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Duyker Eiland Property Western Cape, South Africa

NI 43-101 Technical Report

Prepared by: Armando Simón, Ph.D., P.Geo. (APGO), R.P.Geo. (MAIG) María-Angélica González, R.M. (CMC)

Effective Date: 27 September 2011 Project No. M40075

Prepared For: Montero Mining and Exploration Limited

CERTIFICATE OF QUALIFIED PERSON

Armando Simón, Ph.D., P.Geo. (APGO), R.P.Geo. (MAIG)

AMEC International Ingeniería y Construcción Limitada

Avda. Apoquindo 3846, 8th Floor, Las Condes, Santiago, Chile.

Tel. +56-2-957-7734; Fax +56-2-957-7769

[email protected]

I, Armando Simón, Ph.D., am a Principal Geologist for AMEC International Ingeniería y Construcción

Limitada, a Division of AMEC Americas Limited (“AMEC”) located at Ave. Apoquindo 3846, 8th Floor,

Las Condes, Santiago, Chile, and have been so since January 2005.

This certificate applies to the technical report “Duyker Eiland Property, Western Cape, South Africa, NI

43-101 Technical Report”, dated 27 September, 2011 (the “Technical Report”).

I graduated from the University of Bucharest with a Bachelor of Engineering degree in Geology and

Geophysics in 1974, and a Doctorate of Engineering in 1985. I am a Professional Geoscientist of the

Association of Professional Geoscientists of Ontario (A.P.G.O. # 1633), and a Registered Professional

Geoscientist of the Australian Institute of Geoscientists (A.I.G. # 10053). Since 1974, I have continually

been involved in mineral exploration projects for precious and base metals and industrial minerals in

Argentina, Brazil, Canada, Colombia, D.R. Congo, Cuba, Chile, Eritrea, Ethiopia, Guyana, Jamaica,

Kazakhstan, Madagascar, Mexico, Nicaragua, Pakistan, Peru, Portugal, Romania, Russia, South Africa

and Vietnam.

I visited the Duyker Eiland Property between 20 and 23 January 2011, and between 28 and 31 March

2011.

I am familiar with National Instrument 43-101 – Standards of Disclosure for Mineral Projects (“NI 43-

101”) and by reason of education, experience and professional registration I fulfill the requirements of a

“qualified person” as defined in NI 43-101.

I am fully responsible for the preparation of Sections 1.0 to 13.0, and 15.0 to 27.0 of the Technical

Report.

I am independent of Montero Mining and Exploration Limited (“Montero”), as independence is described

by Section 1.5 of NI 43–101. I have had no previous involvement with Montero or with the property

which is the subject of this Technical Report.

I have read NI 43-101 and the part of the Technical Report which I am responsible for has been prepared

in compliance with NI 43-101.

As of the date of this certificate, to the best of my knowledge, information and belief, the portions of the

technical report for which I am responsible contain all scientific and technical information that is required

to be disclosed to make those sections of the technical report not misleading.

Signed: Armando Simón

(signed and sealed) “Armando Simón

Armando Simón, Ph.D.

Principal Geologist, P.Geo. (APGO # 1633); R.P.Geo. (AIG # 10053)

mailto:[email protected]


Dated at Santiago, Chile, this 5th

day of December 2011

CERTIFICATE OF QUALIFIED PERSON

María-Angélica González, R.M. (CMC)


Avda. Apoquindo 3846, 8th Floor, Las Condes, Santiago, Chile.

Tel. +56-2-957-7700; Fax +56-2-957-7404

[email protected]

I, María-Angélica González, am a Senior Mining Engineer with AMEC International Ingeniería y

Construcción Limitada, a Division of AMEC Americas Limited (“AMEC”) located at Ave. Apoquindo

3846, 8th

Floor, Las Condes, Santiago, Chile, and have been so since September 2010.

This certificate applies to the technical report “Duyker Eiland Property, Western Cape, South Africa, NI

43-101 Technical Report”, dated 27 September, 2011 (the “Technical Report”).

I graduated from the University of Chile with a Bachelor of Engineering degree in Mining and Metallurgy

in 2000. I am a Registered Member of the Chilean Mining Commission (C.M.C. # 64). Since 2000, I have

been continually involved in resource estimation projects for precious and base metals and industrial

minerals in Brazil, Chile, Greece, Panama, Peru and South Africa.

I am familiar with National Instrument 43-101 – Standards of Disclosure for Mineral Projects (“NI 43-

101”) and by reason of education, experience and professional registration I fulfill the requirements of a

“qualified person” as defined in NI 43-101.

I am fully responsible for the preparation of Section 14.0 of the Technical Report.

I am independent of Montero Mining and Exploration Limited (“Montero”), as independence is described

by Section 1.5 of NI 43–101. I have had no previous involvement with Montero or with the property

which is the subject of the Technical Report.

I have read NI 43-101 and the part of the Technical Report which I am responsible for has been prepared

in compliance with NI 43-101.

As of the date of this certificate, to the best of my knowledge, information and belief, the portions of the

Technical Report for which I am responsible contain all scientific and technical information that is

required to be disclosed to make those sections of the technical report not misleading.

Signed: María-Angélica González

(signed and sealed) “María-Angélica González”

María-Angélica González

Senior Mining Engineer, R.M. (CMC)


Dated at Santiago, Chile, this 5th day of December 2011

mailto:[email protected]

IMPORTANT NOTICE

This report was prepared as a National Instrument 43-101 Technical Report

for Montero Mining and Exploration Limited (Montero) by AMEC Earth and

Environmental (UK) Limited (AMEC). The quality of information, conclusions,

and estimates contained herein is consistent with the level of effort involved

in AMEC‟s services, based on: i) information available at the time of

preparation, ii) data supplied by outside sources, and iii) the assumptions,

conditions, and qualifications set forth in this report. This report is intended

for use by Montero subject to the terms and conditions of its contract with

AMEC. Except for the purposes legislated under Canadian provincial

securities law, any other uses of this report by any third party is at that party‟s

sole risk.

Montero Mining and Exploration Ltd.

Duyker Eiland Property

Western Cape, South Africa


Project No.: M40075 TOC i 5 December 2011

C O N T E N T S

1.0 SUMMARY ................................................................................................................................... 1-1 1.1 Background ..................................................................................................................... 1-1 1.2 Location and Ownership .................................................................................................. 1-1 1.3 History .............................................................................................................................. 1-1 1.4 Geology ........................................................................................................................... 1-2 1.5 2011 Exploration .............................................................................................................. 1-2 1.6 Mineral Resource Estimate ............................................................................................. 1-3 1.7 Metallurgical Testing ........................................................................................................ 1-4 1.8 Risks and Opportunities .................................................................................................. 1-6 1.9 Conclusions ..................................................................................................................... 1-6 1.10 Recommendations ........................................................................................................... 1-9

1.10.1 Specific Recommendations ................................................................................ 1-9 1.10.2 Follow-up Program ........................................................................................... 1-10

2.0 INTRODUCTION .......................................................................................................................... 2-1 2.1 Terms of Reference ......................................................................................................... 2-1 2.2 Qualified Persons ............................................................................................................ 2-1 2.3 Effective Date .................................................................................................................. 2-2 2.4 Previous Technical Reports............................................................................................. 2-2 2.5 References ...................................................................................................................... 2-2

3.0 RELIANCE ON OTHER EXPERTS .............................................................................................. 3-1 3.1 Company Ownership and Agreements ........................................................................... 3-1 3.2 Mineral Tenure ................................................................................................................ 3-1 3.3 Surface Rights ................................................................................................................. 3-1 3.4 Royalties .......................................................................................................................... 3-1 3.5 Environmental Issues ...................................................................................................... 3-2

4.0 PROPERTY DESCRIPTION AND LOCATION ............................................................................ 4-1 4.1 Location ........................................................................................................................... 4-1 4.2 Company Ownership and Agreements ........................................................................... 4-2 4.3 Mineral Tenure ................................................................................................................ 4-2 4.4 Surface Rights ................................................................................................................. 4-4 4.5 Royalties .......................................................................................................................... 4-4 4.6 Environmental and Socio-Economic Issues .................................................................... 4-4 4.7 Comment on Section 4.0 ................................................................................................. 4-5

5.0 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY ......................................................................................................................... 5-1 5.1 Access ............................................................................................................................. 5-1 5.2 Physiography ................................................................................................................... 5-2 5.3 Climate ............................................................................................................................. 5-2 5.4 Vegetation and Fauna ..................................................................................................... 5-2 5.5 Local Resources and Infrastructure ................................................................................ 5-3 5.6 Comments on Section 5.0 ............................................................................................... 5-4

6.0 HISTORY ...................................................................................................................................... 6-1

7.0 GEOLOGICAL SETTING AND MINERALIZATION ..................................................................... 7-1





Project No.: M40075 TOC ii 5 December 2011

7.1 Regional Setting .............................................................................................................. 7-1 7.2 Local Geology .................................................................................................................. 7-3

7.2.1 Lithostratigraphic Units ....................................................................................... 7-4 7.2.2 Description of the Mineralized Units ................................................................... 7-7 7.2.3 Mineralization ..................................................................................................... 7-9

7.3 Comments on Section 7.0 ............................................................................................. 7-10

8.0 DEPOSIT TYPES ......................................................................................................................... 8-1 8.1 Comments on Section 8.0 ............................................................................................... 8-2

9.0 EXPLORATION ............................................................................................................................ 9-1 9.1 Drilling, Sampling and Assaying ...................................................................................... 9-1 9.2 Bulk Density ..................................................................................................................... 9-1 9.3 Comments on Section 9.0 ............................................................................................... 9-1

10.0 DRILLING ................................................................................................................................... 10-1 10.1 Legacy AECI Drilling ...................................................................................................... 10-1 10.2 Montero Drilling ............................................................................................................. 10-1 10.3 Drill Program Results ..................................................................................................... 10-3 10.4 Recovery........................................................................................................................ 10-4 10.5 Comments on Section 10.0 ........................................................................................... 10-7

11.0 SAMPLE PREPARATION, ANALYSES, AND SECURITY ........................................................ 11-1 11.1 AECI Legacy Exploration............................................................................................... 11-1 11.2 Montero Exploration ...................................................................................................... 11-1 11.3 Quality Control Program ................................................................................................ 11-3 11.4 Sample Security ............................................................................................................ 11-3 11.5 Sample Storage ............................................................................................................. 11-3 11.6 Comment on Section 11.0 ............................................................................................. 11-3

12.0 DATA VERIFICATION ................................................................................................................ 12-1 12.1 Data Entry ...................................................................................................................... 12-1 12.2 Drill-Hole Collar Review ................................................................................................. 12-1 12.3 Database Checks .......................................................................................................... 12-2

12.3.1 Collar Coordinates ............................................................................................ 12-2 12.3.2 Geological Logs ................................................................................................ 12-2 12.3.3 Original Assay Data .......................................................................................... 12-2

12.4 Geological Interpretation ............................................................................................... 12-2 12.5 Quality Control ............................................................................................................... 12-3

12.5.1 Assessment of Precision .................................................................................. 12-3 12.5.2 Assessment of Accuracy .................................................................................. 12-3 12.5.3 Assessment of Contamination .......................................................................... 12-6

12.6 Comments on Section 12.0 ........................................................................................... 12-6

13.0 MINERAL PROCESSING AND METALLURGICAL TESTING .................................................. 13-1 13.1 Introduction .................................................................................................................... 13-1 13.2 Turgis (2009) Conceptual Study .................................................................................... 13-1 13.3 Turgis (2011) Flotation Tests......................................................................................... 13-1

13.3.1 Test Description ................................................................................................ 13-2 13.3.2 Test Results ...................................................................................................... 13-2

13.4 Comments on Section 13.0 ........................................................................................... 13-3

14.0 MINERAL RESOURCE ESTIMATE ........................................................................................... 14-1





Project No.: M40075 TOC iii 5 December 2011

14.1 Database ....................................................................................................................... 14-1 14.2 Topography ................................................................................................................... 14-1 14.3 Geological Model ........................................................................................................... 14-2 14.4 Estimation Domains ....................................................................................................... 14-2 14.5 Composites .................................................................................................................... 14-4 14.6 Exploratory Data Analysis ............................................................................................. 14-4 14.7 Block Model Definition ................................................................................................... 14-8 14.8 Grade and Thickness Interpolation ............................................................................... 14-9 14.9 Density ......................................................................................................................... 14-12 14.10 Model Validation .......................................................................................................... 14-12 14.11 Mineral Resource Classification .................................................................................. 14-16 14.12 Comment on Section 14 .............................................................................................. 14-19

15.0 MINERAL RESERVE ESTIMATE .............................................................................................. 15-1

16.0 MINING METHODS .................................................................................................................... 16-1

17.0 RECOVERY METHODS ............................................................................................................ 17-1

18.0 PROJECT INFRASTRUCTURE ................................................................................................. 18-1

19.0 MARKET STUDIES AND CONTRACTS .................................................................................... 19-1

20.0 ENVIRONMENTAL STUDIES, PERMITTING AND SOCIAL OR COMMUNITY IMPACT ........ 20-1

21.0 CAPITAL AND OPERATING COSTS ........................................................................................ 21-1

22.0 ECONOMIC ANALYSIS ............................................................................................................. 22-1

23.0 ADJACENT PROPERTIES ........................................................................................................ 23-1

24.0 OTHER RELEVANT DATA AND INFORMATION ..................................................................... 24-1

25.0 INTERPRETATION AND CONCLUSIONS ................................................................................ 25-1

26.0 RECOMMENDATIONS .............................................................................................................. 26-1 26.1 Specific Recommendations ........................................................................................... 26-1 26.2 Follow-up Program ........................................................................................................ 26-1

26.2.1 Phase 1 ............................................................................................................ 26-1 26.2.2 Phase 2 ............................................................................................................ 26-2

27.0 REFERENCES ........................................................................................................................... 27-1

T A B L E S

Table 1-1: Inferred Phosphate Mineral Resources, Effective Date 27 September 2011, María-

Angélica González, Senior Mining Engineer, R.M. (C.M.C.) ................................................. 1-5 Table 7-1: Thickness and Average P2O5 Grades by Drill Hole and Mineral Zone .................................. 7-9 Table 10-1: Drilling Summary .................................................................................................................. 10-1 Table 10-2: Drill-Hole Intercepts by Mineral Zone (Upper and Lower Zones) ........................................ 10-4 Table 10-3: Recovery by Drill Hole and Mineral Zone ............................................................................ 10-6 Table 11-1: Detection Limits for Assayed Elements at Scientific Services ............................................. 11-1 Table 12-1: Summary of Data-Entry Procedures .................................................................................... 12-1 Table 12-2: Collar Coordinate Check ...................................................................................................... 12-2 Table 12-3: Duplicate Summary .............................................................................................................. 12-4





Project No.: M40075 TOC iv 5 December 2011

Table 14-1: P2O5, CaO and MgO Basic Statistics – Original Samples ................................................... 14-8 Table 14-2: Extension of Estimated Zones ............................................................................................. 14-9 Table 14-3: Estimation Plan .................................................................................................................... 14-9 Table 14-4: Statistical Validation and Bias Evaluation .......................................................................... 14-13 Table 14-5: Inferred Phosphate Mineral Resources, Effective Date 27 September 2011, María-

Angélica González, Senior Mining Engineer, R.M. (C.M.C.) ............................................. 14-17

I L L U S T R A T I O N S

Figure 4-1: The Duyker Eiland Property Location Map ............................................................................ 4-1 Figure 4-2: Boundaries of the Duyker Eiland Prospecting Rights ............................................................ 4-3 Figure 5-1: Access Map ............................................................................................................................ 5-1 Figure 5-2: Satellite View of the Duyker Eiland Property ......................................................................... 5-2 Figure 6-1: AECI Historical Drill Holes and Prospecting Pits at Duyker Eiland ........................................ 6-2 Figure 6-2: Location of the Old Langebaan Phosphate Mine ................................................................... 6-3 Figure 7-1: Geologic Map of the Duyker Eiland Region ........................................................................... 7-1 Figure 7-2: Cross-Section Showing the Stratigraphic Position of the Varswater Formation .................... 7-2 Figure 7-3: Typical Stratigraphic Column of the Varswater Formation .................................................... 7-3 Figure 7-4: Preliminary Geological Map of the Duyker Eiland Property ................................................... 7-5 Figure 7-5: Typical Cross-Sections of the Duyker Eiland Property .......................................................... 7-6 Figure 7-6: Distribution of Mineralized Horizons at the Duyker Eiland Property ..................................... 7-8 Figure 8-1: Descriptive Model of the Upwelling Phosphate Deposit Type ............................................... 8-1 Figure 10-1: Splitting the Recovered Sample at the Drill Site .................................................................. 10-2 Figure 10-2: Material Retained for Logging .............................................................................................. 10-3 Figure 10-3: Drilling Recovery Histogram for Samples from Mineralized Horizons ................................ 10-5 Figure 10-4: Recovery versus P2O5 (Samples with >5% P2O5) ............................................................... 10-6 Figure 11-1: Stoichiometric Closure versus P2O5 Plot ............................................................................ 11-2 Figure 12-1: P2O5 Control Chart for the AMIS0055 CRM ........................................................................ 12-4 Figure 12-2: CaO Control Chart for the AMIS0055 CRM ........................................................................ 12-5 Figure 12-3: MgO Control Chart for the AMIS0055 CRM........................................................................ 12-5 Figure 14-1: Sections 6,371,450N and 6,371,850N – Drill-hole Grades of P2O5 ..................................... 14-3 Figure 14-2: P2O5 Histograms of the Lower and Middle Zones – Original Samples ................................ 14-5 Figure 14-3: P2O5 Boxplots by Zone – Original Samples ......................................................................... 14-6 Figure 14-4: Block Model Plan View - Upper Zone ................................................................................ 14-10 Figure 14-5: Block Model Plan View - Lower Zone ................................................................................ 14-11 Figure 14-6: P2O5, CaO and MgO Swath Plots – Upper Zone ............................................................... 14-14 Figure 14-7: P2O5, CaO and MgO Swath Plots – Lower Zone ............................................................... 14-15 Figure 14-8: P2O5, CaO and MgO Swath Plots – Middle Zone .............................................................. 14-16 Figure 14-9: Mineral Resource Areas .................................................................................................... 14-18





Project No.: M40075 TOC v 5 December 2011

G L O S S A R Y

BPL .............................................................................. Bone phosphate of lime CIM .............................................................................. Canadian Institute of Mining, Metallurgy and Petroleum CMC…………… ........................................................... Comisión Calificadora de Competencias en Recursos y A

....................................................................... Reservas Mineras de Chile CRM ............................................................................. Certified Reference Material EDA ............................................................................. Exploratory Data Analysis LOM ............................................................................. Life-of-Mine QA ................................................................................ Quality Assurance QC ............................................................................... Quality Control QP ................................................................................ Qualified Person RC ................................................................................ Reverse Circulation SS....................................................................................Scientific Services C.C. 2D ................................................................................ Two-dimensional 3D ................................................................................ Three –dimensional

U N I T S O F M E A S U R E

a ................................................................................... Annum (year) amsl ............................................................................. Above mean sea level cm ................................................................................ Centimetres g ................................................................................... Grams h ................................................................................... Hour(s) ha ................................................................................. Hectares (10,000 square metres) kg ................................................................................. Kilograms km ................................................................................ Kilometres km

2 ............................................................................... Square kilometres

L ................................................................................... Litre M .................................................................................. Millions m .................................................................................. Metres m

3................................................................................. Cubic metres

mm ............................................................................... Millimetres t .................................................................................... Tonnes (metric) US$ M .......................................................................... Million US dollars US$/t ............................................................................ US dollars per tonne % .................................................................................. Percent ° ................................................................................... Degrees °C ................................................................................. Degrees Celsius





Project No.: M40075 Page 1-1 5 December 2011

1.0 SUMMARY

1.1 Background

Montero Mining and Exploration Limited (Montero) retained AMEC Earth and

Environmental (UK) Limited (AMEC) to present the results of the 2011 drilling

campaign for its Duyker Eiland property (the Property), in Western Cape, South Africa,

and prepare a first-time mineral resource estimate for the project. Montero will use this

Report in support of a press release dated 16 November 2011, titled “Montero

Identifies an Inferred Mineral Resource of 32.8 M Tonnes Grading 7.15% P2O5,

Capable of Producing an Acid-Grade Phosphate Concentrate, At the Duyker Eiland

Project, South Africa”.

1.2 Location and Ownership

The Property is located in the Western Cape Province, South Africa, approximately 18

km north of Vredenburg and 140 km north-northeast of Cape Town, the provincial

capital.

Montero Projects Limited (MPL), a wholly-owned subsidiary of Montero, owns a 74%

interest in the Property. Ventonet (Proprietary) Limited (Ventonet) owns the remaining

26%. Ventonet is subject to a five-year lock-in period, during which it may not dispose

of its shares on the Property.

The Property includes prospecting rights for phosphate mineralization on Portion 1 of

the Farm Skuitjesklip 22, and Portions 4, 5 and 7 of the Farm Duyker Eiland 6, located

in the Western Cape Province, Magisterial District of Malmesbury. The prospecting

rights extend over 1,921.2 ha. No surface rights have been obtained. Exploration

activities have been undertaken through agreements with local property owners.

1.3 History

In the 1940s and 1950s, AMCOR conducted mineral exploration on various phosphate

prospects in South Africa, and identified the presence of citric-soluble phosphates in

the Property.

During the 1960s, African Explosives and Chemical Industries Limited (AECI)

conducted drilling and pitting on the Property. Historical records of the exploration

drilling program have been lost.






No other exploration activities were carried out on the Property until February 2011,

when Montero conducted the drilling campaign which is the subject of this Report. No

mineral production has ever been reported for the property.

1.4 Geology

The regional geology is marked by the presence of numerous outcrops of

Cambrian/Neoproterozoic granites of the Cape Suite, and Tertiary/Quaternary

sediments consisting of calcareous and aeolian sands, calcretes and phoscretes.

In the Property, a portion of the Vredenburg granitic pluton is overlain by sediments of

the Varswater Formation, which is part of the Miocene-Pliocene Sandveld group, and

limestones and calcarenites of the Pleistocene Langebaan Formation.

At the Property, sands, clayey sands and gravels from the Varswater Formation overlie

the Vredenburg granite, which crop out at prominent, weather-resistant small hills at

the east and south east of the Property. The phosphate-rich, Varswater Formation

sediments are partially overlain by limestones of the Langebaan Formation, which is

exposed on top and along the shoulders of the small hill that dominates the

topography of the area.

The phosphate deposit predominantly consists of unconsolidated phosphatic sand with

sporadic intercalations of hard, well-cemented layers. Three phosphatic horizons have

been identified: lower and upper, relatively phosphate-rich zones, and a low-grade,

middle zone, all lying on a largely barren footwall. The phosphatic sediments have

either subhorizontal or shallow westerly/easterly dips. The phosphate mineralization

occurs as rounded and sub-rounded, polished collophane grains.

1.5 2011 Exploration

During the 2011 exploration campaign, Montero drilled 32 holes. Of these, six holes

were abandoned due to equipment failure and low recovery issues, and 26 holes,

totalling 613 m (23.6 m average length), were drilled on a 400 m x 200 m approximate

grid. Drilling was vertical. Due to difficulties in recovering the loose-sand material,

drilling used the dry, reverse circulation (RC) method. The sampling interval was 1 m.

In general, the phosphate-rich horizons (Lower, Middle and Upper Zones) present

good continuity within a 2.0 km (north-south) by 1.5 km (east-west) area, although the

horizons are not equally represented: whereas the Middle Zone is present in most of

the area, the Upper Zone was identified in the eastern half and in one drilling line in the






western half, and the Lower Zone is constrained to a 200 m to 500 m wide, N-S-

oriented band on the eastern half of the Property.

Considering all mineralized intersections, the phosphate-rich horizons have the

following average grades: Lower Zone, 7.93% P2O5; Middle Zone: 2.45% P2O5; and

Upper Zone: 7.16% P2O5. The MgO grades in the phosphate-rich horizons range from

0.04% to 1.07%, averaging, 0.24%. The U3O8 content does not exceed 22 ppm.

No density determinations were conducted, mainly due to the disintegrated nature of

the recovered material. For the purposes of resource estimation, a bulk density value

of 1.82 g/cm3 was assumed by analogy with a similar deposit in the Western Cape

area.

Recovery of representative samples was difficult due to the nature of the material

intersected in the drill holes, namely loose mineralised phosphatic sands alternating

with hard limestone horizons containing dissolution cavities and minor consolidated

sandstone levels. As a result, sample recovery was poor, and it is difficult to confirm

whether the samples are representative of the in-situ material.

In spite of efforts to obtain acceptable recoveries, nearly 50% of the samples from

mineralized horizons had recoveries lower than 60%. Recoveries were also poor in

samples with P2O5 exceeding 5%. Low recovery affected the sample representativity,

resulting in potential sampling bias.

Due to the lack of density determinations and the poor recovery, the information from

the 2011 campaign can be used to estimate Inferred Mineral Resources only.

1.6 Mineral Resource Estimate

AMEC estimated phosphoric anhydride (P2O5), calcium oxide (CaO) and magnesium

oxide (MgO) grades, and also the thickness of the mineralized strata using the inverse

distance weighting (ID) estimation method.

Differences between -2.5 m and 8.0 m, with an average of 2.3 m, were identified in the

3-D topography compared with collar elevations. Collar coordinates were recently

surveyed and are considered more accurate than the elevations that were digitized

from a small-scale map; hence, the new ones were used as the basis for performing

the mineral resource estimate.

Five zones were modeled. The Upper and Lower zones are the richest strata; the

Middle zone is a lower-grade stratum. The Overburden and Footwall are considered

waste. Geological composites were generated with one single composite per






stratigraphic zone and drill hole; a total of 87 composites were obtained for use in

resource estimation.

AMEC built a 2-D block model for each geological zone with regular dimensions of 5 m

x 5 m in the eastern and northern directions. The block model extends on an area of

approximately 1.4 km x 2.2 km (3 km2).

The thickness was interpolated for the five strata while the grade interpolation was only

carried out in the three mineralized strata: Upper, Lower and Middle.

The inverse distance squared method (ID2) was applied to estimate the grades and

inverse distance to the fourth power method (ID4) was used to estimate thickness.

The accumulation of P2O5, CaO and MgO in mineralized zones was calculated, and

consisted of multiplying the grades by the thicknesses.

Reasonable prospect of economic extraction was determined by applying an economic

filter. The deposit is shallow and AMEC looked at what cells have enough phosphate

to pay for the removal of the Overburden and Middle zone waste.

AMEC assumed a phosphate price of US$140/t of phosphate concentrate1, a mining

recovery of 90 %, a concentrate grade of 30% P2O5 (65.6% PBL2) a metallurgical

recovery of 85 %, a mining cost of US$5/t and a processing cost of US$10/t. The

US$140/t price is considered conservative, taking into consideration that the average

price during the last five years for 70% BPL phosphate rock has been US%152/t3. The

phosphate cut-off grade calculated from these parameters was 3.00% P2O5.

The Qualified Person for the phosphate resource estimate is María-Angélica

González. The effective date for the estimate is 27 September 2011, corresponding to

the completion date. The mineral resources tabulated in Table 1-1 are based on

recoverable phosphate resources. This exploitation requires the extraction of 5.0 Mt of

overburden.

1.7 Metallurgical Testing

Preliminary flotation tests were conducted at the Centre for Mineral Research

(Chemical Engineering Department, University of Cape Town), under the supervision

of Turgis Consulting. The tests used a composite of material from the three

1 The phosphate price was estimated considering information provided by Turgis (2009) and an average price in a two-year period from www.infomine.com. 2 In the North American phosphate industry, the phosphate content of the rock is usually expressed as

tricalcium phosphate, and traditionally referred to as bone phosphate of lime (BPL=P2O5 × 2.1853). 3 www.indexmundi.com/commodities

http://www.infomine.com/






mineralized zones, prepared from RC material from four drill holes along the eastern

margin of the deposit.

Table 1-1: Inferred Phosphate Mineral Resources, Effective Date 27 September 2011,

María-Angélica González, Senior Mining Engineer, R.M. (C.M.C.)

Mineralized Zone

Tonnage Mean

Thickness P2O5 MgO CaO

Accumulation

P2O5 MgO CaO

(Mt) (m) (%) (%) (%) (m•%) (m•%) (m•%)

Upper Zone 16.1 7.1 7.73 0.21 13.59 54.3 1.5 96.8

Middle Zone 7.5 6.4 3.66 0.08 6.51 23.3 0.6 42.6

Lower Zone 9.2 4.9 9.02 0.:21 15.84 44.8 1.0 80.2

Total/Weighted Mean

32.8 18.4 7.15 0.18 12.59 44.5 1.2 79.7

Notes to Accompany Inferred Phosphate Mineral Resource Table 14-5: 1. Blocks of the Middle zone are classified as Mineral Resources if the blocks of the Lower zone,

located below in the column, qualify as mineral resources 2. Mineral resources are defined as blocks for which there is sufficient phosphate to pay for the

stripping of the material column over them and reported at a 3.00% P2O5 cut-off grade 3. Mineral resources are reported using concentrate prices of US$140/t of phosphate concentrate; a

mining recovery of 90%; a metallurgical recovery of 85%; a mining cost of US$5/t and a processing cost of US$10/t

4. Tonnages are rounded to the nearest 100,000 t; grades are rounded to two decimal places and accumulations are rounded to one decimal place

5. Rounding as required by reporting guidelines may result in apparent summation differences between tonnages, grades and accumulations

6. Tonnage, grade and accumulation measurements are in metric units.

Samples were milled using a rod mill. Sodium carbonate was added to increase the pH

and act as a regulator in the flotation. The milled samples were washed and then

decanted on a 25 μm screen to remove excess slime. The decanted material was

washed into a flotation cell. Flotation reagents were added after the pH adjustment,

and the slurry was further conditioned. The float cell was a modified Leeds cell, with

3 L capacity. Both the speed and the airflow were adjusted to visual optimum.

As a result of the flotation tests, it was determined that two possible reagent suites can

produce a phosphate concentrate in excess of 30% P2O5: one based on a hydroxamic

acid reagent coded A2 AM2, gave the best results; a reagent coded SR6-6 also

showed ability to produce required grade. In all tests, diesel oil was required as a

promoter assisting agent.

The U3O8 content in flotation products ranged between 20 ppm and 48 ppm.






In conclusion, an acid-grade phosphate concentrate of 33% P2O5 to 35% P2O5 (72.1%

BPL to 76.5% BPL) can be produced by flotation. By optimizing the flotation

conditions, fair recoveries reaching up to 80% could be achieved.

1.8 Risks and Opportunities

The Property is at an early exploration stage. Key risks identified were as follows:

The loose nature of the phosphate-rich material makes it difficult to obtain good

recoveries with conventional drilling methods. Future drilling should consider a

drilling solution able to overcome this, such as sonic drilling.

This exploitation requires the extraction of 5.0 Mt of overburden.

There is an upside potential of increasing the resource base by expanding the

drilling program mainly to the north and west, the deposit being still open in those

directions. In particular, historical information suggests the presence of additional

mineralization at shallow depths to the north.

1.9 Conclusions

The QPs, as authors of this Report, have reviewed the data for the Property and are of

the opinion that:

Information from legal experts supports the validity of the mining tenure.

Montero does not hold surface land rights, but an agreement for the use of the

Property area during the exploration has been signed. No royalties will be paid on

production.

At the effective date of this report, no significant environmental liabilities have been

originated by Montero.

Exploration to date has been conducted in accordance with the appropriate

regulatory requirements

Permitting, environmental and social and community impact studies have yet to be

performed.

There are reasonable expectations that sufficient labour and infrastructure is

available to support declaration of Mineral Resources.

There is sufficient area within the Project to host an open pit mining operation,

including the proposed open pits, mine and plant infrastructure, waste rock and

tailings storage facilities.






The regional setting and the local geology of the Property are adequately

understood and can support the declaration of Mineral Resources.

The deposit type has been correctly understood, and its main features have been

used to guide the exploration campaign.

The exploration conducted by Montero in the Property was in accordance to the

known deposit type. The drilling campaign focused on the southern portion of the

area covered by AECI‟s earlier program.

Collar surveys were conducted using high-quality, differential GPS equipment. Due

to the shallow depth of the drill holes, no down-hole surveys were conducted. In

AMEC´s opinion, the survey data collected during the 2011 exploration program

are sufficiently accurate to support Mineral Resource estimation.

No density determinations were conducted during the 2011 exploration campaign.

A density value was assigned by analogy to a similar deposit in the region that had

been the subject of historic mining. Due to the lack of density determinations, the

Mineral Resources can be classified only as Inferred.

The drill-hole orientation was appropriate for the mineralization style.

The sampling interval was representative of the P2O5 grade distribution, and allows

the identification of areas of higher and lower grades.

Sample collection and handling of RC cuttings was undertaken in accordance with

industry-standard practices.

Drill logging met industry standards.

Drill intercept widths approximately represent true widths.

Drill-hole intercepts, as summarized in Table 10-2, appropriately reflect the nature

of the phosphate mineralization.

In spite of the widely-spaced drilling grid, the mineralized horizons exhibit

reasonable continuity along the drilled areas.

Nevertheless, low recovery in many intervals affected the sample representativity,

resulting in potential sampling bias. In this situation, the sampling data does not

support the estimation of Indicated or Measured Mineral Resources.

The sample preparation and analytical methods and procedures were adequate for

this type of deposit and material. SS has implemented a careful QP protocol in

order to monitor precision, accuracy and contamination.

Sample security was ensured in accordance with exploration best practices and

industry standards.






No significant differences between the collar coordinates measured with a hand-

held GPS and the coordinates recorded in the project database were observed.

Survey, logging, sampling and assay data were properly transferred into the

project database. AMEC did not identify any transcription errors during database

checks consisting in comparing the original survey, logging and assay data with

the data recorded in the project database.

The geological interpretation generally respects the observed RC cutting and data

recorded in the logs and the sections, as well as the interpretation from adjoining

sections, and is consistent with the known characteristics of this deposit type.

The lithologic model has been diligently constructed in conformance to industry-

standards practices.

The QC program implemented by Montero complied with the most stringent

international standards. This program considered every aspect of the exploration

process, and ensured the timely assessment of precision, accuracy and possible

contamination.

The sampling, sub-sampling and analytical precisions and accuracies for P2O5, CaO and MgO were within acceptable limits.

No significant P2O5 cross-contamination during sample preparation and assaying

was identified.

Preliminary flotation tests have indicated that an acid-grade phosphate concentrate

of 33% P2O5 to 35% P2O5 (72.1% BPL to 76.5% BPL) can be produced by flotation.

By optimizing the flotation conditions, improved recoveries that may be as high as

80% could be achieved.

The differences up to 8 m found between the topography contour lines and the

drill-hole collars could impact over the 3-D interpretation of the mineralized

surfaces.

Multiple grade populations were grouped in the same estimation domains. The

data available were insufficient to perform the variography and study the spatial

continuity and arbitrary geological criteria were taken.

Validation of the block model indicated that the differences between the two

alternative P2O5 and thickness estimates showed acceptable bias for all the

mineralized strata (less than 5%). Higher global biases were found in the

estimation of CaO and MgO within the Middle zone. Results obtained from swath

plots showed a closer match between the different types of estimate in the north-

south direction compared with the east-west, reflecting better grade continuity in

the north-south direction.






Current drill hole spacing is sufficient only to support Inferred Mineral Resources.

Another area of uncertainty which may materially impact the mineral resource

estimate is changes to the economic and recovery parameters used to define a

reasonable prospect of economic extraction.

The presence of phosphate-rich deposits, as previously indicated by historic drilling

and pitting data, has been confirmed by the 2011 drilling program.

The phosphate-rich horizons the phosphate-rich horizons remain open-ended in

most directions but southwest. However, potential in the eastern and southern

directions is limited by the close outcrop of the Vrendenburg granite. Therefore,

there is potential to expand the area of known phosphate mineralization mainly to

the west and north. In fact, historical information suggests the presence of

significant mineralization at shallow depths to the north.

In the opinion of the QPs, the information included in this Report is sufficient to

support the estimation of Inferred Mineral Resources. The proposed program for

further exploration on the Property is justified.

1.10 Recommendations

1.10.1 Specific Recommendations

Additional surface rights should be obtained to ensure suitable land for future

mining activities, tailing and waste disposal, process facilities and related mine

infrastructure.

Future work should include hydrogeological studies to locate a reasonable water

supply source.





AMEC recommends resurveying the topography.

In future, when more drill data are available, grade populations should be reviewed

to improve the estimation domain definition.

Variographic analyses are recommended when there are sufficient drill data

available.






1.10.2 Follow-up Program

AMEC has prepared a two-phase recommended work program. The first phase, which

is estimated to cost approximately US$100,000, is to complete a Preliminary Economic

Assessment (PEA).

The second phase, which is contingent on positive results from the PEA, is to conduct

a step-out and infill drill program. Future exploration at the Property should ensure

drilling recoveries over 80%. Given the difficult drilling conditions in the Property,

AMEC recommends that an alternative drilling method, such as sonic drilling, be used

in future exploration campaigns order to provide sufficient robust information for more

detailed mining studies, and support potential upgrades in Mineral Resource

confidence categories. The budget for this phase should be established after the

completion of Phase 1.






2.0 INTRODUCTION

At the request of Mr. Antony Harwood, President and Chief Executive Officer (CEO) of

Montero Mining and Exploration Limited (Montero), AMEC Earth and Environmental

(UK) Limited (AMEC) was retained to compile an updated Canadian National

Instrument (NI) 43-101-compliant Technical Report (the Report), on the Duyker Eiland

Property, Western Cape Province, South Africa.

Montero will use this Report in support of a press release dated 16 November 2011,

titled “Montero Identifies an Inferred Mineral Resource of 32.8 M Tonnes Grading

7.15% P2O5, Capable of Producing an Acid-Grade Phosphate Concentrate, At the

Duyker Eiland Project, South Africa”.

2.1 Terms of Reference

This Report was prepared to support first-time disclosure of Mineral Resources on the

Project.

The work reported on here was managed by AMEC Earth and Environmental (UK)

Limited, from its office in Ashford, Kent, UK. The Qualified Persons, as identified

below, are both employees of AMEC International Ingeniería y Construcción Limitada

and are based in Santiago de Chile, Chile. Both of these companies are subsidiaries

of the UK-registered company AMEC plc. Employees from other subsidiaries of

AMEC plc have also contributed to the preparation of this Report. For the purposes of

this Report, the parent and subsidiary companies are referred to interchangeably as

“AMEC”; the full company names are specified where required for legal purposes.

All measurement units used in this Report are metric, and currency is expressed in US

Dollars unless stated otherwise. The Report uses Canadian English spelling.

2.2 Qualified Persons

The Qualified Persons (QPs) for this Technical Report are as follows:

Dr. Armando Simón, P.Geo. (AIG, APGO), responsible for Sections 1.0 to 13.0,

and 15.0 to 27.0.

María-Angélica González, R.M. (CMC), responsible for Section 14.0.

Dr. Armando Simon completed two site visits on 20 to 23 January 2011 and 28 to 31

March 2011 on behalf of AMEC in order to collect necessary field data. During the site

visits, he reviewed drilling, logging, sampling, and QA/QC practices. No other QP has






visited site. The QPs are not aware of any material scientific and technical changes to

the information on the Property between the dates of the site visit and Report signature

date.

2.3 Effective Date

The Report effective date is 27 September 2011, corresponding to the completion

date.

2.4 Previous Technical Reports

No previous technical reports have been prepared on the Property.

2.5 References

Information that supports the Report has been obtained from Montero, or external

consultants as per Section 3.0, or has been prepared by, or under the supervision of

the QPs. Reference documents are cited in the text as appropriate and summarized in

Section 27.0 of this Report.






3.0 RELIANCE ON OTHER EXPERTS

The QPs state that they are qualified persons for those areas as identified in the

relevant “Certificates of Qualified Person” attached to this Report. The QPs have

relied on, and believe there is a reasonable basis for this reliance, upon the following

reports of other experts, which provided information in sections of this Report as noted

below.

3.1 Company Ownership and Agreements

For information relating to the status of ownership and agreements, AMEC has fully

relied upon, and disclaims responsibility for information derived from legal experts,

prepared by Werksmans Incorporated Jan S. De Villiers (Werksmans), located at 155

5th Street, Sandton 2196, South Africa, telephone 27-11-535 8000, dated 9 April 2010

(Werksmans, 2010b), 1 September 2011 (Werksmans, 2011a) and 2 December 2011

(Werksmans, 2011b). This information is used in Section 4.2 of the Report.

3.2 Mineral Tenure

AMEC has not reviewed the mineral tenure, nor independently verified the legal status,

ownership of the Property area, underlying property agreements or permits. AMEC

has fully relied upon, and disclaims responsibility for information derived from legal

experts, through documents prepared for Turgis Consulting (Proprietary) Limited

(Turgis) by Werksmans, dated 23 March 2010 (Werksmans, 2010a), and for MPL by

Werksmans, dated 1 September 2011 (Werksmans, 2011a) and 2 December 2011

(Werksmans, 2011b). This information is used in Section 4.3 of the Report.

3.3 Surface Rights

The QPs have not reviewed the current status of the surface rights. The QPs have fully

relied upon, and disclaims responsibility for information derived from legal experts,

through a document prepared for MPL by Werksmans, dated 1 September 2011

(Werksmans, 2011a). This information is used in Section 4.4 of the Report.

3.4 Royalties

The QPs have not reviewed the royalty policy. The QPs have fully relied upon, and

disclaims responsibility for information derived from legal experts, through a document

prepared for MPL by Werksmans, dated 2 December 2011 (Werksmans, 2011b). This

information is used in Section 4.5 of the Report.






3.5 Environmental Issues

For information relating to the status of environmental permits, AMEC has fully relied

upon, and disclaims responsibility for information derived from legal experts, prepared

by Werksmans, dated 9 April 2010 (Werksmans, 2010a). This information is used in

Section 4.6 of the Report.






4.0 PROPERTY DESCRIPTION AND LOCATION

4.1 Location

The Property is located in the Western Cape Province, in the Republic of South Africa

(RSA), approximately 18 km north of Vredenburg and 140 km north-northeast of Cape

Town, the provincial capital (Figure 4-1). The geographical coordinates of the center of

the Property are 32°45' S and 17°57' E (UTM coordinates: 6,372,500 m S and 776,300

E, zone 33H, datum WGS84). The Property covers approximately 1,921 ha.

Figure 4-1: The Duyker Eiland Property Location Map






4.2 Company Ownership and Agreements

Various companies are involved in the Property ownership. Inter-relations between

these companies are explained below (Werksmans, 2010b; Werksmans, 2011a;

Werksmans, 2011b):

Montero was incorporated on 2007 in Canada with registration number

BC0771057 (contact address: Suite 400 – 20 Adelaide Street East, Toronto, ON,

M5C 2T6, Canada; registered address: 1900 - 1040 West Georgia St.

Vancouver, BC V6E 4H3, Canada). Montero is listed in the Toronto Venture

Exchange (TSX-V: MON), and its shares are traded since 15 February 2011.

Montero Projects Limited BVI (MPL) is a wholly-owned subsidiary of Montero.

MPL acquired the entire issued share capital of Eurozone Investments Limited

(Eurozone) as a result of the agreement signed between MPL and Celtic Trust

Company Limited (Celtic) on 18 October 2010, amended on 18 July 2011.

Mellosat (Proprietary) Limited (Mellosat) is a fully owned subsidiary of Eurozone.

Midnight Moon Trading 231 (Proprietary) Limited (MMT) is a fully-owned

subsidiary of Mellosat, incorporated on 2 October 2008 in the RSA with registration

number 2008/023102/07. Mellosat's former name was Phosco SA (Proprietary)

Limited, and such name change was effected on 7 December 2009.

Phosco Duyker Eiland (Proprietary) Limited (Phosco), previously known as

Burgundy Rose Trading 5 (Proprietary) Limited (Burgundy), was incorporated on

20 May 2008 in the RSA with registration number 2008/012553/07. Phosco´s

shareholders are MMT (seventy four ordinary shares) and Ventonet (Proprietary)

Limited (Ventonet; twenty six ordinary shares).

For the purposes of compliance with the black empowerment imperatives of the

Republic of South Africa, Ventonet is subject to a five-year lock-in period, during

which it may not dispose of its shares on Phosco (previously Burgundy).

4.3 Mineral Tenure

According to Werksmans (2010a), the Property includes prospecting rights for

phosphate mineralization granted to Phosco, on the terms of section 17(1) of the

Mineral and Petroleum Resources Development Act, No 28 of 2002 (MPRDA), on

Portion 1 of the Farm Skuitjesklip 22, and Portions 4, 5 and 7 of the Farm Duyker

Eiland 6, located in the Western Cape Province, Magisterial District of Malmesbury.

The prospecting rights extend over 1,921.2132 ha. Details of the granted prospecting






rights, including the geographic coordinates of the property corners, are included in

Figure 4-2.

Figure 4-2: Boundaries of the Duyker Eiland Prospecting Rights

Source: Montero

The prospecting rights were registered on 27 July 2009 with Nr.

WC30/1/1/5/2/3430PR. Unless cancelled or suspended in terms of section 47 of the

MPRDA, the validity of the prospecting rights extends until 26 July 2012.

A provision in clause 3.2 of the Duyker Eiland prospecting right stated that

“prospecting operations must commence within one hundred and twenty days from the

date on which the prospecting right becomes effective, being 27 July 2009, or any later

date as may, upon written requires to the Minister, be authorised”. According to

Werksmans (2011a), “prospecting operations” are defined in the MPRDA as “any

activity carried on in connection with prospecting”, and concluded that the Preliminary

Evaluation conducted by Turgis (2009) was undertaken within the one hundred and

twenty day period (Werksmans, 2011a).

Werksmans (2011a) reviewed the shareholders agreement between MMT and

Ventonet, as amended, in respect of Phosco, and confirmed that such agreement is a






fairly standard agreement and no material issues of concern arise there from.

Werksmans (2011a, 2011b) pointed out that appropriate lock-ins (for a period of five

years) for the purposes of the protection of the Broad-Based Black Economic

Empowerment imperatives of the Mining Charter and the MPRDA have been

adequately addressed.

4.4 Surface Rights

Montero does not hold surface rights on the Property. However, on 24 January 2011

Phosco entered into a land use agreement with Bester Eiendomme Trust (Trust) for

the duration of the Duyker Eiland prospecting right for purposes of drilling thirty two

bore holes at a rate of R1,000.00 (excluding VAT) per borehole so drilled to be paid to

the Trust. The total amount of R36,480 was paid to the Trust on 4 March 2011

(Werksmans, 2011a).

4.5 Royalties

According to Werksmanns (2011b), in terms of the Mineral and Petroleum Resource

Development Royalty Act 28 of 2008 (Royalty Act; RSA, 2008), the only royalty

payable in respect of minerals won in terms of the relevant mining rights, is payable to

the State. All other royalties that may have been payable have been abolished since

the entry into force of the Royalty Act.

The Royalty Act (RSA, 2008) indicates that phosphate rock and concentrates are

classed as unrefined mineral products. In this case the royalty is calculated using the

following formula:

where EBIT represents earnings before interest and taxes, and GS represents gross

sales in respect of unrefined mineral resources. The Royalty Act states that royalties

for unrefined mineral products must not exceed 7%.

4.6 Environmental and Socio-Economic Issues

According to Werksmans (2010a), an Environmental Management Program (EMP)

was duly approved on 27 July 2009 by the Regional Manager of the South African

Department of Mineral Resources (DMR) in terms of section 39(4) of the MPRDA.






Phosco provided the DMR a financial guarantee of ZAR465,000 to make financial

provision for the rehabilitation or management of negative impacts to the environment,

as required by section 41 of the MPRDA. To AMEC‟s best knowledge, the Property is

not currently affected by any significant environmental liabilities.

4.7 Comment on Section 4.0

In the opinion of the QP, the information discussed in this section supports the

declaration of Mineral Resources, based on the following:



Property area during the exploration has been signed. Additional surface rights

should be obtained to ensure suitable land for future mining activities, tailing and

waste disposal, process facilities and related mine infrastructure.

No royalties will be paid on production.





Additional permits will be required for Project development.

4 ZAR: South African rands.






5.0 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES,

INFRASTRUCTURE AND PHYSIOGRAPHY

5.1 Access

The Property is located at the Saldanha Bay municipality (population 81,000), Western

Cape province, approximately 18 km north of Vredenburg and 140 km north-northeast

of Cape Town.

Access to the Property from Cape Town is via paved roads (R27-R45 to Vredenburg,

approximately 130 km), and then by the Vredenburg-St. Helena Bay dirt road, which

crosses through the eastern part of the area (approximately 15 km; Figure 5-1).

Alternatively, the property can be accessed from Vredenburg via Paternoster through

the R399 road, and then by a local dirt road (approximately 17 km).

Figure 5-1: Access Map

Source: www.google.com Map north is to top of plan. Area covered by the image is approximately 25 km from top to base, and 36 km across the plan.

Driving outside the established roads is possible through most of the Property.

However, due to the loose and finely sandy soil, four-wheel drive vehicles should be

used, even in nearly flat-lying locations.

The Saldanha Bay port (30 km south of the Property), the deepest and largest natural

port in South Africa, could be used to ship any mineral product from the Project.

http://www.google.com/






5.2 Physiography

A prominent north-south trending limestone ridge (Soetlandskop), with elevations up to

150 m amsl, forms the core of the Property. This elevation, with low-dipping slopes, is

surrounded by flat-lying areas and, with elevations ranging from 5 m to 80 m amsl.

Figure 5-2: Satellite View of the Duyker Eiland Property

Source: www.google.com

5.3 Climate

The Property area has a Mediterranean-type climate. Average mid-day temperature

ranges between 16.6°C in July and 25.3°C in February. In July, the temperature drops

to 8°C on average during the night. The average annual precipitation at Paternoster is

203 mm. Average monthly rainfalls range between 1 mm in February and 39 mm in

June.

The climate does not affect mineral exploration and other ground-based operations.

For the time being, mineral exploration can only be conducted in periods between

plantations, but once the proper permits have been obtained from the land owner,

exploration and mining operations could take place year-round.

5.4 Vegetation and Fauna

The Property area is relatively dry and windswept. Vegetation is of semi-arid type with

scarce bushes and trees in the lower elevations of the valleys. According to Turgis

(2009), the following vegetation types occur in the area:

http://www.google.com/






Saldanha Limestone Strandveld;

Saldanha Flats Strandveld

Saldahna Granite Fynbos

Azonal Cape Wetlands and Vernal Pools.

The first three types are listed as endangered, with the Azonal Cape Wetlands and

Vernal Pools being critically endangered. Current agricultural activities in the Property

have destroyed the Dune Strandveld Scrub and the Saldanha Flats Strandveld

vegetation.

The Property is located at the southern point of the bird migratory route from Europe,

which has resulted in more than 250 bird species being recorded in the neighbouring

areas. The nature and presence of other animals which could potentially be impacted

upon by the proposed development is unknown.

5.5 Local Resources and Infrastructure

The Saldanha Bay port is mainly used for iron-ore exports, but steel processing plants

and related down-stream activities are diversifying its activity. Major economic sectors

of the municipality include manufacturing, transport and communications, wholesale,

retail and tourism, agriculture, forestry and fishing, finance and business services5.

The population of St. Helena Bay and neighbouring areas used to be dedicated to

fishing, but a number of fisheries have been closed in recent years. Tourism is

increasingly taking its place as a major economic endeavour in the area, with

numerous motels and houses for rental at Paternoster and other coastal settlements.

The prominence of tourism in current local life may produce a negative impact in the

local population support for future mining activities, which has to be carefully assessed

by environmental and social-impact studies.

Local infrastructure is excellent. Good cell phone coverage is available throughout the

area. Access to the national power grid is possible, as various power lines pass

through the Property. Personnel with mining experience are available within the

Western Cape Province.

The Property land is currently used for agricultural purposes (mainly wheat and

pasture). Farming operations (dairy farming) and worker residences are found in the

vicinity of the Property.

5: http://www.westerncapebusiness.co.za/pls/cms/ti_regout.munic?p_site_id=127&p_rid=6

http://www.westerncapebusiness.co.za/pls/cms/ti_regout.munic?p_site_id=127&p_rid=6






According to Turgis (2009), a baseline groundwater assessment conducted at the

Property in August of 2008 identified groundwater level at 10 m to 20 m depth, the

aquifer yielding between 0.0 L/s and 0.1 L/s, and with average recharge ranging

between 10 mm and 15 mm per annum. The groundwater potential at the Property

was assessed as low, as well as the potential for the proposed mining activities to

impact on groundwater resources. No permanent water streams are found at or near

the Property. A single, non-perennial stream draining westward transects the project

area at its southeast corner. Future work should include hydrogeological studies to

locate a reasonable water supply source.

5.6 Comments on Section 5.0

In the opinion of the QP:

The possible impact of future mining activities should be assessed by

environmental and social-impact studies.







supply source.

It is a reasonable expectation that any surface rights to support Project

development and operations can be obtained through negotiation and agreement.

It is expected that any future mining operations will be able to be conducted year-

round.






6.0 HISTORY

The phosphate deposits located around Saldanha Bay were known for many years by

the local population, but more detailed studies were first conducted starting from the

early 1900s (Visser and Schoch, 1973).

In the 1940s and 1950s, AMCOR conducted mineral exploration on various phosphate

prospects in South Africa (Boardman, 1961; Visser and Schoch, 1973). Through

shallow pitting and sampling in the Skuitjiekslip farm, AMCOR identified the presence

of citric-soluble phosphates in calcareous sands in the area, and performed a

conceptual tonnage and grade estimate.

During the 1960s, African Explosives and Chemical Industries Limited (AECI)

conducted drilling and pitting on a 3.0 km by 0.5 km area extending over the

Skuitjiesklip, Skoongesig and Stompneusbaai farms (Figure 6-1). Although AECI‟s

primary purpose was to provide blasting explosives and detonators to South African

gold and diamond mines, the company was also the only South African producer of

phosphatic fertilizer. AECI completed a mineral resource estimate, and conducted

flotation tests, obtaining a concentrate with 33.0 % P2O5 (87 % collophane). Historical

records of the exploration drilling program are not available (Turgis, 2010).

A similar phosphate deposit was mined until recent years by Samancor at

Langebaanweg, about 25 km southeast of the Property (Figure 6-2). This phosphate

was sold for direct use as fertiliser, although some upgrading was done by mixing with

other components, such as ammonium sulphate (Turgis, 2009, 2010).

In 2009, Turgis prepared a preliminary evaluation of the Property for Phosco (Turgis,

2009) on the basis of AECI‟s historical estimate. Turgis (2009) assessed three

possible open-pit production scenarios:

1.5 Mt/a of run of mine (RoM) phosphate mineralized material

2.0 Mt/a of RoM phosphate mineralized material

3.0 Mt/a of RoM phosphate mineralized material.

http://en.wikipedia.org/wiki/Explosive

http://en.wikipedia.org/wiki/Gold

http://en.wikipedia.org/wiki/Diamond

http://en.wikipedia.org/wiki/Phosphate

http://en.wikipedia.org/wiki/Fertilizer






Figure 6-1: AECI Historical Drill Holes and Prospecting Pits at Duyker Eiland

Source: Turgis (2010)

The evaluated process, based on analogy with existing Florida operations, considered

obtaining a 30% P2O5 concentrate with 85% recovery through limited grinding, de-

sliming and flotation.

Turgis (2009) concluded that the project deserved further investment and investigation,

and that there were no apparent environmental fatal flaws, although he recommended

exhaustive an investigation of potential risks and environmental and social aspects

should the project advance to feasibility study stage.

No other exploration activities were carried out on the Property until February 2011,

when Montero conducted the drilling campaign which is the subject of this Report. No






mineral production has ever been reported in the property. The prospecting rights at

the Property are currently held by Phosco (Section 4.3).

Figure 6-2: Location of the Old Langebaan Phosphate Mine

Source: Turgis (2009). Map north is to top of plan.






7.0 GEOLOGICAL SETTING AND MINERALIZATION

7.1 Regional Setting

The regional geology is marked by the presence of numerous outcrops of

Cambrian/Neoproterozoic granites of the Cape Suite, and Tertiary/Quaternary

sediments consisting of calcareous aeolian sands, calcretes and phoscretes.

In the Property, a portion of the Vredenburg granitic pluton is overlain by sediments of

the Varswater Formation, which is part of the Miocene-Pliocene Sandveld Group, and

limestones and calcarenites of the Pleistocene Langebaan Formation (Roberts, 2006;

Turgis, 2010; Figure 7-1). In some areas, though, the Sandveld Group is underlain by

carbonaceous fluvial sediments of the Neogene Elandsfontyn Formation, or by meta-

sediments of the Malmesbury Group (Roberts, 2006; Figure 7-2).

Figure 7-1: Geologic Map of the Duyker Eiland Region

Source: Turgis (2010). Map north is to top of plan.






Figure 7-2: Cross-Section Showing the Stratigraphic Position of the Varswater

Formation

Source: Roberts (2006)

According to Roberts (2006), the Varswater Formation is formed of sand, clayey sand

and gravel relating to a series of sea level fluctuations. This formation is characterized

by the presence of phosphatic material. The Varswater Formation was separated in

four members (Figure 7-3):

Langeenhaid Clayey Sand Member, mainly consisting of sporadically phosphatic

clayey sand (structureless, rounded, pale greenish-yellow, fine to very fine quartz

grains), with intercalations of dark to grey-black carbonaceous clays (average

thickness: 10.0 m; maximum thickness: 11.5 m).

Konings Vlei Gravel Member, formed of brownish, spherical to discoidal, mainly

well-rounded and polished phosphorlte clasts, up to 0.6 m in diameter; partly

ferruginised, grading to coarse sandy gravel in places. The matrix comprises

slightly silty sand with pelletal phosphorite and yellowish phosphatized shell

fragments (average thickness: 1.5 m; maximum thickness: 3 m).

Langeberg Quartz Sand Member, composed of light-gray, fine- to medium-grained,

moderately sorted, quartz sands, usually lacking phosphates, with minor

intercalations of clays and lignitic clays (average thickness: 1.5 m; maximum

thickness: 2.5 m).

Muishond Fontein Phosphatic Sand Member, formed of light-brownish gray, fine-

to coarse-grained, moderately sorted, phosphatic quartzose sand. Two kinds of

phosphatic material have been described: coarse-grained, amber-coloured shell

fragments comprising authigenic carbonate apatite, and peIIetaI phosphorite. This






sand is generally soft and weakly cemented by calcareous material, but

occasionally hard and well cemented by phosphorite. At least three such horizons

were identified at the Varswater Quarry (average thickness: 15 m; maximum

thickness: 20 m).

Figure 7-3: Typical Stratigraphic Column of the Varswater Formation

Source: Roberts (2006)

The boundaries between the four members are sharp. The boundary between the

Konings Vlei Gravel and the underlying Langeenheid Clayey Sand members is marked

by the presence of a clay-pebble conglomerate.

The sediments of the Varswater and the Langebaan Formations at the Duyker Eiland

region are usually sub-horizontal or very shallow-dipping (less than 5°) with N-S strike.

7.2 Local Geology

The local geology was studied during the 2011 exploration campaign conducted by

Montero. The following description is summarized from Cullen (2011).






At the Property, sands, clayey sands and gravels from the Varswater Formation overlie

the Vredenburg Granite, which crops out in prominent, weather-resistant small hills at

the east and south east of the Property. The phosphate-rich, Varswater Formation

sediments are overlain by limestones of the Langebaan Formation, which is exposed

on top and along the shoulders of the small hill that dominates the topography of the

area (Figure 7-4).

The phosphate deposit predominantly consists of unconsolidated phosphatic sand with

thin, sporadic intercalations of hard, well-cemented layers. Three phosphatic horizons

have been identified: lower and upper zones, both relatively phosphate rich, and a low-

grade, middle zone, all lying on a largely barren footwall. The phosphatic sediments

have a subhorizontal or shallow westerly/easterly dip (Figure 7-5).

7.2.1 Lithostratigraphic Units

A direct correlation has not been established between local lithostratigraphic units and

the stratotype of the Vaarswater Formation, defined by Roberts (2006) on a location 30

km to the south of the Property. However, on the basis of geological mapping, and RC

drilling, Cullen (2011) recognized a broad correlation, as described below:

Basement granite (Vredenburg Pluton): Locally observed on the hills east and south of

the deposit. It was intersected occasionally in the drill holes, which were halted once

granitic chips were observed. In some instances, weathered „saprolitic‟ grey clay is

observed. Fresh granite chips are grey-coloured, coarse-grained (>0.5 cm), with

approximately 25% plagioclase, K-feldspar and quartz, as well as prominent biotite. No

significant thickness was drilled.

Contact Grit: Occasionally observed towards the lower contact of the phosphatic

horizons; it generally contains coarse fragments of granitic material, as well as coarse

sand and sandstone fragments. It was also observed in the field and may reach a few

meters thickness (less than 2 m thickness in boreholes).

Footwall Clayey Sand and Clays (Vaarswater Formation, Langeenheid Clayey Sand

Member equivalent): These clayey sands and clays occur at the footwall. Their

thickness ranges from 1 m in the eastern part of the Property to 12 m in the western

part.






Figure 7-4: Preliminary Geological Map of the Duyker Eiland Property

Source: Patrick Cullen






Figure 7-5: Typical Cross-Sections of the Duyker Eiland Property

Source: Patrick Cullen; Note: Vertical exaggeration of approximately 1.5 times

Footwall Sand (Vaarswater Formation, Langeberg Quartz Sand Member/lower

Muishond Fontein Member equivalent): Poorly phosphatic, generally pale-coloured,

fine- to medium-grained, rounded to sub-rounded, moderately sorted sands. Fossils

are common, especially broken fragments of echinoderm spines and rare oyster

shells. Elsewhere, land snail shells fragments are observed, which demonstrates that

the environment fluctuated between shallow marine, beach and aeolian sands at

various periods. Thickness varies from 2 m to 19 m.

Lower Zone (Vaarswater Formation, Muishond Fontein Member equivalent):

Phosphatic sands ranging in thickness from 1 m on the eastern margin to a maximum

of 9 m, including with weekly cemented, thin intercalations of sandstones. Collophane

grains are often abundant and visible under hand lens or microscope, generally brown

to yellow-brown, sub-rounded, flattened or poorly spherical grains. A 1 m to 3 m thick






marker band is commonly observed within the unit, which is characterized by the

presence of Fe-oxide staining resulting in red-brown or pale-brown color.

Middle Zone (Vaarswater Formation, Muishond Fontein Member equivalent): Poorly

phosphatic, grey-orange to yellow-orange, generally moderately sorted, fine-grained

sands, and occasional weekly cemented sandstones, ranging in thickness from 3 m to

16 m. Only scattered or occasional collophane grains are observed.

Upper Zone (Vaarswater Formation, Muishond Fontein Member equivalent):

Phosphatic sands and cemented sandstones ranging in thickness from 1 m on the

eastern margin, where they are exposed at surface or lie directly below thin soil cover,

to 13 m along the north-south-trending central area of the deposit. The phosphatic

material is composed of collophane, which is often observed as yellow-brownish to

brownish, medium-grained, sub-rounded grains, often flattened or elongate and

distinguishable from Fe-stained, generally yellow-brownish to grey-orange, fine-

grained, moderately sorted quartz grains.

Limestone (Langebaan Formation): A light-grey calcrete unit, up to 9 m thick in drill

holes, and perhaps up to 12 m thick on the western part of the Property. Rounded

cobbles and large pebbles of igneous origin are observed at certain levels within the

calcrete. This unit is interpreted as a raise-beach deposit that was later formed within

calcified bioclastic to silliclastic arenites of aeolian origin. Rudaceous snail fossils are

also observed.

7.2.2 Description of the Mineralized Units

In general, the phosphate-rich horizons (Lower, Middle and Upper Zones) present

good continuity within a 2.0 km (north-south) by 1.5 km (east-west) area, although the

horizons are not equally represented. Whereas the Middle Zone is present in most of

the area, the Upper Zone was identified in the eastern half and in one drilling line in the

western half, and the Lower Zone is constrained to a 200 m to 500 m wide, N-S-

oriented band on the eastern half of the Property (Figure 7-6).

Considering all mineralized intersections, the phosphate-rich horizons have the

following average grades: Lower Zone, 8.92% P2O5; Middle Zone: 2.31% P2O5; and

Upper Zone: 7.53 % P2O5. Thicknesses and average P2O5 grades by zone and drill

hole are presented in Table 7-1. The MgO grades in the phosphate-rich horizons

range from 0.04% to 1.07%, averaging, 0.24%. The U3O8 content, determined in

selected samples from mineralized horizons used for flotation tests, does not exceed

22 ppm.






Figure 7-6: Distribution of Mineralized Horizons at the Duyker Eiland Property

Map north is to top of plan.






Table 7-1: Thickness and Average P2O5 Grades by Drill Hole and Mineral Zone

Lower Zone Middle Zone Upper Zone

HoleID Drilled

Thickness (m)

P2O5 (%)

Drilled Thickness

(m)

P2O5 (%)

Drilled Thickness

(m)

P2O5 (%)

DYE006 9 8.23 11 3.81 7 7.01

DYE007 NP NP 5 3.68 4 6.47

DYE008 4 13.22 6 3.17 6 6.82

DYE009 6 4.34 NP NP NP NP

DYE010 6 6.25 8 3.77 7 7.45

DYE011 6 7.05 NP NP NP NP

DYE012 4 7.96 4 3.82 1 10.19

DYE013 4 6.67 6 2.30 5 4.14

DYE014 1 5.85 6 2.55 4 13.64

DYE021 NP NP 10 0.90 NP NP



DYE024 NP NP 3 0.24 8 1.90

DYE025 NP NP 13 1.00 7 6.56

DYE026 NP NP 16 0.35 2 1.17

DYE028 NP NP 8 3.17 2 8.53

DYE029 NP NP 10 1.20 13 8.80

DYE030 7 15.43 6 4.87 11 9.70

DYE031 5 10.34 6 3.88 12 9.00

DYE032 2 12.39 5 4.37 6 8.65

Average 8.92 2.31 7.53

Note: Drill intercept widths are approximately similar to true widths.

7.2.3 Mineralization

The phosphate mineralization occurs as rounded and often polished collophane grains

(although often discoidal and occasionally irregular in shape), which are identified in a

field microscope or hand lens. Pelletal phosphate and nodules previously described in

the consulted literature (Birch, 1961; Turgis, 2010) were not preserved by the RC

drilling technique and could not be observed.

According to Cullen (2011), the concentration of these collophane grains with rounded

to sub-rounded quartz grains results from preferential sorting of beach sands along a

marine transgressional zone and to near-shore, in-land aeolian processes. Evidence

relating to a series of sea-level fluctuations is recorded in the Vaarswater Formation

(Rogers, 1980).

Additional details of the phosphate mineralization at the Property are presented in

Section 10.0.







AMEC is of the opinion that the regional setting and the local geology of the Property

are adequately understood and can support the declaration of Mineral Resources.






8.0 DEPOSIT TYPES

The phosphate deposits of the South African continental margin and coastal terrace

were described in detail by Birch (1961), who indicated that diagenetic phosphorites

are ubiquitous in the western and southern margins of South Africa.

According to Birch (1961), authigenic phosphorites form in shallow estuaries or

embayments, in environments of intense, wind-generated upwelling and high biological

productivity. In such conditions, phosphate-rich sediments deposit into the sea floor by

decay of siliceous phytoplankton, which facilitates the interstitial precipitation of apatite

to form phosphatic packstones and oolitic pellets at the water-sediment inter-phase.

Lime mud resulting from the disaggregation of calcareous exoskeletons is replaced by

calcium phosphate. Finally, all sea-bottom components are subsequently lithified into a

thin, near-continuous capping of phosphate rock.

The descriptive model of the upwelling phosphate deposits was developed by Mosier

(1986), and its main features are presented in Figure 8-1.

Figure 8-1: Descriptive Model of the Upwelling Phosphate Deposit Type

Source: Mosier (1986)







In AMEC‟s opinion, the deposit type has been correctly understood, and its main

features have been used to guide the exploration campaign.






9.0 EXPLORATION

9.1 Drilling, Sampling and Assaying

Drilling completed on the Property, as well as the sampling/sample preparation/

assaying procedures, are discussed in Sections 10 and 11 of the Report, respectively.

9.2 Bulk Density

No density determinations were conducted at the Property during the 2011 exploration

campaign, mainly due to the disaggregated nature of the recovered material. AMEC

recommended that backhoe-assisted, in-situ bulk density determinations be

conducted, but it was not possible, because as soon as drilling concluded the

landowner planted the land. For the purposes of resource estimation, a bulk density

value of 1.82 g/cm3 was assumed (Turgis, 2009). AMEC recommends that

representative, in-situ bulk density determinations be obtained in future campaigns.


The QP is of the opinion that:





A density value was assigned by analogy. Due to the lack of density

determinations, the Mineral Resources can be classified only as Inferred.

AMEC recommends that a representative number of in-situ density determinations

be conducted in the next exploration campaign. The density database should be

representative of all major lithologies and phosphate-rich zones.






10.0 DRILLING

Drilling prior to the acquisition of the Property (legacy drilling), as well as drilling

completed by Montero, are summarized in Table 10-1.

Table 10-1: Drilling Summary

Company Date Type Holes Meterage (m) Numbers

AECI 1960s Unknown 32? Unknown x, S-x Montero 2011 RC 26 613 DYE-x

10.1 Legacy AECI Drilling

In the 1960s, AECI conducted a drilling and pitting campaign at the property. A map

showing the approximate drill-hole collar and pit locations, the mineralization

thicknesses and average grades per hole was presented earlier in Figure 6-1.

However, historical records of the AECI‟s exploration cannot be found (Turgis, 2010).

Montero did not use this information for resource estimation.

10.2 Montero Drilling

During the 2011 exploration campaign, Montero drilled 32 holes. Of these, six holes

were abandoned due to low recovery issues, and 26 holes, totalling 613 m (23.6 m

average length), were drilled on a 400 m x 200 m approximate grid (Figure 7-2). Collar

surveys were conducted using high-quality, differential GPS equipment. Due to the

shallow depth of the drill holes, no down-hole surveys were conducted. In AMEC´s

opinion, the survey data collected during the 2011 exploration program are sufficiently

accurate to support Mineral Resource estimation.

The drilling campaign focused on the southern portion of the area covered by AECI‟s

earlier program. Torque Drilling (Torque), the drill contractor, used a Thor rig with a 26

bar Ingersoll Rand compressor. Drilling used the dry RC method, with a 5½" (139.7

mm) bit. Drill-hole lengths ranged from 8 m to 49 m, averaging 23.6 m. The collar

elevations ranged from 26.8 m to 113.8 m. Drill runs were consistently 5 m long.

RC samples consisted of small cuttings (less than 10 mm diameter), similar to material

obtained during reverse-circulation drilling. After drilling, the recovered material was

run through a cyclone and collected by Torque employees in polyethylene bags fixed

to the base of the cyclone in systematic, 1 m long intervals.






At the end of each 1 m sample run, drilling was halted until all material for that interval

was collected at the bag. The cyclone was then hit with a rubber hammer to remove

any material left behind.

Bags containing 1 m long samples were weighed and riffle-split using a three-deck

Jones splitter (Figure 10-1) into two collector trays. One tray, containing 87.5% split,

was initially discarded, until midway through the drill program, when this material was

then stored at a secure site and later transported to commercial secure storage for

future metallurgical studies. The content of the other tray (12.5% split) was collected

into a separate plastic bag marked with sample number and from-to depths, and

placed in the proper sequence. A small portion of each sample was sieved and

retained for logging (Figure 10-2). A Montero geologist was permanently on the drill

site supervising the drilling and sampling operation. Recovery is discussed in Section

10.4.

Figure 10-1: Splitting the Recovered Sample at the Drill Site

Sample bags were trucked every day by Montero to a secured warehouse at

Paternoster for temporary storage. At the warehouse, the sample bags were sorted

and placed on larger bags for transportation to the laboratory.

All holes were vertical. As the mineralized horizons were nearly horizontal or very

shallow-dipping, the vertical thickness indicated by sample length approximately

corresponds to true thickness.






Figure 10-2: Material Retained for Logging

Logging was conducted at the Paternoster office using a stereoscopic microscope. In

addition to local stratigraphy and lithology, the following qualitative parameters were

logged: induration (aggregation state), color, grain size, sorting, presence of fossil

remains, intensity of reaction to HCl, moisture content, presence of Fe oxides, grain

rounding, sorting, presence of certain marker horizons, and intensity of reaction to

long-wave and short-wave ultraviolet light. Logging was recorded in Excel sheets,

using standard alphanumeric codes.

10.3 Drill Program Results

As a result of the 2011 drilling campaign, three phosphate-rich horizons were

identified. In general, the phosphate-rich horizons present relatively good continuity

within a 2.0 km (north-south) by 1.5 km (east-west) area, although the horizons are not

equally represented (Figure 7-6). Selected drill-hole intercepts are listed in Table 10-2.






Table 10-2: Drill-Hole Intercepts by Mineral Zone (Upper and Lower Zones)

HoleID From (m)

To (m)

Drilled Thickness

(m)

P2O5

(%) Mineral

Zone

DYE006 0.0 7.0 7.0 7.01 UPPER

DYE006 18.0 27.0 9.0 8.23 LOWER

DYE007 0.0 4.0 4.0 6.47 UPPER

DYE008 0.0 6.0 6.0 6.82 UPPER

DYE008 12.0 16.0 4.0 13.22 LOWER

DYE009 2.0 8.0 6.0 4.34 LOWER

DYE010 1.0 8.0 7.0 7.45 UPPER

DYE010 16.0 22.0 6.0 6.25 LOWER

DYE011 1.0 7.0 6.0 7.05 LOWER

DYE012 0.0 1.0 1.0 10.19 UPPER

DYE012 5.0 9.0 4.0 7.95 LOWER

DYE013 1.0 6.0 5.0 4.14 UPPER

DYE013 12.0 16.0 4.0 6.67 LOWER

DYE014 1.0 5.0 4.0 13.64 UPPER

DYE014 11.0 12.0 1.0 5.85 LOWER

DYE024 3.0 11.0 8.0 1.90 UPPER

DYE025 5.0 12.0 7.0 6.56 UPPER

DYE026 8.0 10.0 2.0 1.17 UPPER

DYE028 9.0 11.0 2.0 8.52 UPPER

DYE029 1.0 14.0 13.0 8.80 UPPER

DYE030 3.0 14.0 11.0 9.70 UPPER

DYE030 20.0 27.0 7.0 15.43 LOWER

DYE031 1.0 13.0 12.0 9.00 UPPER

DYE031 19.0 24.0 5.0 10.34 LOWER

DYE032 3.0 9.0 6.0 8.65 UPPER

DYE032 14.0 16.0 2.0 12.39 LOWER

As observed in Figure 7-6, the phosphate-rich horizons remain open-ended in most

directions but southwest. However, potential in the eastern and southern directions is

limited by the close outcrop of the Vrendenburg granite. Therefore, there is potential to

expand the area of known phosphate mineralization mainly to the west and north. In

fact, historical information suggests the presence of significant mineralization at

shallow depths to the north. Details of the exploration results are discussed in Section

7.0, which includes a local geological map and representative cross-sections.

10.4 Recovery

As a result of very unfavourable geological conditions (the loose nature of the

mineralized sands alternating with hard limestone horizons with dissolution cavities

and minor compact sandstone levels), sample recovery required permanent attention






from day one of the drill program. Various test holes were drilled at the beginning of

the program until recovery could be improved.

RC recovery was estimated by dividing the theoretical weight of the sample to the

actual recovered weight. A 1.82 g/t bulk density was applied. Overall RC recovery

averaged 60% during the 2011 program, and 58% in the mineralized horizons, but in

addition, recovery was not regular.

In spite of Montero‟s efforts to obtain acceptable recoveries, nearly 50% of the

samples from mineralized horizons had recoveries lower than 60% (Figure 10-3).

Some coarser material probably tended to fill-up cavities and pores within the

surrounding rocks. Recoveries were also poor in samples with P2O5 exceeding 5%

(Figure 10-4). Low recovery possibly affected the sample representativity, which may

have resulted in potential sampling bias.

Figure 10-3: Drilling Recovery Histogram for Samples from Mineralized Horizons

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

15%-40% 40%-60% 60%-90% 90%-110% >110%

Feq

ue

ncy

(%

)

Recovery Ranges (%)

Recovery Histogram (%)Samples in Mineralized Horizons






Figure 10-4: Recovery versus P2O5 (Samples with >5% P2O5)

0%

20%

40%

60%

80%

100%

120%

0 5 10 15 20 25

Re

cove

ry (

%)

P2O5 (%)

Recovery versus P2O5 (%)

A detailed analysis of recovery by drill hole and mineralized horizon is presented in

Table 10-3. The average recovery in all of the mineralized zones present exceeded

60% in only four drill holes (DYE006, DYE022, DYE025 and DYE03).

Table 10-3: Recovery by Drill Hole and Mineral Zone

Recovery (%)

HoleID Lower Zone Middle Zone Upper Zone

DYE006 71.6% 65.3% 64.3% DYE007 NP 69.6% 44.0%

DYE008 67.0% 60.7% 36.3%

DYE009 51.3% NP NP

DYE010 64.7% 56.0% 43.4%

DYE011 54.0% NP NP

DYE012 50.0% 53.0% 40.0%

DYE013 70.0% 63.3% 34.8%

DYE014 44.0% 66.7% 78.0%

DYE021 NP 44.8% NP

DYE022 NP 68.0% NP

DYE023 NP 55.3% NP

DYE024 NP 84.0% 58.5%

DYE025 NP 66.2% 66.3%

DYE026 NP 60.8% 58.0%

DYE028 NP 72.5% 54.0%

DYE029 NP 55.2% 28.3%

DYE030 58.9% 50.7% 50.9%

DYE031 59.2% 57.3% 62.7%

DYE032 72.0% 63.2% 62.7%

NP: Not present; yellow highlight: P2O5 50%-60%; orange highlight: P2O5 < 50%






Future exploration at the Property should ensure drilling recoveries over 80%. Given

the difficult drilling conditions in the Property, AMEC recommends that an alternative

drilling method, such as sonic drilling, be used in future exploration campaigns order to

improve recovery.


In AMEC´s opinion, the quantity and quality of the logging and sampling data collected

during the 2011 exploration program are sufficient to support the estimation of Inferred

Mineral Resource estimation, as follows:

Drill orientation was appropriate for the mineralization style.





Logging met industry standards.









reasonable continuity across the drilled areas.




Future exploration at the Property should ensure drilling recoveries over 80%.

Given the difficult drilling conditions in the Property, AMEC recommends that an

alternative drilling method, such as sonic drilling, be used in future exploration

campaigns order to improve recovery.












.






11.0 SAMPLE PREPARATION, ANALYSES, AND SECURITY

11.1 AECI Legacy Exploration

Historical records of the AECI drilling programs have been lost (Turgis, 2010). Montero

did not use this information for resource estimation.

11.2 Montero Exploration

Samples from the 2011 drilling program were prepared and analyzed at Scientific

Services C.C. (SS) in Cape Town, South Africa. SS has ISO 9001:2008 certification.

Sample preparation was as follows:

Drying to 85°C using an electric oven with forced air circulation

Crushing to finer than 70% -2 mm using a Boyd Rocklabs jaw crusher

Splitting using a rotary splitter to obtain a 100 g fraction

Pulverizing the split fraction to finer than 95% < 0.105 mm using a TS-250 Dickie &

Stockler ring mill

Sieve tests on crushed and pulverized material were conducted on 4% of the

samples (one in 25).

Pulverized samples were assayed for 11 elements in oxide form (Table 11-1) using a

Phillips X‟Unique II X-Ray Fluorescence (XRF) analyzer with the fusion method. Fused

disks were prepared with 0.65 g aliquots and 5.6 g lithium tetra-borate flux, which were

fused in platinum crucibles to 1,200°C. Loss-on-ignition (LOI) was also determined by

drying the samples at 105°C to eliminate moisture, and subsequent roasting to 900°C.

Assay results were digitally reported to Montero in Excel files submitted by e-mail.

Some samples were also assayed for U3O8.

Table 11-1: Detection Limits for Assayed Elements at Scientific Services

Element (oxide)

Detection Limit

Element (oxide)

Detection Limit

Element (oxide)

Detection Limit

Fe2O3 0.02% K2O 0.02% Na2O 0.05%

MnO2 0.02% P2O5 0.02% LOI 0.01%

Cr2O3 0.02% SiO2 0.05% U3O8 20 ppm

TiO2 0.02% Al2O3 0.02%

CaO 0.02% MgO 0.04%






In the XRF measurements, SS used nine individual calibration standards, sourced

from Mintek (South African Council for Mineral Technology), the National Institute of

Standards & Technology (USA) and the China National Analysis Centre. These

standards were diluted by SS using silica.

Precision scales are calibrated once a week using certified weights, and are certified

once a year by CMLAB (last certification on 13 January 2011).

Assay quality was monitored by inserting certified reference materials (CRM, 4%

frequency), pulp duplicates (6% frequency) and fine blanks (4% frequency) in the

assay batches. SS monitored accuracy with the NIST 694 CRM (32.35% P2O5 certified

value), produced by the National Institute of Standards and Technology (NIST). This

CRM was previously diluted to 50% with SiO2 to adjust it to the lower P2O5 values of

most of the samples. The average stoichiometric closure was 97.9%, with most

deviations occurring in samples not exceeding 2.0% P2O5 (Figure 11-1).

In February 2011, AMEC visited SS‟s facilities in Cape Town, and reviewed the

preparation and assaying procedures that would be used for the Duyker Eiland

samples, including the internal quality control protocol, which can be qualified as best

practices.

Figure 11-1: Stoichiometric Closure versus P2O5 Plot

0

20

40

60

80

100

120

0 5 10 15 20 25

Sto

ich

iom

etr

ic C

losu

re (

%)

P2O5 (%)

Stoichimetric Closure versus P2O5 (%)

SC vs P2O5

Regression Line






11.3 Quality Control Program

The quality control (QC) program is discussed in Section 12.0.

11.4 Sample Security

During the Montero drilling program, samples were collected by Torque personnel

under the supervision of a Montero geologist. Samples were always transported by

Montero personnel using company vehicles, and were securely locked at the

Paternoster storage facility or at the laboratory.

Chain-of-custody procedures consisted of filling out sample submittal forms that

accompanied the sample shipments to confirm that all samples were received by the

laboratory.

11.5 Sample Storage

Samples were bagged in plastic bags properly identified with sequential sample

numbers and from-to intervals. The warehouse where samples, rejects and pulps were

stored was located in Paternoster, in the vicinity of the project office, in a secure

environment.

11.6 Comment on Section 11.0

SS is independent from Montero, and holds ISO 9001-2008 accreditation. The sample

preparation and analytical methods and procedures were adequate for this type of

deposit and material. SS has implemented a careful QC protocol in order to monitor

precision, accuracy and contamination.


industry standards.






12.0 DATA VERIFICATION

During the first site visit to the Property, AMEC reviewed the drilling, sampling and

logging procedures, and suggested the implementation of a QC program during the

exploration program at the property.

During the second site visit, after completion of the exploration campaign, AMEC

conducted various verification routines on the data collected by Montero. AMEC

checked the location of various drill holes in the field, audited the mineral resource

database, and compared the logging data with cuttings from selected drill holes.

AMEC also reviewed the interpretation of the geological sections and verified in the

field the geological map.

12.1 Data Entry

The project database was assembled using Excel files. Data-entry procedures for the

database are summarized in Table 13-4.

Table 12-1: Summary of Data-Entry Procedures

Source Data-Entry Method Procedure

Collar survey data Digital Excel files were produced by the surveyor

and e-mailed to Montero

Logging, recovery, and sampling data

Manual The paper logs and records were digitized

by a geologist into Excel files

Assay data Digital SS submitted digital files by e-mail, and the project manager inserted the data into an

Excel file

12.2 Drill-Hole Collar Review

AMEC took readings of the easting and northing collar coordinates for five drill-holes

(20% of the drill holes) with a hand-held Garmin GPS device, and compared them with

the corresponding coordinates determined by ACS. In spite of the fact that

conventional hand-held GPS measurements are less precise than measurements

conducted with more sophisticated equipment, this procedure allows the identification

of gross surveying errors.

The absolute differences between AMEC‟s measurements of the collar coordinates

and the corresponding ACS‟s determinations recorded in Montero‟s database range

between 0.16 m and 4.46 m for the eastern coordinates (averaging 1.84 m), and

between 0.51 m and 3.95 m for the northern coordinates (averaging 1.97 m). These






absolute differences are within the acceptable error of a conventional hand held GPS

(Table 12-1).

Table 12-2: Collar Coordinate Check

Hole ID AMEC Montero Absolute Difference

Easting (m)

Northing (m)

Easting (m)

Northing (m)

Easting (m)

Northing (m)

DYE-006 777,649.00 6,371,456.00 777651.12 6371453.89 2.12 2.11

DYE-016 776,950.00 6,370,451.00 776954.46 6370447.05 4.46 3.95

DYE-017 776,948.00 6,370,748.00 776950.21 6370747.49 2.21 0.51

DYE-020 776,950.00 6,371,052.00 776949.84 6371050.21 0.16 1.79

DYE-023 777,122.00 6,371,458.00 777121.78 6371456.50 0.22 1.50

Averages 1.84 1.95

12.3 Database Checks

12.3.1 Collar Coordinates

AMEC compared the collar coordinates (easting, northing and elevation) of all 26 drill

holes included in the mineral resource database with the original measurements

reported by the surveyor in an Excel file, and did not find any differences.

12.3.2 Geological Logs

AMEC reviewed the original logs of six drill holes (DYE-006, DYE-007, DYE-029, DYE-

030, DYE-031 and DYE-032), corresponding to 23% of the drill holes included in the

project database, and confirmed that the recorded data matched the original logs.

12.3.3 Original Assay Data

AMEC requested the primary laboratory (SS) to provide directly, via e-mail, the original

Excel assay data. AMEC then compared the original assay values with the assay data

recorded in the project database. In total, the assay data corresponding to 712

samples and the 12 assayed elements (including the LOI) were reviewed, and no

errors were identified.

12.4 Geological Interpretation

During the site visit, AMEC compared the cuttings and the logs from six drill-holes

(DYE-006, DYE-007, DYE-029, DYE-030, DYE-031 and DYE-032), corresponding to






23% of the drill holes included in the project database, and confirmed that the recorded

data matched the material collected.

AMEC also reviewed the geometry of the interpreted geological shapes in six 400 m-

spaced, E-W-oriented geological cross-sections. Drill holes were represented with the

projected trace and the main lithology. AMEC also conducted direct field verifications

of the geological interpretation on most sections.

AMEC recognizes that the interpretation generally respects the data recorded in the

logs and the sections, as well as the interpretation from adjoining sections, and is

consistent with the known characteristics of this deposit type. The lithologic model has

been diligently constructed in conformance to industry standards practices.

12.5 Quality Control

During the 2011 drilling program, Montero implemented a QC protocol consisting of

the insertion of the following control sample types (and approximate proportions): field

duplicates (2.7%), coarse duplicates (2.3%), pulp duplicates (2.1%), coarse blanks

(1.4%), fine blanks (1.4%), and CRMs (4.5%).

Montero personnel inserted the field duplicates and the coarse blanks in the

submission batches on site, prior to the submission of the sample batches to SS. A

Montero geologist inserted the other control samples into the sample batches directly

at the laboratory premises, during and/or after sample preparation. The results of the

QC data processing are summarized below.

12.5.1 Assessment of Precision

AMEC evaluated the duplicate data after the hyperbolic method (Simon, 2005). Field,

coarse and pulp duplicates exhibited no failures for MgO, and only one failure for P2O5

and two failures for CaO in pulp duplicates (Table 12-3). The failure rate for CaO

(13.3%) in pulp duplicates is above the commonly-accepted threshold (10%).

However, the two failed pairs plot virtually on the failure line. For that reason, in

AMEC‟s opinion the sampling, sub-sampling and analytical precision for P2O5, CaO

and MgO can be deemed as adequate.

12.5.2 Assessment of Accuracy

Montero used the AMIS0055 CRM (21.22% P2O5 certified value), produced by African

Mineral Standards (AMIS), to monitor accuracy. In total, 32 CRM samples were

inserted in the submission batches. No outliers were identified, and the P2O5, CaO and






MgO biases were -2.3%, -1.9% and -4.6%, respectively (Figures 12-1 to 12-3). AMEC

concluded that the P2O5, CaO and MgO analytical accuracies at SS were adequate.

Table 12-3: Duplicate Summary

Duplicate Type Element Pairs Failures Failure Rate (%)

Field Duplicates

P2O5

16

0 0.0

CaO 0 0.0

MgO 0 0.0

Coarse Duplicates

P2O5

15

0 0.0

CaO 0 0.0

MgO 0 0.0

Pulp Duplicates

P2O5

15

1 6.7

CaO 2 13.3

MgO 0 0.0

Figure 12-1: P2O5 Control Chart for the AMIS0055 CRM






Figure 12-2: CaO Control Chart for the AMIS0055 CRM

Figure 12-3: MgO Control Chart for the AMIS0055 CRM






12.5.3 Assessment of Contamination

In total, 10 coarse blanks and 10 fine blanks were inserted in the submission batches.

All P2O5 values were below the detection limit. AMEC concluded that no significant

P2O5 contamination occurred during sample preparation or assaying.


AMEC verified the easting and northing collar coordinates of six drill holes with a hand-

held GPS and did not observe significant differences with the corresponding

coordinates recorded in the project database.

AMEC conducted a series of database checks, consisting in comparing the original

survey, logging and assay data with the data recorded in the project database. During

these checks, AMEC did not identify any transcription errors.

The geological interpretation generally respects the observed recovered material and

data recorded in the logs and the sections, as well as the interpretation from adjoining

sections, and is consistent with the known characteristics of this deposit type. The

lithologic model has been diligently constructed in conformance to industry-standard

practices.

The QC program implemented by Montero complied with the most stringent international standards. This program considered every aspect of the exploration process, and allowed a detailed quality monitoring:

The sampling, sub-sampling and analytical precisions for P2O5, CaO and MgO

were within acceptable limits.

The analytical accuracies for P2O5, CaO and MgO can be deemed as adequate.


was identified.

In AMEC‟s opinion, survey, logging, sampling and assay data were properly

transferred into the project database. The QC program implemented by Montero

ensured the timely assessment of precision, accuracy and possible contamination,

which were within acceptable limits.






13.0 MINERAL PROCESSING AND METALLURGICAL TESTING

13.1 Introduction

In the late 1960s, AECI drilled approximately 33 holes and dug nine test pits in the

area of the Property. Turgis (2010) noted that “detailed drilling, pitting and flotation

results are not available”. AECI described the phosphatic sand as consisting of brown

to yellow collophane and colorless rounded quartz grains; the mineralized material was

subjected to flotation tests and the concentrate averaged 33% P2O5 (Turgis, 2010).

It is unknown, but assumed that the AECI flotation tests were based on bulk samples

taken from the test pits. Figure 6-1 (Section 6.0) shows the location of AECI‟s drill

holes and test pits. This map shows that all test pits are located in the Western,

Central, and Eastern areas of the Property, with none located in the Skoongesig or

Stompneusbaai areas. Therefore, it is unknown if these samples are representative of

the mineralization intercepted in the Montero drilling.

13.2 Turgis (2009) Conceptual Study

The following process concept is summarized from Turgis (2009). The Duyker Eiland

deposit is similar to the Florida phosphate deposits, and because of the lack of specific

data, the main source of information was from the Florida Institute of Phosphate

Research.

Turgis (2009) assumed a phosphate concentrate, averaging 30 % P2O5, could be

produced by limited grinding of the mineralized material (average feed grade of 7.6 %

P2O5 with a recovery of 85%) followed by de-sliming and flotation. The tailings were

estimated to comprise 70% to 80% of the mineralized material. From the scavenger

bank, the tailings would be pumped to a tailings thickener together with the slimes from

the de-sliming process. Following partial dewatering, the thickened tailings could be

pumped to a tailings impoundment and later recycled to the mine pit as space

becomes available. The percentage of slimes was unknown, but was considered

minor. It was assumed that the amount of middlings would also be minor and

uneconomic to recover. The concentrate would be filtered and stockpiled for later

transport.

13.3 Turgis (2011) Flotation Tests

After concluding the 2011 drilling campaign, Montero prepared a composite sample

from RC-drilled samples in order to conduct preliminary tests aimed at assessing if

concentrate exceeding 30% P2O5 could be obtained by flotation. These tests were






conducted at the Centre for Mineral Research (Chemical Engineering Department,

University of Cape Town), under the supervision of Turgis Consulting. The flotation

tests and their main conclusions are summarized below (based on Turgis, 2011).

13.3.1 Test Description

A composite of material from the three mineralized zones was prepared using RC

material from four drill holes along the eastern margin of the deposit. Good

homogenization was achieved by repeated riffle-splitting and re-mixing. Three large

sample bags weighing approximately 16 kg each were obtained as a result of this

process.

Then, a 1 kg sample was riffle-split from each of the large bags, and the remaining

material in the large bags was retained for metallurgy test work. Of the three 1 kg

splits, one was retained as a reference, one was used raw for fraction/grade analysis

and the other was de-slimed first and used for fraction/grade analysis.

The composite samples were split into two bags of approximately 20 kg each, and

delivered to the Chemical Engineering laboratory for flotation tests. One of the

samples was split in 1 kg lots using a rotary splitter.

Flotation samples were milled using a rod mill for two minutes to break up consolidated

lumps and to produce fresh surfaces for flotation. Sodium carbonate was added to the

mill to increase the pH and act as a regulator in the flotation. The 1 kg samples were

milled at 66% solids. The milled samples were washed and then decanted on a 25 μm

screen to remove excess slime.

The decanted material was washed into a flotation cell. Conditioning was done at 65%

to 70% solids with an adjusted pH. Flotation reagents were added after the pH

adjustment, and the slurry was conditioned nominally for 2 minutes. Tap water was

added to maintain the level in the flotation cell. The float cell was a modified Leeds

cell, with 3 L capacity. Both the speed and the airflow were adjusted to visual optimum.

With the slimes removed, the solids content was approximately 30%.

13.3.2 Test Results

Two possible reagent suites can produce a phosphate concentrate in excess of 30%

P2O5: one based on a hydroxamic acid reagent coded A2 AM2, supplied by Axis

House, gave the best results; a reagent coded SR6-6 also showed the ability to

produce required grade. In all tests, diesel oil was required as a promoter assisting

agent.






De-sliming on 25 μm lost in excess of 20% of the phosphates in the slime fraction.

This is excessive, and a finer, 5 μm to 10 μm cut, is likely to recover a large portion of

this loss material without much effect on the flotation. It is noted that, by excluding the

slimes, the flotation recovery in the rougher concentrate may exceed 90%.

The U3O8 content in flotation products ranged between 20 ppm and 48 ppm (Moir,

2011).

In conclusion, an acid-grade phosphate concentrate of 33% P2O5 to 35% P2O5 (72.1%

BPL to 76.5% BPL) could be produced by flotation. According to Turgis (2011), by

optimizing the flotation conditions, improved recoveries that may be as high as 80%

could be achieved.


In the QP‟s opinion, the results of the preliminary metallurgical test work reported

above support the prospects for economic extraction of the material and the reporting

of a Mineral Resource.






14.0 MINERAL RESOURCE ESTIMATE

AMEC estimated phosphoric anhydride (P2O5), calcium oxide (CaO) and magnesium

oxide (MgO) grades, and also the thickness of the mineralized strata using the inverse

distance (ID) estimation method. Only those blocks which have sufficient grade to pay

for the removal of the overburden waste under reasonable technical-economical

assumptions were classified as Mineral Resources.

The Mineral Resource estimate was prepared by María-Angélica González, Resource

Modeller at AMEC, under the supervision of Edmund Sides, Principal Geologist at

AMEC. María-Angélica González, registered member at the Chilean Mining

Commission (CMC), is the Qualified Person (QP) for the resource estimation.

14.1 Database

Montero provided AMEC a Microsoft Excel® database consisting of 26 drill holes

which represent 615 drilled meters and 613 grade samples. AMEC imported the

collar, assay, strata definition and lithology data into GEMS (version 6.3), a

commercially-available software package. The drill-holes were not surveyed and

AMEC assumed they are all perfectly vertical, which is reasonable given their short

lengths. Database integrity was checked for inconsistencies and no errors were found.

14.2 Topography

Montero provided surveyed topographic contour lines at 20 m intervals from which a 3-

D surface was generated.

AMEC found that the elevations of the collars were mostly lower than the 3-D surface.

The average difference was 2.3 m, with a minimum of -2.5 m and a maximum of 8.0 m.

The original collar locations were considered for performing the resource estimates;

the 3-D topography was shifted 2.3 m downwards in order to obtain an average

elevation difference equal to zero. The collar coordinates were recently surveyed and

they are considered more accurate than the topographic contours which have been

digitized from a small-scale topographic map.

AMEC recommends that Montero should resurvey the topography.






14.3 Geological Model

The drilling grid is semi-regularly spaced at 200 m x 400 m to the east and north,

respectively. Strata and their thicknesses were logged in the drill-hole database. Five

zones were identified as follows, from top down:

Overburden

Upper

Middle

Lower

Footwall.

The Upper and Lower zones have the highest grades; the Middle zone is a lower-

grade stratum. The Overburden and Footwall are considered waste.

AMEC estimated the thickness of each stratum using an inverse distance to the fourth

power (ID4) estimation method to build a 3-D strata model.

AMEC defined vertical sections with the following characteristics:

Six E–W sections spaced at 400 m, from coordinate 6,370,250N to 6,372,250N

Seven N–S sections spaced at 200 m, from coordinate 776,750E to 777,950E.

14.4 Estimation Domains

The Upper, Middle and Lower zones constitute three distinct grade estimation

domains. The following image illustrates two typical sections of the deposit (Figure

14-1).






Figure 14-1: Sections 6,371,450N and 6,371,850N – Drill-hole Grades of P2O5

Drill hole Grades P2O5%

Section 6,371,450N

Section 6,371,850N

The Upper and Lower mineralized zones are illustrated in red and cyan lines, while the Middle zone is identified in blue.






14.5 Composites

The original samples have equal lengths of 1 m. AMEC grouped the samples to build

a single composite per zone and drill hole. Not all strata are present in every drill hole,

and only 87 composites were generated.

14.6 Exploratory Data Analysis

The exploratory data analysis (EDA) consisted of samples and composite basic

statistics, histograms, frequency plots and box plots.

The grade distributions of P2O5, CaO and MgO vary significantly with the stratigraphic

horizon. The better phosphoric anhydride grades are located in the Upper and the

Lower zones, whereas grades are lower in the Middle zone. However, the highest

grades of calcium and magnesium oxides are found in the Overburden and the

Footwall.

Frequency plots suggest the presence of multiple grade populations in the same

estimation domain, especially in the Lower and Middle Zones; nevertheless, additional

analyses will be necessary to separate these populations in the future, when the size

of the database increases (Figure 14-2).






Figure 14-2: P2O5 Histograms of the Lower and Middle Zones – Original Samples






Boxplots (Figure 14-3) confirm the better phosphoric anhydride grades are in the

Upper and in particular the Lower zones. The Overburden and Footwall zones are

considered as waste.

Figure 14-3: P2O5 Boxplots by Zone – Original Samples

There is insufficient information to perform a reliable contact analysis and establish the

behaviour of grades at hard stratigraphic contacts.

A summary of the sample univariate statistics is presented below in (






Table 14-1).






Table 14-1: P2O5, CaO and MgO Basic Statistics – Original Samples

Total Sample P2O5 CaO MgO

Statistics (%) (%) (%)

Number of Samples 613 613 613

Minimum 0.02 0.08 0.04

Maximum 22.66 52.23 2.75

Mean 3.16 17.78 0.27

Standard Deviation 3.86 14.40 0.26

Variance 14.73 210.04 0.07

Coefficient of Variation 1.22 0.81 0.96

Sample Statistics

P2O5 (%)

613 57 95 142 54 265

100% 9% 15% 23% 9% 43%

Minimum 0.02 0.09 0.68 0.02 0.69 0.02

Maximum 22.66 6.93 19.06 6.68 22.66 9.55

Mean 3.16 1.60 7.53 2.31 8.92 1.20

Standard Deviation 3.86 1.74 4.07 1.62 5.53 1.19

Variance 14.73 3.02 16.80 2.63 30.66 1.40

Coefficient of Variation 1.22 1.09 0.54 0.70 0.62 0.99

Sample Statistics

CaO (%)

613 57 95 142 54 265

100% 9% 15% 23% 9% 43%

Minimum 0.08 0.32 1.96 0.09 1.80 0.08

Maximum 52.23 46.70 38.54 47.58 35.23 52.23

Mean 17.78 23.06 13.65 12.67 16.03 21.23


Variance 210.04 165.22 57.73 163.32 84.14 286.36


Sample Statistics

MgO (%)

613 57 95 142 54 265

100% 9% 15% 23% 9% 43%

Minimum 0.04 0.04 0.04 0.04 0.04 0.04

Maximum 2.75 2.75 1.07 0.92 0.62 1.63

Mean 0.27 0.51 0.22 0.18 0.20 0.29


Variance 0.07 0.22 0.03 0.04 0.01 0.05


Overburden Upper Zone Middle Zone Lower Zone Footwall



Number of Samples

Total

Total

Total

Number of Samples

Number of Samples

14.7 Block Model Definition

AMEC built a 2-D block model with regular dimensions of 5 m x 5 m in the eastern and

northern directions. The block model extends on an area of 1.4 km x 2.2 km (3 km2)

approximately. The extension of each zone varies, as shown in Table 14-2.






Table 14-2: Extension of Estimated Zones

Zone Extension for Estimating

(km2)

Overburden 2.0

Upper Zone 1.5

Middle Zone 0.8

Lower Zone 1.0

14.8 Grade and Thickness Interpolation

The thickness was interpolated for the five strata while the grade interpolation was only

carried out in the three mineralized strata: Upper, Lower and Middle. Subsequently,

accumulation was calculated for the stratigraphic horizons which had interpolated

grades.

The inverse distance squared interpolation method (ID2) was applied to estimate P2O5,

CaO and MgO, and inverse distance to the fourth power method (ID4) was used to

estimate thickness. The accumulation of P2O5, CaO and MgO in mineralized zones

was calculated by multiplying the grades by the thicknesses.

There are insufficient data to perform a variographic analysis. Anisotropic search radii

were considered based on arbitrary geological criteria which indicated greater

continuity of grades and thicknesses in the north-south direction. No restrictions were

applied to outliers at this stage of deposit knowledge. The estimation plan is shown in

Table 14-3. Figure 14-4 and Figure 14-5 show typical plans of the upper and lower

block model.

Table 14-3: Estimation Plan

Parameters Value

Minimum Number of Drill Holes 3

Minimum Number of Composites 3

Maximum Number of Composites 8

Search Type Ellipsoidal

Search Ranges (m) (EW / NS) 400 / 600

Number of Passes 1






Figure 14-4: Block Model Plan View - Upper Zone






Figure 14-5: Block Model Plan View - Lower Zone






14.9 Density

At this stage there are no density measurements available. The density was set to a

fixed value of 1.82 t/m3 based on the data from a neighbouring deposit which was

mined in the past. AMEC recommends Montero develop a density determination

program.

14.10 Model Validation

AMEC performed the following validations to verify that the block model honours the

drill-hole data:

Statistical validations

Visual inspections

Swath plots.

AMEC declustered the drill-hole data by means of a nearest neighbour (NN) estimate.

The validation showed that bias of the ID2 estimate as compared to the NN estimate is

within 5% for the Upper and Lower strata, which is considered acceptable. It is also

acceptable for thickness and P2O5, but high for CaO and MgO, in Middle Zone. A

summary of this validation is included in Table 14-4.






Table 14-4: Statistical Validation and Bias Evaluation

Statistical Validation

UPPER ZONE ID4 NN ID2 NN ID2 NN ID2 NN

Number of Blocks

Minimum 1.0 1.0 1.20 1.17 5.55 5.55 0.04 0.04

Maximum 13.0 13.0 13.41 13.64 19.52 19.78 0.59 0.60

Mean 6.7 6.8 7.15 7.21 13.17 13.24 0.21 0.22

Standard Deviation 2.7 3.4 2.22 3.03 2.11 3.57 0.07 0.11

Variance 6.8 11.6 5.00 9.28 4.61 13.20 0.00 0.01

Coefficient of Variation 0.4 0.5 0.31 0.42 0.16 0.27 0.31 0.52

Bias


LOWER ZONE ID4 NN ID2 NN ID2 NN ID2 NN

Number of Blocks

Minimum 1.0 1.0 4.96 4.34 8.63 8.27 0.09 0.09

Maximum 9.0 9.0 15.17 15.43 23.80 24.05 0.31 0.32

Mean 4.9 4.9 9.02 9.02 15.84 15.77 0.21 0.21


Variance 3.3 4.2 4.52 12.19 10.76 22.89 0.00 0.00


Bias


MIDDLE ZONE ID4 NN ID2 NN ID2 NN ID2 NN

Number of Blocks

Minimum 4.0 4.0 2.31 1.20 3.40 3.36 0.04 0.04

Maximum 11.0 11.0 4.82 4.86 13.82 8.65 0.20 0.14

Mean 6.4 6.3 3.50 3.70 6.34 5.75 0.08 0.07


Variance 2.1 3.0 0.25 0.61 3.12 2.01 0.00 0.00


Bias

Thickness (m) P2O5 (%) CaO (%) MgO (%)

31,641 31,641 31,641 31,641

MgO (%)

P2O5 (%)

58,350

CaO (%) MgO (%)

58,350 58,350

Thickness (m)

58,350

Thickness (m) P2O5 (%) CaO (%)

1.6% -5.4% 10.3% 14.3%

-1.5% -0.8% -0.5% -4.5%

0.0% 0.0% 0.4% 0.0%

40,994 40,994 40,994 40,994

Visual validations indicated good agreement between the composites and estimated

grades. The grade extrapolation appeared well controlled by the application of

influence areas from drill holes.

Swath plots (Figure 14-6 to Figure 14-8) confirm the observations made from Table

14-4, in which the Middle zone presents higher global biases for CaO and MgO. The

swath plot validation shows better results for all domains in the north-south direction

compared with the east-west.






Figure 14-6: P2O5, CaO and MgO Swath Plots – Upper Zone

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

6370000 6370500 6371000 6371500 6372000 6372500 6373000

Mg

O (%

)

P2O

5 &

CaO

(%

)

North Coordinate

Swath Plots P2O5, MgO and CaO EstimatesUpper Zone - North Direction

P2O5%_ID P2O5%_NN CaO%_ID CaO%_NN MgO%_ID MgO%_NN

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

776400 776600 776800 777000 777200 777400 777600 777800 778000

Mg

O (%

)

P2O

5 &

CaO

(%

)

East Coordinate

Swath Plots P2O5, MgO and CaO EstimatesUpper Zone - East Direction







Figure 14-7: P2O5, CaO and MgO Swath Plots – Lower Zone

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0

20.0

6370000 6370500 6371000 6371500 6372000 6372500 6373000

Mg

O (%

)

P2O

5 &

CaO

(%

)

North Coordinate

Swath Plots P2O5, MgO and CaO EstimatesLower Zone - North Direction


0

0.1

0.2

0.3

0.4

0.5

0.6

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0

20.0

22.0

777200 777300 777400 777500 777600 777700 777800 777900

Mg

O (%

)

P2O

5 &

CaO

(%

)

East Coordinate

Swath Plots P2O5, MgO and CaO EstimatesLower Zone - East Direction







Figure 14-8: P2O5, CaO and MgO Swath Plots – Middle Zone

0

0.05

0.1

0.15

0.2

0.25

0.3

0.35

0.4

0.45

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

6370000 6370500 6371000 6371500 6372000 6372500 6373000

Mg

O (%

)

P2O

5 &

CaO

(%

)

North Coordinate

Swath Plots P2O5, MgO and CaO EstimatesMiddle Zone - North Direction


0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

10.0

777200 777300 777400 777500 777600 777700 777800 777900

Mg

O (%

)

P2O

5 &

CaO

(%

)

East Coordinate

Swath Plots P2O5, MgO and CaO EstimatesMiddle Zone - East Direction


14.11 Mineral Resource Classification

Mineral Resources take into account geologic, mining, processing and economic

constraints, and have been confined within appropriate LG pit shells, and therefore are

classified in accordance with the 2010 CIM Definition Standards for Mineral Resources

and Mineral Reserves.

The resource classification took into consideration the following criteria:






Geological continuity of the mineralization

Grade continuity and support

Data quality

Reasonable prospects for economic extraction.

At the current stage of deposit testing, the drill hole spacing is sufficient only to support

Inferred Mineral Resources.

Reasonable prospects of economic extraction were determined by applying an

economic filter. The deposit is shallow and AMEC reviewed which blocks had

sufficient phosphate grades to conceptually pay for the removal of the Overburden and

Middle zone waste.

AMEC assumed a phosphate price of US$140/t of phosphate concentrate6, a mining

recovery of 90%, a concentrate grade of 30% P2O5 (65.6% PBL7) a metallurgical

recovery of 85%, a mining cost of US$5/t and a processing cost of US$10/t. No

restriction was applied over the thickness of the strata. The US$140/t price is

considered conservative, taking into consideration that the average price during the

last five years for 70% BPL phosphate rock has been US$152/t8. The phosphate cut-

off grade calculated from these parameters was 3.00% P2O5.

Table 14-5: Inferred Phosphate Mineral Resources, Effective Date 27 September 2011,

María-Angélica González, Senior Mining Engineer, R.M. (C.M.C.)

Mineralized Zone

Tonnage Mean

Thickness P2O5 MgO CaO

Accumulation

P2O5 MgO CaO

(Mt) (m) (%) (%) (%) (m*%) (m*%) (m*%)

Upper Zone 16.1 7.1 7.73 0.21 13.59 54.3 1.5 96.8

Middle Zone 7.5 6.4 3.66 0.08 6.51 23.3 0.6 42.6

Lower Zone 9.2 4.9 9.02 0.21 15.84 44.8 1.0 80.2

Total/Weighted Mean

32.8 18.4 7.15 0.18 12.59 44.5 1.2 79.7

Notes to Accompany Inferred Phosphate Mineral Resource Table 14-5: 1. Blocks of the Middle zone are classified as Mineral Resources if the blocks of the Lower ne,

located below in the column, qualify as mineral resources; 2. Mineral resources are defined as blocks for which there is sufficient phosphate to pay for the

stripping of the material column over them and reported at a 3.00% P2O5 cut-off grade;

6 The phosphate price was estimated considering information provided by Turgis (2009) and an average price in a three-year period (2009-2011) from www.indexmundi.com. 7 In the North American phosphate industry, the phosphate content of the rock is usually expressed as

tricalcium phosphate, and traditionally referred to as bone phosphate of lime (BPL=P2O5 × 2.1853). 8 www.indexmundi.com/commodities

http://www.infomine.com/






3. Mineral resources are reported using concentrate prices of US$140/t of phosphate concentrate; a mining recovery of 90%; a metallurgical recovery of 85%; a mining cost of US$5/t and a processing cost of US$10/t;

4. Tonnages are rounded to the nearest 100,000 tonnes; grades are rounded to two decimal places and accumulations are rounded to one decimal place;

5. Rounding as required by reporting guidelines may result in apparent summation differences between tonnes, grades and accumulations;

6. Tonnage, grade and accumulation measurements are in metric units.

The Qualified Person for the phosphate resource estimate is María-Angélica

González. The effective date for the estimate is 27 September 2011, corresponding to

the completion date.

The mineral resources tabulated in Table 14-5 are based on potentially recoverable

phosphate resources. This exploitation requires the extraction of 5.0 Mt of overburden.

Zones that classify as mineral resources, which constitute areas operationally and

potentially feasible to extract, are illustrated in Figure 14-9. Blocks coloured in grey

indicate grades below a cut-off of 3% P2O5.

Figure 14-9: Mineral Resource Areas

LEGEND

Mineral Resources

Upper Zone

Mineral Resources

Middle Zone

Mineral Resources

Lower Zone

Operative

Extraction Zones

1.2 km2

0.6 km2

1.0 km2

0 3

3 5

5 6

6 7

7 8

8 9

9 10

10 11

11 12

12 100

P 2 O 5 (%)






14.12 Comment on Section 14

The differences up to 8 m in elevation found between the topography contour lines

and the drill-hole collars could impact on the 3-D interpretation of the mineralized

surfaces. AMEC recommends resurveying the topography.

Multiple grade populations were grouped in the same estimation domains. In

future, when the size of the database increases, additional analyses will be

required to improve the estimation domain definition.

Data were insufficient to perform the variography and study the spatial continuity

and arbitrary geological criteria were taken. Variographic analyses are

recommended once the database increases and improves.

The block model was validated and the P2O5 and thickness estimates showed

acceptable bias for all the mineralized strata (lower than 5%). Higher global biases

were found in the estimation of CaO and MgO within the Middle zone and better

results were obtained in the north-south direction compared with the east-west.

The conduction of a density determination program will permit to improve the

tabulation and classification of mineral resources. Current drill hole spacing is

sufficient only to support Inferred Mineral Resources.

Other areas of uncertainty which may materially impact the mineral resource

estimate are the variation in economic and recovery parameters used to define

reasonable prospects of economic extraction, including commodity price

assumptions, mining and metallurgical recovery assumptions, specific gravity

assignment, and open pit design parameters such as hydrological and

geotechnical considerations.

AMEC has made an assumption that Montero can acquire appropriate surface

rights. Permitting, environmental and social and community impact studies have

yet to be performed. These areas represent an unknown risk to the Mineral

Resource estimate. No marketing strategy has yet been planned. Marketing of any

future phosphate production represents an unknown risk to the Mineral Resource

estimate.






15.0 MINERAL RESERVE ESTIMATE

As the Property is not an advanced property, this section is not applicable to this

Technical Report.






16.0 MINING METHODS


Technical Report.






17.0 RECOVERY METHODS


Technical Report.






18.0 PROJECT INFRASTRUCTURE


Technical Report.






19.0 MARKET STUDIES AND CONTRACTS


Technical Report.






20.0 ENVIRONMENTAL STUDIES, PERMITTING AND SOCIAL OR

COMMUNITY IMPACT


Technical Report.






21.0 CAPITAL AND OPERATING COSTS


Technical Report.






22.0 ECONOMIC ANALYSIS


Report.






23.0 ADJACENT PROPERTIES

To AMEC‟s best knowledge, there are no other exploration or mining properties

adjacent to the Property that are relevant to this Report.






24.0 OTHER RELEVANT DATA AND INFORMATION

To AMEC‟s best knowledge, there are no other relevant data and information.






25.0 INTERPRETATION AND CONCLUSIONS

The QPs, as authors of this Report, have reviewed the data for the Property and are of

the opinion that:



Property area during the exploration has been signed. No royalties will be paid on

production.





Permitting, environmental and social and community impact studies have yet to be

performed.






The regional setting and the local geology of the Property are adequately

understood and can support the declaration of Mineral Resources.

The deposit type has been correctly understood, and its main features have been

used to guide the exploration campaign.

















The drill-hole orientation was appropriate for the mineralization style.





Drill logging met industry standards.





reasonable continuity along the drilled areas.




The sample preparation and analytical methods and procedures were adequate for

this type of deposit and material. SS has implemented a careful QP protocol in

order to monitor precision, accuracy and contamination.


industry standards.

No significant differences between the collar coordinates measured with a hand-

held GPS and the coordinates recorded in the project database were observed.

Survey, logging, sampling and assay data were properly transferred into the

project database. AMEC did not identify any transcription errors during database

checks consisting in comparing the original survey, logging and assay data with

the data recorded in the project database.

The geological interpretation generally respects the observed RC cutting and data

recorded in the logs and the sections, as well as the interpretation from adjoining

sections, and is consistent with the known characteristics of this deposit type.

The lithologic model has been diligently constructed in conformance to industry-

standards practices.

The QC program implemented by Montero complied with the most stringent

international standards. This program considered every aspect of the exploration

process, and ensured the timely assessment of precision, accuracy and possible

contamination.






The sampling, sub-sampling and analytical precisions and accuracies for P2O5, CaO and MgO were within acceptable limits.


was identified.

Preliminary flotation tests have indicated that an acid-grade phosphate concentrate

of 33% P2O5 to 35% P2O5 (72.1% BPL to 76.5% BPL) can be produced by flotation.

By optimizing the flotation conditions, improved recoveries that may be as high as

80% could be achieved.

The differences up to 8 m found between the topography contour lines and the

drill-hole collars could impact over the 3-D interpretation of the mineralized

surfaces.

Multiple grade populations were grouped in the same estimation domains. The

data available were insufficient to perform the variography and study the spatial

continuity and arbitrary geological criteria were taken.

Validation of the block model indicated that the differences between the two

alternative P2O5 and thickness estimates showed acceptable bias for all the

mineralized strata (less than 5%). Higher global biases were found in the

estimation of CaO and MgO within the Middle zone. Results obtained from swath

plots showed a closer match between the different types of estimate in the north-

south direction compared with the east-west, reflecting better grade continuity in

the north-south direction.

Current drill hole spacing is sufficient only to support Inferred Mineral Resources.

Another area of uncertainty which may materially impact the mineral resource

estimate is changes to the economic and recovery parameters used to define a

reasonable prospect of economic extraction.

The presence of phosphate-rich deposits, as previously indicated by historic drilling

and pitting data, has been confirmed by the 2011 drilling program.







In the opinion of the QPs, the information included in this Report is sufficient to

support the estimation of Inferred Mineral Resources. The proposed program for

further exploration on the Property is justified.






26.0 RECOMMENDATIONS

26.1 Specific Recommendations

Additional surface rights should be obtained to ensure suitable land for future

mining activities, tailing and waste disposal, process facilities and related mine

infrastructure.


supply source.





AMEC recommends resurveying the topography.

In future, when more drill data are available, grade populations should be reviewed

to improve the estimation domain definition.

Variographic analyses are recommended when there are sufficient drill data

available.

26.2 Follow-up Program

AMEC has proposed a two-phase program to follow-up the exploration in the Property.

The first phase will consist of completion of a Preliminary Economic Assessment

(PEA) to determine likely Project economics. Should the PEA return encouraging

results, then Montero should consider an infill and step-out drilling program in order to

provide sufficient robust information for more detailed mining studies, and support

potential upgrades in Mineral Resource confidence categories.

26.2.1 Phase 1

Montero should complete a Preliminary Economic Assessment (PEA) to include:

Definition of the Engineering Concept:

Evaluation of geological information.

Geotechnical analysis for mining.

Production rate estimation using Whittle pit optimisation software.

Surface mining concept, layout and scheduling of mine.






Mine engineering infrastructure.

Logistics design for any proposed mine.

Beneficiation concept work, including assimilation of test work completed.

Beneficiation plant concept.

Waste rock dump and tails dam site.

Support infrastructure engineering.

Manpower generation for all aspects of the project.

Bulk utilities supplies.

Product logistics.

Preliminary consideration of surface rights, access, and easement corridors

Preliminary consideration and collection of initial baseline information on

environmental, permitting and social and community issues

Water sources to meet potable and process requirements

Preliminary marketing study.

Costing and Evaluation of the Engineering Concepts

Risk Assessment

A basic risk assessment will be undertaken on the technical, environmental

and social aspects of the project.

Determine any fatal flaws.

Determine areas of sensitivity which will need particular focus as the project

moves forward.

The work in Phase 1 could be completed with a budget of approximately US$100,000.

26.2.2 Phase 2

Completion of Phase 2 is contingent on receipt of positive results from the PEA study.

The second phase of work should comprise collection of additional data to support

upgrades in mineral confidence categories. AMEC recommends the following actions:

Evaluate the most appropriate drill type to provide robust information for detailed

mining studies

Complete an infill and step-out drill program of an additional 40 drill holes

(approximately 1,000m)






Collect at least 30 density determinations per lithological horizon

Acquire sufficiently detailed photogrammetry to provide accurate topographic

contours.

Future exploration at the Property should ensure drilling recoveries over 80%. Given

the difficult drilling conditions in the Property, AMEC recommends that an alternative

drilling method, such as sonic drilling, be used in future exploration campaigns in order

to improve the drilling recovery. The budget for this phase should be established after

the completion of Phase 1.






27.0 REFERENCES

Birch, G., 1961. Phosphorite Deposits on the South African Continental margin and

Coastal Terrace.

Boardman, L.G., 1961. Results of Phosphate Prospecting by AMCOR on Cape West

Coast. Report prepared by African Metals Corporation Limited for the

Department of Mines, Pretoria, 23 August 1961.

Cullen, Patrick, 2011. Duyker Geology. Internal report prepared for Montero Mining

and Exploration Ltd.

Maptek, 2010. Geological Model Report Phosphate Project, Western Cape South

Africa, Montero Project Ltd. Internal report prepared by Maptek Technical

Services Africa for Montero Mining and Exploration Ltd., July 2010.

Moir, 2011. U Results. E-mail from Kelly Moir dated 28 September 2011.

Mosier, D., 1986. Model 34c. Descriptive Model of Upwelling Type Phosphate

Deposits. In: Dennis P. Cox and Donald A. Singer (eds.), Mineral Deposit

Models, US Geological Survey Bulletin 1693, 1986.

Roberts, D.L., 2006. Varswater Formation (Including the Langeenheid Clayey Sand,

Konings Vlei Gravel, Langeberg Quartz Sand and Muishond Fontein

Phosphatic Sand Members). In: Johnson, M.R. (Ed.): Catalogue of South

African Lithostratigraphic Units. SA Commitee for Stratigraphy, 2006.

Rogers, J., 1980. First Report on the Cenozoic Sediments Between Cape Town and

Eland's Bay. Unpublished report, Geol. Surv. S. Afr., 136 pp.

RSA, 2008. No. 28 of 2008: Mineral and Petroleum Resources Royalty Act, 2008,

Enacted by the Parliament of the Republic of South Africa. Government

Gazette, Vol. 521, No. 31635, 24 November 2008, Cape Town.

Turgis, 2009. Preliminary Evaluation of the Duyker Eiland Prospect. Report 30551-01.

Internal report prepared by Turgis Consulting (Pty) Ltd. for Phosco, October

2009.

Turgis, 2010. Technical and Legal Assessment of Four Potential Phosphate

Resources. Report 30640-02. Internal report prepared by Turgis Consulting

(Pty) Ltd. for Montero Mining and Exploration Ltd., 6 April 2010.






Turgis, 2011. Duyker Eiland Phosphate Sand, Exploratory Flotation Tests. Report

30887-00. Report prepared by Turgis Consulting (Pty) Ltd. for Montero Projects

Ltd., July 2011.

Visser, H.N and Schoch, A.E., 1973. The Geology and Mineral Resources of the

Saldanha Bay Area. Memoir 63, Department of Mines, Geological Survey of

the Republic of South Africa.

Werksmans, 2010a. Validity of Mining and Prospecting Rights Held by The Phosco

Group Of Companies. E-mail addressed to Jim Pooley, Turgis dated 23 March

2010.

Werksmans, 2010b. Limited Corporate Due Diligence Report-

SAL/GR01022010/TURG13277.1. Limited Corporate Legal Due Diligence

Report 09.04.10/#563943v1. Internal report prepared by Werksmans

Incorporating Jan S. De Villiers for and on behalf of Turgis Consulting

(Proprietary) Limited, in relation to Mellosat (Proprietary) Limited and its

subsidiaries, 9 April 2010.

Werksmans, 2011a. Updated due Diligence Investigation in Relation to Mellosat

(Proprietary) Limited (“MELLOSAT”) and Its subsidiaries (MELLOSAT

GROUP”). Internal report prepared by Werksmans Inc. for and on behalf of

Montero Projects Limited in relation to Mellosat (Proprietary) Limited and its

subsidiaries, 1 September 2011.

Werksmans, 2011b. Update on the Amendment of the Contract Between Montero

Projects Limited BVI and Celtic Trust Company Limited BVI, Signed on 18 July

2011, on the Purchase of the Entire Share Capital from Eurozone Investments

Limited, and on Royalties Payable according to the Royalty Act. Internal Memo

prepared by Werksmans Inc. for AMEC and on behalf of Montero Projects

Limited, 2 December 2011.

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