 5-3.



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Table 5-3 Summary of the regolith sample results from the Tantalus project

STATS TREO

(ppm)

HREO

(%)

Nb2O5

(ppm)

Ta2O5

(ppm)

ZrO2

(ppm)

HfO2

(ppm)

Ga

(ppm)

MIN 56 1 2 0 20 0 1

MAX 14,788 61 7,296 442 33,095 650 195

MEAN 835 19 209 12 1,011 22 40

MEDIAN 628 19 152 9 720 17 38

nSamples 11,143

TREO - Total Rare Earth Oxides

HREO - Heavy Rare Earth Oxides



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6 EXPLORATION AND RESULTS

6.1 Historical Exploration and Results

6.1.1 Colonial Exploration

Colonial-era exploration activities completed by French Geologists first noted “peculiar”

granitic intrusive rocks near to the village of Ampasibitika in the late 19th century. This was

followed by mineralogical studies of the rocks, uniquely named fasibitikite, and the

documented description of niobium-tantalum-zirconium mineralisation (Lacroix, 1922).

Between the 1920‟s and the 1970‟s, work in the area mainly consisted of academic research.

However, during this time, the Ampasindava Peninsula was also geologically mapped by the

Governmental Service Géologique at a scale of 1:200,000 (sheet PQRS34-35

Anorotsangana-Ambanja) and published in 1958.

6.1.2 Soviet Exploration

Between 1988 and 1991, a Russian-funded exploration programme termed the Soviet

Geological Mission was completed in conjunction with the Malagasy Office Militaire National

pour les Industries Stratégiques (OMNIS).

Russian Geologists undertook a programme that included systematic stream sediment and

outcrop sampling, ground radiometric surveying and pitting. They also completed the first

detailed mapping of the mineralised intrusives along a 2 km stretch of coastline in the vicinity

of Ampasibitika village.

The programme speculated that radiometric survey results over visible mineralised intrusions

could be extended along strike under the regolith cover and through areas of poor outcrop.

However, it is now understood that that, because radioactive emissions can only be detected

from material at or very near the surface, it was most likely recording the radiometric response

of relict uranium and thorium minerals present in the regolith rather than the actual bedrock

mineralisation.

The pitting programme involved the excavation of a series of shallow pits on a 100 m by

400 m grid that aimed to expose the extent and nature of mineralisation at depth. In total,

eleven pits were excavated (totalling 55 m) with all but one reaching fresh rock. Their typical

dimensions were 1 m by 1.35 m with depths that varied from 2.75 m to 6.75 m.

Over the course of the programme, the mapping component extended out from the main

study area and covered an area of 10 km2 at a scale of 1:50,000.

Preliminary metallurgical testwork was carried out on pit samples to determine possible

concentration techniques for the observed mineralisation. The results demonstrated some

success with gravity and magnetic techniques.

A list of the work completed as part of the Soviet Geological Mission is provided in Table 6-1.

This period was followed by an episode of political instability in Madagascar and during the

1990‟s and early 2000‟s no exploration work was conducted in this area.



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Table 6-1 Exploration completed as part of the Soviet Geological Mission (after OMNIS-SM, 1989; 1990; 1992b; 1992c; 1992d; 1992e)

Type of geological work Unit of measure Planned Actual

Geological prospecting at 1:10,000 scale

Radiometric surveys Line km 18 18

Excavation of pits Line m 55 55

Geochemical sampling around aureoles of secondary dispersion Sample 750 748

Geochemical sampling of outcrops Sample 0 55

Geochemical channel-sampling of pits Sample 55 55

Geochemical channel-sampling of outcrops Sample 0 15

Line cutting Line km 17 13.4

Pegging profiles and baselines at 25 m intervals Line km 20.4 21

Research at 1:50,000 scale

Research traverse Line km 25 25

Geochemical sampling of outcrops Sample 0 22

Litho-geochemical investigation following the traces of dispersion Sample 100 122

6.2 Contemporary Exploration and Results

6.2.1 Stream and beach sediment sampling

In 2008, Fugro Consult GmbH (Fugro) was commissioned by the then owners of the Tantalus

project area, Zebu Metals Ltd (Zebu) to undertake a week-long reconnaissance field

programme. As part of this programme Fugro collected five beach sediment samples along

the eastern edge of the project area. However, no major accumulations of heavy minerals of

interest were identified.

6.2.2 Bulk Sampling

In 2008, as part of the Zebu-commissioned programme, Fugro confirmed the widespread

occurrence of mineralised peralkaline granitic intrusives in the vicinity of Ampasibitika village

and collected two „mini bulk samples‟ weighing 60 kg and 80 kg for geochemical analysis. The

aim of this sampling was to study the mineral ratios and overall grades of the mineralisation.

The results of the bulk sampling are summarised in Table 6-2.

Table 6-2 Fugro ‘Mini bulk sample’ results

Sample No. TREO + Y2O3 (ppm) Nb2O5 (ppm) Ta2O5 (ppm) Sn (ppm) U (ppm) ZrSiO4 (%)

476323 4427 1932 165 137 115 5.37

476324 3332 4107 336 200 207 2.8

6.2.3 Airborne Geophysical Surveys

In 2008, Fugro Airborne Surveys of South Africa completed a helicopter-borne magnetic and

radiometric survey. Between the 4th and 8

th of July a total of 2,936 line kilometres were flown

at a line spacing of 100 m and a bearing of 045°. Tie lines were flown every 1000 m on a



Page 48

bearing of 135°. In total, the survey covered an area of 244.4 km2. The full survey

specifications are detailed in a separate report by Fugro Consult (2008).

In 2009, a geological interpretation of the magnetic and radiometric data was complete by Mr

K. P. Knupp of Earthmaps Consulting. The pertinent findings of the interpretation have been

described in Section 5 and complete details are provided in a separate report (Earthmaps

Consulting, 2009). Example radiometric and magnetic data images are provided in Figure 6-1

and Figure 6-2 respectively.

6.2.4 Outcrop Sampling

Tantalus has collected and analysed a total of 284 outcrop samples from within the project

area. These were predominantly peralkaline intrusive rocks collected from areas associated

with radiometric anomalies. The locations of the outcrop samples are shown in Figure 6-3 and

are summarised by prospect in Table 6-3.

Whilst they provide an indication of the presence of mineralisation, it should be noted that

outcrop samples may be obtained with some selectivity and may not be fully representative of

the overall geological or mineralogical conditions.

The results have confirmed the presence of bedrock-hosted REE mineralisation in known

areas, as well as identifying new areas of mineralisation. Not unexpectedly, the highest grade

samples are associated with peralkaline granitic rocks derived from the Ampasibitika prospect

(up to 22,408 ppm / 2.24% TREO). Of note is that none of the Caldera prospect outcrop

samples are peralkaline granite. The vast majority are volcanic breccia that is also evidently

enriched in REEs (up to 8201 ppm / 0.82% TREO).



Page 49

Figure 6-1 Map showing the radiometric Ternary imagery for the Tantalus project (after Earthmaps Consulting, 2009)



Page 50

Figure 6-2 Map showing the magnetic total field reduced to pole imagery for the Tantalus project (after Earthmaps Consulting, 2009)



Page 51

Figure 6-3 Map showing the locations of the Tantalus outcrop and soil samples



Page 52

Table 6-3 Summary of the Tantalus outcrop sample results

PROSPECT STATS TREO (ppm)

HREO (%)

Nb2O5 (ppm)

Ta2O5 (ppm)

ZrO2 (ppm)

HfO2 (ppm)

Ga (ppm)

All prospects MIN 45 5 6 0 39 1 2

MAX 22,408 69 10,544 891 58,760 1,480 78

MEAN 2,108 26 949 70 5,442 116 36

MEDIAN 863 23 386 23 1,530 33 37

nSamples 284

Ampasibitika MIN 45 5 6 0 39 1 2

MAX 22,408 47 10,544 891 58,760 1,480 69

MEAN 3,031 24 1,698 125 10,512 224 38

MEDIAN 1,134 22 484 30 1,905 43 41

nSamples 91

Ambaliha MIN 100 12 9 1 174 4 6

MAX 7,582 69 2,768 200 12,387 281 49

MEAN 1,842 28 770 51 3,753 82 34

MEDIAN 1,096 24 419 29 1,986 46 36

nSamples 43

Befitina MIN 161 14 19 1 204 4 16

MAX 13,576 65 3,419 368 22,288 479 57

MEAN 1,825 27 649 52 3,634 78 36

MEDIAN 781 24 386 24 1,736 37 36

nSamples 97

Caldera MIN 257 17 131 8 507 13 22

MAX 8,201 65 538 26 1,594 33 40

MEAN 1,824 31 178 10 631 16 26

MEDIAN 988 30 153 10 558 15 26

nSamples 19


South MAX 10,684 30 3,820 244 19,181 320 73

MEAN 1,650 22 789 46 3,301 62 49

MEDIAN 676 22 452 24 1,604 34 44

nSamples 10

Other MIN 223 12 71 4 207 4 16

MAX 2,349 28 845 48 4,336 88 78

MEAN 642 21 325 18 1,253 26 34

MEDIAN 476 22 278 15 896 18 32

nSamples 24

6.2.5 Soil Sampling

Tantalus has completed soil sampling in several parts of the Tantalus project area, namely

parts of the Befitina, Ampasibitika and Caldera prospects and several lines across the

northwest of the property (Figure 6-3). This exploration method was utilised due to the lack of



Page 53

outcrop in these areas.

The Befitina soil sampling programme was completed in 2009 and comprises 77 samples that

were collected at 50 m intervals along six east-west orientated lines spaced 200 m apart. The

soil sampling completed over part of the Caldera prospect and a small part of the

Ampasibitika prospect was completed in 2011. A total of 71 samples were collected on a

500 m by 500 m rectilinear grid.

The soil sampling in the northwest of the project area was also completed in 2011 and

comprises 62 samples collected at 500 m intervals along three north-south oriented lines

spaced approximately 3 km apart. The samples were collected using Puerckhauer soil

sampling rods, resulting in the collection of material at a consistent depth of 0.5 m to 1.0 m.

The vast majority of the samples were pedolith material with a few consisting of saprolith. The

soil sampling programme results are summarised by prospect in Table 6-4 below.

Table 6-4 Summary of the Tantalus soil sample results

PROSPECT STATS

TREO HREO Nb2O5 Ta2O5 ZrO2 HfO2 Ga

(ppm) (%) (ppm) (ppm) (ppm) (ppm) (ppm)


MAX 1,691 1007 999 66 4593 97 73

MEAN 558 302 300 17 1391 29 43

MEDIAN 497 258 262 14 1110 23 43

nSamples 210


+ Caldera MAX 1,219 1007 791 40 2634 53 73

MEAN 498 257 251 14 1043 22 42

MEDIAN 468 228 226 14 937 20 41

nSamples 71

Befitina MIN 108 52 64 4 621 15 18

MAX 1,614 989 999 66 4593 97 68

MEAN 644 365 403 25 1980 43 46

MEDIAN 598 330 405 25 1810 39 46

nSamples 77

Northwest MIN 126 51 8 1 292 7 11

MAX 1,691 985 621 29 3404 60 65

MEAN 520 275 228 12 1058 21 41

MEDIAN 497 251 219 11 931 18 41

nSamples 62

The range of TREE results for the different prospects and the northwest area are evidently

similar. The cerium (Ce) results do appear elevated, consistent with the recognised trend that

it is enriched in the near-surface of the regolith. Additional analysis and interpretation of the

results is planned.

6.2.6 Trenching

A total of five trenches have been excavated in the Tantalus project area, one in the

Ampasibitika prospect and two in each of the Befitina and Caldera prospects (Figure 6-4.



Page 54

Figure 6-4 Map showing the locations of the Tantalus trenches and drillholes



Page 55

The single trench in the Ampasibitika prospect was excavated and sampled in 2008 by Fugro

as part of the Zebu-commissioned programme (Fugro Consult, 2008). The 30 m long, east-

west orientated trench (TANT1) was manually excavated above a weathered peralkaline

granite intrusive and surrounding regolith. The depth of the trench averaged 0.7 m but it did

not reach bedrock over its entire length. A total of 16 contiguous channel samples were

collected from the trench (each corresponding to a length of approximately 2 m). The best

TREO, Nb, Ta and Zr grades corresponded to samples that included bedrock material. These

returned average grades of just over 2,000 ppm / 0.2 % TREO. Regolith samples comprising

clayey soil contained an average of 1,000 ppm / 0.1 % TREO.

In the Befitina prospect, two 100 m long trenches were manually excavated and sampled

(TANT2 and TANT3). The two trenches were excavated perpendicular to one other, crossing

at about their mid points. The depth of the trenches was 3 m, but did not intersect bedrock.

Twenty contiguous horizontal channel samples were collected from trench TANT2 and 22

samples were collected from trench TANT3 (each corresponding to a length of approximately

5 m). The sample results for trenches TANT2 and TANT3 are summarised in Table 6-5.

In the Caldera prospect, two 100 m long trenches were manually excavated and sampled

(TANT4 and TANT5). The two trenches were excavated perpendicular to one another and

attained depths of greater than 4 m. Trench TANT4 intersected predominantly regolith

(pedolith and saprolith), but also bedrock in a few places. Trench TANT5 intersected only

saprolith. In total 100 horizontal channel samples were collected from each trench (each

corresponding to a length of approximately 1 m). The sample results for trenches TANT4 and

TANT5 are summarised in Table 6-5.



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Table 6-5 Summary of the Tantalus trench sample results

TRENCH STATS TREO (ppm)

HREO (%)

Nb2O5 (ppm)

Ta2O5 (ppm)

ZrO2 (ppm)

HfO2 (ppm)

Ga (ppm)

TANT2 MIN 899 16 383 28 1,932 50 48

(Befitina) MAX 3,663 39 1,753 144 8,456 213 73

MEAN 1,612 28 1,033 79 4,820 121 59

MEDIAN 1,328 29 974 71 4,593 116 57

nSamples 20

TANT3 MIN 661 13 192 12 1,299 30 49

(Befitina) MAX 2,666 38 1,788 112 6,889 157 71

MEAN 1,397 26 950 63 4,403 101 61

MEDIAN 1,272 27 1,023 70 4,944 116 59

nSamples 22

TANT4 MIN 467 11 131 9 401 12 30

(Caldera) MAX 2,640 35 439 24 1,526 31 66

MEAN 1,107 22 232 14 812 21 40

MEDIAN 982 21 228 14 812 21 40

nSamples 100

TANT5 MIN 470 16 183 11 655 17 32

(Caldera) MAX 4,589 31 383 21 1,322 30 55

MEAN 1,264 23 232 14 819 23 41

MEDIAN 1,108 22 234 14 805 22 40

nSamples 100

The summary trench sample results show a conspicuous trend. Whilst the average TREO

(ppm) results for the Befitina and Caldera prospect trenches are similar, those for the other

rare metals are evidently dissimilar. That is the Nb, Ta, Zr and Hf results from the Befitina

prospect are significantly higher than those from the Calder prospect. This is an interesting

trend that can be explained by the differences in lithological setting, with the Befitina prospect

comprising sedimentary rocks that contain mineralised intrusives that host certain rare metals

and the Caldera prospect that is predominantly volcanic breccia. From an economic

perspective, it suggests that the regolith material is similarly enriched in REEs. This is

significant as it substantiates the prospectivity of areas underlain by volcanic breccia in line

with those underlain by mineralised intrusive rocks. However, it should be noted that this is

too small a dataset on which to make definitive conclusions.

6.2.7 Core Drilling

The initial strategy specifically focussed on exploration for bedrock-hosted REE mineralisation

and in 2010 the decision was made to drill the radiometric anomaly of the Ampasibitika

prospect. Between July 2010 and October 2011, E Global Drilling Corp (a subsidiary of

Energold Drilling Corp) was contracted to complete the drilling. The drilling involved the use of

three rigs: two Energold EGD II‟s, and a Versadrill Kmb.4km rig. The Energold rigs were man-

portable and the Versadrill was adapted to become man-portable. Local teams were hired to

work as off-siders as well as for rig moves. A photograph showing one of the drill-rigs in

operation is provided in Figure 6-5.



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Figure 6-5 Photograph of the Versadrill Kmb.4km drill rig in operation

A total of 277 holes were drilled in the Ampasibitika prospect, equating to 20,084.6 m of NW

(7.62 cm diameter), NTW (5.61 cm diameter) and BTW (4.17 cm diameter) core. Drillhole

lengths ranged from 42.2 m to 130.0 m and the average drillhole length was 72.5 m. The

average daily metreage rate per drillhole was 26.4 m. The locations of the drillholes are

shown in Figure 6-4.

The drilling programme encompassed a 500 km by 4800 km section of the eastern and north-

eastern flank of the Ambohimirahavavy igneous complex. Holes were ultimately drilled on

100 m to 200 m spaced fences typically comprising eight drillholes spaced at 50 m intervals.

Drilling commenced in the south of the prospect on 400 m spaced fences and proceeded

northwards across the radiometric anomaly. Infill drilling was subsequently completed. The



Page 58

majority of the holes were drilled at an angle of -70° with azimuths to the east and northeast,

but also included holes drilled at -45° and vertically. All of the drillholes were cased through

the regolith and bedrock core recovery was consistently good and typically greater than 90%.

An additional 20 holes were also drilled in the south-eastern part of the Caldera prospect,

equating to 2004.07 m of NW (7.62 cm diameter) and NTW (5.61 cm diameter) core. Drillhole

lengths ranged from 100.0 m to 100.8 m and the average daily metreage rate per drillhole

was 50.3 m. The locations of the drillholes are shown in Figure 6-4. The purpose of the drilling

programme was to test for the presence of bedrock-hosted REE mineralisation within the

volcanic breccia occurring within the caldera. All of the holes were drilled vertically.

Core Logging and Sampling Procedures

Once drilled the core was placed in wooden core boxes by the off-siders and wooden depth

markers inserted. Prior to being manually transported from the drill-site to either the field

camp at Ankatafa or Ampasibitika village, the boxes were sealed with a plywood lid to prevent

core displacement. From either of these localities the core was then transferred by boat and /

or by 4x4 vehicle to the Tantalus sample preparation facility in Ambanja.

Once at the sample preparation facility the core was logged and photographed by Tantalus

geologists and marked-up for sampling. The initial sampling strategy was restricted to

intersections that included intrusive rocks, were radioactive and / or fluoresced under

ultraviolet light. This resulted in incomplete sampling of the bedrock sections of the drillholes

that was subsequently remedied by selective infill sampling.

Core Drilling Summary

The holes drilled in the Ampasibitika prospect intersected between 0.0 m and 41.35 m of

regolith (corrected thickness) that averages 13.8 m thick. The underlying bedrock comprised

the expected sedimentary package of mudstones interbedded with sandstones, marls and

minor limestone that have been intruded by alkaline and peralkaline intrusive rocks. However,

what was intersected was not in keeping with the simplistic “ring-dyke” interpretation

illustrated in the geological cross-section in Figure 5-4. Rather than being a series of thick

intrusives with consistent orientations and predictable continuity, they were observed to have

highly variable thicknesses and much more complex geometries. Furthermore, there were

often wide intersections of sedimentary rocks devoid of any intrusives.

Despite the erratic nature of the intrusives in the Ampasibitika prospect area, the drilling

programme did confirm the presence of mineralised rocks with grades of up to 23,857 ppm /

2.39% TREO.

The holes drilled in the Caldera prospect intersected between 4.85 m and 18.00 m of regolith

that averages 9.81 m thick. The underlying bedrock is dominated by the expected volcanic

breccia target lithology, but many drillholes intersected a succession resembling the

Ampasibitika prospect (mudstone intruded by peralkaline granitic rocks). Based upon the

available results, the volcanic breccia is predominantly un-mineralised, typically less than 500

ppm / 0.05% TREO, with the overlying regolith often being more enriched in REE.

Ultimately the drilling programme at the Ampasibitika prospect has established that the

continuity, predictability and grades of the mineralised intrusives are insufficient for a bedrock-

hosted REE resource. For this reason it was decided to focus exploration efforts on the

regolith-hosted mineralisation.



Page 59

6.2.8 Pitting

To date, Tantalus has manually excavated a total of 1019 pits for the purposes of assessing

regolith-hosted REE mineralisation. The majority of the pits were excavated between April

and November 2011, however two pits were excavated prior to this in November 2010. These

have been excavated in the Ambaliha, Befitina, Caldera and Ampasibitika South prospects on

100 m by 200 m, 200 m by 200 m and 500 m by 500 m grids (Figure 6-7).

Ideally the pits were excavated to bedrock. However, for safety reasons the pits were not

excavated deeper than 10 m. The average depth of all the pits is 6.74 m. It took, on average,

4 days to manually excavate each pit. All of the pits were back-filled as soon as geological

observations, density measurements, moisture readings and sampling were completed. A

photograph of a typical exploration pit is shown in Figure 6-6 and the summary statistics for

the pits excavated to date are provided in Table 6-6.

Figure 6-6 Photograph of a typical exploration pit

Table 6-6 Summary of the Tantalus pit parameters

Prospect No. pits MIN (m) MAX (m) AVERAGE (m)

All prospects 1,019 1.00 10.10 6.74

Ampasibitika 0 - - -

Ambaliha 170 1.00 10.00 6.29

Befitina 399 1.00 10.10 6.91

Caldera 346 1.00 10.10 7.08

Ampasibitika South 104 0.50 10.00 5.70



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Figure 6-7 Map showing the locations of the Tantalus pit and window sampler holes



Page 61

Pit Logging and Sampling Procedures

Once a pit was excavated, the sampling methodology involved marking out the samples on

the same wall of each pit at either 0.5 m or 1.0 m intervals. Unfortunately, all of the pits to

date were arbitrarily sampled at 0.5 m or 1.0 m intervals. In addition they did not follow the

industry best practise procedures, now in place, to not harvest samples across subdivisions in

the regolith. For this reason, the coding in the database includes codes to indicate when this

occured. All future pit logging will adhere to the logging procedures cited in the CPR

(Tantalus, 2012).

Samples were collected from the lowermost interval first to minimise contamination.

Collection involved using the pointed end of a rock pick to create a continuous vertical

channel with the displaced material collected into a polythene sample bag with an average

sample weight of 1.8 kg. A unique, predefined sample tag was then placed into the bag and

the bag closed with a plastic cable tie. Once bagged, the samples were manually carried to

the field camp at Ankatafa then transferred by boat and / or by 4x4 vehicle to the Tantalus

sample preparation facility in Ambanja.

6.2.9 Window Sampling

To date, Tantalus has drilled a total of 47 window sampling holes using a Geotools Wacker

BH23 unit (www.ngdgeo.de/index.php/wacker-bh-23.html). The majority of the window

sampling holes (44) were drilled in the Caldera prospect with rest in the Ampasibitika South

prospect. Their purpose was to assess the suitability of the technique as a faster and safer

accompaniment to pitting (Figure 6-8). It took, on average, four days to manually excavate

each pit compared to one day on average to drill each window sampler hole. An additional

four units have been purchased and are expected to arrive in Madagascar in the first quarter

of 2013.

Figure 6-8 Photograph of a window sampler in operation



Page 62

The window sampling programme has resulted in the drilling of approximately 354 m of

regolith material. Hole lengths range from 1.5 m to 11.0 m and the average length was 7.5 m.

On average, one window sampling hole can be completed per day. The regolith sampling

results for all the drillholes, pits and window sampling holes are summarised by prospect in

Table 6-7. The overall grade range between the prospects is quite variable, but the average

grades for each of the prospects are strikingly similar at approximately 800 ppm / 0.08%

TREO.

Table 6-7 Summary of the Tantalus regolith sample results.

PROSPECT STATS TREO (ppm)

HREO (%)

Nb2O5 (ppm)

Ta2O5 (ppm)

ZrO2 (ppm)

HfO2 (ppm)

Ga (ppm)


MAX 14,788 61 7,296 442 33,095 650 195

MEAN 835 19 209 12 1,011 22 40

MEDIAN 628 19 152 9 720 17 38

nSamples 11,143


MAX 14,788 49 7,296 442 33,095 650 100

MEAN 884 21 197 12 1,108 24 32

MEDIAN 641 21 97 5 607 14 31

nSamples 2,965

Ambaliha MIN 56 3 3 0 101 2 1

MAX 5,109 54 2,389 150 15,399 348 70

MEAN 669 18 124 8 820 19 37

MEDIAN 514 18 47 3 598 15 37

nSamples 918

Befitina MIN 63 1 2 0 84 2 3

MAX 6,844 54 2,396 173 12,036 245 94

MEAN 810 17 226 13 1,082 24 44

MEDIAN 614 17 160 9 771 18 42

nSamples 2,917

Caldera MIN 86 3 11 1 200 4 9

MAX 12,964 61 3,004 203 10,050 203 195

MEAN 840 20 227 13 934 21 43

MEDIAN 646 19 196 11 773 18 41

nSamples 3,900


South MAX 6,734 35 940 50 3,174 61 88

MEAN 974 18 192 10 953 20 42

MEDIAN 695 18 136 7 806 18 41

nSamples 443



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6.3 SRK ES Comments

A wide variety of exploration activities have been completed across the Tantalus project area

over a number of years and a great deal of progress and understanding has been achieved. A

considerable amount of exploration data now exist and it is important that these are

adequately reviewed and interpreted to facilitate the next phase of exploration.

Whilst the window samplers cannot entirely replace pitting (for example, regolith density

measurements derived from the windows samplers are less accurate), the technique does

represent a faster and safer means of collecting geological observations and samples and

their use is supported.

7 SAMPLE PREPARATION, ANALYSIS QUALITY ASSURANCE AND QUALITY CONTROL

7.1 Sample preparation and analysis

The vast majority of samples are prepared at the Tantalus sample preparation facility in

Ambanja. Whilst the facility is basic, it serves the purpose of preparing samples and sub-

sampling ahead of dispatch to ALS Chemex. Sample preparation procedures are described

as follows.

7.1.1 Drill core samples - bedrock intersections

1. The core is split in half using a hydraulic splitter (core sawing is reportedly not

possible due to frequent mains power outages), and half is returned to the core box;

2. The half to be sampled undergoes systematic density measurement using the

immersion in water method;

3. The samples are then crushed to minus 2 mm using a Fritsch Industries RoHS

2002/86/EG electric jaw crusher. After each sample, blank material (locally sourced

granitic material) is crushed and the equipment is cleaned with compressed air and a

vacuum cleaner in order to minimise sample contamination;

4. The crushed samples are then split twice using a Humboldt H-3962 riffle splitter in

order to produce a quarter of the sample. Of this homogenised material, 250 g to

350 g is collected using a plastic scoop and bagged for analysis. Sample numbers

are written onto the polythene sample bags with permanent marker pen and an

aluminium tag inscribed with the sample number is also placed into the bag.

7.1.2 Drill core samples - regolith intersections

1. Due to its consistency, the core is split in half using a geological hammer;

2. The samples are then weighed (inclusive of moisture) and emptied into stainless steel

bowls in preparation for drying;

3. The samples are then dried in a gas oven at a temperature of 135°C for four to eight

hours, depending on the moisture content of the samples;

4. Once dried, the samples are re-weighed and the weight recorded;

5. If the dried samples are observed to contain any rock fragments, they are crushed to

minus 2 mm using a Fritsch Industries RoHS 2002/86/EG electric jaw crusher. After

each sample, blank material is crushed and the equipment is cleaned with

compressed air and a vacuum cleaner in order to minimise contamination;

6. If the dried samples contain no rock fragments, they are manually pulverised in the



Page 64

stainless steel bowls using a large wooden pestle;






The remaining coarse reject material is retained and stored at the sample preparation facility.

The drill core is stored in a dedicated warehouse in Ambanja.

7.1.3 Pit and window samples

1. The samples are weighed (inclusive of moisture) and emptied into stainless steel

bowls in preparation for drying;

2. The samples are then dried in a gas oven at a temperature of 135°C for four to eight

hours, depending on the moisture content of the samples;

3. Once dried, the samples are re-weighed and the weight recorded;

4. If the dried samples are observed to contain any rock fragments, they are crushed to

minus 2 mm using a Fritsch Industries RoHS 2002/86/EG electric jaw crusher;

5. If the dried samples contain no rock fragments, they are manually pulverised in the

stainless steel bowls using a large wooden pestle;






During the course of the 2011-2012 pitting programme, the number of samples being

collected exceeded the preparation capacity of the Ambanja facility. To mitigate this, some of

the samples were outsourced to the Intertek-Genalysis sample preparation laboratory in

Antananarivo. The Intertek-Genalysis preparation procedure was intended to mimic the

Tantalus preparation procedure, but differences in the equipment prevented this. The Intertek-

Genalysis sample preparation methodology is described as follows:

1. The samples are weighed as received (inclusive of moisture);

2. The samples are then oven dried at a temperature of 110°C for eight hours;

3. Once dried, the samples are re-weighed;

4. The samples are then crushed to minus 10 mm;

5. The crushed samples are then split and approximately 250 g of this material is

collected as the sub-samples;

6. The sub-samples are then subject to 30 seconds of pulverisation to reduce the

material to approximately minus 2 mm.

All prepared sub-samples are transported to Antananarivo using a Tantalus 4x4 vehicle. Here

they are checked by customs prior to being dispatched to ALS Chemex in South Africa by

courier.



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7.1.4 ALS Chemex - South Africa

On arrival at ALS Chemex in South Africa:

1. The samples are laid out and logged according to the received sample submission

sheet (ALS code LOG-22), labelled and weighed (ALS code WEI-21);

2. The samples are then removed from their sample bags and placed in drying pans and

oven dried at 105°C for approximately three to four hours (ALS code DRY-21);

3. The dried samples are then pulverised to 85% less than 75 um (ALS code PUL-31);

4. The pulverised samples are then riffle split (ALS code SPL-21);

5. One half of the samples are retained as master pulps in South Africa and the other

half are sent to ALS Chemex in Vancouver.

7.1.5 ALS Chemex - Vancouver

At ALS Chemex in Vancouver the samples are subject to 38-element fusion Induced Coupled

Plasma Mass Spectrometry (ICP-MS) analysis (ALS code ME-MS81). This involves the

addition of 0.2 g of prepared sample to 0.9 g of lithium metaborate flux, mixing and fusion in a

furnace at 1000°C. The resulting melt is then cooled and digested in 100 mL of 4% nitric acid

(HNO3) and 2% hydrochloric acid (HCl) solution and analysed using ICP-MS.

When the detection limits of the ME-MS81 package are exceeded, it is necessary to use the

ore-grade fusion XRF package (ALS code ME-XRF10). This involves the calcination or

ignition of 0.9 g of prepared sample and its addition to 9.0g of lithium borate flux (50% Li2B4O7

- 50% LiBO2), mixing and fusion in an auto-fluxer between 1050 and 1100°C. A flat molten

glass disc is prepared from the resulting melt and analysed by X-Ray Fluorescence (XRF)

spectrometry.

Both of the ALS Chemex laboratories are ISO accredited.

7.2 Sample Quality Assurance and Quality Control (QAQC)

To enable the validation of the sample results, Tantalus have adopted their own internal

sample Quality Assurance and Quality Control (QAQC) procedures that involve the insertion

of blank, standard and duplicate material. The current insertion rate is approximately 8%, with

one in every twelve samples dispatched to the ALS Chemex laboratories constituting QAQC

material (standard - one in 35, blank - one in 35 and duplicate - one in 35).

7.2.1 Standards

Tantalus Standards

Standard material is inserted into the sample stream to test for assaying accuracy at the

laboratory. The standard used, up until September 2011, was created in 2009 from a bulk

sample of bedrock primary mineralisation from the Ampasibitika prospect, containing elevated

REE grades, the exact location is unknown. A 40 kg standard sample was produced by the

Office Militaire National pour les Industries Stratégiques (OMNIS) which was almost

exhausted by late August 2011.

A second standard was created from an 80 kg bulk sample of regolith mineralisation from

TPIT006 (198,000 / 8,469,500 in UTM 39S coords) from within the Caldera prospect. This

was introduced into the sample stream in September 2011.

A third Standard has been produced by the Ambanja sample preparation laboratory but has

not yet been used



Page 66

These standards do not currently have a certified mean grade as Tantalus have has not yet

sent the material for round robin assay at several different assaying laboratories. This has

been recommended by SRK ES, since the results from such an exercise will allow a more

meaningful assessment of primary laboratory precision and accuracy as well as sample

homogeneity.

SRK ES analysed the results graphically, see Figure 7-1to Figure 7-4. While these standards

are not ideal until a robust round robin analysis has been completed, it can be seen that there

is no significant bias over time with the TREO assays, the mean (3326 ppm) is maintained

within 2 standard deviations with only a few minor exceptions. The ZrO2 assays show a slight

drift over time, with the assays averaging 37,800 ppm in mid-late 2010, and 39,000 ppm in

mid-late 2011 but have been quite consistent from then onwards. There are also two clear

periods where either the wrong standard material was assayed, or the assaying equipment

was re-calibrated (anomalous populations in Figure 7-2). SRK ES advise that this should be

investigated further.

With Standard 2, both the TREO and ZrO2 show very good adherence to their mean (738

ppm and 1705 ppm respectively) but a few batches show some anomalous readings in both

TREO and ZrO2, most notably Batch 30, that should ideally have been picked up during

routine QAQC checks and investigated further.

Note: all means and standard deviations for all standards are not certified.

Figure 7-1 Tantalus Standard 1: TREO (ppm)

2,500

2,700

2,900

3,100

3,300

3,500

3,700

3,900

TR

EO

(pp

m)

Field Standard 1 - TREO

Standard 1

Mean

Mean +2σ

Mean -2σ

Date

Mean Value: 3326 (ppm)



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Figure 7-2 Tantalus Standard 1: ZrO2 (ppm)

Figure 7-3 Tantalus Standard 2: TREO (ppm)

35,000

36,000

37,000

38,000

39,000

40,000

41,000

42,000

43,000

44,000

ZrO

2(p

pm

)Field Standard 1 - ZrO2

Standard 1

Mean

Mean +2σ

Mean -2σ

Date

Mean Value: 39,153 (ppm)

Anomalous Population

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

TREO

(p

pm

)

Field Standard 2 - TREO

Standard 2

Mean

Mean +2σ

Mean -2σ

Batch ID

Mean Value: 738 (ppm)



Page 68

Figure 7-4 Tantalus Standard 2: ZrO2 (ppm)

ALS Chemex Standards

In addition to the standard material inserted by Tantalus, ALS Chemex in Vancouver also use

internal Certified Reference Material (CRM) in order to test for within-laboratory accuracy.

Reliance has been placed on ALS Chemex‟s in-house QAQC protocols to identify any issues.

However, SRK ES recommended that these data are also analysed independently of ALS

Chemex.

7.2.2 Blanks

Tantalus Blanks

Blank material is inserted into the sample stream in order to assess any sample

contamination. Tantalus inserts blank mudstone material collected from a quarry in mainland

Madagascar that is known to be devoid of REE mineralisation. Figure 7-5 illustrates the

results for the blank material, which shows consistent results of between 180 ppm and

240 ppm TREO. There is no obvious bias over time, however a few significantly high grades

was recorded (this value plotted off the graph in Figure 7-5), SRK ES consider this most likely

to be due to a numbering error, but would suggest that this is investigated further.

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

ZrO

2(p

pm

)Field Standard 2 - ZrO2

Standard 2

Mean

Mean +2σ

Mean -2σ

Batch ID

Mean Value: 1,705 (ppm)



Page 69

Figure 7-5 Tantalus Blank material

Note: significant anomalous high grades are plotted off the top of this graph

ALS Chemex Blanks

In addition to the TRE blank material, ALS Chemex in Vancouver also introduces barren

material into the assay stream. Again, these assays were not available for analysis. Reliance

has been placed on ALS Chemex‟s in-house QAQC protocols to identify any issues.

However, SRK ES recommended that these data are also analysed independently of ALS

Chemex.

7.2.3 Duplicates

Pulp duplicate samples (additional half or quarter core material taken from the original core)

are also sent to ALS Chemex in Vancouver to test for analytical precision at the laboratory.

The results of the duplicate analyses versus the original analyses are shown in Figure 7-6.

The results show a good level of precision, with a correlation coefficient of close to 1 and only

a few reading outside the 10% confidence level.

150

160

170

180

190

200

210

220

230

240

250

TREO

(p

pm

)

Date

Blanks: TREO (ppm)

Possible numbering error



Page 70

Figure 7-6 Original vs. Duplicate TREO (ppm) assays

7.2.4 Umpire Laboratory

Currently Tantalus does not send duplicate assays to a secondary (umpire) laboratory. This

represents one of the recommendations made by SRK ES in order to test the quality of the

results from ALS Chemex.

7.2.5 Topographical Data

The available topographical data is derived from a helicopter-borne geophysical survey flown

by Fugro in July 2008. The flight lines were orientated northeast-southwest on lines

approximately 100 m apart.

The topographic survey is of low resolution, and unsurprisingly shows poor correlation to the

handheld GPS-surveyed drillhole collars. Due to the discrepancies between the collars and

the topographic surface, the collars were pressed to the Fugro topography in order to

maintain a constant baseline for which to model the geological data. However, SRK ES

considers that the resolution of the topographic survey will need to be improved to provide an

appropriately detailed start point for any future attempts to estimate an Indicated Mineral

Resource for the regolith-hosted REE mineralisation.

7.2.6 Data verification

SRK ES completed a database validation exercise on the entire Tantalus dataset as available

ahead of the Mineral Resource estimate, completed in January 2012, to ensure the quality of

data was adequate.

SRK ES was provided with the following data to assist with the Mineral Resource estimate:

Drillhole database: comprising, collar coordinates and estimated direction of

drilling, elemental assay data, lithological logging data, weathering logging data

0

5000

10000

15000

20000

25000

0 5000 10000 15000 20000 25000

Du

plic

ate

Ass

ay

Original Assay

Scatter Plot of TREO

TREO_Scatter

RMA Line

Ideal Correlation

Upper 10% Limit

Lower 10% Limit

Slope = 1.001

Y axis Intercept = 2.791

Error on slope = 0.005

Error on Y axis Intercept = 7.277

y = 1.001x +2.791

Corellation co-efficient = 0.995



Page 71

and density measurements;

Pitting/trenching database: comprising pit/trench coordinates, elemental assay

data, lithological logging data, weathering logging data and density

measurements;

QAQC data to accompany the assay data; and

Fly-over topographic survey in DXF format.

Tantalus database validation:

The database is continually validated by Tantalus on receipt of assays from ALS Chemex.

Drilling, pitting, trenching and window sampling collar locations, surveys and logging is

entered manually into the database by the Geologist responsible for the specific hole/pit. The

data are then validated by a dedicated Database Manager.

SRK database validation:

In August 2011, SRK and SRK ES visited the Tantalus drill core storage facilities in Ambanja

in order to review some of the drill core and validate it against the assay data and lithological

logging. The main objectives were to confirm the logging of the mineralised intrusives, along

with radioactivity counts per second of greater than 0.5 and fluorescence caused by the

presence of zircon. The visit identified multiple discrepancies between the drill core, the

hardcopy lithological logs and the digital database. This was investigated by Tantalus and the

drill core was subsequently re-logged in the first quarter of 2012. This issue primarily effects

the primary (hard rock) mineralisation and not the surface regolith mineralisation and as such,

SRK ES feel that this does not constitute a significant issue at this stage.

During the 2011 Mineral Resource estimate SRK imported the provided drillhole data into

Datamine Studio 3 software in order to validate the files. All interval files and collar files were

clean and valid drillholes were created.

On receipt of the final assay database in December 2011, SRK also made a representative

number of spot checks, confirming that the database entries for multi-element geochemical

results matched the official laboratory certificates. No discrepancies were identified.

7.2.7 SRK ES Comments

The sample QAQC procedures in place are, on the whole, considered appropriate for the

project at its current level of development and SRK ES have reviewed these results up until

the end 2011, but have nave not yet reviewed any QAQC results from the 2012 window

sampling campaign.

While these procedures are considered appropriate for the Mineral Resource at its current

level of confidence, additions and amendments to this programme are required to support the

elevation of any part of these resources to the Indicated category in the future. SRK ES

recommend that these additions would include:

1. The installation of a suitable generator at the Ambanja sample preparation facility to

ensure both drill core cutting and sample crushing can proceed unhindered by power

shortages;

2. Investigate the standard material discrepancies arising from Standard 1;

3. Instigate a full round robin assaying of the standard material and instruct an umpire

laboratory to test the quality of the ALS Chemex laboratory. This programme, as well

as the planned 2013-14 exploration programme will require large amount of standard



Page 72

material. Therefore SRK ES would recommend that a new standard, well in excess

of the current 80kg samples used to date, be produced and undergo the round robin

analysis; this will ensure a good stock of material is produced and negate the need

for further round robin studies in the future; and

4. Ensure clear sampling and data input, storage and validation procedures are

constructed and adhered to and that a quarterly sample QAQC report is produced so

that Tantalus are able to undertake rapid corrective actions should any further

discrepancies be observed.

8 MINERALOGICAL AND METALLURGICAL TESTWORK

8.1 Historical Testwork

The Soviet Geological Mission completed between 1988 and 1991 included the collection of

samples for mineralogical and metallurgical testwork.

8.1.1 Soviet Mineralogical Testwork

Mineralogical testwork completed as part of the Soviet Geological Mission confirmed that the

locally and historically termed fasibitikite has a granitic composition containing 30 to 50 %

quartz, 10 to 30 % feldspar, 15 to 30 % riebeckite and aegirite, and up to 10 % metalliferous

minerals. The identified metal-bearing minerals include pyrochlore, zircon, chevkinite,

eudialyte, monazite, galena, sphalerite and magnetite. Due to the limitations of the testwork,

they were unable to define the complete list of minerals that contain thorium, yttrium or tin.

The only mineral that was subject to comprehensive study was pyrochlore. Pyrochlore is

found in the peralkaline granitic intrusive rocks and appears as irregularly dispersed

disseminations or crystalline aggregates (0.03 to 1.5 mm). Although dispersed irregularly,

pyrochlore occurs throughout the rock mass and can be concentrated at the margins of the

intrusives as octahedral crystals (particularly the aegirite varieties). Weathered pyrochlore

was observed to often be replaced by columbite and the typical Nb/Ta ratio for the studied

samples was 13.6.

The distribution of zircon was found to be extremely irregular and to have a variable content of

between 1 and 15 %. Grain size was also observed to be variable (a few hundredths of a mm

to 2 mm) but with primary zircon being typically coarser and mainly found in the peralkaline

granitic intrusive rocks. Secondary zircon occurs as a replacement mineral and was identified

in fenite.

Chevkinite mainly occurs within the peralkaline granitic rocks whilst monazite is present in all

mineralised rocks. Galena is less common and has an extremely irregular grade distribution

from 100 to 6,400 ppm. Subordinate minerals were identified as xenotime, samarskite,

gagarinite, sphalerite, pyrite and chalcopyrite.

The main economic elements of interest were identified as tantalum, niobium and REE (±

zirconium and hafnium). Minor thorium was also identified, but in uneconomic quantities and

associated with only low radioactivity.

The main Ta-Nb mineral is pyrochlore, which is often partly columbitised (where weathered)

and as a result becomes more enriched in Nb. A monomineralic pyrochlore sample was

calculated to contain 31.43 % Nb2O5, 2.31 % Ta2O5, 1.10 % ZrO2, 0.35 % ThO2 and 23.19



Page 73

% TREO.

The rare earth elements were identified in chevkinite, eudialyte and pyrochlore. Cerium-

bearing REEs were mainly observed in association with chevkinite, and yttrium-bearing REEs

with eudialyte. The samples were determined to be LREE dominant, with particular

enrichment in cerium and a notable depletion in europium - a trend that is well-documented in

published literature.

8.1.2 Soviet Metallurgical Testwork

Metallurgical testwork completed as part of the Soviet Geological Mission included both

bedrock and regolith material. The main objective of the testwork was to establish a

processing methodology that would result in a rare-metal concentrate. Testwork was

completed on 14 composited samples (9 bedrock and 5 regolith samples) at the OMNIC

laboratory and included:

• Gravity concentration;

• Magnetic separation;

• Flotation.

Flotation proved to be the most effective concentration method, with the -0.08 mm fraction

containing 80 % of the minerals of interest and the -0.04 mm fraction containing 40 %. The

discarded / residue material was also found to contain very fine-grained mineralisation not

amenable to recovery using the utilised flotation method. Due to the limitations of the OMNIS

laboratory, it was not possible to carry out further testwork on selective grinding and flotation

of the fines.

8.2 Contemporary Testwork

Contemporary mineralogical testwork and studies have been completed in Germany by

independent Geochemist Dr. Udo Jakobs (www.dr-jakobs-gmbh.de) and Consulting Geologist

Dr. Thomas Hatzl (www.mineral-consult.de) and as part of research by Guillaume Estrade at

the University of Toulouse in France. Contemporary metallurgical testwork has been

completed in Germany by Dr. Hatzl and in Canada by the Metallurgical testwork Department

of the Chemical Engineering and Applied Geochemistry section of the University of Toronto.

8.2.1 Contemporary Mineralogical Testwork

Given the re-focus from bedrock-hosted REE mineralisation to regolith-hosted ionic

adsorption-type REE mineralisation, this section describes the testwork completed on

predominantly regolith material. The findings of the contemporary mineralogical studies

completed on bedrock material are summarised in Section 5 - Geological Setting and

Mineralisation.

In 2010, Dr. Hatzl studied a regolith sample collected from trench TANT2 in the Befitina

prospect (sample TANT2-477067). The sample comprised material collected from the

ferruginous zone of the regolith profile overlying syenite bedrock (Tantalus, 2012b). The

sample was subject to the following analytical methods:

• X-Ray Diffraction (XRD);



Page 74

• X-Ray Fluorescence (XRF);

• Fourier Transmission Infrared Spectrometry (FTIR);

• Scanning Electron Microscopy (SEM-EDX);

• Petrographic study of thin and polished sections;

• Sieving and Atterberg centrifugation (for grain-size analysis).

A summary of the XRD results for sample TANT2-477067 are provided in Table 8-1.

Table 8-1 Summary of the XRD results for sample TANT2-477067

Fraction Kaolinite-D Illite Quartz Hematite Goethite Gibbsite Baddeleyite

Total sample 20 n.d. 50 3 12 15 n.d.

< 2 µm 65 1 5 5 13 10 < 1

> 40 µm 8 n.d. 70 2 8 12 n.d.

All values in wt. %. n.d. = not detected

The XRD analysis indicates that half of the total sample comprises quartz, which is the

dominant mineral in the coarser (> 40 µm) fraction. Kaolinite is the second most abundant

mineral, and represents the most abundant mineral in the finer (< 2 µm) fraction. Both size-

fractions contain significant proportions of iron (as hematite and goethite) and aluminium (as

gibbsite). Interestingly, baddeleyite (ZrO2) was sufficiently concentrated in the finer fraction to

be detected by XRD.

The mineralogical work classified the sample as a quartz-rich ferruginous “laterite” with a high

gibbsite content and accessory baddeleyite. Petrographic studies confirmed the presence of

baddeleyite and secondary zirconium, pyrochlore, rare thorianite, REE (comprising almost

exclusively cerium, probably as a hydroxide/oxide) and secondary REE phosphate minerals.

Zirconium was present in the coarser fraction, whilst the REE tended to occur in the finer

fraction as aggregates and coatings. Secondary cerium-enriched REE minerals represented

the latest phase of the mineralisation of interest, mostly developed as very fine-grained

aggregates on and between Al-Fe-hydroxides.

Based upon the mineralogical studies, the other rare earth elements appear to be host by

relict accessory minerals including monazite, pyrochlore, thorite, and zircon, and secondary

baddeleyite.

Tantalum and niobium mainly occur in minerals belonging to the pyrochlore group, with both

yttropyrochlor and plumbopyrochlor observed. Both phases appear to be relict accessory

minerals. In the studied sample, zirconium occurs as both relict zircon and secondary

baddeleyite.

A second composite regolith sample was also mineralogically studied by Dr. Hatzl using the

aforementioned methods. The sample comprised clay-rich saprolith material collected from



Page 75

the Caldera prospect (composite sample I679066 - I679069).

A summary of the XRD results for sample I679066 - I679069 are provided in Table 8-2.

Table 8-2 Summary of the XRD results for sample I679066 - I679069

All values in wt. %. n.d. = not detected

The XRD for the saprolith sample returned very different results to those obtained from the

ferruginous zone sample. The saprolith contains a lot more clay and a greater variety of clay

minerals. From an economic perspective, the presence of smectite is very significant because

it has a much higher ionic exchange capacity (has the potential to adsorb more REE ions)

than monomineralic kaolinite. Hematite, goethite and gibbsite are also only present in small

quantities in the saprolith sample. Despite being mineralised, no REE or other rare metal

bearing minerals were identified in the saprolith sample using XRD. A plausible explanation is

that the mineralisation occurs as very fine-grained relict and ionic phases that were not

discernible using XRD (Tantalus, 2012b).

8.2.2 Contemporary Metallurgical Testwork

In 2010, Dr. Hatzl also completed metallurgical testwork on a ferruginous zone sample

collected from trench TANT2 in the Befitina prospect (sample TANT2-477069). The sample

was subject to preliminary column leaching / ion-exchange testwork using the following

lixiviants:

• 1N ammonium sulphate ((NH4)2SO4);

• 1N hydrochloric acid (HCl);

• 1N sodium hydroxide (NaOH);

• 1N citric acid (C6H8O7);

Followed by Induced Coupled Plasma Mass Spectrometry (ICP-MS).

The results of the column leaching of the ferruginous material were unremarkable, with only

NaOH noted as mobilising Si, and Al. Although very preliminary in nature, the results indicate

that REE and other rare metals present in the ferruginous zone are not amenable to leaching

and recovery using the utilised lixiviants. However, given the likely absence of “ionic” REE

Probe Smectite Mica Illite-

Smectite

Kaolinite-

Smectite

Kaolinite-D Chlorite Quartz Albite K-feldspar Hematite Goethite Gibbsite

Total

sample

1 11 7 18 21 3 33 n.d. n.d. 2 3 1

< 0.1 mm

A

1 9 6 13 22 2 39 n.d. n.d. 2 3 3

< 0.1 mm B 1 10 4 17 22 2 34 n.d. < 1 2 3 4

< 0.1 mm

C

1 10 6 18 25 2 30 n.d. n.d. 3 3 2

0.1 - 0.315

mm MAG1

1 9 6 11 24 2 38 n.d. n.d. 3 3 3

0.1 - 0.315

mm

NONMAG1

1 5 4 2 2 1 78 < 1 1 < 1 < 1 3

0.1 - 0.315

mm MID1

1 9 6 13 21 2 39 n.d. n.d. 2 3 4

0.1 - 0.315

mm B´

1 4 3 5 5 1 73 n.d. < 1 1 1 5

0.1 - 0.5

mm

1 9 6 9 15 2 49 < 1 n.d. 2 2 4

0.5 - 1.0

mm

1 12 6 14 17 2 42 n.d. n.d. 2 2 2



Page 76

mineralisation, the results are not considered that surprising.

Dr. Jakobs also tested a 675 g sample of TANT2-477069 to derive magnetic, non-magnetic

and intermediate magnetic fractions that were subsequently studied by Dr. Hatzl using the

following analytical methods:

• X-Ray Diffraction (XRD);

• X-Ray Fluorescence (XRF);

• Microprobe analysis.

The results of the analysis are provided in Table 8-3.

Table 8-3 Microprobe and ICP-MS results for sample TANT2-477069

F Al Si Fe Mn Nb Ta Ga Th U Zr La

Ce Er Dy Yb Y

< 0.5 mm NONMAG

100

6,800 380,000

2,600 160 160 1.5 4.4 21 4.5

170 14

110 1.5

2.8

1 12

< 0.5 mm

MID

120

18,000 360,000

5,400 360 360 2.2 11 46 10 220 25

320 4.3

7.9

2.9

34

< 0.5 mm

MAG

330

28,000 240,000

140,000

1,200

1,200

7.7 68 370

41 500 45

2,700

9.2

20 5 74

< 0.5 mm

SF (PW)

600

30,000 130,000

230,000

1,100

1,300

54 110

520

59 650 34

4,600

13 28 6.8

100

< 0.5 mm

400

110,000

170,000

55,000 250 1,100

7 63 420

38 1,000

30

2,700

11 23 6.8

92

< 0.5 mm

LF

140

12,000 370,000

6,700 55 270 8.5 8.5 41 7.3

160 16

190 4.5

2.3

1.5

18

< 0.63 mm SMAG

430

59,000 88,000 230,000

980 3,000

120

160

710

88 1,100

28

3,000

32 73 15 260

FINE

120

14,000 330,000

36,000 280 420 18 20 110

15 200 19

790 3.6

7.5

2.2

28

All values in parts per million (ppm)

NONMAG = non-magnetic fraction

MID = intermediately magnetic fraction

MAG = magnetic fraction

SF (PW) = separation with poly-tungstate solution (approx. 2.9 g / cc)

LF = light fraction after separation of SF

SMAG = liquid magnetic separation of the fraction <0.63 um

FINE = slimes

The results indicate that the highest accumulation of Nb, Ta, Ce, Y, and Zr occurs where the

sample has been subject to separation with poly-tungstate solution and in the < 0.63 um

magnetic fraction.

In November 2011, the clay-rich saprolith composite sample collected from the Caldera

prospect (sample I679066 - I679069) was also subject to column leaching using 2 %

ammonium sulphate solution. Available observations and results suggest that due to the high

clay content of the sample, percolation was extremely slow and that only approx. 1 % of the

REE was recovered. Based on the vastly better results completed as part of the subsequent

testwork completed by the University of Toronto, it is considered likely that the physical

parameters of the analysis (column leaching and percolation rather than saturation and



Page 77

agitation) are the main reason for the poor REE recovery.

The preliminary mineralogical and metallurgical testwork completed in Germany by Drs.

Jakobs and Hatzl resulted in the following conclusions:

The ferruginous zone and the clay-rich saprolith samples are associated with different REE

enrichments;

In the ferruginous zone sample, the majority of the more interesting REE occur in relict

minerals;

In the clay-rich saprolith sample, the REE appear to be adsorbed onto clay minerals and to a

smaller extent to occur in very fine-grained relict minerals;

Clay-rich saprolith material should be amenable to leaching;

Ferruginous zone material would require mechanical separation (density, magnetic). Any

leaching would probably require the use of very strong acids.

In January 2012, the University of Toronto (UoT) in Canada initiated metallurgical testwork on

samples from the Tantalus project. The testwork was more specifically completed by the

Department of the Chemical Engineering and Applied Geochemistry by Dr. Georgiana

Moldoveanu and Prof. Vladimiros G. Papangelakis, both of whom have recently published

papers specifically on the recovery of rare earth elements adsorbed on clay minerals

(Moldoveanu & Papangelakis, 2012; and 2013a) and are considered to be the amongst the

leading experts in this field outside of China.

The samples provided to the University of Toronto are summarised in Table 8-4.

Table 8-4 Summary of the samples provided to the University of Toronto

Tantalus SampleID

UoT SampleID

Prospect

Type From (m)

To (m)

Interval (m)

Material

I618258 MC1 Caldera Pit sample

6.50 7.00 0.50 Saprolith

I618440 MC2 Caldera Pit sample

5.50 6.00 0.50 Saprolith

L546213 MC3 Caldera Pit sample

4.00 4.50 0.50 Saprolith

L546571 MC4 Befitina Pit sample

7.00 7.50 0.50 Weathered bedrock (syenite)

L547432 MC5 Befitina Pit sample

5.00 5.50 0.50 Saprolith

MC = Madagascar Clay

* Due to the inadvertent modification of the Tantalus SampleID‟s prior to their arrival at the

UoT, it has not yet been possible to reconcile the results with the original sample details.

The main objectives of the UoT testwork were to measure the REE and selected base metal

composition of the provided samples, and investigate the leachability of the clays within the

samples by measuring the REE terminal extraction under previously defined “base-line”

conditions established during preceding research.



Page 78

The methodology involved two phases:

Phase 1 - Clay Elemental Analysis:

• The samples (5 g each) were digested in 80 mL aqua regia (3:1 concentrated

HCl:NHO3, vol/vol) to bring the constituent elements into solution (except for the insoluble

alumino-silicate matrix). The digested residue was then filtered, washed with 5% HNO3 and

denaturated alcohol (85-15 % vol/vol ethanol-methanol mixture) and dried overnight in an

oven at 60° C. The filtrate was then diluted to 250 mL (with DI-H2O);

• Inductively Coupled Plasma (ICP) analysis on the solution for:

(a) all lanthanide-group REE (La through Lu, plus Y);

(b) Th, U, and Sc.

Phase 2 - Leaching Tests:

Batch leaching tests were performed by adding 50 g of dry sample material to 100 mL of

leaching agent (i.e. Solids/Liquids = 1/2) in 250 mL Erlenmeyer flasks plugged with rubber

stoppers. The flasks were equipped with Teflon-coated stirring bars and placed on a stirring

magnetic plate for 30 minutes, to ensure solid suspension. At the end of the experiment, the

solids were separated by filtration, washed with distilled water of pH 5 and denaturated

alcohol, dried in the fume hood under ambient temperature and pressure, weighted and

stored for further analysis (by aqua regia digestion and ICP).

The previously defined “base-line” conditions established during preceding research (as

described in Moldoveanu & Papangelakis, 2012; and 2013a) involved the following

parameters:

Lixiviants: 0.5M (NH4)2SO4 (i.e., 1M NH4+ exchange ions); 1M NaCl; ~ 0.5M NaCl (simulated

seawater);

S/L = 1/2 (wt/vol), i.e. 50 g clay /1/00 mL lixiviant

Room temperature (~22°C);

Natural pH of the system was monitored and adjusted to ~5 (with 0.1M HCl) for NaCl-based

lixiviants;

Initial test duration: 1 h (no kinetics study due to extreme difficulties in S/L separation);

Aqua Regia Digestion (ARD) and ICP analysis were conducted on the residue (the same

procedure as the one described in Phase 1) to determine the final REE and Th, U, Sc.

The UoT sample descriptions and aqua regia digestion results are provided in Table 8-5.



Page 79

Table 8-5 University of Toronto sample descriptions and aqua regia digestion results

UoT SampleID UoT Description % Dissolved during ARD

MC1 Light brown, very fine powder 23.6

MC2 Pinkish-orange, soft chunks (easily broken with a pestle) plus some fine black sandy magnetic material

35.3

MC3 Pinkish-orange, very fine, occasional soft chunks (easily broken with the pestle)

31.5

MC4 Pinkish-orange, higher content of coarse particles (sand-like) 25.3

MC5 Brownish-orange, fine, occasional soft chunks (easily broken with a pestle)

35.7

ARD = Aqua Regia Digest

The Total Rare Earth Oxide (TREO) and relative Rare Earth Oxide (REO) results, in wt. % are

provided in Table 8-6 and Table 8-7 respectively.

Table 8-6 Total Rare Earth Oxide (TREO) results (as wt. %)

REO MC1 MC2 MC3 MC4 MC5

La2O3 0.1103 0.0627 0.2047 0.0031 0.0339

Ce2O3 0.0476 0.0388 0.0299 0.0629 0.0204

Dy2O3 0.0034 0.0063 0.0066 0.0007 0.0027

Er2O3 0.0021 0.0036 0.0027 0.0086 0.0014

Eu2O3 0.0006 0.0010 0.0011 0.0000 0.0010

Gd2O3 0.0088 0.0097 0.0131 0.0021 0.0048

Ho2O3 0.0007 0.0010 0.0010 0.0019 0.0008

Lu2O3 0.0003 0.0007 0.0003 0.0002 0.0003

Nd2O3 0.0607 0.0375 0.1159 0.0028 0.0271

Pr2O3 0.0181 0.0112 0.0327 0.0056 0.0077

Sm2O3 0.0115 0.0090 0.0202 0.0009 0.0051

Tb2O3 0.0013 0.0014 0.0019 0.0002 0.0007

Tm2O3 0.0014 0.0004 0.0002 0.0007 0.0001

Y2O3 0.0273 0.0489 0.0362 0.0024 0.0177

Yb2O3 0.0013 0.0035 0.0018 0.0017 0.0013

TREO 0.295 0.235 0.468 0.093 0.125

ThO2 0.0064 0.0079 0.0049 0.0335 0.0066

U3O8 0.0128 0.0283 0.0145 0.0256 0.0244

Sc2O3 0.0001 0.0004 0.0005 0.0002 0.0030

Total REO (TREO) content of clays is calculated as following:

Total REE “in” = sum of all individual REE in the initial clay (i.e. total mass), as detected by

ICP;



Page 80

Table 8-7 Relative Rare Earth Oxide (REO) results (as wt. %)

REO MC1 MC2 MC3 MC4 MC5

La2O3 37.33 26.62 43.71 3.28 27.13

Ce2O3 16.12 16.46 6.39 67.67 16.29

Dy2O3 1.16 2.68 1.40 0.79 2.12

Er2O3 0.72 1.51 0.59 9.21 1.16

Eu2O3 0.22 0.41 0.24 0.01 0.78

Gd2O3 2.98 4.10 2.79 2.26 3.85

Ho2O3 0.24 0.44 0.21 2.05 0.67

Lu2O3 0.08 0.29 0.06 0.23 0.24

Nd2O3 20.56 15.93 24.75 2.98 21.69

Pr2O3 6.11 4.77 6.98 6.00 6.16

Sm2O3 3.88 3.81 4.31 0.96 4.11

Tb2O3 0.43 0.59 0.40 0.20 0.56

Tm2O3 0.46 0.16 0.05 0.74 0.08

Y2O3 9.24 20.75 7.74 2.61 14.12

Yb2O3 0.44 1.47 0.38 1.78 1.01

TREO 100 100 100 100 100

From Table 8-6 and Table 8-7 it can be observed that:

Sample MC3 has the highest REO content, while MC4 has the lowest;

MC1 and MC2 are rather similar in terms of total REO content relative composition;

MC5 has less total REO content but follows similar relative distribution as MC1 and

MC2;

MC4 has the lowest REO content and seems to consist of different minerals (when

compared to the other clays), with Ce, U and Th accounting for 80% of the content.

Major REE in all clays: La, Nd, Ce, Pr, Sm and Y;

Leaching with 0.5 M (NH4)2SO4 (1M total exchange cations):

The results of leaching with 0.5 M (NH4)2SO4 (1M total exchange cations) are provided in

Table 8-8, and shown graphically in Figure 8-1.



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Table 8-8 REE extraction levels (as % Extraction) both as individual REE and Total REE, respectively, based on solids analysis (0.5M (NH4)2SO4, 60 min, 22°C, S/L = 1/2, pH ~ 5.4)

REE MC1 MC2 MC3 MC4 MC5

La 73.6 71.1 81.7 3.6 67.5

Ce 17.3 34.6 36.6 29.5 22.7

Dy 90.9 84.8 85.1 0.0 70.9

Er 65.4 69.9 72.1 29.1 57.3

Eu 56.8 67.7 68.8 0.0 79.1

Gd 70.6 55.6 73.2 0.0 41.6

Ho 94.7 98.2 87.1 11.0 70.0

Lu 19.9 52.5 34.4 7.9 17.7

Nd 72.3 68.9 75.2 25.4 70.5

Pr 53.6 48.7 70.5 0.0 68.6

Sm 65.2 63.5 74.9 0.0 68.3

Tb 57.5 60.3 66.1 0.0 45.1

Tm 89.0 66.5 93.9 0.0 79.4

Y 69.4 71.7 87.2 0.0 65.5

Yb 50.8 63.1 82.5 13.7 44.0

Total REE 62.4 63.0 76.1 23.4 59.4

Th 0.0 0.0 0.0 0.0 0.0

U 0.0 0.0 0.0 0.0 0.0

Sc 0.0 0.0 0.0 0.0 0.0

Total REE “in” = sum of all individual REE in the initial clay (i.e. total mass), as detected by

ICP; Total REE “extracted” = the sum of all individual REE in the residue, as detected by ICP;

% E = [(Mass REE)leached/(Mass REE)in clay initially]x100

(Mass REE)leached = (Mass REE) in clay initially – (Mass REE)in final residue



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Figure 8-1 REE extraction levels for (NH4)2SO4 leaching

General comments relating to the leaching with 0.5 M (NH4)2SO4 (1M total exchange cations)

are as follows:

Dry clays are known to absorb water (the characteristic “swelling” phenomenon). However,

the clays in the Tantalus samples appeared to absorb more water compared to previous

published studies with other clays (Moldoveanu & Papanagelakis, 2012; and 2013a). Due to

extreme difficulties in Solid / Liquid (S/L) separation, it was not possible to collect a

representative filtrate sample at the end of the experiments and recover the whole mass of

clays in order quantify the solution loss via water absorption. However, this behavior has likely

been explained by the routine drying (and hence dehydration) of the samples as part of the

Tantanlus sample preparation procedure.

The mass of REE leached is referenced to the final solid residue to avoid uncertainties due to

lixiviant volume changes during leaching due to absorption in clay and/or sampling.

Kinetic studies were not conducted due to the difficulty of systematic sampling and S/L

separating; the leaching tests were conducted for 60 minutes Based on the cited previous

studies, equilibrium is usually reached in less than 15 minutes.

- Leaching with NaCl-based Lixiviants:

The conditions used for the leaching of a selection of the samples are as follows:

22°C, 60 min, S/L = 1/2, initial pH of lixiviant ~ 5, adjusted with 0.1M HCl; the pH adjustment

was necessary in order to avoid potential REE loss via hydrolysis (formation of insoluble

hydroxides).

Based on extraction levels achieved by leaching with 0.5M ammonium sulphate, it was

decided to employ only samples MC1, MC2, MC3 and MC5 for further studies (the clays with

greatest leachability), as M4 demonstrated limited/low extraction.



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Leaching with 1M NaCl (i.e. 1M total exchange monovalent cations available):

The results for REE Extraction during leaching with 1M NaCl are provided in Table 8-9 and

shown graphically in Figure 8-2.

Table 8-9 % REE Extraction during leaching with 1M NaCl

REE MC1 MC2 MC3 MC5

La 56.0 52.4 48.8 47.9

Ce 1.0 0.5 0.0 11.1

Dy 75.6 61.5 48.6 49.1

Er 73.4 53.0 47.6 39.8

Eu 55.4 47.6 48.0 45.1

Gd 60.3 46.0 48.1 40.3

Ho 67.0 70.0 57.7 27.2

Lu 44.3 32.1 12.2 5.1

Nd 49.9 52.2 44.4 44.5

Pr 46.9 43.9 41.3 41.1

Sm 61.3 49.9 50.6 54.1

Tb 47.9 55.7 46.4 37.1

Tm 65.1 73.6 61.1 63.8

Y 55.7 57.1 48.0 48.1

Yb 42.3 48.6 41.5 39.3

Total REE 46.0 44.1 44.0 40.2

Figure 8-2 REE extraction levels for NaCl leaching



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Despite the fact that both 0.5M (NH4)2SO4 and 1M NaCl offer identical initial concentration of

available exchange cations, 1M NaCl achieves lower REE extraction levels. This behavior is

consistent with the hydration energy theory that was postulated during previous published

work (Moldoveanu & Papanagelakis, 2012).

Leaching with Simulated Seawater Solution (SSW):

The results for REE Extraction during leaching with Simulated Seawater Solution (SSW), with

~ 0.48M Na (i.e. ~ 10.8 g/L Na+, 19.4 g/L Cl

-, 2.7 g/L SO4

2-, 1.28 g/L Mg

2+, 0.4 g/L K

+, 0.4 g/L

Ca2-

) are provided in Table 8-10 and shown graphically in Figure 8-3.

Table 8-10 % REE Extraction during leaching with simulated seawater (0.48M Na)

REE MC1 MC2 MC3 MC5

La 52.4 48.0 42.8 46.0

Ce 0.0 0.0 0.0 8.4

Dy 77.7 55.4 42.7 41.8

Er 44.0 45.5 41.6 36.7

Eu 45.4 40.1 41.1 39.3

Gd 50.3 41.2 44.1 37.1

Ho 54.6 61.9 48.2 21.8

Lu 0.0 23.4 5.0 0.0

Nd 46.3 46.1 40.1 40.8

Pr 39.6 37.0 36.6 37.7

Sm 53.1 45.1 46.2 49.9

Tb 48.6 43.0 42.6 32.8

Tm 5.6 56.6 49.3 52.2

Y 50.8 51.8 42.8 45.4

Yb 38.8 41.0 34.4 33.2

Total REE 41.6 39.5 39.1 37.2



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Figure 8-3 REE extraction levels for Simulated Seawater leaching

Based upon these results, simulated seawater (0.48M Na) achieves even lower REE

extraction levels when compared to 1M NaCl (by ~10%).

Two-Stage Leaching Experiments:

In order to investigate a possible increase of REE extraction by multi-stage leaching, a 2-

stage process was applied to sample MC3 (as the material that exhibited the highest

extraction levels). The leached clays were filtered, washed with DI-H2O adjusted to pH 5 as

previously explained, and re-pulped again with fresh lixiviant under identical conditions (i.e.

22°C, 60 min, S/L = 1/2, pH ~5). The utilised lixiviants comprised 0.5M (NH4)2SO4, 1M NaCl

and simulated seawater (0.48M NaCl), respectively.

In order to accelerate the data collection process, the extraction levels are solution-based and

calculated with reference to the final volume. Proper extraction values should be based on

solids. Nevertheless, they are comparable with solution-based ones.

% Etotal = [(Mass REE)leached, total/(Mass REE)in clay initially]x100

(Mass REE)leached,total = [(Mass REE)in final solution1 + [(Mass REE)in final solution2]

The results of the two-stage leaching experiments are provided in Table 8-11.



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Table 8-11 Two-stage leaching for MC3 (22°C, 60 min, S/L = 1/2)

Element 0.5M (NH4)2SO4 1M NaCl SSW

E1 Etot E1 Etot E1 Etot

La 83.6 97.5 48.8 72.0 42.8 56.9

Ce 0.0 0.0 0.0 0.0 0.0 0.0

Dy 80.9 94.7 48.6 70.2 42.7 59.4

Er 86.8 93.0 47.6 66.1 41.6 57.7

Eu 62.1 77.6 48.0 67.0 41.1 51.4

Gd 82.6 96.7 48.1 70.4 44.1 59.4

Ho 75.5 93.2 57.7 80.0 48.2 63.0

Lu 52.3 61.2 12.2 12.2 5.0 5.0

Nd 80.8 94.3 44.4 65.5 40.1 52.6

Pr 75.1 87.1 41.3 60.7 36.6 48.0

Sm 90.6 94.3 50.6 74.5 46.2 61.4

Tb 84.1 98.5 46.4 66.4 42.6 56.1

Tm 53.4 60.9 61.1 77.4 49.3 57.2

Y 77.3 90.5 48.0 69.2 42.8 60.5

Yb 73.2 85.7 41.5 57.2 34.4 46.6

Total REE 76.6 88.8 44.0 64.6 39.1 52.1

As observed in Table 8-11, the two-stage leaching procedure has the ability to significantly

increase overall REE extraction by an additional 10 to 20 units % (depending on the individual

REE and lixiviant used).

General conclusions relating to the testwork completed by the UoT are summarised as

follows:

The samples provided by Tantalus and identified as MC1 through MC5, respectively, have a

content of REO ranging from 0.09 to 0.47 %wt. (as per Table 8-6);

Samples MC1, MC2, MC3 and MC5 exhibit good “ion adsorption”-type behavior( i.e. the

major part of the REE content can be easily and rapidly recovered by simple leaching with

either ammonium sulphate or sodium chloride solutions under ambient conditions) MC3

shows the highest leachability (76% Total REE leached), followed by MC1, MC 2 and MC5,

respectively. MC4 has the lowest REE content and poor leachability (i.e. ~ 24% out of 0.09%

wt. initial TREO), attributed to it comprising weathered bedrock (syenite) rather than clay-

dominant material;

0.5M (NH4)2SO4 offers the best extraction levels (Table 8-8), between 60 and 76 %, whereas

1M NaCl and simulated seawater (0.48M Na) achieve ~20 % units lower extraction levels

(Table 8-9 and Table 8-10, respectively);

Individual REE extraction varies depending on sample type;

The samples exhibit no extraction for U, Th and Sc;

A two-stage leaching process (i.e. leaching of previously leached clays with fresh lixiviant) on

sample MC3 appears to improve the overall REE extraction levels by 10 to 20 units %,

depending on the lixiviant used (Table 8-11).

Following on from the testwork conducted at UoT, the University has recommended the

following course of future testwork:



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Multiple stage leaching tests using dieering strengths of NaCl, (NH4)2SO4 and a mixture of

seawater and (NH4)2SO4;

Sedimentation and filterability testwork on the leached slurries;

Oxalate precipitation tests, including reagent optimisation, kinetic and temperature effects,

and sedimentation and filterability testwork; and

Oxalate calcination testwork, including kinetics and final product purity.

8.3 SRK ES Comments

It should be noted that the mineralogical and metallurgical testwork completed as part of the

Soviet Geological Mission was conducted on samples collected near-surface. For this reason

it is considered likely that the samples were weathered or partially weathered and that may

have resulted in mineralogical and metallurgical differences compared to fresh rock.

Furthermore, the methods used for the metallurgical testwork are considered to be incomplete

and additional testwork was required to conclude their findings.

The contemporary mineralogical and metallurgical investigations, with the focus on the

regolith-hosted ionic adsorption-type REE mineralisation, has identified two distinct REE

mineralisation occurrences, with REEs predominantly occurring in relict minerals in the

ferruginous zone sample, and with REEs predominantly occurring as adsorbed onto clay

minerals in the clay-rich saprolith sample.

The REEs in the ferruginous material responded to physical concentration via the host

minerals, however at this stage no testwork has been undertaken to determine the potential to

extract the REEs from the host minerals. Being “hard rock” hosted minerals, SRK ES expects

that the extraction of the REEs from the ferruginous material will require the complete

breakdown of the host minerals. This is the approach typically required for such REE

occurrences.

Testwork conducted on the saprolith samples has demonstrated that high recoveries can be

obtained for most of the REEs of interest. Further work will be required, and has been

recommended by UoT, to optimize the parameters for leaching, and to develop the next

aspects of a processing flowsheet for these minerals, namely precipitation with a view to

further purification and separation. At this stage, it seems likely that the next major processing

challenge will be to upgrade the REEs from what appears likely to be relatively low

concentrations even after precipitation from the leach solution.

SRK ES believes that the scope and nature of mineralogical and metallurgical testwork

undertaken to date is appropriate for the developmental stage of the project and the

declaration of an Inferred Mineral Resource.

At this stage, SRK ES notes that the TREO grade of two of the samples tested at UoT – MC4

and MC5 – were of the same order of magnitude as the Resource grade (0.08%), however

the grades of the other three samples were somewhat higher than this figure.

In order to track the variability in the solubility of the REEs within the deposit, SRK ES

recommends that a “solubility test” is included as part of any future exploration assay protocol.

Such a test would mirror the procedure used in the UoT work, and enable an estimate of the

soluble (i.e. ion-exchange hosted) REEs present in each sample submitted for assay as part

of the exploration program. Initially SRK ES recommends that parallel tests are conducted,



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one using ammonium sulphate and the other (simulated) sea water; if the results indicate a

robust relationship between the two lixiviants, then future tests could be conducted using sea

water only, at a reduced cost.

Incorporating such a procedure into the exploration programme will provide valuable

information as to the variability in the proportion of REEs in the deposit that are readily

extractible, both across the lateral extent of the orebody, and more particularly, with depth.

9 MINERAL RESOURCE ESTIMATE

9.1 Introduction

SRK has produced Mineral Resource estimates for the regolith material in parts of the

Tantalus project area, namely the Ampasibitika, Befitina, Caldera and Ampasibitika South

prospects. The Ampasibitika prospect resource is based on diamond drilling sampling and the

Befitina, Caldera and Ampasibitika South prospect resources are based on pitting sampling.

Total Rare Earth oxide (TREO) grades quoted in this report relate to the total of all Rare Earth

Oxide (REO) grades including Y2O3. The Heavy Rare Earth oxide (HREO) grades relate to all

REO from Eu to Lu including Y2O3, whilst the Light Rare Earth oxide (LREO) grades account

for all REO from La to Sm. The proportion of TREO that is made up by HREO is denoted by

H/TREO.

The following fields were estimated into the model: TREO%, H/TREO%, Y/TREO%, Ta2O5,

Nb2O5, Sn, Ga, ZrO2, HfO2, ThO2 and U3O8.

9.2 Available Data

Table 9-1 shows the available drilling, pitting and trenching data and returned assays for all

areas explored to date (as of 28th November 2011).

Table 9-1 Available drillhole and pitting data (as of 28th

November 2011)

Prospect Drillholes Planned/

Completed

Drillholes with Assays

Pits Planned/ Completed

Pits with Assays

Trenches Planned/

Completed

Trenches with Assays

Ampasibitika 292 / 277* 150 0 0 0 0

Ambaliha 0 0 205 / 129 0 0 0

Befitina 0 0 400 / 397 149 2 / 2 2

Caldera 39 / 12 0 661 / 335 184 2 / 2 2

Ampasibitika

South 0 0 109 / 107* 66 0 0

Total 331 / 289 150 1438 / 968 398 4 / 4 4

*Remainder cancelled

9.3 Statistical Analysis - Raw Data

Prior to the estimation, a statistical analysis was undertaken in order to identify key

differences in material types, and to define domaining criteria for the estimation. As of the

start of December 2011, Tantalus had completed 277 drillholes in Ampasibitika prospect, with

no holes remaining to be drilled and 15 holes cancelled. Of the 277 completed holes, 150 had

returned assays and 127 had assays outstanding prior to commencement of the Mineral

Resource estimate. The Ambaliha prospect had 129 pits with no assays returned, the Caldera



Page 89

prospect had 335 pits with assays and four trenches with assays, and the Ampasibitika South

prospect had 66 pits with returned assays. To date, no assays have been returned from the

Ambaliha prospect or from the drilling in the Caldera prospect.

Table 9-2 shows the average grades of the estimated key elements and groups of elements

broken down by main weathered lithology per prospect. Due to the close proximity of the

Caldera and Ampasibitika South prospects, these two datasets were combined for the

estimation process.



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Table 9-2 Statistics per weathered lithology

Prospect Lithology Count TREO% H/TREO

%

Y/TREO

%

Sn

(ppm)

Ga

(ppm)

ZrO2

%

HfO2

(ppm)

Ta2O5

(ppm)

Nb2O5

(ppm)

U3O8

(ppm)

ThO2

(ppm)

Ampasibitika LAT 449 0.09 19.16 11.61 10.91 35.28 0.12 26.18 13.13 225.08 11.80 63.49

SAP 270 0.11 21.42 13.10 13.36 32.64 0.13 28.31 13.57 220.65 11.77 60.62

Befitina LAT 646 0.07 17.37 10.90 17.07 48.44 0.15 32.05 17.00 284.17 15.33 77.77

SAP 787 0.09 17.27 10.37 10.69 40.25 0.09 21.02 10.32 171.73 10.98 53.27

Caldera +

Ampasibitika South

LAT 827 0.07 19.45 12.17 9.38 44.40 0.10 22.64 12.32 216.58 9.58 47.94

SAP 1702 0.09 19.94 12.23 8.50 38.01 0.08 18.22 9.95 173.25 8.91 43.68

Prospect Lithology LREO

(ppm)

HREO

(ppm)

La2O3

(ppm)

Ce2O3

(ppm)

Pr2O3

(ppm)

Nd2O3

(ppm)

Sm2O3

(ppm)

Eu2O3

(ppm)

Gd2O3

(ppm)

Tb2O3

(ppm)

Dy2O3

(ppm)

Ho2O3

(ppm)

Er2O3

(ppm)

Tm2O3

(ppm)

Yb2O3

(ppm)

Lu2O3

(ppm)

Y2O3

(ppm)

Ampasibitika LAT 699 178 181 335 36 124 23 3 19 3 18 4 10 2 10 1 109

SAP 834 242 246 346 48 164 30 4 26 4 24 5 14 2 12 2 148

Befitina LAT 573 129 67 438 13 45 9 1 9 2 12 3 9 1 9 1 82

SAP 700 174 190 318 38 130 24 3 19 3 18 4 10 1 9 1 105

Caldera + Ampasibitika

South

LAT 546 128 127 296 25 83 15 2 12 2 13 3 8 1 8 1 80

SAP 695 171 216 260 44 149 27 3 21 3 18 3 9 1 8 1 103



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9.3.1 Scatterplots

Scatterplots were created split by pedolith and saprolith to assess the suitability to domain

these two regolith units separately at each prospect.

TREO% data was plotted against ZrO2%, and Nb2O5 (ppm) for the Ampasibitika prospect.

They both show unclear patterns, with two trends observable in both pedolith and saprolith;

one increasing TREO% and increasing ZrO2% and Nb2O5 (ppm), and another positive

correlation with an increase in both grades simultaneously.

The data for the Befitina and Caldera prospects showed slightly clearer patterns, with the

pedolith mainly producing positive X=Y correlations, and the saprolith showing an increase in

TREO% grade whilst the ZrO2 and Nb2O5 grades remained constant.

9.3.2 Downhole/down-pit Variability

In order to assess the suitability of estimation techniques for the different target areas, the

downhole variability was investigated to assess grade distributions across the pedolith and

saprolith domains. In total, TREO% grades from 10 drillholes from the Ampasibitika prospect,

five pits from the Befitina prospect, and five pits from the Caldera prospect were plotted

downhole to observe for variability patterns.

These plots illustrated varying grade profiles in different holes and pits. The thicknesses of the

pedolith and saprolith vary greatly, along with the grade trends, with some increasing in grade

with depth, others decreasing.

From the evidence shown in these plots, no consistent grade trends were seen across the

pedolith or saprolith units, and therefore estimating the individual units using a conventional

kriging method is deemed appropriate for an Inferred Mineral Resource.

9.4 Geological Modelling and Domaining

In order to honour the differences in grade populations between pedolith and saprolith, the

two units were modelled and estimated separately as continuous surfaces. The mineralisation

was constrained by modelling to within one drillhole / pit distance from the last drillhole / pit on

each section. It was decided not to use TREO grade to constrain the boundaries, due to the

unknown cut-off grades relating to the pedolith and saprolith material at present. Further

metallurgical testwork is being commissioned and will provide supporting evidence to further

domain the material.

The geological logging codes were used to code the drillholes/pits to be either pedolith or

saprolith. In the Ampasibitika prospect, the drillholes all penetrate through the saprolith zone

and so data below the saprolith was omitted from the database prior to analysis. In the

Befitina and Caldera prospects, the pits often finish in saprolith material, as the pit has either

reached the maximum safe working depth, intersected the water table or the material has

become too hard to dig by hand. As a result, the vast majority of pits do not show a

representative thickness of saprolith, which will likely result in an underestimation of the

volume of the regolith. The average depth of the pits in the Befitina and Caldera prospects is

7 m, compared to the average intersected thickness of the regolith in the drilling of in excess

of 15 m, approximately 13.5 m. Therefore, there is large potential to add additional tonnage to

the resource with the addition of window sampling or drilling data in the pitted prospect areas.



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9.4.1 Gridded Surfaces

In order to accurately model the thickness of the pedolith and saprolith, three gridded

surfaces, topography, pedolith and saprolith, were created for each prospect. The gridding

process is described below:

Sample data (drillhole / pit) were coded manually downhole before loading into

Datamine Studio 3 to include a pedolith and a saprolith code. Each hole/pit thus

contained a thickness of pedolith and saprolith (some drillholes / pits did not contain

logged pedolith or saprolith, in which case the thicknesses were set to 0 m);

For the Ampasibitika prospect, the drillholes are inclined between 45⁰ and 90⁰ to

intercept the bedrock mineralisation as close to perpendicular as possible. In order to

produce the gridded surfaces, the collar points, pedolith points, and the saprolith

points are all assumed to contain the same X and Y values, therefore the downhole

thicknesses were converted into vertical thickness. This was achieved by calculating

the SIN of the dip of the drillhole multiplied by the depth of the sample (both the

FROM and TO values in the drillhole were converted). This method adjusts the

location of the drillhole in 3D space, however, this adjustment is offset by the higher

resolution that a gridded surface can create. In addition, the accuracy of the

topographic surface along with the collar coordinates is low therefore the X and Y

adjustments are not material;

The topographic points from the Fugro topographic survey data were used along with

the collar points in order to estimate Z values into a 2D block model;

The thicknesses of the pedolith and saprolith were then estimated into the model

using the drillhole/pit data;

The thicknesses of pedolith was deducted from each Z coordinate estimated from

topographic data (and each Z collar coordinate in the drillhole/pit), to produce a

pedolith Z coordinate, and then the saprolith thickness deducted from this point to

give a saprolith Z coordinate; and

The Z coordinates were then used to produce three individual surfaces, which do not

overlap each other due to using the same X and Y coordinates for each point.

9.4.2 Chosen Domains

After wire-framing, SRK outlined two different model zones (domains) per target area, namely

Zone 1 for pedolith and Zone 2 for saprolith.

9.5 Statistical Analysis - Domained Data

Prior to undertaking the interpolation, a statistical study was undertaken on the geological

domains to determine their suitability for purpose and to confirm that the appropriate

estimation domains have been generated.

9.5.1 Compositing

The estimation process assumed an equivalent weighting per composite. It was therefore

necessary to discard or ignore remnant composite intervals that were generated in the

downhole compositing process to avoid a bias in the estimation. In the case of the Befitina,

Caldera and Ampasibitika South prospects, the vast majority of samples were either 0.5 m or

1 m in length, and so 1 m composites were generated, with samples < 0.5 m discarded. For



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the diamond drilling at the Ampasibitika prospect, different sample lengths were generated

depending on sample selection. Therefore, the file was composited to 2 m and all samples

less than 1 m thick were discarded; this equated to less than 2% of samples.

9.5.2 Domain Histograms

Histograms of the estimation grade fields were created for each zone to check the domaining

was appropriate; the TREO histograms are shown below in Figure 9-5. The TREO histograms

show positive skew in each of the zones, representing the patchy nature of the high grade

TREO mineralisation, with high grade outliers amongst a low grade background.



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Figure 9-1 TREO% histograms by zone

9.5.3 High Grade Capping

Due to the presence of high-grade tails on many of the histograms shown above, high grade

capping was introduced to reduce the influence of very high grades which may belong to

smaller domains.

9.5.4 Domain Statistics

Table 9-3 to Table 9-5 shows the domain statistics for all the estimated zones within the

Ampasibitika prospect: Zone 1 Ampasibitika prospect: Zone 2

Befitina prospect: Zone 1 Befitina prospect: Zone 2

Caldera prospect+5: Zone 1 Caldera prospect+5: Zone 2



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Tantalus project. The %DIFF column shows the difference between the raw drillhole data

statistics and the de-clustered composite statistics. The larger %DIFF values generally relate

to where high grade capping has had more significant influence. The coefficient of variation

(CoV = Stdev/Mean) is an indicator of the variability of the grades within each zone; with a

CoV of less than one representing a well-domained zone with relatively homogenous grade.

Very few of the estimated fields within the domains showed a CoV of greater than one. The

fields affected were restricted to Ta2O5 and Nb2O5, which show more variability than the other

estimated fields. SRK does not believe this has made a material impact to the estimate.

Table 9-3 Domain Statistics for the Ampasibitika prospect

Zone Field No. Samps Min Max Mean Variance Stdev CoV %Diff

1 TREO% 429 0.02 0.30 0.09 0.003 0.05 0.62 1.18

1 H/TREO% 429 6.11 39.01 19.10 21.479 4.63 0.24 0.28

1 Y/TREO% 429 3.11 25.34 11.56 9.341 3.06 0.26 0.46

1 Sn 429 2.00 50.00 10.15 72.731 8.53 0.84 7.49

1 Ga 429 14.00 65.00 35.52 60.311 7.77 0.22 0.67

1 ZrO2% 429 0.02 0.50 0.11 0.010 0.10 0.90 9.79

1 HfO2 429 5.00 100.00 23.87 388.757 19.72 0.83 9.68

1 Ta2O5 429 1.00 100.00 12.40 267.582 16.36 1.32 5.90

1 Nb2O5 429 22.00 1000.00 206.19 46108.138 214.73 1.04 9.16

1 U3O8 429 2.00 50.00 11.25 83.311 9.13 0.81 4.89

1 ThO2 429 8.00 216.00 53.59 1083.658 32.92 0.61 18.47

2 TREO% 228 0.02 0.30 0.10 0.004 0.07 0.64 3.58

2 H/TREO% 228 6.00 36.96 21.40 24.508 4.95 0.23 0.10

2 Y/TREO% 228 4.00 24.97 13.09 10.961 3.31 0.25 0.08

2 Sn 228 1.00 50.00 11.55 120.826 10.99 0.95 15.69

2 Ga 228 13.99 73.00 32.81 64.607 8.04 0.24 0.53

2 ZrO2% 228 0.02 0.50 0.11 0.012 0.11 1.00 14.82

2 HfO2 228 4.00 100.00 24.20 504.070 22.45 0.93 16.96

2 Ta2O5 228 1.00 100.00 12.43 266.766 16.33 1.31 9.15

2 Nb2O5 228 15.27 1000.00 200.48 42142.843 205.29 1.02 10.06

2 U3O8 228 1.00 50.00 11.18 80.620 8.98 0.80 5.32

2 ThO2 228 5.00 225.00 53.20 1286.251 35.86 0.67 13.96



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Table 9-4 Domain Statistics for the Befitina prospect

Zone Field No.

Samps Min Max Mean Variance Stdev CoV %Diff

1 TREO% 479 0.007 0.3 0.07 0.003 0.05 0.73 1.74

1 H/TREO% 479 4 45 17.41 60.94 7.81 0.45 0.27

1 Y/TREO% 479 2 30 10.92 28.40 5.33 0.49 0.23

1 Sn 479 1 75 16.08 186.97 13.67 0.85 6.19

1 Ga 479 9 86 48.26 198.90 14.10 0.29 0.37

1 ZrO2% 479 0.024 1 0.14 0.02 0.13 0.93 2.04

1 HfO2 479 5 150 31.16 648.70 25.47 0.82 2.87

1 Ta2O5 479 1 75 16.09 265.58 16.30 1.01 5.64

1 Nb2O5 479 9 1500 275.59 85,250 292 1.06 3.11

1 U3O8 479 2 75 14.87 144.99 12.04 0.81 3.12

1 ThO2 479 8 300 74.47 3,301 57 0.77 4.43

2 TREO% 612 0.006 0.3 0.09 0.00 0.07 0.80 0.05

2 H/TREO% 612 1 50 17.44 65.41 8.09 0.46 0.97

2 Y/TREO% 612 1 33 10.50 29.31 5.41 0.52 1.20

2 Sn 612 1 75 10.72 95.95 9.80 0.91 0.31

2 Ga 612 3 81.3 40.26 145.11 12.05 0.30 0.02

2 ZrO2% 612 0.008 0.5 0.09 0.01 0.08 0.86 0.39

2 HfO2 612 2 100 20.88 266.38 16.32 0.78 0.69

2 Ta2O5 612 1 75 10.39 159.45 12.63 1.22 0.67

2 Nb2O5 612 2 1000 172.48 45,412 213.1 1.24 0.44

2 U3O8 612 1 50 10.88 70.52 8.40 0.77 0.88

2 ThO2 612 4 200 52.83 1,410 37.55 0.71 0.82



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Table 9-5 Domain Statistics for the Caldera and Ampasibitika South prospects

Zone Field No. Samps Min Max Mean Variance Stdev CoV %Diff

1 TREO% 585 0.011 0.3 0.07 0.003 0.05 0.74 1.11

1 H/TREO% 585 5 58 19.50 52.78 7.27 0.37 0.25

1 Y/TREO% 585 3 38 12.20 24.70 4.97 0.41 0.27

1 Sn 585 1 30 9.05 20.58 4.54 0.50 3.70

1 Ga 585 14 80 44.40 138 11.74 0.26 0.01

1 ZrO2% 585 0.029 0.3 0.10 0.002 0.05 0.48 6.40

1 HfO2 585 7 60 21.25 76.77 8.76 0.41 6.56

1 Ta2O5 585 1 40 11.77 61.44 7.84 0.67 4.73

1 Nb2O5 585 12 750 210.69 20,593 143.5 0.68 2.79

1 U3O8 585 2 25 9.22 15.26 3.91 0.42 3.98

1 ThO2 585 13.5 150 47.64 387.7 19.69 0.41 0.63

2 TREO% 1015 0.0095 0.3 0.09 0.004 0.06 0.74 1.31

2 H/TREO% 1015 4 47 20.05 40.04 6.33 0.32 0.58

2 Y/TREO% 1015 2 31.5 12.30 18.65 4.32 0.35 0.55

2 Sn 1015 1 30 8.42 23.88 4.89 0.58 0.89

2 Ga 1015 10 96 38.12 138.3 11.76 0.31 0.27

2 ZrO2% 1015 0.0225 0.3 0.08 0.002 0.05 0.60 2.82

2 HfO2 1015 5 50 17.62 72.29 8.50 0.48 3.41

2 Ta2O5 1015 1 40 9.77 64.18 8.01 0.82 1.76

2 Nb2O5 1015 6 750 171.47 22,385 149.62 0.87 1.04

2 U3O8 1015 1 25 8.79 19.98 4.47 0.51 1.35

2 ThO2 1015 6 150 43.34 459.6 21.44 0.49 0.79

9.6 Density Analysis

In order to report tonnages from the estimated block models, a density value needed to be

applied to every reported block. For mineral resource estimation, it is necessary to work with

the dry density, as this represents the material which has been assayed. Due to the pitting

measurements being taken from wet samples, it was necessary to perform tests on a

selection of samples from the Befitina and Caldera prospects to calculate the moisture

content. Initial measurements determined an average a moisture content of 30% which had

been subtracted from the wet tonnages in order to calculate the dry tonnages reported in

Mineral Resource Statement.

For the Befitina prospect, the average wet density values of 1.49 and 1.47 for pedolith and

saprolith respectively were calculated from field measurement averages. For the Caldera and

Ampasibitika South prospects, an average wet density value of 1.69 for pedolith and saprolith

was calculated. The Ampasibitika prospect comprises only diamond core drilling sampling,

from which density measurements were only collected from solid core. Weathered core was

not able to be used for density determinations and therefore the Ampasibitika prospect

regolith has not been represented by density measurements to date. As a result, average



Page 98

values from the other target areas were used to estimate a density value for pedolith and

saprolith at the Ampasibitika prospect. SRK considers this reasonable for an Inferred Mineral

Resource. The density values utilised for each area are shown in Table 9-6.

Table 9-6 Density values used for tonnage reporting

Target Material Average Wet Density Moisture Content Average Dry Density

Befitina

PED 1.49 30% 1.04

SAP 1.47 30% 1.03

Caldera+

Ampasibitika

South

PED 1.69 30% 1.18

SAP 1.69 30% 1.18

Average Ampasibitika

PED 1.59 30% 1.11

SAP 1.58 30% 1.11

9.7 Geostatistical study

9.7.1 Variography

The composited drillhole database, coded by the modelled domains, was imported into

ISATIS software for the geostatistical analysis. Variography was attempted on all six regolith

zones separately, producing moderate to poor quality variograms. The results from the

variography are shown in Figure 9-2 Downhole and omnidirectional variograms were created

for each dataset to fix the nugget effect and to check for along strike and down-dip continuity.

As a result of the variography, ordinary kriging (OK) was deemed the most appropriate

interpolation technique for TREO%. The additional variables were estimated by Inverse

distance weighting cubed (IDW3).

Ampasibitika prospect: Zone 1 Downhole

Variogram

Ampasibitika prospect: Zone 1 Omnidirectional

Variogram

Ampasibitika prospect: Zone 2 Downhole

Variogram

Ampasibitika prospect: Zone 2 Omnidirectional

Variogram



Page 99

Target 3: Zone 1 Downhole Variogram Target 3: Zone 1 Omnidirectional Variogram

Target 3: Zone 2 Downhole Variogram Target 3: Zone 2 Omnidirectional Variogram

Caldera prospect+5: Zone 1 Downhole

Variogram

Caldera prospect+5: Zone 1 Omnidirectional

Variogram



Page 100

Caldera prospect+5: Zone 2 Downhole

Variogram

Caldera prospect+5: Zone 2 Omnidirectional

Variogram

Figure 9-2 TREO Variograms


20130121_ES7520_SRKES_Tantalus CPR_Final_English.docx Page 101

Table 9-7 Variography Results

Zone Nugget

Structure 1 - Range

Sill

Structure 2 - Range

Sill Variance Relative

Nugget (%) Along Strike Down Dip Down hole Along Strike Down-Dip Down hole

Ampasibitika Zone 1 0.0002 125 125 9 0.0012 310 310 9 0.001 0.002 6

Ampasibitika Zone 2 0.0001 25 25 5 0.0027 300 300 5 0.001 0.004 3

Befitina Zone 1 0.0001 115 115 10 0.0014 300 300 10 0.000 0.002 7

Befitina Zone 2 0.0007 300 300 10 0.0029 750 750 10 0.001 0.005 14

Caldera + Ampasibitika South Zone 1 0.0001 200 200 5 0.0017 1000 1000 5 0.001 0.003 4

Caldera + Ampasibitika South Zone 2 0.0040 125 125 15 0.0040 300 300 15 0.002 0.010 39



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9.8 Block Model Frameworks

An empty block model was generated in Datamine using the mineralisation and lithology

wireframes with blocks of 50 mY by 50 mX by 1 mZ dimension. These block dimensions

approximate half the average drillhole spacing along strike (50 m) and sensible height to

define the thickness of the mineralisation (1 m). A block width of 50 m was chosen due to the

overall dimensions of the mineralisation. Table 9-8 summarises the block model parameters.

Table 9-8 Block Model Framework

Ampasibitika prospect

Axis Origin Number of Blocks Block Size(m)

X 194100 120 50

Y 8471200 90 50

Z -10 320 1

Befitina prospect


X 188800 100 50

Y 8468400 100 50

Z 100 450 1

Caldera and Ampasibitika South prospects


X 194000 120 50

Y 8468500 105 50

Z 0 400 1

Regular sub-blocks down to 5 m by 5 m by 0.5 m were used to refine boundaries between

mineralisation and waste rock units. However, these sub-blocks were not individually

estimated and have the same value as their parent block.

9.9 Grade Interpolation

Grade has been estimated into the block model with properties as described in Table 9-8. The

variography results allowed for TREO% grade estimates for each of the modelled domains to

be calculated using OK, applying hard boundaries for the pedolith and saprolith estimation

domains. The additional fields H/TREO%, Y/TREO%, Ta2O5, Nb2O5, Sn, Ga, ZrO2, HfO2, ThO2

and U3O8 were all estimated into the model using inverse-distanced cubed (IDW3)

interpolation.

9.9.1 Search Ellipse Parameters

In the interpolation, three different grade estimation runs with specific sample criteria were

undertaken. The first run used the parameters determined by the variogram ranges

considered the optimum set of interpolation parameters. The second run doubled the

dimensions of the search ellipse. The third run multiplied the original search ellipse by a factor

of ten. The third run was designed to estimate any blocks not estimated in runs one and two.

Table 9-9 shows the search ellipse parameters used for the three estimation runs from the

estimated models.



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Table 9-9 Search ellipse parameters

Prospect Zone Run

Along

Strike Radii (m)

Down

Dip Radii (m)

Across

Strike Radii (m)

Min Samples

Max Samples

Max

Samples per

DH/Pit

Ampasibitika

1

1 200 200 10 3 30 5

2 400 400 20 3 30 5

3 2000 2000 100 3 30 5

2

1 400 400 10 3 30 5

2 800 800 20 3 30 5

3 4000 4000 100 3 30 5

Befitina

1

1 300 300 10 3 30 5

2 600 600 20 3 30 5

3 3000 3000 100 3 30 5

2

1 750 750 10 3 30 5

2 1500 1500 20 3 30 5

3 7500 7500 100 3 30 5

Caldera +

Ampasibitika South

1

1 800 800 10 3 30 5

2 1600 1600 20 3 30 5

3 8000 8000 100 3 30 5

2

1 450 450 10 3 30 5

2 900 900 20 3 30 5

3 4500 4500 100 3 30 5

9.9.2 Dynamic Anisotropy

Due to the changing direction of the bedrock mineralisation, and along with the regolith profile,

dynamic anisotropy was used to align the search ellipses with the mineralisation.

Dynamic anisotropy is a function in Datamine Studio 3 which enables the interpolation to use

true dip and dip direction values calculated from the mineralisation wireframes. It is useful for

deposits exhibiting folding, or changes in dip and strike within estimation domains. Each block

is assigned a dip and dip direction value, which is estimated into the model prior to grade

estimation using the geometry of the mineralisation wireframes. The dip and dip direction are

then used to align the search ellipse for each block estimate. the anisotropy study showed

that the regolith mineralisation dips between 0-30⁰ towards the east and north. All three target

areas use this form of dynamic anisotropy to align the search ellipses.

The block model has been validated using the following techniques:

visual inspection of block grades in plan and section and comparison with drillhole

grades;

comparison of global mean block grades and composite sample grades; and

validation through sectional slices.



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9.9.3 Visual Validation

Figure 9-3 to Figure 9-5 show examples of the visual validation checks between block

%TREO grades and the input composite %TREO grade. It is difficult to see whether the

grades follow the strike and dip of the mineralisation showing that the search ellipse

orientation has been used appropriately due to the thin nature of the mineralisation.

Figure 9-3 Ampasibitika prospect cross-section showing visual validation of TREO% block grades and TREO% sample grades



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Figure 9-4 Befitina prospect cross-section showing visual validation of TREO% block grades and TREO% sample grades

Figure 9-5 Caldera and Ampasibitika South prospects cross-section showing visual validation of TREO% block grades and TREO% sample grades



Page 106

9.9.4 Global mean grade comparison

Table 9-10 shows a comparison of the global block mean grades with the global sample

means grades for TREO%, H/TREO%, Y/TREO%, Ta2O5, Nb2O5, Sn, Ga, ZrO2, HfO2, ThO2

and U3O8.

Overall, SRK is confident that the interpolated grades are a reasonable reflection of the

available sample data with the key grade fields being well within acceptable limits.

Table 9-10 Comparison of block and sample mean grades

Ampasibitika prospect

Zone Field Block Mean Grade Composite Mean Grade % Difference

1 TREO% 0.09 0.09 1.18

1 H_TREO% 18.82 19.10 0.28

1 Y_TREO% 11.40 11.56 0.46

1 Sn_PPM 10.47 10.15 7.49

1 Ga_PPM 36.31 35.52 0.67

1 ZrO2% 0.12 0.11 9.79

1 HFO2 25.19 23.87 9.68

1 TA2O5 13.63 12.40 5.90

1 NB2O5 228.32 206.19 9.16

1 U3O8 11.94 11.25 4.89

1 THO2 59.78 53.59 18.47

2 TREO% 0.10 0.10 3.58

2 H_TREO% 21.05 21.40 0.10

2 Y_TREO% 12.83 13.09 0.08

2 SN_PPM 10.96 11.55 15.69

2 GA_PPM 32.56 32.81 0.53

2 ZRO2% 0.10 0.11 14.82

2 HFO2 23.21 24.20 16.96

2 TA2O5 11.61 12.43 9.15

2 NB2O5 193.90 200.48 10.06

2 U3O8 10.63 11.18 5.32

2 THO2 54.46 53.20 13.96



Page 107

Befitina prospect


1 TREO% 0.064 0.07 7.5

1 H_TREO% 17.645 17.41 1.3

1 Y_TREO% 11.037 10.92 1.0

1 SN_PPM 14.398 16.08 11.7

1 GA_PPM 47.096 48.26 2.5

1 ZRO2% 0.129 0.14 11.3

1 HFO2 28.363 31.16 9.8

1 TA2O5 14.360 16.09 12.0

1 NB2O5 243.939 275.59 13.0

1 U3O8 13.392 14.87 11.0

1 THO2 67.551 74.47 10.2

2 TREO% 0.087 0.09 0.9

2 H_TREO% 17.629 17.44 1.1

2 Y_TREO% 10.574 10.50 0.7

2 SN_PPM 10.330 10.72 3.8

2 GA_PPM 39.822 40.26 1.1

2 ZRO2% 0.089 0.09 3.7

2 HFO2 20.187 20.88 3.4

2 TA2O5 9.835 10.39 5.6

2 NB2O5 163.869 172.48 5.3

2 U3O8 10.443 10.88 4.2

2 THO2 50.840 52.83 3.9



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Caldera and Ampasibitika prospects


1 TREO% 0.07 0.07 2.7

1 H_TREO% 19.85 19.50 1.8

1 Y_TREO% 12.41 12.20 1.7

1 SN_PPM 8.76 9.05 3.3

1 GA_PPM 44.66 44.40 0.6

1 ZRO2% 0.10 0.10 0.0

1 HFO2 21.14 21.25 0.5

1 TA2O5 12.17 11.77 3.3

1 NB2O5 215.12 210.69 2.1

1 U3O8 8.97 9.22 2.8

1 THO2 46.22 47.64 3.1

2 TREO% 0.08 0.09 1.1

2 H_TREO% 20.26 20.05 1.0

2 Y_TREO% 12.40 12.30 0.8

2 SN_PPM 8.00 8.42 5.3

2 GA_PPM 37.70 38.12 1.1

2 ZRO2% 0.08 0.08 0.1

2 HFO2 17.43 17.62 1.0

2 TA2O5 9.69 9.77 0.8

2 NB2O5 169.53 171.47 1.1

2 U3O8 8.53 8.79 3.1

2 THO2 41.79 43.34 3.7

9.9.5 Validation slices

As part of the validation process, the block model and input samples that fall within defined

sectional or elevation criteria were compared and the results displayed graphically to check

for visual discrepancies between grades.

Whilst this process does not truly replicate the samples used in the estimation of each block,

the process of sectional validation quickly highlights areas of concern within the model and

enables a more thorough and quantifiable check to be undertaken in specific areas of the

model. Each graph also shows the number of samples available within each sectional

wireframe. This provides information relating to the support of the blocks in the model. Only

those blocks estimated within search volume one (TREO_SV = 1) were compared, as this

represents the estimated data using the optimum sample criteria.

Figure 9-10 to Figure 9-15 show the section validation slices by northing for TREO%

composite data against block data per estimation domain (Zone). As expected, the block

model grades (red line) are smoothed through the composite grades (blue line), with the block

model reconciling well against the input sample file.



Page 109

Figure 9-6 Ampasibitika prospect Zone 1 northing validation plot – TREO%

Figure 9-7 Ampasibitika prospect Zone 2 northing validation plot – TREO%



Page 110

Figure 9-8 Befitina prospect Zone 1 northing validation plot – TREO%

Figure 9-9 Befitina prospect Zone 2 northing validation plot – TREO%



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Figure 9-10 Caldera and Ampasibitika South Zone 1 easting validation plot – TREO%

Figure 9-11 Caldera and Ampasibitika South Zone 2 easting validation plot – TREO%



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9.10 Mineral Resource Classification

The definitions given in the following section are taken from the 2004 JORC Code, and SRK‟s

classification remains unchanged in the light of the 2012 edition of the JORC Code which has

been published since the estimate was made.

9.10.1 Mineral Resource Definitions

A 'Mineral Resource' is a concentration or occurrence of material of intrinsic economic interest

in or on the Earth's crust in such form, quality and quantity that there are reasonable

prospects for eventual economic extraction. The location, quantity, grade, geological

characteristics and continuity of a Mineral Resource are known, estimated or interpreted from

specific geological evidence and knowledge. Mineral Resources are sub-divided, in order of

increasing geological confidence, into Inferred, Indicated and Measured categories.

Portions of a deposit that do not have reasonable prospects for eventual economic extraction

must not be included in a Mineral Resource.

The term 'Mineral Resource' covers mineralisation, including dumps and tailings, which has

been identified and estimated through exploration and sampling and within which Ore

Reserves may be defined by the consideration and application of the Modifying Factors.

The term 'reasonable prospects for eventual economic extraction' implies a judgement (albeit

preliminary) by the Competent Person in respect of the technical and economic factors likely

to influence the prospect of economic extraction, including the approximate mining

parameters. An 'Inferred Mineral Resource' is that part of a Mineral Resource for which

tonnage, grade and mineral content can be estimated with a low level of confidence. It is

inferred from geological evidence and assumed but not verified geological and/or grade

continuity. It is based on information gathered through appropriate techniques from locations

such as outcrops, trenches, pits, workings and drill holes which may be limited or of uncertain

quality and reliability.

An 'Indicated Mineral Resource' is that part of a Mineral Resource for which tonnage,

densities, shape, physical characteristics, grade and mineral content can be estimated with a

reasonable level of confidence. It is based on exploration, sampling and testing information

gathered through appropriate techniques from locations such as outcrops, trenches, pits,

workings and drill holes. The locations are too widely or inappropriately spaced to confirm

geological and/or grade continuity but are spaced closely enough for continuity to be

assumed.

A 'Measured Mineral Resource' is that part of a Mineral Resource for which tonnage,

densities, shape, physical characteristics, grade and mineral content can be estimated with a

high level of confidence. It is based on detailed and reliable exploration, sampling and testing

information gathered through appropriate techniques from locations such as outcrops,

trenches, pits, workings and drill holes. The locations are spaced closely enough to confirm

geological and grade continuity.



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9.11 Classification applied to the Tantalus Deposit

9.11.1 Introduction

To classify the Tantalus deposit, the following key indicators were used:

Geological complexity;

Quality of data used in the estimation;

QAQC, density analysis;

Results of the geostatistical analysis;

Variography;

QKNA results; and

Quality of the estimated block model.

9.11.2 Geological Complexity

The complexity of the regolith material geometry is low, with a layered sequence visible in the

majority of holes and pits, from pedolith through saprolith to bedrock. The TREO grades

appear to have been mobilised down slope in certain areas of the Ampasibitika prospect,

resulting in material not lying directly above the bedrock mineralisation often containing

elevated grades.

The continuity of thickness may be oversimplified in the current model, which is based on

gridded point data whose spacing is wide relative to topographic undulations in the resource

area. The topographic undulations have amplitude similar to or greater than the thickness of

the regolith and therefore may affect the actual regolith layer thickness more than the gridded

sample locations can measure.

A series of close spaced infill pits or window samples will be required to test the continuity of

regolith layer thickness and the influence of the topographic surface on the thickness of

pedolith and saprolith layers and this should be completed before any Indicated Mineral

Resources are considered.

9.11.3 Quality of the Data used in the Estimation

As discussed previously, SRK has highlighted many aspects of the exploration programme

which could be introducing potential errors into the estimate. The resolution of the topographic

survey, the accuracy of the collar surveys, the lack of downhole surveying, the sample

selection procedure and the lack of certified reference material in the QAQC process may all

be contributing to errors in the estimate.

Density and moisture content data should be gathered in the Ampasibitika prospect area by

digging a number of pits in representative locations.

9.11.4 Results of the Geostatistical Analysis

Preliminary geostatistical analysis produced moderate to poor omnidirectional variograms for

the pedolith and saprolith at each prospect separately. With additional data, more robust

variograms should be able to be modelled.

9.11.5 Quality of the Estimated Block Model



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Due to the long variogram ranges observed in the regolith mineralisation, the estimate worked

efficiently and the grades reconcile well against the composite data.

9.11.6 Results of Classification

The regolith material in the Tantalus project area has been classified as containing Inferred

Mineral Resources. Inferred Mineral Resources have been assigned to all blocks estimated to

within a distance equal to one drillhole or one pit grid spacing beyond the assayed holes pits

on each section. Figure 9-12 to Figure 9-14 show the Ampasibitika, Befitina, Caldera and

Ampasibitika South prospects regolith mineralisation classified as Inferred in red and an

additional area which is widely sampled at a wider spacing and which SRK has not yet

included in resource in pink. Outside of these coloured areas, there remains good exploration

potential.

Figure 9-12 Ampasibitika prospect regolith mineralisation



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Figure 9-13 Befitina prospect regolith mineralisation



Page 116

Figure 9-14 Caldera and Ampasibitika prospects regolith mineralisation

9.12 Mineral Resource Statement

The Mineral Resource Statement generated by SRK has been restricted to regolith material

and further restricted to a boundary drawn around areas which are well covered by assayed

drillholes and pits. SRK considers the entire Inferred Mineral Resource to have reasonable

prospect for eventual economic extraction above a 0% TREO cut-grade, assuming a blended

feed will be appropriate. Further studies will be required should any mining or stockpiling

selectivity be required.

Table 9-11 and Table 9-12 show the Mineral Resource Statement for the Tantalus project.

The quantity and grade of reported Inferred Mineral Resources in this estimation are, by

definition, uncertain in nature and there has been insufficient exploration to define these as an

Indicated or Measured Mineral Resources; and it is uncertain if further exploration will result in

upgrading them to an Indicated or Measured Mineral Resource category.



Page 117

Table 9-11 Mineral Resource Statement Part 1

Prospect Resource Category

Material Dry Tonnes

(Mt) TREO

(%) H/TREO (%)

ZrO2

(%) Ta2O5 (ppm)

Nb2O5 (ppm)

U3O8 (ppm)

ThO2 (ppm)

Sn (ppm)

Ga (ppm)

Ampasibitika Inferred

Pedolith 10 0.09 19 0.12 14 228 12 60 10 36

Saprolith 6 0.10 21 0.10 12 194 11 54 11 33

Sub-Total 17 0.09 20 0.11 13 215 11 58 11 35

Befitina Inferred

Pedolith 13 0.06 18 0.13 14 244 13 68 14 47

Saprolith 19 0.09 18 0.09 10 164 10 51 10 40

Sub-Total 32 0.08 18 0.11 12 197 12 58 12 43

Caldera + Ampasibitika

South Inferred

Pedolith 29 0.07 21 0.10 12 215 10 49 9 44

Saprolith 53 0.08 20 0.08 10 169 9 44 8 37

Sub-Total 81 0.08 20 0.08 11 186 9 46 9 40

Sub-Total Inferred Pedolith 52 0.07 19 0.11 13 225 11 56 11 43

Saprolith 78 0.09 20 0.08 10 170 9 46 9 37

Total Inferred TOTAL 130 0.08 20 0.09 11 192 10 50 10 40

Table 9-12 Mineral Resource Statement Part 2: Individual REO Grades

La2o3 Ce2O3 Pr2O3 Nd2O3 Sm2O3 Eu2O3 Gd2O3 Tb2O3 Dy2O3 Ho2O3 Er2O3 Tm2O3 Yb2O3 Lu2O3 Y2O3

Area Material (ppm) (ppm) (ppm) (ppm) (ppm) (ppm) (ppm) (ppm) (ppm) (ppm) (ppm) (ppm) (ppm) (ppm) (ppm)

Laterite 175 330 35 120 22 3 18 3 18 4 10 2 10 1 105

Saprolite 240 340 45 160 30 4 26 4 24 5 14 2 12 2 145

Sub-Total 200 335 40 135 26 3 22 3 20 4 12 2 10 1 120

Laterite 65 440 15 45 10 1 10 2 12 3 10 1 10 1 80

Saprolite 185 310 35 125 24 3 18 3 18 4 10 1 8 1 100

Sub-Total 130 375 25 90 16 2 14 3 16 4 10 1 8 1 95

Laterite 120 285 25 80 14 2 12 2 12 3 8 1 8 1 75

Saprolite 210 250 40 145 26 3 20 3 18 3 8 1 8 1 100

Sub-Total 175 270 35 120 22 3 16 3 16 3 8 1 8 1 90

Laterite 120 335 25 80 14 2 12 2 14 3 8 1 8 1 85

Saprolite 205 270 40 140 26 3 20 3 18 3 10 1 8 1 105

Total Total 170 305 35 115 20 3 16 3 16 3 10 1 8 1 95

T1 Ampasibitika

T3 Befitina

T4+T5 Caldera + Ampasibitika South

Sub-Total

Tantalus CPR – Technical Appendix C


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9.13 Grade-Tonnage Curves

In order to show the sensitivity of the estimated regolith block models to changing cut-off

grades, grade-tonnage curves were plotted as shown in Figure 9-19 to Figure 9-21.

Figure 9-15 Ampasibitika prospect TREO% grade-tonnage curve

Figure 9-16 Befitina prospect TREO% grade-tonnage curve



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Figure 9-17 Caldera and Ampasibitika South TREO% grade-tonnage curve

9.14 Regolith Exploration Prospects

It is common practice for a company to comment on and discuss its exploration in terms of

target size and type. In accordance with Clause 18.1 of the JORC Code however, SRK notes

that such information relating to Exploration Prospects (“EPs”) must be expressed so that it

cannot be misrepresented or misconstrued as an estimate of Mineral Resources or Ore

Reserves. Furthermore SRK recognises that: the terms Mineral Resource(s) or Ore

Reserve(s) must not be used in this context; and that any statement referring to potential

quantity and grade of the target must be expressed as ranges and must include (1) a detailed

explanation of the basis for the statement, and (2) a proximate statement.

ETs are stated in accordance with Section 18 of the JORC Code and for the avoidance of

doubt, SRK notes:

The potential quantity and grade as reported in respect of the ETs are conceptual in

nature;

There has been insufficient exploration to define a Mineral Resource; and

It is uncertain if further exploration (as planned by the Company) will result in the

determination of a Mineral Resource.

The resource is currently confined to 200 m by 200 m, and locally 100 m by 200 m at the

Befitina, Caldera and Ampasibitika South prospects, and 50 m by 100 m at the Ampasibitika

prospect, sample grid areas where sample assay results have been returned. The resource

will increase as pending assay results are received in the short term, as 200 m by 200 m

pitting grids extend to cover the remaining parts of the prospects in the medium term and as

sampling coverage extends across the rest of the Ambohimirahavavy igneous complex in the

longer term.

SRK recommends identifying those pits which did not encounter bedrock and supplementing

these with full intersections with twin window samples or drill holes, this will add to the model

thickness and increase the resource accordingly.



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Providing the window sampling or drilling is implemented more rigorously to achieve full

intersections through the regolith and also providing the 200 m by 200 m grid expands to

cover the entire Ambohimirahavavy igneous complex, SRK considers the regolith ET in the

medium term is four to seven times the current resource with similar grades.



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10 DEVELOPMENT STRATEGY AND EXPLORATION PROGRAMME

10.1 Introduction

Tantalus has completed a significant amount of pitting, drilling and sampling in various parts

of the project area (namely the Ampasibitika, Ambaliha, Befitina, Caldera and Ampasibitika

South prospects) that has resulted in a JORC-compliant Inferred Mineral Resource of some of

the identified regolith-hosted REE mineralisation.

SRK ES understands that Tantalus intends to continue its focus on the exploration and

delineation of the regolith-hosted REE mineralisation in order to expand the existing Mineral

Resource, improve its classification and work towards a feasibility study for the project as a

whole. Mine development and production are the ultimate objectives of the project. SRK ES is

in agreement with this strategy and programme and some related suggestions are made in

Section 10.3.

SRK ES expects that a greater understanding of the extent of the regolith mineralisaion and

the ion clay distribution could be achieved by this proposed programme. SRK ES also expect

to see an upgrade of the resource in terms of both tonnage and resource confidence; this will

be particularly aided by the planned LIDAR survey.

10.2 Project Development Strategy

10.2.1 Planned Exploration Programme

The main planned exploration activities include a regolith orientation survey, additional

metallurgical testwork, the establishment of an on-site laboratory, a LIDAR survey, exploration

targeting, pitting, window sampling, drilling and sampling, geological / regolith mapping,

updating of the Mineral Resource estimate, and the potential development of a pilot plant and

bulk sampling. Related activities include infrastructure development and social and

environmental programmes.

- Regolith orientation survey:

Tantalus intends to resume fieldwork with the completion of an orientation survey to better

characterise the regolith profile in the project area. This will involve pitting, detailed geological

observations, density, moisture and radioactivity measurements and the collection of

representative samples. Subsequent laboratory work will include geochemical analysis,

metallurgical testwork and infrared spectrometry. The geochemical analysis will involve multi-

element Induced Coupled Plasma Mass Spectrometry (ICP-MS) at an accredited laboratory to

determine the REE grade of the samples. Metallurgical testwork will be completed at the

University of Toronto to determine the ionic exchange characteristics and REE recoveries of

the samples. Provisional infrared spectrometry will be trialled to see if it is possible to rapidly

discriminate the different clay minerals and hence provide an indication of their ionic

exchange characteristics. In addition to improving the understanding of the regolith material,

the orientation survey will also be used to refine the fieldwork procedures.

The exact location of the regolith orientation survey has yet to be decided as this will require

the preliminary analysis of the geochemical results received in December 2012 but will be

located in an area of representable material.



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- Additional metallurgical testwork:

Further to the preliminary metallurgical testwork and that to be completed as part of the

orientation survey, additional testwork is planned to optimise the recovery of REE from the

regolith material.

- Establishment of an on-site laboratory:

To reduce the time, cost and logistical challenges associated with shipping samples, Tantalus

is currently in the process of designing and evaluating the viability of setting-up an on-site

laboratory. This would enable the samples to be analysed in-country and may represent a

more cost-effective option than using an overseas facility.

- LIDAR survey:

Tantalus intends to appoint an external contractor to complete an airborne LIDAR (Light

Detection and Ranging) survey over the project area. This will provide very accurate

topographical data and include the collection of high spatial resolution ortho-imagery. These

data will fundamentally enable the creation of a Digital Terrain Model (DTM) that will be used

for a variety of applications including regolith / geomorphological studies, Mineral Resource

estimation and environmental assessment.

- Exploration targeting:

The exploration activities completed to date have generated a voluminous amount of data,

some of which needs to be compiled and interpreted in order to identify more localised targets

within what is a very large area of prospective ground (potentially everything underlain by the

Ambohimirahavavy igneous complex). Targeting parameters will include, but are not limited

to, areas underlain by favourable REE-enriched host rocks, the presence of complete and in-

situ regolith profiles, accessibility and environmental considerations.

- Pitting and window sampling:

The majority of the fieldwork will focus on the manual excavation of pits and the drilling of

window sampling holes in order to observe and sample the regolith profile. The pitting and

window sampling programme will focus on the previously identified prospects (Ampasibitika,

Ambaliha, Befitina, Caldera and Ampasibitika South), but ultimately involve exploration of all

identified prospects, for the above mentioned exploration targeting, within the project area that

are underlain by the Ambohimirahavavy igneous complex.

Pitting and window sampling will typically be completed on a 200 m by 200 m grid, but will

ultimately be affected by the required geological information and local conditions. Ideally, pits

and window sampling holes will be excavated or drilled from surface to bedrock. However,

local conditions and safety factors will ultimately dictate their depths. For example, pits will not

be excavated below the water table or deeper than 10 m for safety reasons. All pits and

window samples will be subject to geological observations and associated measurements

(including density, moisture and radioactivity). Samples will also be collected and submitted

for geochemical analysis, metallurgical testwork and potentially infrared spectrometry (the

latter depending on the outcome of the provisional work completed as part of the orientation

survey). All pits and window sampling holes will be re-instated (back-filled and capped

respectively) as soon as geological observations and sampling are complete.

- Geological and regolith mapping:

Tantalus plans to complete detailed geological and regolith mapping of the



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Ambohimirahavavy igneous complex at a scale of 1:25,000 and the various identified

prospects at a scale of 1:5,000.

- Updating of the Mineral Resource:

The Mineral Resource estimate will be updated and re-classified at frequent intervals in order

to assess the success of the exploration programme as a whole.

- Development of a pilot plant and bulk sampling:

Tantalus plans to develop a pilot plant capable of processing more significant quantities of

regolith material and ultimately result in the production of REE concentrate. This is a later-

stage aspect of the project that will develop with the additional metallurgical testwork

scheduled February 2013.

- Infrastructure development:

Planned infrastructure development activities include the repair of existing access roads and

bridges and the construction of new ones. The semi-permanent field camp near Ankatafa and

the personnel accommodation and laboratory facility in Ambanja will be developed as

required.

- Social and environmental programmes:

Tantalus will continue its social and environmental programmes that, to date, have included

the hiring of local people, community projects and strict environmental procedures (including

the reinstatement of all work sites and the planting of trees and shrubs).

This aspect of the project will be revisited as soon as more immediate requirements are met.

- Other:

Other fundamentally important activities will include iterative compilation and interpretation of

the available geological data, the implementation of strict Quality Assurance / Quality Control

(QAQC) procedures and retrospective surveying of all pits and window sampling holes.

The estimated exploration programme costs for 2013-2014 are provided in Table 10-1 and

Table 10-2. These costs include Value Added Tax (VAT) and Importation Tax at 20% and

10% respectively.



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Table 10-1 Exploration project expenditures for 2013-2014

Table 10-2 Other related expenditures for 2013-2014

Item No.

Total

(USD)

Capital Expenditure

Construction of roads

170,00

General equipment

40,000

Geological equipment

310,000

Geological consumables

100,000

Window samplers

100,000

Mobile laboratory and other laboratory equipment

390,000

Sub-total 940,000

Administrative Expenditure

Total administrative expenditure for 24 months

1,160,000

Sub-total 1,160,000

Payroll for 24 months Total payroll for expatriate staff and Malagasy contract staff,

also laboratory and pitting and window sampling casual workers

2,230,000

Sub-total 2,230,000

Expenditure 4,330,000

Contingency 10% 433,000

Total 4,763,000

In summary, the total estimated exploration expenditure for the Tantalus project for 2013-

2014 inclusive of a 10% contingency is USD 6.2M.

Unit

No.

units Unit price (USD) Total (USD)

Pitting / Window Sampling

Drilling m 20,220 Costs assigned to personnel and equipment related costs

Sample Analysis

Sample export samples 20,220 1 20,220

Sample preparation samples 20,220 8 161,760

Sample analysis samples 20,220 22 444,840

Standard Round Robin analysis

1 15000 15,000

Sub-total 641,820

Studies

Independent geologist audits

4 24,000 96,000

Independent Mineral Resource updates

8 20,000 160,000

Independent consultants

8 24,000 192,000

Metallurgic / bulk sample studies

1 20,000 20,000

LIDAR survey

1 200,000 200,000

Sub-total 668,000

Expenditure 1,309,820

Contingency 10%

130,980

Total Exploration Costs 1,440,800



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10.3 SRK ES Comments

Exploration activities to date have confirmed the presence of both bedrock- and regolith-

hosted REE mineralisation and most significantly, from current metallurgical testwork, that the

latter includes ion adsorption-type mineralisation that can be leached and from which REEs

can be recovered.

SRK ES have reviewed the proposed exploration and resource development plans along with

the corresponding budgets and agree with them and believe the capital requirements to be

reasonable for a project of this type.

To date, the Tantalus activities have only systematically explored approximately 60 km2 of the

Ambohimirahavavy igneous complex that encompasses approximately 150 km2 of the project

area. The preliminary Mineral Resource and the current metallurgical testwork results are only

defined from approximately 18 km2.

Given the extent of the Ambohimirahavavy igneous complex, the project area contains a

significant amount of ground that is prospective for extensions to the regolith-hosted REE

mineralisation that has yet to be systematically explored. SRK ES considers that a means of

careful and methodical targeting and prioritisation is essential to optimise the programme and

achieve the project objectives. To this end, all available data should be regularly interpreted

so that the programme and its priorities can be reviewed and amended as required.

Given the objective to update and improve the classification of the Mineral Resource, there

are a number of independent activities that are necessary in order to accomplish this. These

include a round robin study to increase confidence in the accuracy of the geochemical results,

variogram and geostatistical cross analysis and potentially a grade variability study.

SRK ES considers the completion of the regolith orientation survey as important for the future

development of the regolith resource and to better understand the distribution of clays with

ionic exchange characteristics that are amenable to leaching and the recovery of REEs.

Accessibility represents one of the biggest logistical challenges for the project, especially in

the wet season. A significant amount of road and bridge construction is required to facilitate

movement to, from and around the project area throughout the year.

Better communications at the Ankatafa field camp and the Ambanja laboratory would also

greatly improve the overall management of the project, particularly with regards to the

exchange of data.



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11 RISKS AND OPPORTUNITIES

11.1 Introduction

The following section includes a summary of the principal risks and opportunities as they may

relate to the Tantalus project. Both generic and specific risks and opportunities to the Tantalus

project are summarised.

11.2 General Risks and Opportunities

The Tantalus project is subject to certain inherent risks that apply to any international mineral

exploration or mining project. These include:

• Commodity price fluctuations:

These may be influenced, inter alia, by demand for all the Tantalus project‟s principal

commodities in industry, actual or expected sales and production cost levels for these

commodities in major producing countries;

• Exchange rate fluctuations:

Specifically relative to the strength of the US$, the currency in which commodity prices are

generally quoted;

• Inflation rate fluctuations:

Specifically related to the macro-economic policies of Madagascar;

• Country risk:

Specific country risk including: political, economic, legal, tax, operational and security risks;

• Legislative risk:

Specifically changes to future legislation (tenure, mining activity, labour, occupational health,

safety and environmental) within Madagascar;

• Exploration risk:

Resulting from the elapsed time between discovery of deposits, development of technically

feasible and economically viable feasibility studies to bankable standards and the associated

uncertainty of outcome;

• Environmental risk:

The environmental impact to date is largely limited to activities associated with exploration

activities. The ultimate development of the Tantalus project will inevitably impart positive

aspects on the local economy in respect of employment and the potential for taxation

revenues to be used for further social development, but also runs the risk of causing negative

impact on the physical environment which has certain unique and environmentally important

characteristics; and

• Development project risk:

Specifically technical risks associated with green-field projects for which feasibility studies

have not been completed.

11.3 Asset Specific Risks and Opportunities

Specific perceived risks to the Tantalus project identified by SRK ES include:



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• Metallurgical processing:

Whilst the results of the metallurgical testwork are encouraging and have confirmed the

presence of “ionic” regolith material that is amenable to leaching and the recovery of REEs,

testwork has only been completed on a comparatively small number of samples. To eliminate

this risk, additional samples need to be subjected to metallurgical testwork to ensure the

reproducibility of the results and to also optimise the recovery of REEs. Also it is important to

highlight that the eventual processing route may not be able to extract all of the commodities

of interest recorded in the resource estimate.

• Geological:

Even though a sizeable number of pits and drillholes have been excavated and drilled through

the regolith profile, there is considered to be limited understanding with respect to the

distribution and continuity of the “ionic” component of regolith. However, the planned

orientation survey that includes additional metallurgical testwork and the application of

infrared spectrometry to confirm the presence of favourable clay minerals aims to offset this

risk;

• Mineral Resource:

Tantalus has generated sufficient exploration data to enable the estimation of a JORC-

compliant Inferred Mineral Resource. However, in order for the classification of the Mineral

Resource to be improved, Tantalus must ensure that all data are collected systematically and

in accordance with industry best practices, particularly with regards to sample Quality Control

and Quality Assurance (QAQC) procedures;

• Planned exploration programme:

The planned exploration programme should advance the Tantalus project and achieve the

intended objectives. However, there is considered to be a risk to the achievement of the

objectives if the programme is attempted with insufficient resources. This stated, once fully

funded Tantalus should be able to appoint adequate numbers of suitably qualified and

experienced personnel and the required equipment to complete the programme as planned;

• Environmental issues:

Tantalus already has an environmental plan in place and dedicated personnel to execute it.

However, the completion of a comprehensive environmental impact study and a formal

environmental management plan remain requirements for the project due to the stringent

environmental regulations set by the government of Madagascar. No mining activity will be

permitted without prior approval by the relevant authorities, as per the regulations on

environmental protection and the commitments contained in the environmental impact study.

For this reason, due attention should be given to the environmental aspects of the project as it

is practicable to mitigate this risk;

• Economic potential:

The main impact relating to the economic potential of the project concerns the fluctuation of

what is a large number of commodity prices. Most mineral projects include only a few

commodities whereas the Tantalus project includes the REEs plus potentially niobium,

tantalum, hafnium and gallium. This means that the potential “basket value” for any

concentrates recovered from the Tantalus project could fluctuate significantly on the selection

of defendable long term prices. However, it could also be viewed that having a spread of

commodities actually lessens the economic risk as it is more likely that if the value of some of



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the elements decreases, others will increase;

• Project uniqueness:

When considered globally, the Tantalus project is comparatively unique. When it comes to

minerals projects, uniqueness is often not considered to be a desirable characteristic given

that risks are often reduced by characteristics that are familiar. However, in the case of the

Tantalus project, the opposite may hold true. It is widely thought that there is no regolith-

hosted ion adsorption clay-type REE mineralisation anywhere other than China. The Tantalus

project has proven that this is an incorrect assumption and that it has the potential to be a

World-class resource outside of China.

12 CONCLUSIONS AND RECOMMENDATIONS

The Tantalus project encompasses a large area, 300 km2, of very complex poly-phased

peralkaline intrusives, a situation made even more complex by the thick vegetation,

weathering and a deeply laterised environment. Despite this, Tantalus have accomplished a

significant amount of exploration and greatly advanced the project towards its maiden Mineral

Resource. This has all taken place in the backdrop of very challenging access and

environmental considerations. Over time the emphasis has moved from ring dyke hosted

primary mineralisation to regolith mineralisation with ionic clay characteristics similar to those

seen in Southern China.

A large amount of drilling, pitting and window sampling have now been completed with field

procedures, practices and data storage greatly improved with a competent team of geologists.

SRK ES have independently reviewed and advised on this since 2008 and undertook the

maiden regolith Mineral Resource estimate with data up until 28th November 2011. SRK ES

have reviewed all aspects of Tantalus's field procedures, sampling, assaying and data

manipulation/storage and, while a number of recommendations and corrective measures have

been highlighted, believe the project to be managed and the data collected in a robust and

professional manner sufficient enough to be used in a JORC compliant Mineral Resource.

SRK UK's January 2012 Inferred Mineral Resource Estimate defines 130Mt at 0.08% TREO

with a HREO content of 20%; full details are tabulated in Table 9-11 and Table 9-12. Current

metallurgical testwork conducted by the University of Toronto further emphasises the

amenability of the regolith mineralisation to direct leaching. However, while this has

demonstrated high recoveries of REEs, due in part to the low in situ grades, further

optimization of leaching and development further downstream in the processing flowsheet are

still critical to realising an economic extraction process. To assist in this SRK ES have

recommended that a solubility test be built into future assaying procedures their by providing

Tantalus with an estimate of the ion-exchange hosted REEs for each sample.

SRK ES understand that Tantalus plan to commission a re-estimation of the regolith resource

during 2013 following the completion of a significant amount of new pitting and window

sampling. SRK ES are in agreement with this and suggest that Tantalus consider halting or

slowed down their current exploration until this process has been completed thereby saving

funds for further testwork or other required studies should the scale of the new resource

numbers be adequate to form an economic mining project.



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SRK ES have made a number of other recommendations namely to make more use of the

window samplers, to complete a programme of twining a number of the pits with the window

sampler to ensure repeatability, commissioning a full LIDAR survey to ensure that the

topography, including incised valleys and streams, are adequately represented and address

all current concerns with the QAQC results; the later will require the round robin testing of the

in-house standards currently being used. However, the most important recommendations

revolve around development of the latter stages of the proposed process flowsheet along with

securing a pilot plant programme. It is SRK ES's opinon that while the hosting geology and

mineralisation at Tantalus is considered complex, the metallurgy and the full understanding of

the likely economic processing is equally as complex and for the Tantalus project critical and

key to its successful development. Tantalus are aware of this and has defined a reasonable

budget for their development strategy (outlined in Section 10), to continue the exploration and

metallurgical testwork required to further progress this project.

For and on behalf of SRK Exploration Services Ltd

James Gilbertson,

Principal Geologist, Exploration


Date: 21/01/2013

Martin Pittuck,

Corporate Consultant, Mining Geology,


Date: 21/01/2013



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13 GLOSSARY OF TERMS

TERM DEFINITION

Adsorption The adhesion of atoms, ions, molecules, etc. to a surface.

Aegirite Mineral of the Pyroxene Group, common in alkaline igneous rocks, carbonatites and pegmatites.

Alteration Alteration of a rock/mineral by geological forces.

Assay The analysis of minerals, rocks and mine products to determine and quantify their constituent parts.

AusIMM Australasian Institute of Mining and Metallurgy.

Bankable (Of a document) written with the required degree of expertise and content to give a bank confidence to make a lending decision on the project.

Basanitic Undersaturated olivine basalt consisting of calcic plagioclase, augite, olivine and a feldspathoid.

Basin A general region with an overall history of subsidence and thick sedimentary section.

Bastnäsite A carbonate-fluoride mineral containing yttrium and cerium. With monazite, this is the largest source of cerium and other REEs.

Borehole A subsurface means of geological exploration made with a drilling machine.

Carboniferous The geological time interval between 360 and 286 Ma.

Ce Cerium.

CEng Chartered Engineer.

Cenozoic Geological era covering the Earth's history during the last 65 million years.

Chevkinite Cerium-bearing mineral occurring as an accessory in aegirine-quartz-feldspar pegmatites.

Clay Material with a particle size of less than 2 μm.

Columbite Important ore of niobium and tantalum. May also form through alteration of pyrochlore.

Concentrate Metal ore once it has been through milling and concentration so that it is ready for chemical processing or smelting.

Contact The place or surface where two different kinds of rocks meet. Applies to sedimentary rocks, as the contact between a limestone and a sandstone, for example, and to metamorphic rocks; it is especially applicable between igneous intrusions and the host rock.

Core A cylindrical sample of rock obtained by core drilling.

Core axis Defines the long axis of cylindrical diamond drilling core. The angle of intersected features can be measured against this.

Core samples Cylindrical rock samples collected by diamond core drilling.

CPR Competent Persons Report.



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Cretaceous Interval of geological time between 114 and 65 Ma.

Crushing Reduction in size of mined rocks by mechanical action, generally to the size of one or two centimetres.

Cu Copper.

Cut-off grade When determining economically viable Mineral Reserves, the lowest grade of mineralised material that qualifies as ore.

Denudation The long-term sum of processes that erode the surface of the earth.

Deposit A naturally occurring accumulation of minerals that may be considered economically valuable.

Devonian The geological period between 354 and 410 Ma ago.

Dip Inclination of a geological feature/rock from the horizontal (perpendicular to strike).

Disseminated Fine-grained material scattered quite evenly throughout the rock.

Dolomite Magnesium limestone rock.

Drilling fence A line of boreholes usually set out perpendicular to the expected strike of mineralisation. A drill programme may consist of multiple fences.

Dy Dysprosium.

Dyke A tabular body of intrusive igneous rock emplaced vertically or at a steeply inclined angle to the horizontal.

Er Erbium.

Eu Europium.

Eudialite A comparatively rare silicate mineral found in alkaline igneous rocks and a source of zirconium.

Exploration drilling

Drilling in an unproved area or to an untried depth either to seek new areas of mineralisation or the possibility of increasing the area of known mineralisation.

Fasibitikite Nb-Ta-REE(U-Sn-Hf) bearing alkaline granite dykes and sills with their type locality near Ampasibitika.

Fault A fracture or a fracture zone along which there has been displacement of the two sides relative to one another parallel to the fracture. The displacement may be a few inches or many miles.

Feasibility study A detailed study of the economics of a project based on technical calculations and specific mine designs undertaken to a sufficiently high degree of confidence to justify a decision on construction.

Fenitisation A syenitic rock produced by alkali metasomatism in the contact zone around an alkali intrusion. Usually contain alkali feldspar and aegirine.

FGS Fellow of the Geological Society.

FIMMM Fellow of the Institute of Materials, Minerals and Mining.

Flotation Wet mineral extraction process by which certain mineral particles are induced to become attached to bubbles and float, and others to sink. Valuable minerals are thus concentrated and separated from valueless material (gangue).



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Fracture A general term to include any kind of discontinuity in a body of rock if produced by mechanical failure, whether by shear stress or tensile stress. Fractures include faults, shears, joints, and planes of fracture cleavage.

FSA Financial Services Authority.

Gagarinite Sodium-calcium-yttrium bearing mineral found in sodium-metasomatised alkali granites and syenites.

Garnet Group of aluminium nesosilicate with the generalised formula X3Z2(SiO4)3 (X=Ca, Fe, etc· Z=Al, Cr, etc·).

Gd Gadolinium.

GDP Gross Domestic Product.

Geology The scientific study of the origin, history, and structure of the earth.

Geophysical surveys

A prospecting technique which measures the physical properties (magnetism, conductivity, density) of rocks and defines anomalies for further testing.

Gneiss A foliated metamorphic rock formed under conditions of high pressure, often coarse grained with layering.

Grade The quantity of ore or metal in a specified quantity of rock.

Granite A medium to coarse grained plutonic igneous rock usually light coloured and consisting largely of quartz and feldspar.

Granodiorite A coarse grained rock intermediate in composition between granite and diorite: approximately 65% SiO2.

Gravity separation Separating two or more products by the variance in their specific gravity.

Grinding Further reduction, after crushing, of size of mined rocks by mechanical action.

Hafnium Chemical element with symbol Hf and atomic number 72. Found in zirconium minerals, it is used in filaments, electrodes and some super-alloys in combination with Nb, Ta and W.

Heel and toe drilling

Drilling pattern whereby the end of one borehole coincides laterally with the top of the adjacent hole. Ensures that targeted features will be intersected and may be correlated between holes.

High grade Pertaining to ore which is rich in the metal being mined.

Ho Holmium.

Hollow-stem auger

Auger drilling technique whereby the sample is retained within a hollow tube in the centre of the flight of augers.

Horst-graben Depressed block of land bounded by parallel normal faults.

Host rock The rock containing a mineral or an orebody.

HREE or Heavy Rare Earth Elements

Comprising Eu, Gd, Tb, Dy, Ho, Er, Tm, Yb and Lu. Y is often included in the HREE

group as it tends to occur in the same ore deposits as other HREE and exhibits similar

chemical properties, despite its lower atomic mass. Of higher monetary value than

LREEs.

Hydrothermal The name given to any processes associated with igneous activity which involve heated or superheated water.

Hydroxyl A compound containing an oxygen atom bound with a hydrogen atom.



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Impact An effect on people, property or the environment caused by a certain action or change.

Infill drilling/ sampling

Drilling or sampling in between locations that have already been drilled/sampled.

Infrastructure The supporting installations and services that supply the needs of the project.

Intercalated Existing or introduced between layers of a different type.

Intersection Occurrence of a lithological unit or ore within drill core where the top and bottom of the unit may be observed.

Ion An atom or molecule in which the total number of electrons is not equal to the total number of protons, giving it a net positive or negative electrical charge.

JORC Joint Ore Reserves Committee (of the AusIMM and other institutions).

JORC code Australasian code for reporting of Mineral Resources and Ore Reserves.

km Kilometres.

La Lanthanum.

Limestone A sedimentary rock composed almost entirely of calcium carbonate (CaCO3).

Lineament A linear feature of non-specific origin.

Lithology The physical characteristics of rock.

Low Grade Pertaining to ore which is comparatively low in content for the metal which is being mined.

LREE or Light Rare Earth Elements

Comprising La, Ce, Pr, Nd Pm and Sm.

Lu Lutetium.

m Metre.

Mt Million tonnes.

Mafic Describing an igneous rock of low silica and high magnesium and iron content, usually dark in colour.

Marble A fine to coarse-grained metamorphosed limestone.

Mass movement Bulk, downslope transfer of masses of material (especially soil and weathered rock) under the direct influence of gravity.

Massive Having homogeneous structure or texture.

Mesozoic The geological era between 245 and 65 Ma including the Triassic, Jurassic and Cretaceous periods.

Metallurgical studies

Tests performed upon ore material to ascertain its extraction and recovery properties.

Metallurgical testwork

Laboratory based tests which examine methods of concentrating minerals and/or metals of interest.

Metallurgy The domain of materials science that studies the physical and chemical behaviour of metallic elements, their intermetallic compounds and alloys.



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Metamorphic Term applied to pre-existing sedimentary and igneous rocks which have been altered in composition, texture, or internal structure by processes involving pressure, heat and/or the introduction of new chemical substances.

Metamorphosed Rock transformed by heat and/or pressure.

Metasomatism Metamorphic process whereby existing minerals are transformed totally or partially into new minerals by the replacement of their chemical constituents. Occurs by the introduction of chemically reactive capillary solutions.

Metallurgy The science that deals with procedures used in extracting metals from their ores.

Mineral A natural, inorganic, homogeneous material that can be expressed by a chemical formula.

Mineral Processing

Processing of ore-bearing rock to produce commercially valuable mineral concentrates.

Mineral Resource A concentration or occurrence of material of intrinsic economic interest in or on the Earth’s crust in such a form and quantity that there are reasonable prospects for eventual economic extraction. The location, quantity, grade, geological characteristics and continuity of a Mineral Resource are known, estimated or interpreted from specific geological evidence and knowledge. Mineral Resources are sub-divided, in order of increasing geological confidence, into Inferred, Indicated and Measured categories.

Mineralisation The process by which minerals are introduced into a rock. More generally, a term applied to accumulations of economic or related minerals in quantities ranging from weakly anomalous to economically recoverable.

Mineralised Containing ore minerals.

Miocene Epoch of the Tertiary Period between the Oligocene and Pliocene Epochs.

MSc Master of Science.

Nb Niobium.

Nd Neodynium.

Nepheline A feldspathoid. A silica-undersaturated aluminosilicate occurring in intrusive and volcanic rocks with low silica contents, and in their associated pegmatites.

Nickel Silvery white metal that takes on a high polis; hard, malleable, ductile, somewhat ferromagnetic, and a fair conductor of heat and electricity.

Niobium Chemical element with symbol Nb and atomic number 41. Used in alloys and various superconducting materials.

Ore Mineral bearing rock that contains one or more minerals, at least one of which can be mined and treated profitably under current or immediately foreseeable economic conditions.

Ore Reserve The economically mineable part of a Measured or Indicated Mineral Resource. It includes diluting materials and allowances for losses which may occur when the material is mined. Appropriate assessments, which may include feasibility studies, have been carried out, and include consideration of and modification by realistically assumed, mining, metallurgical, economic, marketing, legal, environmental, social and governmental factors. These assessments demonstrate at the time of reporting that extraction could reasonably be justified. Ore Reserves are sub-divided in order of increasing confidence into Probable Ore Reserves and Proved Ore Reserves.

Orebody A continuous, well-defined mass of material of sufficient ore content to make extraction economically feasible.



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Pegmatite Very coarse-grained intrusive rock with crystals usually larger than 2.5 cm in size, typically found as veins or lenticular bodies. May be enriched with REE and other rare minerals.

Permian Geological period between 286 and 245 Ma.

PhD Doctor of Philosophy.

Phyllite A cleaved metamorphic rock due to high mica content, less well cleaved than slate.

Pits Exploration excavations to determine nature and structure of the underlying rocks and to obtain samples.

Pm Promethium

Porphyritic Igneous texture referring to large crystals in a groundmasss of smaller crystals, resulting from a two-stage cooling process.

Pr Praesodymium.

Prospect A mineral property, the value of which has not been proved by exploration. To search for minerals or oil by looking for surface indications, by drilling boreholes, or both.

Pyrochlore Mineral occurring in pegmatites associated with nepheline syenites and other alkaline rocks. Important ore of niobium and tantalum.

Quartz A very common mineral in sedimentary, magmatic, metamorphic, and hydrothermal environments: Chemical symbol SiO2.

Quartzite A metamorphic rock type formed predominantly of recrystallised quartz.

Rare Earth Elements (REEs) or Rare Earths

A series of metallic lanthanide elements with similar chemical properties comprising

HREEs and LREEs (but excluding Pm for the purposes of the Tantalus Project having regard to its unstable nature). Widely used in technological devices.

Regolith Weathered material that occurs above unweathered bedrock.

Reserves That part of a mineral resource which has been demonstrated to be economically exploitable.

Resource The total quantity of a mineral which is calculated to lie within given boundaries and which is economically workable.

Rhyolite Igneous extrusive volcanic rock of felsic (silica-rich) composition. Extrusive equivalent of plutonic granite.

Riebeckite Sodium-rich member of the Amphibole Group forming dark elongate crystals in highly alkali granites, syenites and pegmatites.

Rock Mineral matter of various compositions.

Saddle-reef A mineral deposit found in the crest of an anticline, following bedding planes. Deposits usually found in vertically-stacked succession.

Samarskite Radioactive REE-bearing mineral found in granite pegmatites with other rare minerals.

Sample A representative fraction of body of material; removed by approved methods; guarded against accidental or fraudulent adulteration; and tested or analysed to determine the nature, composition, percentage of specified constituents. Bulk samples are large (several tons), so taken as to represent the ore for the purpose of developing a suitable treatment. Channel samples, cores, chips, grab, are small ones- made primarily to establish the value of the ore.



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Schist A metamorphic rock defined by its well-developed parallel orientation of more than 50% of the minerals present.

Sediment Particles transported by water, wind or ice.

Sedimentary A type of rock formed from pre-existing rocks or pieces of once-living organisms. They form from deposits that accumulate on the Earth’s surface.

Siliciclastic Clastic sedimentary rock that is almost exclusively silica-bearing either as forms of quartz or other silicate minerals.

Sill A tabular body of intrusive igneous rock with boundaries conformable with the planar structure of surrounding rock.

Skarns Contact rocks containing calcium, magnesium and iron silicates (and economic mineralisation) derived from carbonaceous rocks and forming due to metasomatic alteration during metamorphism, for example when in contact with intruding igneous rocks.

Sm Samarium.

SRK ES SRK Exploration Services.

Stockwork Mineral deposit formed of a network of small, irregular veins so closely spaced that it may be mined as a unit.

Stratigraphy The interpretation of geological strata with reference to derivation and geological background.

Strike A geological term which describes a horizontal line on the surface of a dipping stratum. The strike is 90° to the dip of the stratum.

Syenite Usually coarse-grained igneous rock with similar composition to granite but with quartz either absent or present at levels less than 5%. Feldspar content is mainly alkaline.

T Tonne.

Ta Tantalum.

Tantalum Chemical element with symbol Ta and atomic number 73. Main use is for capacitors in electronic equipment, as also as a component in alloys.

Tb Terbium.

Tertiary A geological period that is part of the Cenozoic and includes the time between 65 and 2.6 Ma.

Thorianite Mineral with a high percentage of thorium and also containing uranium and REEs. Can occur in pegmatites.

Thorium Chemical element with symbol Th and atomic number 90. It is radioactive and Th-232 has been used for the production of nuclear fuel.

Tm Thulium.

Trachyte Fine grained extrusive alkaline rock, often porphyritic, with the main component being alkali feldspar. Also contains minor mafic minerals and sometimes quartz.

TREO Total Rare Earth Oxides - the sum of the concentrations of rare earth oxides.

Triassic Period of geological time between 245 and 208 Ma.



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Uraninite Radioactive uranium-rich mineral also known as pitchblende and also containing Th and REE. Major ore of uranium.

Uranium Hard, lustrous, silver-white, malleable and ductile, radioactive, metallic element of the actinide series.

Uranothorianite A mineral intermediate between uraninite and thorianite.

Vein/veinlet A fracture which has been filled by minerals which have crystallised from mineralised fluids.

Xenotime A REE-bearing phosphate mineral found as a minor accessory in pegmatites and other igneous rocks.

Y Yttrium.

Yb Ytterbium.

Zircon A tetragonal mineral, ZrSiO4 ; occurs widely in granite, granite pegmatite, other felsic igneous rocks, and placers; the chief source of zirconium.

Zirconium A chemical element with symbol Zr and atomic number 40. Commonly used as an alloying agent due to its excellent resistance to corrosion, as a refractory mineral in furnaces, and for the production of thin ceramic coatings.

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