prefeasibility study mayaniquel projectcanadian national instrument 43-101 technical report...

CANADIAN NATIONAL INSTRUMENT 43-101 TECHNICAL REPORT

PREFEASIBILITY STUDY

MAYANIQUEL PROJECT

GUATEMALA

EFFECTIVE DATE:

October 24, 2012

DATE OF REPORT:

December 7, 2012

QUALIFIED PERSONS:

Neil B. Prenn, PE Robert Sim, PGeo

Bruce M. Davis, PhD Nicholas A. Barcza, PhD, Pr Eng

_________________________________________________________________________

Prepared by: MTB Project Management Professionals, Inc. 8301 E. Prentice Avenue, Suite 312 Greenwood Village, Colorado 80111 P: 303.741.9633 F: 303.741.9636

Prepared for:

MTB Project Management Professionals, Inc.

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Table of Contents

1.0 Summary ............................................................................................ 15

1.1 Introduction .................................................................................................................15

1.2 Project Location, Accessibility and Climate .................................................................15

1.3 Property Ownership ....................................................................................................15

1.4 Property Description ...................................................................................................16

1.5 Geology and Mineralization .........................................................................................18

1.6 Drilling .........................................................................................................................20

1.7 Mineral Resource ........................................................................................................21

1.8 Mining .........................................................................................................................23

1.9 Mineral Reserve Estimate ...........................................................................................24

1.10 Metallurgical Testwork ................................................................................................25

1.10.1 Prior Testwork ......................................................................................................25

1.10.2 Ore Upgrading Pilot Testwork ..............................................................................25

1.10.3 Smelter Pilot Testwork .........................................................................................26

1.11 Process Design and Recovery ....................................................................................26

1.12 Execution Plan and Schedule .....................................................................................27

1.13 Capital Cost ................................................................................................................28

1.14 Operating Cost ............................................................................................................28

1.15 Marketing Studies .......................................................................................................29

1.16 Economic Evaluation ..................................................................................................29

1.17 Conclusions and Recommendations ...........................................................................30

1.17.1 Conclusions .........................................................................................................30

1.17.2 Recommendations ...............................................................................................31

1.18 Cautionary Note Regarding Forward-Looking Information and Statements .................31

2.0 Introduction ......................................................................................... 34

2.1 Purpose of the Technical Report .................................................................................34

2.2 Sources of Information ................................................................................................34

2.3 Personal Inspections of the Mayaniquel Project ..........................................................35

2.4 Currency Assumptions ................................................................................................35

3.0 Reliance on Other Experts .................................................................. 36

4.0 Property Description and Location ...................................................... 37


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4.1 Property Ownership and Agreements .........................................................................37

4.2 Environmental Liabilities and Permitting ......................................................................39

4.2.1 Environmental and Permitting Requirements .......................................................39

4.2.2 Environmental Baseline .......................................................................................40

4.2.3 Reclamation Activities ..........................................................................................40

4.3 Other Significant Factors and Risks Affecting Access or Title .....................................41

4.4 Royalties .....................................................................................................................41

5.0 Accessibility, Climate, Local Resources, Infrastructure & Physiography ................................................................................................................. 42

5.1 Location and Access ...................................................................................................42

5.2 Physiography ..............................................................................................................42

5.3 Climate .......................................................................................................................42

5.4 Local Resources .........................................................................................................42

5.5 Infrastructure ...............................................................................................................43

6.0 History ................................................................................................ 44

6.1 Regional Exploration ...................................................................................................44

6.2 Project Area Exploration .............................................................................................44

7.0 Geological Setting and Mineralization ................................................. 46

7.1 Regional Geology .......................................................................................................46

7.2 Local and Property Geology ........................................................................................46

7.3 Mineralization ..............................................................................................................50

8.0 Deposit Types ..................................................................................... 51

9.0 Exploration .......................................................................................... 53

9.1 Historical Exploration ..................................................................................................53

9.2 Exploration by Anfield Nickel Corp. .............................................................................53

10.0 Drilling ............................................................................................... 54

11.0 Sample Preparation, Analyses and Security ..................................... 57

11.1 Sampling Method and Approach .................................................................................57

11.2 Sample Preparation ....................................................................................................59

11.3 Chemical Analysis.......................................................................................................60

11.4 Quality Assurance/Quality Control ..............................................................................60

11.5 Sample Security ..........................................................................................................61


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12.0 Data Verification ............................................................................... 63

13.0 Mineral Processing and Metallurgical Testing ................................... 64

13.1 Background.................................................................................................................64

13.2 Ore Upgrading Pilot Testwork .....................................................................................65

13.2.1 Introduction ..........................................................................................................65

13.2.2 Pilot Scale Testing ...............................................................................................66

13.3 Smelter Pilot Testwork ................................................................................................68

13.3.1 Introduction ..........................................................................................................68

13.3.2 Objectives of the Testwork Campaign ..................................................................68

13.3.3 Ore Sample Selection and Preparation at the Mine..............................................69

13.3.4 Ore Sample, Sampling, Analysis, and Homogenization at Morro Azul .................69

13.3.5 Feed Processing ..................................................................................................70

13.3.6 Smelting Operating Philosophy ............................................................................75

13.3.7 Smelting Operating Conditions ............................................................................75

13.3.8 Smelting Campaign Results .................................................................................78

13.3.9 Evaluation and Discussion of Results ..................................................................80

13.4 Conclusions and Recommendations ...........................................................................82

14.0 Mineral Resource Estimates ............................................................. 85

14.1 Introduction .................................................................................................................85

14.2 Geologic Model, Domains and Coding ........................................................................85

14.3 Available Data .............................................................................................................87

14.4 Compositing ................................................................................................................92

14.5 Exploratory Data Analysis ...........................................................................................92

14.5.1 Basic Statistics by Domain ...................................................................................92

14.5.2 Contact Profiles ...................................................................................................93

14.5.3 Indicator Variogram Continuity .............................................................................94

14.5.4 Modeling Implications ..........................................................................................94

14.5.5 Conclusions .........................................................................................................94

14.6 Bulk Density Data .......................................................................................................95

14.7 Evaluation of Outlier Grades .......................................................................................95

14.8 Trend Controls and Relative Elevations ......................................................................95

14.9 Variography ................................................................................................................96

14.10 Model Setup and Limits ...........................................................................................99


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14.11 Interpolation Parameters .........................................................................................99

14.12 Validation .............................................................................................................. 100

14.13 Resource Classification ......................................................................................... 103

14.14 Mineral Resources ................................................................................................ 104

14.15 Comparison with Previous Estimate ...................................................................... 109

15.0 Mineral Reserve Estimates ............................................................. 111

15.1 Introduction ............................................................................................................... 111

15.2 New Grade Models ................................................................................................... 111

15.3 Whittle Pit Optimization ............................................................................................. 111

15.4 Mining Panels ........................................................................................................... 111

15.5 Dilution and Ore Loss ............................................................................................... 114

15.6 Mineral Reserve Classification .................................................................................. 115

15.7 Upgrading Factors .................................................................................................... 117

15.8 Discussion on Potentially Impacts to Mineral Reserve Estimates .............................. 117

16.0 Mining Methods .............................................................................. 118

16.1 Mining Methods ........................................................................................................ 118

16.1.1 Main Panel Access Roads ................................................................................. 118

16.1.2 Vegetation and Topsoil Removal ....................................................................... 118

16.1.3 Detailed Development Drilling ............................................................................ 118

16.1.4 Mining Plan ........................................................................................................ 118

16.2 Reclamation .............................................................................................................. 120

16.3 Mine Development and Production Schedule ............................................................ 120

16.4 Mine Personnel ......................................................................................................... 128

16.4.1 Mine Staff .......................................................................................................... 128

16.5 Mine Equipment ........................................................................................................ 128

16.5.1 Drilling................................................................................................................ 128

16.5.2 Blasting .............................................................................................................. 128

16.5.3 Loading .............................................................................................................. 128

16.5.4 Hauling .............................................................................................................. 128

16.5.5 Support .............................................................................................................. 131

16.5.6 Equipment List ................................................................................................... 131

17.0 Recovery Methods .......................................................................... 133

17.1 Introduction ............................................................................................................... 133


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17.2 Process Selection ..................................................................................................... 133

17.3 Process Description .................................................................................................. 133

17.3.1 ROM Reception and Crushing ........................................................................... 133

17.3.2 Ore Drying and Tertiary Crushing – ONE LINE .................................................. 134

17.3.3 Metallurgical Plant ............................................................................................. 135

17.3.4 Reclaiming ......................................................................................................... 135

17.3.5 Smelting ............................................................................................................. 136

17.3.6 Refining ............................................................................................................. 140

17.3.7 Metal Granulation and Conditioning ................................................................... 140

17.4 Ancillary Facilities ..................................................................................................... 140

17.4.1 Coal Preparation ................................................................................................ 140

17.4.2 Dust Handling Systems ...................................................................................... 141

17.5 Utilities ...................................................................................................................... 141

17.5.1 Fuel Oil Storage ................................................................................................. 141

17.5.2 Diesel Storage ................................................................................................... 141

17.5.3 LPG Storage ...................................................................................................... 141

17.5.4 Water Systems .................................................................................................. 142

17.5.5 Söderberg Paste Handling ................................................................................. 142

17.5.6 Refinery Reagents Handling .............................................................................. 142

17.5.7 Compressed Air ................................................................................................. 142

17.5.8 Oxygen and Nitrogen ......................................................................................... 142

17.6 Nickel Recovery and Process Production ................................................................. 142

18.0 Project Infrastructure ....................................................................... 146

18.1 Roads ....................................................................................................................... 146

18.1.1 Main Access Road ............................................................................................. 146

18.1.2 Mine Haul Roads and Bypass Road .................................................................. 147

18.1.3 Ancillary Plantsite Roads ................................................................................... 149

18.1.4 Ore Transfer Conveyor ...................................................................................... 149

18.2 Water Supply ............................................................................................................ 150

18.3 Coal Storage Facility ................................................................................................. 151

18.4 Slag Storage Facility ................................................................................................. 151

18.5 Security and Fencing ................................................................................................ 151

18.6 Water Treatment and Minesite Sewage .................................................................... 152


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18.7 Employee Housing and Transportation ..................................................................... 152

18.8 Fire Protection .......................................................................................................... 153

18.9 Communications ....................................................................................................... 153

18.10 Sanitary Landfill ..................................................................................................... 154

18.11 Port Staging Facility .............................................................................................. 154

18.12 Power Supply ........................................................................................................ 157

18.12.1 Updated Preliminary Power Supply Study ...................................................... 157

18.12.2 Guatemalan Energy Market – General ........................................................... 157

18.12.3 Current Conditions ......................................................................................... 157

18.12.4 Power Supply Options .................................................................................... 158

18.12.5 Recommended Power Supply Option ............................................................. 159

18.12.6 Average Power Cost ...................................................................................... 159

18.12.7 Implementation Schedule ............................................................................... 159

19.0 Market Studies and Contracts ......................................................... 160

19.1 Market Studies .......................................................................................................... 160

19.2 Product Use, Demand, and Supply ........................................................................... 160

19.3 Nickel Price Forecasts .............................................................................................. 160

19.4 Iron Credit Forecast .................................................................................................. 162

19.5 Economic Evaluation Product Pricing Basis .............................................................. 164

19.6 Contracts .................................................................................................................. 164

20.0 Environmental Studies, Permitting, and Social or Community Impact ............................................................................................................... 165

20.1 Environmental Baseline ............................................................................................ 165

20.2 Permitting ................................................................................................................. 165

20.3 Conceptual Closure .................................................................................................. 171

20.3.1 Mine Closure...................................................................................................... 171

20.4 Mineral Processing Facilities Closure........................................................................ 173

20.5 Aggregate Quarries Closure ..................................................................................... 173

20.6 Safety and Security ................................................................................................... 173

20.7 Final Closure and Environmental Monitoring ............................................................. 174

20.8 Closure Costs ........................................................................................................... 174

20.9 Socioeconomic Conditions ........................................................................................ 175

20.9.1 Summary ........................................................................................................... 175


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20.9.2 Current Project Status ........................................................................................ 175

20.9.3 Legal Requirements ........................................................................................... 175

20.9.4 Area of Influence ................................................................................................ 176

20.9.5 Social Context .................................................................................................... 177

20.9.6 Social Management ........................................................................................... 178

20.9.7 Main Stakeholders ............................................................................................. 179

21.0 Capital and Operating Costs ........................................................... 181

21.1 Capital Cost Estimate ............................................................................................... 181

21.1.1 Summary ........................................................................................................... 181

21.1.2 Exclusions and Clarifications ............................................................................. 183

21.1.3 Estimating Methodology ..................................................................................... 183

21.1.4 Contingency ....................................................................................................... 183

21.1.5 Accuracy ............................................................................................................ 183

21.1.6 Execution Plan and Schedule ........................................................................... 184

21.2 Operating Cost Estimate ........................................................................................... 184

21.2.1 Summary ........................................................................................................... 184

21.2.2 Mining ................................................................................................................ 185

21.2.3 Ore Upgrading Facilities .................................................................................... 186

21.2.4 Processing ......................................................................................................... 186

21.2.5 Infrastructure Maintenance Summary ................................................................ 187

21.2.6 General and Administrative ................................................................................ 187

21.2.7 Mine Reclamation .............................................................................................. 188

21.2.8 C-1 Cash Costs (net of iron credits) ................................................................... 188

22.0 Economic Analysis .......................................................................... 190

22.1 General Criteria ........................................................................................................ 190

22.2 Production Summary ................................................................................................ 192

22.3 Gross Income from Mining ........................................................................................ 192

22.4 Transportation ........................................................................................................... 193

22.5 Royalties ................................................................................................................... 193

22.6 Operating Costs ........................................................................................................ 194

22.7 Depreciation and Income Tax ................................................................................... 194

22.8 Initial Capital Costs ................................................................................................... 194

22.9 Sustaining Capital Costs ........................................................................................... 194


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22.10 Working Capital ..................................................................................................... 195

22.11 Base Case Analysis .............................................................................................. 196

22.12 Base Case Sensitivity Analysis .............................................................................. 196

22.13 Economic Model .................................................................................................... 199

23.0 Adjacent Properties ......................................................................... 202

24.0 Other Relevant Data and Information .............................................. 203

25.0 Interpretations and Conclusions ...................................................... 204

25.1 Interpretations and Conclusions ................................................................................ 204

25.2 Risks and Opportunities ............................................................................................ 205

26.0 Recommendations .......................................................................... 206

27.0 References ..................................................................................... 207

28.0 Date and Signature Pages .............................................................. 208


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List of Figures Figure 1.1 General Location Map ........................................................................................17

Figure 1.2 Typical Laterite Profile .......................................................................................19

Figure 1.3 Drillhole and Model Limits ..................................................................................22

Figure 4.1 Exploration Licenses Map ..................................................................................39

Figure 7.1 Regional Geology ..............................................................................................47

Figure 7.2 Regional Laterite Deposit Location Map .............................................................48

Figure 8.1 Typical Laterite Profile .......................................................................................52

Figure 11.1 Nickel Check Assays between ALS and BSi ......................................................61

Figure 11.2 SiO2 Check Assays between ALS and BSi .........................................................61

Figure 13.1 Horizontal and Vertical Variability in MNSA Bulk Sample Pit ..............................65

Figure 13.2 MNSA Bulk Sample Upgrading System .............................................................66

Figure 13.3 Coal Addition .....................................................................................................71

Figure 13.4 Residual Carbon in the Calcine ..........................................................................72

Figure 13.5 Rotary Kiln Thermal Profile ................................................................................73

Figure 13.6 Calcine Temperature .........................................................................................73

Figure 13.7 Pre-reduction of the Calcine ...............................................................................74

Figure 13.8 Slag Temperature – 1st and 2nd Periods .............................................................76

Figure 13.9 Nickel Recovery and Alloy Grade .......................................................................80

Figure 13.10 Impact of Coal Addition on Ni Recovery and Fe Reduction ................................81

Figure 14.1 Isometric View of Drillhole Collars in Various Deposit Areas ..............................87

Figure 14.2 Plan View of DDH and RC Drillholes at Sechol ..................................................89

Figure 14.3 Boxplot of Nickel by Domain Type .....................................................................93

Figure 14.4 Contact Profiles for Nickel Grades across Main Domain Types ..........................94

Figure 14.5 Examples of Herco Plots for Nickel Models ...................................................... 101

Figure 14.6 Examples of Grade/Tonnage Comparison of Nickel Models ............................ 102

Figure 14.7 Nickel Swath Plots by Easting .......................................................................... 103

Figure 14.8 Plan View of the Distribution of Base Case Resources .................................... 108

Figure 15.1 Nueva Concepcion Mining Panels ................................................................... 112

Figure 15.2 Sechol Mining Panels ...................................................................................... 113

Figure 15.3 Tres Juanes Norte Mining Panels .................................................................... 114

Figure 17.1 Process Block Diagram .................................................................................... 134

Figure 17.2 Block Flow Diagram ......................................................................................... 138

Figure 17.3 Process Mass and Energy Balance Data ......................................................... 139

Figure 17.4 Nickel Recovery v Fe/Ni Ratio at a Nickel Grade of 22.5% .............................. 144

Figure 17.5 Nickel Recovery v FeNi Grade at a Nickel Grade of 22.5% .............................. 145

Figure 18.1 Class 1 – Typical Road Section (Mine and Local) ............................................ 147

Figure 18.2 Class 2 – Typical Road Section (Mine Only) .................................................... 148

Figure 18.3 Class 3 – Typical Road Section (Mine or Local) ............................................... 148

Figure 18.4 Santo Tomas Port Staging Facility ................................................................... 156

Figure 19.1 FeNi Price in $/t FeNi Alloy as a Function of FeNi Grade ................................. 163

Figure 19.2 Ni Price in $/t in FeNi as a Function of Ni Grade .............................................. 163

Figure 21.1 C-1 Cash Costs Net of Iron Credits .................................................................. 189

Figure 22.1 NPV Sensitivity Analysis – Metal Prices ........................................................... 197


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Figure 22.2 IRR Sensitivity Analysis – Metal Prices ............................................................ 198

Figure 22.3 NPV Sensitivity Analysis – Capital v Operating Costs ...................................... 198

Figure 22.4 IRR Sensitivity Analysis – Capital v Operating Costs ....................................... 198

Figure 22.5 NPV Sensitivity Analysis - Metallurgical Recovery ........................................... 199

Figure 22.6 IRR Sensitivity Analysis – Metallurgical Recovery ............................................ 199


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List of Tables

Table 1.1 Mineral Resource Estimate Summary (1.0% Ni Cut-Off "Base Case") ...............23

Table 1.2 Mine Production Schedule Summary .................................................................24

Table 1.3 Proven and Probable Reserve Estimates ...........................................................24

Table 1.4 Process Design Criteria .....................................................................................27

Table 1.5 Estimated Construction and Operations Jobs ....................................................27

Table 1.6 LOM Operating Costs Summary ........................................................................29

Table 4.1 Granted Exploration Licenses ............................................................................38

Table 4.2 Applications for Exploration Licenses .................................................................40

Table 4.3 Applications for Exploitation Licenses ................................................................40

Table 7.1 Chemical Criteria for Facies Designation ...........................................................50

Table 10.1 Distribution of Drilling Data by Area ...................................................................56

Table 11.1 Bulk Density Values ...........................................................................................59

Table 13.1 Chemical Characteristics of Blends for Smelting Testwork .................................64

Table 13.2 Energy and Grade Recovery Values ..................................................................64

Table 13.3 Primary (Rougher) Upgrading Results ...............................................................67

Table 13.4 Final Results – Two Stage Sort ..........................................................................67

Table 13.5 Chemical Composition of Blend 4 ......................................................................69

Table 13.6 Chemical Composition of Bulk Samples 1 and 2 and Blends 4 and C ................69

Table 13.7 Rotary Kiln Operating Conditions .......................................................................74

Table 13.8 Smelting Furnace Feed and Products ................................................................76

Table 13.9 Daily Slag Analysis ............................................................................................77

Table 13.10 Metal Analysis ....................................................................................................77

Table 13.11 Metal Produced ..................................................................................................78

Table 13.12 Mass Balance ....................................................................................................79

Table 13.13 Impact of Granulometry on Process and Engineering ........................................81

Table 14.1 LithChemA (LCA) Codes ....................................................................................86

Table 14.2 Distribution of Drilling Data by Model Area .........................................................88

Table 14.3 Statistical Summary of Sample Assay Data by Model Area ................................91

Table 14.4 Summary of Interpolation Domains ....................................................................94

Table 14.5 Summary of Dry Bulk Density Values .................................................................95

Table 14.6 Sechol Nickel Variogram Parameters .................................................................96

Table 14.7 Nueva Caledonia Nickel Variogram Parameters ................................................97

Table 14.8 Amanecer-Nueva Concepcion Nickel Variogram Parameters ............................97

Table 14.9 Amanecer-Chiis Area Nickel Variogram Parameters ..........................................97

Table 14.10 Poza Azul Nickel Variogram Parameters ...........................................................98

Table 14.11 Tres Juanes Norte Nickel Variogram Parameters ..............................................98

Table 14.12 Tres Juanes Rio Nickel Variogram Parameters ..................................................98

Table 14.13 Block Model Limits .............................................................................................99

Table 14.14 Mineral Resource Summary (0.8% Ni Cut-Off) ................................................. 105

Table 14.15 Mineral Resource Summary (1.0% Ni Cut-Off "Base Case") ............................ 106

Table 14.16 Mineral Resource Summary (1.2% Ni Cut-Off) ................................................. 107

Table 14.17 Mineral Resource Summary of All Elements (1.0% Ni Cut-Off) ........................ 109


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Table 14.18 Mineral Resources – May 2011 vs. March 2012 (1.0% Ni Cut-Off) .................. 110

Table 15.1 Whittle Pit Optimization Parameters ................................................................. 111

Table 15.2 Deposit Mineral Reserves ................................................................................ 116

Table 16.1 Sechol Deposit Mining Production Schedule .................................................... 122

Table 16.2 Tres Juanes Norte Deposit Mining Production Schedule .................................. 123

Table 16.3 Nueva Concepcion Deposit Mining Production Schedule ................................. 124

Table 16.4 Mayaniquel Mining Production Schedule ......................................................... 125

Table 16.5 Process Production Schedule – High Grade and Sechol Upgrader Feed ......... 126

Table 16.6 Process Production Schedule – TJN Upgrader and Total Feed ....................... 127

Table 16.7 Mayaniquel Mine Department Salary Staff ....................................................... 129

Table 16.8 Mayaniquel Mine Department Hourly Staff ....................................................... 130

Table 16.9 Main Panel Access Road Construction by Year ............................................... 131

Table 16.10 Mine Equipment List ........................................................................................ 132

Table 17.1 Design Basis Parameters ................................................................................. 135

Table 17.2 Calcining Characteristics .................................................................................. 136

Table 17.3 Smelting Characteristics .................................................................................. 137

Table 17.4 Metal Characteristics ....................................................................................... 140

Table 17.5 Granulation Characteristics .............................................................................. 140

Table 17.6 Coal Consumption ........................................................................................... 141

Table 18.1 Haul Roads ...................................................................................................... 149

Table 18.2 Bypass Road ................................................................................................... 149

Table 18.3 Estimated Monthly Stream Flow (average rainfall year) ................................... 150

Table 18.4 Estimated Monthly Stream Flow (dry rainfall year) ........................................... 150

Table 18.5 Stages for Power Requirements ...................................................................... 158

Table 19.1 Alternative Nickel Price Forecast ..................................................................... 161

Table 19.2 Base Metals Price Forecast ............................................................................. 161

Table 19.3 Average Price Forecast for Nickel in FeNi Alloy ............................................... 162

Table 19.4 Analyst Consensus Commodity Prices ............................................................. 164

Table 20.1 Permitting Requirements and Regulations ....................................................... 166

Table 20.2 Permits - Regulatory Authorities and Objectives .............................................. 167

Table 20.3 Direct and Indirect Areas of Influence .............................................................. 177

Table 20.4 Area of Influence for Potential Access Roads .................................................. 177

Table 21.1 Summary of Initial Capital Costs (US$000’s) .................................................... 182

Table 21.2 Currency Conversion Rates ............................................................................. 183

Table 21.3 Project Contingency ......................................................................................... 184

Table 21.4 Estimated Construction and Operations Jobs .................................................. 184

Table 21.5 LOM Operating Cost Summary ........................................................................ 185

Table 21.6 LOM Mine Operating Cost Summary – Mining by Operation ............................ 185

Table 21.7 LOM Mine Operating Cost Summary – Mining by Expense Element ................ 185

Table 21.8 LOM Operating Cost Summary – Ore Upgrading ............................................. 186

Table 21.9 LOM Operating Cost Summary – Processing ................................................... 186

Table 21.10 LOM Operating Cost Summary - Infrastructure Maintenance ........................... 187

Table 21.11 LOM Operating Cost Summary – G&A ............................................................. 188

Table 21.12 C-1 Cash Costs ............................................................................................... 189

Table 22.1 Economic Model Inputs .................................................................................... 191


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Table 22.2 Process Production Schedule .......................................................................... 192

Table 22.3 Nickel and Iron Market Prices .......................................................................... 192

Table 22.4 Nickel Market Price Comparison ...................................................................... 193

Table 22.5 Depreciation ..................................................................................................... 194

Table 22.6 Sustaining Capital Cost Summary .................................................................... 195

Table 22.7 Plant Production Ramp-Up Schedule ............................................................... 196

Table 22.8 NPV at Various Discount Rates ....................................................................... 196

Table 22.9 Sensitivity Analysis of IRR and NPV ................................................................ 197

Table 22.10 Cash Flow Model ............................................................................................. 200

Table 26.1 Recommended Future Work ............................................................................ 206


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1.0 Summary

1.1 Introduction

The Mayaniquel Project is a nickel project in northeastern Guatemala owned by Mayaniquel, S.A. (MNSA), a wholly-owned subsidiary of Anfield Nickel Corp. (ANC), based in Vancouver, British Columbia, Canada. This technical report (Technical Report) has been prepared for ANC by, or under the supervision of, Qualified Persons within the meaning of National Instrument 43-101 Standards of Disclosure for Mineral Projects (NI 43-101) in support of ANC’s disclosure of scientific and technical information for the Mayaniquel Project. This Technical Report, among other matters, includes a Prefeasibility Study (PFS) of the Mayaniquel Project.

1.2 Project Location, Accessibility and Climate

The project is located approximately 120km northeast of Guatemala City in the Department of Alta Verapaz, in the municipalities of Panzos and Senahú. The town of El Estor is the largest population center in the project vicinity and it serves as MNSA’s logistical base (Figure 1.1).

Access to the project area from the Caribbean coastal towns of Santo Tomas de Castilla and Puerto Barrios is via highways CA-9, CA-13, and 7E. From Guatemala City, access is via highways CA-9, CA-13, and 7E, or by small aircraft to a local gravel landing strip located near the town of El Estor, and then approximately 45km west by highway. MNSA schedules regular charter flights to El Estor through an independent service based in Guatemala City.

The climate in the project area is tropical with variable conditions due to the influence of wind and the humid climate. Rains occur throughout the year with the heaviest precipitation during the June to October rainy season. Rainfall in the area ranges from six millimeters in the driest months to 500mm during the wet months, with the average rainfall reported at 4,000mm/year. Temperatures range from 12ºC to 40ºC with relative humidity ranging from 70% to 84%. Due to relatively mild temperatures, plant operations can be undertaken throughout the year. Potential interruptions of mining operations may occur due to periods of heavy rainfall, hence adequate stockpile storage at the ore blending facility will exist to maintian continuous plant operation. Mining equipment and schedules are conservatively based on 300 days of mining per year to account for the rainy periods.

1.3 Property Ownership

In January 2006, a wholly-owned subsidiary of BHP Billiton Limited (BHP) acquired all of the issued and outstanding shares of Jaguar Nickel, S.A. (Jaguar Nickel) from Jaguar Nickel Inc. (predecessor to Jaguar Financial Inc.) and thereby acquired indirect ownership of Jaguar Nickel's exploration licenses in Guatemala, including the exploration license comprising the Sechol deposit area (Jaguar Transaction). Following the closing of the Jaguar Transaction, Jaguar Nickel was renamed Mayaniquel, S.A. and a mineral resource delineation program was commenced.

In May 2009, Anfield Ventures Corp. (now ANC) completed the purchase of all of the issued and outstanding shares of MNSA from BHP Billiton Holdings Pty Ltd. and The Broken Hill Proprietary Company Pty Ltd. The purchase included a 1.5% net smelter revenue royalty (NSR) payable to BHP Billiton World Exploration Inc., on any future production from the project. Upon completing the acquisition of the project, ANC commenced an aggressive community relations effort and parallel exploration program aimed at substantially increasing mineral resources.


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1.4 Property Description

The Mayaniquel Project is a nickel laterite project located in northeastern Guatemala comprised of four mineral exploration licenses totaling 120.7568km2. ANC has not acquired any surface rights for the Mayaniquel Project, but MNSA negotiates from time to time with communities and local land owners for surface access rights sufficient to complete work on the various license areas. The boundaries of the license areas comprising the Mayaniquel Project have not been legally surveyed as this is not required under Guatemalan mining regulations.

Of the four exploration licenses granted, only two have been extensively drilled to test for nickel mineralization. These license areas are Sechol II and Chatala. There exist several individual deposits of nickel laterite within each of these license areas.

Mitigation studies have been completed for each of the nine additional exploration license areas under application.

On March 31, 2011, MNSA filed with the Guatemala Ministry of Energy and Mines (MEM) a compliant mining exploitation application over the Sechol II exploration license area, named Sechol. The Sechol II exploration license has been extended by ministry of the law, until the Proyecto de Extracción Minera Sechol exploitation license application is granted. In support of the Sechol exploitation license application, MNSA filed an Environmental Impact Assessment (EIA) on April 15, 2011 with the Ministry of the Environment and Natural Resources (MARN). The MARN has already approved the EIA, and the only thing that is pending is the mining exploitation license, which has yet to be granted by the MEM.

On August 31, 2012, MNSA filed with the MEM two compliant mining exploitation applications derived of the Chatala exploration license area, named Tres Juanes and Amanecer. In support of the Chatala exploitation license application, MNSA filed an EIA with the MARN for Tres Juanes on October 2, 2012, and for Amanecer on October 10, 2012. MNSA is currently awaiting MARN and MEM comments on those EIAs.

Additional details regarding MNSA’s property ownership and agreements are presented in Item 4.0 of this Technical Report. For purposes of this Technical Report, the terms Environmental Assessment (EA), Environmental Impact Assessment (EIA), and Environmental Impact Study (EIS) are used interchangably.


17

Figure 1.1 General Location Map


18

1.5 Geology and Mineralization

The nickel laterites that cover the project area are found in the foothills of the Sierra de Santa Cruz Mountains, and range in elevation from 100 to 1,000m. Relief is moderate to steep with local flat-lying areas. The majority of the vegetation is secondary growth and comprises dense forest to sparse grassy areas. A significant portion of the property is currently under cultivation.

Laterites form in tropical climates with heavy rainfall where the weathering process is especially effective. A typical laterite profile contains three distinct zones: limonite, transition, and saprolite formed by texturally destructive weathering of ultramafic rocks. Nickel laterites consist of a succession of facies that are commonly irregular in distribution and thickness. Figure 1.2 (Elias, M. 2001) shows a typical laterite profile from the Mayaniquel Project area.

Limonite is characterized by its chemistry which is iron-rich and magnesium-poor. At surface, the limonite (Red Limonite) typically is a red to dark-brown, clay-like soil typically contaminated by organic material as well as volcanic ash. Red Limonite grades downward into a yellow-orange and/or brown amorphous clay-rich material containing a high proportion of iron oxides. Nickel concentrations are typically lower in the Red Limonite zone than that found in the underlying transition and saprolite zones.

The transition zone, as the name implies, represents a gradational contact between limonite above and saprolite below. Transition material is recognized by faint preservation of original rock textures, not seen in overlying amorphous limonite. The zone is greenish to yellow-brown and represents partially decomposed saprolitic rock. Chemically, transition material is characterized by decreasing iron and increasing magnesium concentrations.

Saprolite is magnesium-rich with low iron and low cobalt; color varies from yellow-green to greenish-brown. Saprolite occurs in two forms: earthy saprolite where the parent rock has been completely weathered, yet retains its original texture and appearance; and rocky saprolite or “saprock” where fragments to boulders of unweathered parent rock in varying percentages exist within a matrix of earthy saprolite.

As internal contacts within the laterite sequences are often difficult to discern visually, most are finalized upon receipt of detailed chemical information obtained from continuous sampling. Consistent, accurate chemical designations are critical for geological modeling and resource definition. MNSA has developed chemical criteria for identification of the various facies. Proper designation of contacts between chemically distinct units will also be critical for mine planning to control chemical characteristics of ore being sent for processing.


19

Figure 1.2 Typical Laterite Profile

Graphic LITHOLOGY

and

FACIES

CODE CRITERIA

OO

1

Organics/Topsoil “waste”

< 7 MgO%, >35% Fe2O3, >0.02 K2O

LR

1

Red Limonite

< 7 MgO% >35% Fe2O3, >0.02 K2O

LB

2

Brown Limonite

< 7 MgO%, >35% Fe2O3

LY

2

Yellow Limonite

< 7 MgO%, > 35% Fe2O3

LT

3

Transition

≥7 <15% MgO; >22 ≤35% Fe2O3

SE

4

Earthy Saprolite

≥15 ≤ 20% MgO; >11< 35% Fe2O3

SR

4

Rocky Saprolite

>20 < 32% MgO; >11<35% Fe2O3

P

5

Bedrock

≥32% MgO;≤ 11% Fe2O3


20

1.6 Drilling

Beginning in 2004, a total of 4,676 drillholes have been completed over thirteen different areas totaling 100,021 meters. Of these, 4,473 are diamond drill (core) holes (DDH) and 203 are reverse circulation (RC) holes. Drilling has been conducted by or on behalf of three companies:

� Jaguar Nickel

o 13,007m in 856 DDH holes drilled between 2004 and 2005

o Also included are 710 channel samples taken from the exposed walls of drill setups in the Sechol area

� BHP

o 21,019m in 654 DDH holes and 7,306m in 203 RC holes drilled between 2006 and 2008

� ANC

o 58,688m in 2,963 DDH holes drilled beginning in January 2010 to February 28, 2012

ANC’s HQ (96mm inside diameter) DDH drilling commenced in January 2010 and is now complete. As of the cut-off date for inclusion into the mineral resource estimate with an effective date of March 22, 2012, ANC had drilled 2,963 holes totaling 58,688m in the following ten target areas:

1. Nueva Caledonia 2. Nueva Concepcion 3. Chiis 4. Tres Juanes Norte 5. Tres Juanes Sur 6. Tres Juanes Rio 7. Sechol – El Inicio 8. Sechol – Segundo 9. Sechol – Poza Azul 10. Sechol - Seococ

In the Qualified Person’s opinion, significant upside potential remains on undrilled extensions to some deposits, particularly in the Tres Juanes Norte and Sechol – Segundo areas.

The Segundo deposit is open to the north – northwest outside the area of MNSA’s current licenses. ANC made an application for an exploration license that covers this area (Sechol IV), and if this license is granted it will allow further exploration and potential expansion of the Segundo deposit onto new lands. Portions of the Tres Juanes Norte deposit remain open for expansion as well within existing Mayaniquel licenses.

ANC’s drill program is utilizing man-portable rigs supplied by Kluane Guatemala, SA. These rigs require minimal logistical support and have readily gained social acceptance with minimal surface disturbance, which is readily reclaimed. Up to eight drills were utilized during the drilling campaign.

Targets were grid drilled on 100m centers (inferred resource) with many areas receiving infill drilling to a nominal 70m (indicated resource) configuration. A few zones have been drilled to nominal 50m centers, sufficient for defining a measured resource. To improve geological modeling control and alleviate sampling/contact-designation uncertainties inherent in the RC


21

drilling conducted by BHP, ANC redrilled areas of the Sechol deposit that had been exclusively tested with RC using DDH.

As drillholes were completed, core was transported to the Chulac exploration compound for logging and subsequent processing for assay and density testwork. The vertical holes intersect the flat-lying deposits defining the true thickness of those deposits.

1.7 Mineral Resource

Mineral resource estimates have been generated for the six deposit areas referred to as Sechol, Nueva Caledonia, Amanecer, Tres Juanes Norte, Tres Juanes Rio, and Poza Azul. Estimations are made from 3-dimensional (3D) block models based on geostatistical applications using commercial mine planning software (MineSight® v7.0-3). The project limits are based on the UTM coordinate system (NAD83 zone 16). A nominal block size for each model of 25x25x2mV is considered appropriate for the distribution of sample data and also the shape and scale of the deposits. Sample data is derived from surface drilling programs completed by three operators: Jaguar Nickel from 2004-05, BHP from 2006-08, and ANC from 2009-present. Throughout 2009-2010, ANC reviewed the BHP drilling and brought the geologic information in line with that produced by Jaguar Nickel. Drilling is completed using vertical holes that are generally spaced on regular 100m grid patterns. Portions of Amanecer, Tres Juanes Norte, Tres Juanes Rio, and Sechol are drilled on a tighter drill grid spacing of 50 to 70m, resulting in some higher-class resource designation in these areas.

The resource estimates have been generated for each of the six areas using drillhole sample assay results and the interpretation of a geologic model which relates to the spatial distribution of nickel, iron, silica, alumina, magnesia, and cobalt. Interpolation characteristics have been defined based on the geology, drillhole spacing, and geostatistical analysis of the data. The mineral resources have been classified by their proximity to the sample locations and are reported as required by NI 43-101, according to the CIM definition standards on Mineral Resources and Reserves (CIM Definition Standards). The distribution of drillholes in the various model areas is shown in Figure 1.3 and discussed further in Item 14.0.


22

Figure 1.3 Drillhole and Model Limits

MNSA followed industry standard sampling preparation and assaying procedures and reasonable and adequate procedures were followed to ensure the reliability of the sampling and assay data. The sample analysis and check sampling program have demonstrated that the sample assays are representative of the mineralization and that there appears to be no bias in the sampling.

Mineral resources were summarized at several nickel cut-off grades for comparison purposes. The base case cut-off grade of 1.0% Ni is considered appropriate based on assumptions derived from deposits of similar type, scale and location and is shown in Table 1.1.

The mineral resource estimate includes nickel limonite mineralization as metallurgical testwork completed to date has shown that up to 30% of the ferronickel FeNi) plant’s feed material can be comprised of limonitic mineralization without appreciable loss of nickel recovery or quality of product. There are no limonite estimates for Chatala and El Tunico.

Due to the relatively small amount of sub-economic material overlying the resource, it is felt that all of the reported resources show reasonable prospects for economic extraction. Listed below are the estimated mineral resources. Mineral resources that are not reserves have no demonstrated economic viability. Mineral reserve estimates are presented in Item 1.9 and 15.2 of this Technical Report.

Mineral resources have been estimated as at March 22, 2012. R. Sim, P.Geo. and B. Davis, FAusIMM, are the independent Qualified Persons within the meaning of NI 43-101 for purposes of the mineral resource estimates.


23

Table 1.1 Mineral Resource Estimate Summary (1.0% Ni Cut-Off "Base Case")

A more detailed discussion regarding the methodology of determining the mineral resource estimate is presented in Item 14.0.

1.8 Mining

In connection with this Technical Report, Mine Development Associates (MDA) completed the mine planning portion of this PFS using the mineral resource estimates (with an effective date of March 22, 2012) completed by SIM Geological Inc. (SIM) and BD Resource Consulting, Inc. (BDRC) and the corresponding block models (see Section 1.7 and Item 14.0). MDA completed

ktonnes Ni% ktonnes Ni% ktonnes Ni% ktonnes

Sechol 2,350 1.23 267 1.83 3,909 1.79 6,526 1.59

Total 2,350 1.23 267 1.83 3,909 1.79 6,526 1.59


Sechol 4,712 1.15 1,197 1.54 15,605 1.54 21,514 1.45

Tres Juanes Norte 10,430 1.20 759 1.53 18,998 1.52 30,187 1.41

Tres Juanes Rio 655 1.12 298 1.16 1,908 1.24 2,861 1.20

Tres Juanes Sur 488 1.27 16 2.12 280 1.52 784 1.38

N Concepcion 1,315 1.14 228 1.25 2,282 1.19 3,826 1.18

Chiis 4,152 1.12 116 1.24 6,868 1.36 11,136 1.27

Total 21,752 1.17 2,615 1.46 45,941 1.47 70,307 1.38


Sechol 1,351 1.15 707 1.36 6,966 1.43 9,024 1.38

Chiis 587 1.11 31 1.20 1,390 1.24 2,008 1.20

N Concepcion 208 1.15 40 1.31 749 1.16 997 1.17

N Caledonia 3,166 1.11 1,348 1.37 9,299 1.41 13,812 1.34


Tres Juanes Rio 1,423 1.14 281 1.06 1,708 1.27 3,413 1.20

Tres Juanes Sur 1,704 1.26 78 1.95 704 1.89 2,487 1.46

Chatala [2] 540 1.24 1,360 1.18 1,900 1.20

Tunico [2] - - 1,660 1.34 1,660 1.34

Total 10,504 1.16 3,259 1.33 28,023 1.40 41,786 1.33

[2] The mineral resource estimates for the Chatala and Tunico deposits were originally reported in Tschabrun 2009 and there have been no additional work completed or changes to these estimates, since that time. R. Sim has reviewed and verified these mineral resource estimates for inclusion in this Technical Report. Limonite estimates are not available for these deposits.

[1] Inferred mineral resources have a great amount of uncertainty as to their existence and as to whether they can be mined legally or economically. It cannot be assumed that all or any part of inferred mineral resources will ever be upgraded to a higher category.

Inferred [1]

AreaLimonite Transition Saprolite Total

Ni%

Indicated


Ni%

Measured


Ni%


24

the mine planning after reviewing the preliminary economic assessment (PEA) for the project with William Rose, who completed the mine planning portion of the PEA study. The project will utilize conventional open pit mining methods.

The costs and recovery information developed for the PEA were used in the PFS to optimize pits to determine a mine plan for the Nueva Concepcion, Sechol, and Tres Juanes Norte deposit area grade models using only those mineral resources contained within the measured and indicated categories.

The mine plan contemplates a series of panels or area outlines that were used to plan production from the pit. There are 24 mining panels in Sechol, nine mining panels in Tres Juanes Norte, and two mining panels in Nueva Concepcion. The final production schedule is based on a start-up in the Sechol El Inicio panels, ultimately feeding 1.33 million tonnes per year of upgraded and high-grade material to the ore blending stockpiles. Production is expected to double in year five to a maximum capacity of 2.66 million tonnes per year of upgraded and high-grade material after introduction of a second process train.

As part of the mine plan, it is proposed that high grade laterites (>1.6% Ni) would be shipped directly to the ore blending facility at the process plant and lower grade laterites (between 1.0% and 1.6% Ni) would be hauled to an ore upgrading facility to reject subgrade Ni or high Fe material, thereby upgrading the Ni grades and controlling the Fe-to-Ni ratio to acceptable smelting standards. The ore upgrading facility is expected to reject 35-36% of the feed which will be returned to the mining panels as backfill.

The life-of-mine (LOM) mine production schedule is summarized below in Table 1.2.

Table 1.2 Mine Production Schedule Summary

Mining is presented in more detail in Item 16.0, including the complete mine production schedule in Table 16.4.

1.9 Mineral Reserve Estimate

MDA completed the mine planning to develop the mineral reserve estimates, as discussed more fully in Item 15.0. Estimates of total proven and probable mineral reserves are summarized below in Table 1.3. Nickel grades in the mineral reserve estimates are lower than grades in the mineral resource estimates due to inclusion of mining dilution in the mineral reserve estimates.

Table 1.3 Proven and Probable Reserve Estimates

Mineral reserves have been estimated as at October 24, 2012. Mr. N. Prenn, P.E is the independent Qualified Person within the meaning of NI 43-101 for purposes of the mineral reserve

High-Grade to

Stockpile

Low-Grade to

UpgraderTotal Ore Mined Waste Mined

Total Ore &

Waste Mined

Tonnes

000's16,848 52,572 69,420 27,868 97,288

Tonnes

000's

Proven 6,688.9 1.57

Probable 63,199.9 1.39

Proven + Probable Total 69,888.8 1.41

Reserve Classification%Ni


25

estimates. The mineral reserves have been reported as required by NI 43-101 in accordance with the CIM Definition Standards.

Mineral reserves presented herein include amounts that have been identified as mineral resources. Mineral resources that are not mineral reserves have no demonstrated economic viability

1.10 Metallurgical Testwork

1.10.1 Prior Testwork

Prior work in respect of the Mayaniquel Project, including ANC’s previously filed Technical Report, was based on a single Rotary Kiln Electric Furnace (RKEF) process flowsheet with ore upgrading to provide a target feed to the plant. The target feed to the RKEF plant and the plant’s selected operating characteristics were determined from extensive physical and chemical characterization of representative laterite material samples from the Mayaniquel site, predictive metallurgical smelting modeling, and small-scale smelting testwork by Mintek of Johannesburg, South Africa.

A target feed to produce the 22.5% nickel grade ferronickel (FeNi) was selected. Ferronickel alloys were successfully produced from all five blends and the smelting testwork confirmed that the predictions from the metallurgical smelting model were reliable.

Due to the inherent variability of the laterite materials, selective mining, effective ore upgrading, blending, and good plant operating practices were recognized to be important factors in producing the target FeNi alloy grade.

Using samples of laterites from Mayaniquel, laboratory bench scale testwork was completed at Laser Analytical Systems & Automation GmbH (LSA) in Germany and Mintek in South Africa, using Laser Induced Breakdown Spectroscopy (LIBS), and X-ray Fluorescence (XRF) methods, respectively. Results from both Mintek’s and LSA’s work supported the use of sensor-based systems for upgrading low grade laterites to achieve Blend 4 target feed to the RKEF plant.

1.10.2 Ore Upgrading Pilot Testwork

MineSense Technologies Ltd. (MineSense), a Vancouver-based technology company, was engaged by ANC to evaluate methods and recommend an appropriate system design and operational parameters to suitably upgrade the nickel laterite resources for feed into an RKEF process plant using AC electrical furnaces for the pyrometallurgical smelting reduction process.

Mineral resources at Mayaniquel, as defined at various cut-off grades, do not meet the time-average preferred feed blend to the smelter defined at 1.67% Ni, with 30.4% Fe2O3, 29.0% SiO2, and 17.6% MgO. Significant upgrading is therefore required to meet the overall project criteria at present estimated tonnage and grade.

A process considering mining by truck/shovel and direct shipping to the process plant of high grade blocks >1.6% Ni cut-off, combined with upgrading of mined blocks <1.6% Ni cut-off through a combination of upgrading by size classification, and sensor-based sorting to further upgrade the nickel content while controlling overall iron content was considered optimal in maximizing resource extraction while optimizing FeNi production.

A pilot-scale ore upgrading facility was designed, built, and commissioned by MineSense based on previous lab and semi-pilot work completed in 2011. Two sensor-based methods for the upgrading of nickel laterites, XRF and LIBS were investigated.

Results of the bulk treatment, peridotite rejection, and scavenging tests were used to construct an overall metallurgical balance for the upgrading of nickel laterites from the Mayaniquel deposit by XRF means. Overall confirmation of the effectiveness of XRF sorting to be used to adjust the chemistry of the laterite ores to better meet requirements for smelting has been established, and


26

is included in the prefeasibility design as a base case option for upgrading low grade resource material <1.6% Ni cut-off prior to smelting.

1.10.3 Smelter Pilot Testwork

IGEO – Mineração Inteligente Ltda (IGEO) was contracted to conduct a smelting pilot plant testwork campaign on a bulk laterite ore sample blend prepared by MineSense from the Mayaniquel deposit. The objective of the metallurgical smelting campaign carried out in July 2012 was to demonstrate that a selected blended ore feed could be used to produce a FeNi alloy containing the target grade of 22.5% nickel at a recovery of over 90%.

IGEO contracted Morro Azul Ltda (Morro Azul) to carry out the testwork at their pilot plant facility. Morro Azul provided experienced operating personnel and other resources required for carrying out the continuous campaign as required to achieve the objectives.

The smelting campaign was considered to be one of the key objectives of the PFS. The laboratory-scale work carried out previously by Mintek generated metallurgical data for the process flowsheet design, but a larger-scale test was required to verify the process and equipment-related parameters used in the PFS. The use of a bulk sample prepared in a manner similar to what is envisaged for the full-scale metallurgical plant was also considered an important part of the PFS.

The pilot plant testwork campaign successfully demonstrated that the pyrometallurgical treatment of a 120 tonne bulk sample of blended ore from the Mayaniquel Project can be completed in accordance with project design parameters. The operation of both the rotary kiln and the electric furnace was carried out on a continuous basis during a campaign at the Morro Azul testwork plant. The primary objective of producing an alloy grade close to 22.5% with a nickel recovery of 90% was achieved. The result of the operation of the pilot plant indicates that the decision for selecting the RKEF process for the Mayaniquel Project is justified.

Metallurgical testwork is discussed in more detail in Item 13.0.

1.11 Process Design and Recovery

The Mayaniquel Project consists of a greenfield FeNi smelter with a production capacity of 40,000 tonnes per annum of nickel in FeNi from laterite ore, at full capacity, utilizing the RKEF process. The RKEF process was compared against the Fluid Bed – DC (FBDC) furnace option and was reviewed and evaluated with regards to recent FeNi projects as well as the results of the pilot plant testwork campaign carried out at Morro Azul under the coordination of IGEO and with the involvement of ANC. The project will start-up line one at the beginning of year one while the second line will start-up at the beginning of year five, incorporating lessons learned during line one ramp-up.

The plant will have one primary and one secondary crushing station, one ore homogenization facility, and two production lines, each one comprised of one rotary dryer, a tertiary crushing station, a rotary kiln, an 80MW (nominal) smelting electric furnace and a refining ladle furnace, coupled to a metal granulation and metal conditioning area and a metal from refining slag recovery plant.

The mineral and pyrometallurgical processing plant will perform in accordance with the criteria shown in Table 1.4.


27

Table 1.4 Process Design Criteria

A more detailed discussion of mineral processing and the process plant is provided in Item 17.0.

1.12 Execution Plan and Schedule

As part of the PFS, an execution schedule was considered that would commence if a positive Feasibility Study (FS) is completed and a development decision on the Mayaniquel Project is made. The schedule begins at the start of engineering and extends through to metallurgical commissioning of the FeNi process plant, which is planned to be an overall preproduction period of 36 months, and continues on through nine months of production ramp-up to 100% production.

Although detailed construction logic was not completed at this stage of the project development, a summary level schedule was developed using major activity durations, including manufacturing and delivery durations for all major process equipment packages provided by IGEO and ThyssenKrupp Polysius (Polysius) based on recent and current projects.

Overall durations for construction, as well as the time required following receipt of the critical long- lead items mentioned above, has also been provided by IGEO based on recent and current projects and information provided by major equipment suppliers in written quotations. Construction manhours were estimated by factoring a recently completed similar project by IGEO

The addition of a second production line will require an additional two years of construction during operating years three and four.

Estimated direct construction and operation jobs for the first and second lines are summarized below in Table 1.5.

Table 1.5 Estimated Construction and Operations Jobs

Unit

RKEF combined availability % 90Plant throughput - year 1 to year 4 t/year, dry 1,330,000Plant throughput - year 5 to end t/year, dry 2,660,000Coal consumption in the dryer kg/t of new dry ore 24Coal consumption in the rotary kiln kg/t of new dry ore 83Ore grade %Ni 1.71Overall recovery %Ni 90Ni production - year 1 to year 4 t/year 20,000Ni production - year 5 to end t/year 40,000Furnace power (per furnace) MW 81Energy consumption in the furnace kWh/dry t calcine 544Ni grade in the metal % 22.50Refinery Ladle furnaceFinal product Granulated FeNi

Item Value

Construction Operation Construction Operation

Preproduction 1-3 Years 1-22 Years 3 & 4 Years 5 - 22

Direct Construction 1,000 700

Permanent Operations 800 150

Second LineFirst Line

Estimated Jobs


28

1.13 Capital Cost

In connection with this Technical Report, capital costs were estimated for the proposed mining and FeNi operations of the Mayaniquel Project. The total estimated initial cost to design, procure, construct, and commission the facilities described in this Technical Report is $946 million USD. The smelter and its ancillary facilities capital cost estimate was developed by IGEO by: factoring and escalating a two-kiln line FeNi project in Brazil comprised of the same process flowsheet concepts proposed for the Mayaniquel Project; and incorporating current information provided by major equipment suppliers in written quotations. The total estimated LOM sustaining capital cost is approximately $1.1 billion USD. The increase in sustaining capital from that presented in the PEA is due principally to the addition of a second process line and associated infrastructure and equipment to the processing plant for the fifth year of production ($533 million USD).

A contingency of 13%, or $113.6 million USD, has been included in the capital cost. This contingency is based on the level of definition that was used to prepare the estimate. IGEO provided a high level of confidence for its estimate of the process plant, refinery, and other battery limit scope. Of the total direct cost, the vast majority of the estimate is based on budget quotations obtained from supliers for the main process equipment and also on actual costs of a similar plants with which IGEO was recently involved.

The PFS estimate included in this Technical Report has been developed to a level sufficient to assess/evaluate the project concept, various development options, and the potential overall project viability. After inclusion of the recommended contingency, the capital cost estimate is considered to have a level of accuracy in the range of minus ten percent (-10%) plus twenty five percent (+25%). This is based on the level of contingency applied, the confidence levels of IGEO, Ausenco, MDA, and MTB in their respective estimates, on their estimate accuracy, and an assessment comparing this estimate to standard accuracy levels on prefeasibility study estimates.

The qualified person for this section has reviewed and approved for inclusion in this Technical Report the capital cost estimates.

Capital costs are discussed in more detail in Item 21.0.

1.14 Operating Cost

Operating costs have been estimated for mining, ore upgrading, ore conveyance, processing, infrastructure maintenance, general and administrative (G&A), and mine reclamation and closure.

Table 1.6 shows the LOM operating cost by area.


29

Table 1.6 LOM Operating Costs Summary

Methodologies and further details are presented in Item 21.0.

1.15 Marketing Studies

An original market study entitled “The World Ferronickel Markets” was completed by Heinz Pariser Alloy Metals & Steel Market Research (Pariser) of Xanten, Germany during the fourth quarter of 2010; it was issued in January 2011 and formed the basis for the Mayaniquel Project PEA in July 2011. Continuing under contract with ANC, Pariser updated its original findings in September 2012 (Pariser, September 2012) in a report entitled “Ferronickel Markets Update”. In this update, Pariser addressed changes to the market since their prior report, including supply, demand, pricing, and market outlook.

While certain of the nickel price forecasts support a higher nickel price, for purposes of the economic analysis “Base Case”, a more conservative long-term nickel price of $8.50/lb and an iron credit at $0.17/lb for five years before moving to $0.18/lb iron credit for the long-term, were used. Through not used as a basis for the economic evaluation, a concensus price forecast by 23 analysts (Table 19.6 in Item 19.0) suggested a long term price of $8.94/lb Ni would be appropriate. The impact of using $8.94/lb Ni pricing is illustrated in Table 22.4.

Marketing and contracts are discussed in more detail in Item 19.0.

1.16 Economic Evaluation

The results of this Technical Report estimate an after-tax internal rate of return (IRR) of 19.9% for the Mayaniquel Project. Assuming a discount rate of eight percent (8%) over an estimated mine life of 21.3 years, the after-tax net present value (NPV) is estimated to be approximately $1.3 billion. The results of this PFS estimate payback to occur early in the sixth year of mine life, approximately 5.7 years after start of production. The payback period is impacted by other expenditures of significant incremental capital in the third and fourth years of production to double plant capacity.

A more detailed discussion of project economic performance is presented in Item 22.0.

Total Life of

Mine Cost

Average

Annual Cost

LOM Cost per

Tonne Ore x 000 x 000 (Smelter Feed)

Mining 590,195 27,709 11.65 Ore Upgrading 93,644 4,396 1.85 Ore Conveyance 13,302 624 0.26 Processing - Smelting 4,165,162 195,548 82.19 Infrastructure Maintenance 15,107 709 0.30 General and Administration 535,877 25,159 10.57 Mine Reclamation & Closure 9,625 ** 0.19

Total Operating Cost (USD) 5,422,912$ 254,145$ 107.00$

LOM = 21.3 years LOM K-Tonnes of Ore (Smelter Feed): 50,680

** No Average Annual Cost indicated as cost is considered incurred after LOM in Year 22 and after.

Description


30

1.17 Conclusions and Recommendations

1.17.1 Conclusions

The Qualified Persons for this Technical Report have made the following conclusions:

• The mineral resource estimate with an effective date of March 22, 2012 is based on drillhole data through February 28, 2012. The resources have increased substantially since the previous mineral resource estimate with an effective date of July 2011 prepared by SIM and BDRC due to a continuation of the drilling program.

• Additional drilling by ANC in the Sechol deposit upgraded resources from the indicated to the measured category as well as upgrading a significant amount of resource from the inferred to the indicated category. Drilling in the Tres Juanes Norte and Tres Juanes Rio areas also resulted in increasing indicated and inferred resources.

• The mineral resource estimate includes nickel in limonite mineralization as metallurgical testwork completed to date has shown that up to 30% of the FeNi plant’s feed material can be comprised of limonitic mineralization without appreciable loss of recoveries or quality of product.

• Due to the relatively small amount of sub-economic material overlying the resource, it is felt that all of the reported resources show reasonable prospects for economic extraction.

• LiDAR topographic mapping was completed by ANC in July 2012. The mineral resource estimate and significant mine planning had previously been completed using the older topography. Portions of the mineral resource estimates were reestimated using the new topography to evaluate potential impacts. The Qualified Person for the mineral resource estimate determined that use of the new topography versus the old topography resulted in no material change to the mineral resource estimate.

• Significant upside potential remains on undrilled extensions to some deposits, particularly the Tres Juanes Norte and Sechol-Segundo areas.

• Reliability of the sample assay data is within acceptable limits for mineral resource estimation.

• There are no known factors related to metallurgical, environmental, permitting, legal, title, taxation, socio-economic, marketing or political issues which could materially affect the mineral resource estimate.

• Ore upgrading pilot plant testwork confirmed the effectiveness of XRF sorting to adjust the chemistry of the laterite ores to better meet target smelter feed characteristics.

• The objective of the metallurgical smelting campaign carried out in July 2012 was to demonstrate that a selected blended ore feed could be used to produce a FeNi alloy containing the target grade of 22.5% nickel at a recovery of 90%. Test results confirmed that the process would produce the target FeNi alloy product at greater than 90% nickel recovery over a range of varying feed capacity.

• Test samples chosen for both the ore upgrading pilot testwork and the smelter pilot testwork are representative of the three main lithologies and the overall mineral resource with the Mayaniquel Project deposit areas.

• The results of the Technical Report estimate that a mine at the Mayaniquel Project will be a low cost operation. The Mayaniquel Project benefits significantly from a higher grade starter pit (plant feed of 1.86% Ni for first three years of operation), low strip ratio, relatively easy terrain, positive metallurgy (average Ni recoveries of 90%), amenability of material to physical upgrading, close proximity to major infrastructure, and large reserve base.


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• Overall, the Mayaniquel Project is economically viable and has robust project economics at this stage of development and warrants further work, advancing to the next stage of development. The exploration program continues to demonstrate the potential for future growth of the resource. Risks, as well as significant opportunities, can be evaluated in the feasibility stage of the project.

1.17.2 Recommendations

Based on the results of this PFS, the authors recommend that ANC complete a FS to further define the Mayaniquel Project to more accurately assess its economic viability, to support permitting activities and, ultimately, project financing should the FS results be positive. In addition, the authors recommend that ANC and MNSA continue their community relations programs with stakeholders of Mayaniquel Project.

An estimate of the costs to continue community relations programs, complete the infill drilling, and the other work needed to complete the FS in Table 26.1.

1.18 Cautionary Note Regarding Forward-Looking Information and

Statements

Information and statements contained in this Technical Report that are not historical facts are “forward-looking information” or “forward-looking statements” within the meaning of applicable Canadian securities legislation and the United States Private Securities Litigation Reform Act of 1995, respectively, and involve risks and uncertainties. Examples of forward-looking information and statements contained in this Technical Report include, information and statements with respect to:

• ANC’s plans and expectations for the Mayaniquel Project;

• the results of the economic analysis of ANC’s Mayaniquel Project, including, but not limited to, base case parameters and assumptions, base case analysis, forecasts of net present value, internal rate of return, upfront capital costs, sustaining capital costs, capital payback, operating costs, working capital, cash flows and sensitivity analyses;

• ANC’s plans related to mine development and design, operations, equipment, and infrastructure;

• ANC’s production schedule and life-of-mine estimates;

• ANC’s plans related to mineral processing, recovery methods and ore upgrading and blending;

• nickel price projections and estimates of iron byproduct credits;

• mineral reserve and resource estimates and assumptions and the potential to upgrade mineral resources to higher mineral resource classifications;

• ANC’s applications for new exploration and exploitation licenses, extensions of existing exploration licenses, renewals of exploration licenses, and EIA submissions and assumptions;

• the potential of ANC to extend areas of known mineralization;

• estimates of long term power costs, coal prices, water requirements and waste:ore stripping ratios;

• estimates of mine reclamation and closure costs;


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• the results and further testing of ANC’s metallurgical testing programs including, but not limited to estimates of recovery rates;

• ANC’s plans relating to exploration and development of the project, including permitting and regulatory requirements related to any such plans;

• ANC’s plans and projected costs to complete additional drilling, metallurgical testwork, other engineering, logistics, and infrastructure and a feasibility study;

• ANC’s plans to meet World Bank’s Group Policy and Performance Standards and Equator Principles regarding social and environmental sustainability and performance;

• ANC’s plans to address environmental compliance, reclamation and liabilities; and

• risks related to performance of the project and opportunities to improve project performance.

In certain cases, forward-looking information can be identified by the use of words such as “plans”, “expects”, “is expected”, “budgets”, “forecasts”, “anticipates”, “estimates”, “intends”, “targets”, “scheduled”, “believes”, “appears”, “likely”, “typically”, “potential”, “continue”, “strategy”, or “proposed”, or variations (including negative variations) of such words and phrases or may be identified by statements to the effect that certain actions, events or results, “may”, “could”, “should”, “would”, “will be” or “shall” be taken, occur or be achieved.

Various assumptions or factors are typically applied in drawing conclusions or making the forecasts or projections set out in forward-looking information and statements. In some instances, material assumptions and factors are presented or discussed elsewhere in this Technical Report in connection with the statements or disclosure containing the forward-looking information and statements. You are cautioned that the following list of material factors and assumptions is not exhaustive. The factors and assumptions include, but are not limited to, assumptions concerning nickel prices and iron by-product credits; cut-off grades; short and long term power and coal prices; processing recovery rates; mine plans and production scheduling; acquisition of surface and access rights to further explore and develop the Mayaniquel Project will be successful; ability to obtain and maintain required regulatory approvals; process and infrastructure design and implementation; accuracy of the estimation of operating and capital costs; applicable tax rates; open-pit design, accuracy of mineral resource estimates and resource modeling; reliability of sampling and assay data; representativeness of mineralization; accuracy of metallurgical testwork; and amenability of upgrading and blending mineralization.

Forward-looking statements are subject to a variety of known and unknown risks, uncertainties and other factors which could cause actual events or results to differ materially from those expressed or implied by the forward-looking statements, including, without limitation:

• risks relating to nickel, iron, and other mineral price fluctuations;

• risks relating to estimates of mineral reserves and resources, production, purchases, costs, decommissioning or reclamation expenses, proving to be inaccurate;

• the inherent operational risks associated with mining and mineral exploration, development, mine construction, and operating activities, many of which are beyond ANC’s control;

• risks relating to ANC’s ability to enforce ANC’s legal rights under permits or licenses or risk that ANC will become subject to litigation or arbitration that has an adverse outcome;

• risks relating to ANC’s project being in Guatemala, including political, economic and regulatory instability;


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• risks relating to the uncertainty of applications to extend and renew exploration licenses, applications for new exploration licenses and applications for exploitation licenses for the Sechol and Chatala (Tres Juanes and Amanecer) license areas;

• risks relating to potential challenges to ANC’s right to explore and/or develop the project;

• risks relating to mineral resource estimates being based on interpretations and assumptions which may result in less mineral production under actual circumstances;

• risks relating to ANC’s operations being subject to environmental compliance and remediation requirements, which may increase the cost of doing business and restrict ANC’s operations;

• risks relating to being adversely affected by environmental, safety and regulatory risks, including increased regulatory burdens or delays and changes of law;

• risks relating to inadequate insurance or inability to obtain insurance;

• risks relating to the fact that ANC’s properties are not yet in commercial production;

• risks relating to the uncertainty as to whether ANC will acquire permitting required to further explore and develop the project and risks related to the permitting timelines;

• risks relating to fluctuations in foreign currency exchange rates, interest rates and tax rates; and

• risks relating to ANC’s ability to raise funding to continue its exploration, development and mining activities.

This list is not exhaustive of the factors that may affect the forward-looking information and statements contained in this Technical Report. Should one or more of these risks and uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in the forward-looking information and statements. The forward-looking information and statements contained in this Technical Report are based on beliefs, expectations and opinions as of the effective date of this Technical Report. For the reasons set forth above, readers are cautioned not to place undue reliance on forward-looking information. ANC and the authors of this Technical Report do not undertake to update any forward-looking information and statements included herein, except in accordance with applicable securities laws.

Project risks are discussed further in Item 25.0 of this Technical Report.


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2.0 Introduction

2.1 Purpose of the Technical Report

The Mayaniquel Project is a nickel project in northeastern Guatemala owned by MNSA, a wholly-owned subsidiary of ANC, based in Vancouver, British Columbia, Canada. This Technical Report has been prepared for ANC by or under the supervision of Qualified Persons within the meaning of NI 43-101 in support of ANC’s disclosure of scientific and technical information for the Mayaniquel Project.

This Technical Report provides an update to three previous technical reports regarding the Mayaniquel Project:

• “Mineral Resource Estimate for the Mayaniquel Project, Guatemala, NI 43-101 Technical Report”, dated May 19, 2009 with an effective date of May 5, 2009;

• “Technical Report for the Mayaniquel Project, Guatemala”, dated November 3, 2010, with an effective date of September 1, 2010; and

• “Canadian National Instrument 43-101 Technical Report Preliminary Economic Assessment Mayaniquel Project, Guatemala”, dated July 22, 2011, with an effective date of April 12, 2011.

A PFS for the Mayaniquel Project has been completed. The PFS defines the current overall scope of the project and provides the information required by ANC to make decisions regarding further evaluation and development of mining, processing and infrastructure facilities and provides the basis for the estimates, assumptions, parameters, designs, and criteria included in this Technical Report.

MTB Project Management Professionals, Inc. (MTB), a project management consulting firm, are responsible for the coordination and compilation of the PFS. MTB assisted in completing this Technical Report under the supervision of the Qualified Persons listed below, and under the overall supervision of Neil B. Prenn, P.E.

2.2 Sources of Information

This Technical Report is based on data supplied by ANC. The information presented, opinions and conclusions stated, and estimates made are based on the following information:

� Source documents used for this Technical Report are summarized in Item 27.0 of this Technical Report;

� Assumptions, conditions, and qualifications as set forth in the Technical Report;

� Data, reports, and opinions from prior owners and third-party entities; and

� Personal inspection and review.

The below-listed Qualified Persons are responsible for the information provided in the indicated items.

Neil B. Prenn, P.E., of Mine Development Associates (MDA), is responsible for the information provided in Items 1, 2, 3, 4, 5, 6, 15, 16, 18, 20, 21, 22, 23, 24, and portions of 25, 26 and 27.

Robert Sim, P. Geo., of SIM Geological Inc. (SIM) is responsible for the information provided in Item 14, and portions of 7, 8, 9, 10, 25, 26, and 27.


35

Bruce Davis, Ph.D., FAusIMM, of BD Resource Consulting, Inc. (BDRC), is responsible for the information provided in Items 11, 12, and portions of 7, 8, 9, 10, 14, 25, 26, and 27.

Nic Barcza, Ph.D., PrEng, HLF SAIMM, an independent metallurgical process consultant, is responsible for the information provided in Items 13, 17, 19, and portions of 21, 25, 26, and 27.

2.3 Personal Inspections of the Mayaniquel Project

The below-listed Qualified Persons conducted personal inspections of the Mayaniquel Project as indicated below:

� Neil Prenn completed a site visit March 7-8, 2012. The purpose of the site visit was to review progress and area geology, view core samples, observe drill sites, and inspect topography and vegetative cover in the general areas of mineral deposits. Additionally, Mr. Prenn participated in a helicopter tour of the previously mined areas at the adjacent Fenix property with Don Mackenzie, a consultant for ANC who previously worked at the Fenix project during operations, to learn firsthand about mining methods and experiences in similar mineralization and conditions. The purpose of this aspect of the site visit was to understand the local conditions as they relate to mining activities and to verify other information required for the Technical Report.

� Robert Sim completed a site visit June 19, 2012 for the purposes of: reviewing the status of the exploration program and geology with MNSA’s geologists; reviewing core handling and sampling procedures; and visiting the sample preparation facility.

� Dr. Bruce Davis completed a site visit June 18-20, 2012 for the purposes of: reviewing drilling, data handling and Quality Assurance/Quality Control (QA/QC) procedures.

� Dr. Nicholas Barcza completed a site visit May 21-25, 2012 for the purpose of participating in and observing the ore upgrading testwork and pilot plant.

2.4 Currency Assumptions

Unless otherwise noted herein, all references to currency or “$” are to United States dollars (USD).


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3.0 Reliance on Other Experts The authors have not independently conducted any title or related searches, but have relied upon an opinion from Juan Pablo Carrasco de Groote, independent legal counsel of Diaz-Duran & Asociados Central Law based in Guatemala, on behalf of ANC, regarding the status of the licenses, property title, agreements, and other pertinent conditions presented in Sections 4.1, 4.2, and 4.3. In an opinion dated February 28, 2012, Juan Pablo Carrasco de Groote stated that in their opinion, MNSA has complied with all legal requirements under Guatemalan mining law to maintain its exploration licenses (see Table 4.1) in good standing and has fulfilled all of the environmental requirements established by applicable laws of Guatemala. The authors have not conducted a legal review of the land ownership or license area boundaries and are relying on the legal opinion of Juan Pablo Carrasco de Groote.


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4.0 Property Description and Location

4.1 Property Ownership and Agreements

The Guatemalan Mining Law, administered by the MEM, establishes permitting requirements for exploration and exploitation (development) activities. Exploration licenses are granted for areas less than 100km2 for a maximum term of three years; licenses may be extended for up to two additional two-year periods. Each license extension results in the reduction of the size of the license area by 50%, although the Guatemalan General Directorate of Mining may authorize a reduction of less than 50%.

An exploitation license is granted for a maximum period of 25 years and may be extended for an additional 25 years. Exploitation licenses cover an area less than 20km2. Prior to development, an environmental impact study for the area must be approved by the National Commission of the Environment. Once an exploitation license is issued, operations leading to the development of the deposit must begin within 12 months.

The Mayaniquel Project is a nickel laterite project located in northeastern Guatemala comprised of four mineral exploration licenses totaling 120.7568km2, as listed in Table 4.1. Figure 4.1 shows the location of the exploration licenses. The boundaries of the license areas comprising the Mayaniquel Project have not been legally surveyed as this is not required under Guatemalan mining regulations.

ANC has not acquired any surface rights for the Mayaniquel Project, but MNSA negotiates from time to time with communities and local land owners for surface access rights sufficient to complete work on the various license areas. It will be necessary for MNSA to acquire additional surface rights and access rights in order to develop the Mayaniquel Project.

Of the four exploration licenses, only two have been extensively drilled to test for nickel mineralization. These license areas are Sechol II and Chatala. There exist several individual deposits of nickel laterite within each of these license areas.

On April 30, 2011, the maximum seven-year period allowed for an exploration license was reached for the Sechol II exploration license. However, as established in Article 25 of the Mining Law, upon filing an application for an exploitation license, within a current exploration license term, exploration rights will be extended automatically until the exploitation license is granted. A mining exploration license confers to its holder the exclusive right to locate, study, analyze, and evaluate the deposits for which such license was granted, within the territorial limits set forth therein (Article 24, Mining Law).

On March 31, 2011, MNSA filed with the MEM a compliant mining exploitation application over the Sechol II exploration license area, named Sechol. The file was assigned file number SEXT-06-11. The Sechol II exploration license has been extended by ministry of the law, until the Proyecto de Extracción Minera Sechol exploitation license application is granted. In support of the Sechol exploitation license application, MNSA filed an EIA on April 15, 2011 with the MARN, the file was assigned file number 142-11. The MARN has already approved the EIA, and the only pending item is the mining exploitation license, which has yet to be granted by the MEM.

On August 31, 2012, MNSA filed with the MEM two compliant mining exploitation applications derived of the Chatala exploration license area, named Tres Juanes and Amanecer. The Tres Juanes area covers a total of 17.5819km2, and was assigned file number SEXT-015-12. The Amanecer area covers a total of 10.5km2, and was assigned file number SEXT-016-12. In support of the Chatala exploitation license application, MNSA filed EIAs with the MARN for Tres Juanes on October 2, 2012, which was assigned file number 248-2012 by MARN, and for


38

Amanecer on October 10, 2012, obtaining file number 258-2012 with the MARN. MNSA is currently awaiting MARN and MEM comments on those EIAs.

Table 4.1 Granted Exploration Licenses

Upon approval of the three pending exploitation licenses, which encompass all of the planned mining areas, ANC will be allowed to mine the mineral reserves for a period of 25 years from the time of approval with an option to renew the license for an additional 25 year period. No date has been set for the approval of the exploitation licences, but ANC expects them to be approved prior to the completion of a feasibility study on the Mayaniquel Project.

For more information on property location, see Item 5.0.

First Extension

Second Extension

09/20/05 2008-10

09/20/08 2010-1204/30/04 2007-09

04/30/07 2009-11

06/26/07 2010-1206/26/10 2012-14

05/19/12 2015-17

05/19/15 2017-19

120.7568

[2] In force until the new exploitation license is granted.

[1] On August 31, 2012, two exploitation licenses derived from Chatala were applied for: Amanecer for a total

of 10.5 km2 and Tres Juanes for 17.5819 km2, totalling 28.0819 km2 applied for exploitation.

[3] On June 5, 2012 a writ was filed at the Dirección General de Minería (DGM) in order to modify the area. This

modification includes 11.0000 km2 additional to the 26.0000 km2 MNSA currently had (at that time) due to the first additional period granted on May 24, 2012. On June 18, 2012 MNSA asked for the second additional

period of the license, reducing the area to 4.0000 km2.

LEXR-004-06

LEXR-839

LEXR-848

Sechol III

San Lucas I [3]

1.5300

4.0000

15.2400 MNSA

MNSA

MNSA

99.9868

Current Area for Exploration Licenses

LEXR-830

Issue DateLicense

NumberLicense Area

Sechol II [2]

Chatala [1]

Area (km2)License

Holder

MNSA


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Figure 4.1 Exploration Licenses Map

4.2 Environmental Liabilities and Permitting

4.2.1 Environmental and Permitting Requirements

Guatemalan Mining Law, administered by the MEM, establishes permitting requirements for exploration of areas less than 100km2 for a maximum term of three years; licenses may be extended for up to two additional two-year periods. Each license extension results in the reduction of the size of the license area by 50%, although the Guatemalan General Directorate of Mining may authorize a reduction of less than 50%.

To maintain an exploration license, an annual area fee must be paid in advance during the first month of each exploration year, in the following amount:

a. Three units per square kilometer or fraction thereof, in each of the first three years; b. Six units per square kilometer or fraction thereof, in each year of the first extension; and c. Nine units per square kilometer or fraction thereof, in each year of the second extension.

Each unit represents Q1,000.00 or approximately US$130.00.


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A mitigation study is one of the requirements for issuance of an exploration license and mitigation studies have been completed for each of the exploration license areas under application identified in Table 4.2. Mitigation studies are technical reports that describe biological, physical, and socio-cultural characteristics of the local setting and identify protection and mitigation measures.

An exploitation license is granted for a maximum period of 25 years and may be extended for an additional 25 years. Exploitation licenses cover an area less than 20km2. Prior to development, an EIA for the area must be approved by the MARN. Once an exploitation license is issued, operations leading to the development of the deposit must begin within 12 months. Table 4.3 summarizes the current pending exploitation applications.

Table 4.2 Applications for Exploration Licenses

Table 4.3 Applications for Exploitation Licenses

4.2.2 Environmental Baseline

MNSA began environmental baseline data collection to support exploration and development in 2009. The intent of baseline data collection was to first and foremost document existing conditions at the site. Baseline data collection has included historical information from previous owners of the site, other sources, (i.e., governmental agencies) and new data. MNSA intends to utilize this information to document compliance, develop environmental protections, and design appropriate mitigation measures to initially satisfy Guatemalan regulatory requirements of the MEM and MARN during exploration, development, and mining.

To date, MNSA has completed separate EIAs to support the Sechol, Tres Juanes, and Amanecer exploitation licenses. Additional work is ongoing and needed to support design, permitting, and compliance for the entire Mayaniquel Project.

Environmental and permitting activities are discussed in more detail in Item 20.0.

4.2.3 Reclamation Activities

Since the Mayaniquel Project was acquired and exploration began, MNSA has been conducting concurrent reclamation activities on exploration roads, access, drill sites, and test pits. This work has been reviewed by an independent reclamation expert, Kit Walther, to assess reclamation

License Number

Seyamche I SEXR-054-09 78.3443 El Tunico I 34.1625 La Ruidosa I SEXR-07-10 26.9365 Potrero Carrillo I SEXR-032-10 22.0000 Sechol IV SEXR-043-10 69.3336 Tres Juanes Rio SEXR-077-10 61.1493 Jolompek SEXR-020-12 64.3750 Renacer SEXR-019-12 35.2000 Raxpek SEXR-051-12 49.8300

Area (km2)License Area

License Number

Proyecto de Extracción Minera Sechol

SEXT-06-11 15.2400

Amanecer SEXT-016-12 10.5000 Tres Juanes SEXT-015-12 17.5819

License Area Area (km2)


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practices, review reclamation/revegetation successes, and make recommendations for any required mitigation and future mine development reclamation.

4.3 Other Significant Factors and Risks Affecting Access or Title

The authors of this Technical Report are unaware of any other significant factors and risks that may affect access, title, or the right or ability to perform work on the property.

4.4 Royalties

Two royalties apply to the Mayaniquel Project. The purchase by ANC of all of the issued and outstanding shares of MNSA included a 1.5% NSR payable to BHP Billiton World Exploration Inc. on future production from the Mayaniquel Project (BHP Royalty). The BHP Royalty is calculated as 1.5% of net smelter revenue further reduced by other allowable deductions for beneficiation of the ore, including costs for ore upgrading, ore conveyance, and smelter processing. Commencing three years after the quarter in which commercial operation (defined as an average of 65% of production capacity sustained over a 90 day period) is achieved, BHP Royalty payments are due by end of month following each quarter. Other terms in the royalty agreement provide for the annual determination of a threshold market price for nickel (currently at $4.59/lb), below which royalties are waived. The BHP Royalty does not apply to revenue from iron byproduct.

In addition, a royalty imposed by the Guatemalan government is calculated as one percent of gross revenue and is required to be paid annually each January for the prior year. While not officially mandated, the mining sector in Guatemala voluntarily agreed to raise the royalty from 1% to 3% on non-precious metal, hence the 3% royalty value has been used in the economic evaluation for the Mayaniquel Project. Additionally, voluntary royalty payments are suspended if the price of the metal falls below an established threshhold of $6.50/lb nickel. Deduction of total royalties from the calculated NSR yields gross income from mining.


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5.0 Accessibility, Climate, Local Resources, Infrastructure &

Physiography

5.1 Location and Access

The project is located approximately 120km northeast of Guatemala City in the Department of Alta Verapaz, in the municipalities of Panzos and Senahú. The town of El Estor is the largest population center in the project vicinity and it serves as MNSA’s logistical base (Figure 1.1).

Access to the project area from the Caribbean coastal towns of Santo Tomas de Castilla and Puerto Barrios is via highways CA-9, CA-13, and 7E. From Guatemala City, access is via highways CA-9, CA-13, and 7E, or by small aircraft to a local gravel landing strip located near the town of El Estor, and then approximately 45km west by highway. MNSA schedules regular charter flights to El Estor through an independent service based in Guatemala City.

The geographic coordinates of the Mayaniquel Project are approximately 89o38’46” west and 15o26’32” north.

5.2 Physiography

The two physiographic regions which comprise the project area are the High Sedimentary Lands region and the Izabal Depression region. The High Sedimentary Lands region includes the Sierra de Santa Cruz geomorphological unit and approximately 94.5% of the project area lies within this region. The Izabal Depression region includes the Polochic Plains Coluvio-Alluvial geomorphological unit.

The nickel laterites that cover the project area are found in the foothills of the Sierra de Santa Cruz Mountains, and range in elevation from 100 to 1,000m. Relief is moderate to steep with local flat-lying areas. The majority of the vegetation is secondary growth and comprises dense forest to sparse grassy areas. A significant portion of the property is currently under cultivation.

5.3 Climate

The climate in the Mayaniquel Project area is tropical with variable conditions due to the influence of wind and the humid climate. Rains occur throughout the year with the heaviest precipitation during the June to October rainy season. Rainfall in the area ranges from six millimeters in the driest months to 500mm during the wet months, with the average rainfall reported at 4,000mm/year. Temperatures range from 12ºC to 40ºC with relative humidity ranging from 70% to 84%. Due to relatively mild temperatures, plant operations can be undertaken throughout the year. Potential interruptions of mining operations may occur due to periods of heavy rainfall, hence adequate stockpile storage at the ore blending facility will exist to maintian continuous plant operation. Mining equipment and schedules are conservatively based on 300 days of mining per year to account for the rainy periods.

5.4 Local Resources

El Estor, with a population of 16,000, is the largest town in the vicinity of the project and it serves as MNSA’s logistical base. MNSA maintains a mining camp in the immediate project area near the community of Chulac. Skilled and unskilled labor is available and utilized from various small towns and villages in proximity to the project. Efforts are made to stimulate the local economies as much as possible, with El Estor and the village of Panzos providing most of the project’s consumables although some supplies must be obtained in Guatemala City.


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5.5 Infrastructure

The Mayaniquel Project is well served by regional infrastructure, including roads connecting to the main Guatemalan highway which connects the east and west coasts of Guatemala. A 66kV power line is located approximately two kilometers from the project. Availability of power is discussed in more detail in Item 18.0.

Further, the Mayaniquel Project is located within 70km of the Carribean Sea and 167km by road from the largest port in Guatemala, Santo Tomas de Castilla, thus facilitating the exportation of FeNi alloy and importation of equipment, materials, coal, and other consumables. The port facility has an access channel that is capable of handling up to 28,000 tonne capacity ships and has three Liebher mobile cranes with 104 tonne capacity used mainly for container handling.

Figure 4.1 illustrates the Mayaniquel Project location relative to rail, road, and port infrastructure.

ANC has not acquired any surface rights for the Mayaniquel Project, but MNSA negotiates from time to time with communities and local land owners for surface access rights sufficient to complete work on the various license areas. It will be necessary for MNSA to acquire additional surface rights and access rights in order to develop the Mayaniquel Project

Project infrastructure is described in detail in Item 18.0.


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6.0 History

6.1 Regional Exploration

Interest in the region began in the mid-1950s when José Manuel Montufar, a ranch-owner near Lake Izabal, sent soil samples to Hanna Mining Company (Hanna Mining) believing the red color was indicative of iron mineralization. Although the samples contained no iron of economic interest, they were sufficiently anomalous in nickel to justify further sampling and testing. This initiated nickel exploration in the region in which the following three main groups participated:

1. In 1958, Hanna Mining formed a joint venture with International Nickel Company (INCO) and shortly afterwards formed Eximbal. The venture culminated in the production of 15,340 tonnes nickel in matte between 1977 and 1980 from a mine and smelter located adjacent to the town of El Estor.

2. Transmetales Limitada (Transmetales), Refractorios, and Panamericana carried out exploration in the 1960s and 1970s under a joint venture agreement between BHP and Basic Resources International Ltd. (Basic Resources).

3. Cominco Resources International Limited (CRIL) carried out exploration for nickel laterites in the 1980s.

6.2 Project Area Exploration

Exploration of the project area by previous owners began in 1969 and has continued intermittently by various companies. From 1969 to 1974, Transmetales, a subsidiary of Basic Resources, explored certain properties in the Lake Izabal area of the Republic of Guatemala (the Sechol area), which was historically the primary focus of exploration efforts in the region where ANC’s licenses are located. Most of the exploration activities were conducted by digging pits and taking surface samples in the nickel laterites.

In 1983, CRIL acquired rights in the Sechol property from Transmetales and began a systematic examination of the Sechol property and adjacent areas. CRIL resampled all of Transmetales' pits with nickel values greater than 1.5%. Pits were channel sampled at one meter intervals and samples were prepared and sent to the Glenbrook Nickel Company in Oregon for assaying. CRIL’s intent was to evaluate the economic potential of the main zone (El Inicio) at the Sechol property for the direct shipping of high grade nickel laterite to the Glenbrook smelting facility, but the project was abandoned when the Glenbrook smelting facility was closed.

In January 1998, Jaguar Nickel Inc. (initially under the name of Chesbar Resources Inc. and predecessor in name to Jaguar Financial Inc.) entered into an agreement with Intrepid Minerals Corporation (Intrepid) to jointly explore the Sechol property through a Guatemalan corporation, Minera Mayamerica S.A. (Mayamerica). Mayamerica was incorporated under the laws of the Republic of Guatemala on October 3, 1996. Jaguar Nickel Inc. initially purchased a 25% interest in Mayamerica and by April 2002, held 100% of Mayamerica through increases in ownership brought about by the funding of exploration and financing. In September 2004, Mayamerica’s name was changed to Jaguar Nickel, S.A. (Jaguar Nickel) which was the only active subsidiary of Jaguar Nickel Inc. Jaguar Nickel’s exploration program objective was to systematically drill the deposits and prepare an NI 43-101 mineral resource estimate, which was completed by Snowden Mining Industry Consultants (Snowden) in September 2005.

In January 2006, a wholly-owned subsidiary of BHP acquired all of the issued and outstanding shares of Jaguar Nickel from Jaguar Nickel Inc. and thereby acquired indirect ownership of Jaguar Nickel's exploration licenses in Guatemala, including the exploration license comprising the Sechol deposit area (Jaguar Transaction). Following the closing of the Jaguar Transaction,


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Jaguar Nickel was renamed Mayaniquel, S.A. (MNSA) and a mineral resource delineation program was commenced.

The main BHP activities undertaken by MNSA included:

� Putting in place an organizational structure to undertake a large scale exploration and resource delineation program;

� Obtaining surface access rights to the most prospective areas;

� Conducting significant infill drilling on Sechol, Chatala, and El Tunico license areas; and

� Implementing an extensive socio-economic community engagement program to maintain and build on MNSA’s ability to operate successfully in the region.

In May 2009, Anfield Ventures Corp. (now ANC) completed the purchase of all of the issued and outstanding shares of MNSA from BHP Billiton Holdings Pty Ltd. and The Broken Hill Proprietary Company Pty Ltd. Upon completing the acquisition of the Mayaniquel Project, ANC commenced an aggressive community relations effort and parallel exploration program aimed at substantially increasing mineral resources.

Additional details concerning exploration and drilling conducted by Jaguar Nickel and BHP are presented in Items 9.0 and 10.0 of this Technical Report.


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7.0 Geological Setting and Mineralization

7.1 Regional Geology

As described by Vinson (1962), the main tectonic elements within Guatemala are the Chapayal Basin, the Sierra Madre del Sur Nuclear Central American geo-anticline, and the Maya Mountains uplift. Ultramafic bedrock for nickel laterite development has been tectonically emplaced along the northern boundary of the Polochic-Motagua fault system separating the North American and Caribbean plates.

Four geological provinces with a general east-west orientation describe the geomorphology of Guatemala. The Pacific Coastal Plain comprises mainly detritus from the erosion of adjacent volcanics to the northeast. The Volcanic Highlands represent the highest elevations of Guatemala forming a range parallel to the Pacific Coast. The Central American Cordillera comprises primarily metamorphic and igneous rocks with a northwards extending sedimentary fold belt. The Peten Lowlands represent a sedimentary basin in the northernmost parts of Guatemala. Figure 7.1 shows the general regional geology.

7.2 Local and Property Geology

The nickel laterite deposits in the project area were developed over the ultramafic members of an ophiolitic complex that was emplaced in the late Mesozoic and lower Tertiary as part of a collision zone between the North and South American continents. The ultramafic bodies average 80km in length and up to 20km in width and consist predominantly of harzburgite (olivine + pyroxene), and peridotites with local minor small bodies of dunite and pyroxenite. Gabbroic intrusions are locally common, likely a co-genetic part of the ophiolite sequence. The ultramafics are strongly jointed and variably serpentinized and have thrust fault contacts in many places. In some locations sedimentary rocks (clastic and carbonate) have been faulted into proximity with the ultramafics.

Laterite profiles are developed on an old weathering surface now consisting of terraces and ridge crests isolated by steep valleys cut by subsequent erosion (Figure 8.1). The laterite profiles can be up to 50m thick as defined from both field mapping and drillhole logging, and are characterized by three principle units: limonite, transition, and saprolite. The units described within the weathered profile are variably altered products of the underlying ultramafic and mafic lithologies. Highest nickel concentrations typically occur in the transition zone (between limonite and saprolite) and upper saprolite zones.

Nickel concentrates as a result of residual accumulation as most components of the ultramafic rock are removed during the weathering process. Chemical transport of nickel by downward percolating surface water and precipitation/incorporation into stable mineral species also serves to enrich the mid to lower laterite sequence. Within the MNSA licenses, erosion has affected all areas to differing degrees and preservation of the laterite section varies widely.

Limonite is characterized by its chemistry which is iron-rich and magnesium-poor. At surface the limonite (Red Limonite) typically is a red to dark-brown, clay-like soil typically contaminated by organic material as well as volcanic ash. Surficial units are readily discernable via chemical analysis by elevated potassium concentrations, absent from the underlying, uncontaminated limonite sequence. Local transported and mixed surficial deposits are also readily discernible via geochemistry and easy to differentiate from underlying undisturbed limonite.

MTB Project Management Professionals, Inc. 47

Figure 7.1 Regional Geology


Figure 7.2 Regional Laterite Deposit Location Map


Red Limonite grades downward into a yellow-orange and/or brown amorphous clay-rich material containing a high proportion of iron oxides, commonly goethite and lesser hematite. Within the limonite sequence, nickel resides principally within trevorite (NiFe2O4) and goethite. Minor amounts of gibbsite, saponite, chromite, and magnetite are locally present. Low-temperature silica (quartz) can occur as nodules, veinlets, and/or networks within the lower limonite section, but overall is rare. Nickel concentrations are typically lower than found in the underlying transition and saprolite zones.

The transition zone, as the name implies, represents a gradational contact between limonite above and saprolite below. Transition material is recognized by faint preservation of original rock textures, not seen in overlying amorphous limonite. Typically transition zone rocks have a more granular texture distinctive from the massive, structureless limonite above. Commonly transition material can be anomalous in cobalt as well as nickel. The zone is greenish to yellow-brown and represents partially decomposed saprolitic rock. The zone is rich in serpentine with lesser amounts of goethite. Nickel typically is contained in serpentine, trevorite, and goethite. Chemically, transition material is characterized by decreasing iron and increasing magnesium concentrations.

Saprolite is magnesium-rich with low iron and low cobalt; color varies from yellow-green to greenish-brown. Saprolite occurs in two forms: earthy saprolite where the parent rock has been completely weathered, yet retains its original texture and appearance; and rocky saprolite or “saprock” where fragments to boulders of unweathered parent rock in varying percentages exist within a matrix of earthy saprolite.

Nickel resides principally in serpentine, but can also be hosted by chlorite and locally garnierite. Rocky saprolite forms the base of the saprolite sequence and is transitional downward to massive ultramafic basement rocks unaffected by the weathering process.

The laterite deposits are locally crosscut by weathered gabbroic dikes and sills. Quartz is present in some locations, typically occurring near the base of the limonite section. Gabbroic intrusions, free quartz, and unweathered ultramafic rock within the saprolite sequence all act to dilute nickel grades.

Field observations in areas of steep slopes on the margins of ridges and terraces show that the laterite profile is variably preserved. Areas of more active erosion have resulted in the partial removal of the limonite and saprolite zones. Deeper erosion of the valleys has resulted in the complete removal of the laterite profile. Overall, the laterite deposits within the project area average about 30% limonite, 10% transition, and 60% saprolite by volume.

As internal contacts within the laterite sequences are often difficult to discern visually, most are finalized upon receipt of detailed chemical information obtained from continuous sampling. Consistent, accurate chemical designations are critical for geological modeling and resource definition. MNSA has developed chemical criteria (Table 7.1) for identification of the various facies. Proper designation of contacts between chemically distinct units will also be critical for mine planning to control chemical characteristics of ore being sent for processing.


Table 7.1 Chemical Criteria for Facies Designation

7.3 Mineralization

Mineralization at the Mayaniquel Project consists of a typical nickel laterite deposit developed in a tropical environment. Primary mineralization consists of nickel and minor cobalt with associated magnesium, silica, and iron in varying quantities depending on the facies. Prior to ANC’s involvement with the Mayaniquel Project, six deposits had been mapped and drilled for mineral resource delineation. The six deposits consist of:

1. El Inicio 2. El Segundo 3. Rio Negro 4. Chatala 5. Chiis 6. El Tunico

The first three deposits are collectively known as “Sechol” and El Tunico is located east of the core area of deposits. The reader is referred to Figure 7.2 for the relative location of the deposits.

Since acquisition of the Mayaniquel Project, ANC has drilled seven additional areas, namely:

1. Nueva Caledonia 2. Nueva Concepcion 3. Tres Juanes Norte 4. Tres Juanes Sur 5. Tres Juanes Rio 6. Sechol – Seococ 7. Sechol – Poza Azul

ANC has also expanded drill coverage at the Sechol group of deposits and at Chiis.

The deposits are similar in nature in that each contains a limonite, transition, and saprolite zone. Depth of the laterite profile and mineralization varies from less than one to about 50m with considerable lateral thickness variations due largely to the highly irregular basement contact topography and erosional history. Thickness of the laterite sequence averages about 10m in most deposits. Minimum target size worthy of initial exploration is typically one to two square kilometers of continuous laterite exposure sufficient to host a minimum-sized orebody of 5 to 10 million tonnes. Saprolite is the dominant host for nickel mineralization in most deposits, and is typically intersected over the extent of the laterite exposure. Overlying transition and limonite zones can be patchy or non-existent, depending on the degree of erosion.

Lithology Code Abbreviation MgO % Fe2O3 % K2O%

Organics/Topsoil 1 OO <7 >35 >0.02Limonite (red) 1 LR <7 >35 >0.02Limonite (brown) 2 LB <7 >35Limonite (yellow) 2 LY <7 >35Transition 3 LT >7<15 >22<35Earthy Saprolite 4 SE >15<20 >11<35Rocky Saprolite 4 SR >20<32 >11<35Bedrock 5 P >32 <11


8.0 Deposit Types Laterites form in tropical climates with heavy rainfall where the weathering process is especially effective. A typical laterite profile contains three distinct zones: limonite, transition, and saprolite formed by texturally destructive weathering of ultramafic rocks. Nickel laterites consist of a succession of facies that are commonly irregular in distribution and thickness. Figure 8.1 shows a typical laterite profile from the Mayaniquel Project area.

Economic concentrations of nickel are formed in laterites by prolonged tropical weathering of ultramafic rocks containing the nickel-bearing mineral olivine. Laterization involves the progressive dissolution and removal of magnesia and silica, while relatively immobile elements such as iron, nickel, cobalt, and aluminum remain in the residual lateritic material. With time and suitable conditions, the relative concentration of these remnant elements increases. Nickel concentration on the order of 5 to 10 ten times background is normally required to provide an economically viable target.

Laterization begins along joints and fractures within ultramafic rocks exposed at surface. As the process continues, boulders of jointed and fractured peridotite are surrounded and progressively replaced by the fine-grained, residual weathering product until fresh rock is completely consumed. This initial product of laterization is known as saprolite. Overlying limonite results from continued leaching of silica and magnesia from the saprolite. The alteration profile is thus divided over time into two principle facies, limonite composed of remnant iron hydroxide, and saprolite consisting mainly of silica and magnesia.

Considerable reduction in volume occurs during the laterization process which is another mechanism for the enrichment of certain elements within their respective facies. Structural complexity including fracture density, multi-orientation faulting, and metamorphism (serpentinization) control depth and ease of percolation of weathering surface fluids. Differences in permeability result in a complex basement topography consisting of bedrock pinnacles where fracturing, etc. was limited with adjacent, deep, saprolite-filled troughs where structural preparation was complete. Enrichment of nickel is best where the weathering process was static and exceeding the rate of erosion while zones of rapid through-flowing groundwater (large faults, etc.) appear to have resulted in nickel and other elements being flushed from the laterite profile.

Except where fracture-filling garnierite, a green, green-blue hydrated nickel-bearing silicate, is present, fresh ultramafic bedrock contains no economic nickel concentrations and generally averages around 0.25-0.4% nickel. Narrow, (< a few meters wide) steeply-dipping garnierite-filled fracture zones running as high as 5 to 10% nickel may provide an economic target worthy of evaluation, but are difficult to evaluate or quantify with vertical drilling.


Figure 8.1 Typical Laterite Profile

Graphic LITHOLOGY

and

FACIES

CODE CRITERIA

OO

1

Organics/Topsoil “waste”

< 7 MgO%, >35% Fe2O3, >0.02 K2O

LR

1

Red Limonite

< 7 MgO%, >35% Fe2O3, >0.02 K2O

LB

2

Brown Limonite

< 7 MgO%, >35% Fe2O3

LY

2

Yellow Limonite

< 7 MgO%, >35 % Fe2O3

LT

3

Transition

≥7<15% MgO;> 22 ≤35% Fe2O3

SE

4

Earthy Saprolite

≥15 ≤ 20% MgO; >11<35% Fe2O3

SR

4

Rocky Saprolite

>20 < 32% MgO;>11<35% Fe2O3

P

5

Bedrock

≥32% MgO;≤11% Fe2O3


9.0 Exploration

9.1 Historical Exploration

Exploration work for the nickel deposits historically consisted of geologic mapping, soil geochemical sampling (both surficial grab samples and/or shallow auger drilling, maximum depth of five meters), excavation of vertical pits (shafts) to test the profiles to greater depth (15 to 20m), some ground-penetrating radar (GPR), with subsequent DDH and RC drilling.

Systematic drilling by Jaguar Nickel began in March 2004 and was directed towards establishing a mineral resource estimate for the Sechol deposits. Previous work by Jaguar Nickel included limited sampling in old pits, auger sampling, mapping, and GPR surveys. Jaguar Nickel’s drilling consisted only of DDH drilling conducted during 2004 and 2005, primarily on a nominal 100m grid over the El Inicio, El Segundo, and Rio Negro mineralized zones.

BHP continued in 2006 through 2008 with an infill drilling campaign at the El Inicio deposit as well as initial tests of the Chatala, Chiis, and El Tunico deposits. No new drilling by BHP occurred on the El Segundo, Rio Negro, or Poza Azul deposits. BHP conducted infill drilling using RC when the infill grid was less than 100 by 100m spacing and all drilling greater than the 100m spacing was conducted using DDH. Approximately 10% of the drill spacing at El Inicio was on 25 by 25m spacing in two detailed grids while drill spacing at the other deposits varied from 100 to 200m.

Geologic surface mapping of the laterite was conducted by both Jaguar Nickel and BHP geologists in order to determine deposit extents and for planning drill locations. Laterite outcrops are scarce within the main zones due to significant vegetative cover and they are restricted mainly to road cuts and major stream valleys.

GPR surveys were completed over the El Inicio and El Segundo deposits in 2000 and 2004 in order to determine the effectiveness of the technique in resolving the various laterite facies. A total of 46 profiles were generated along nominally spaced 100m lines using one meter station spacing. The GPR survey utilized a 50 MHz radar antenna for a maximum theoretical penetration of 32m. GPR data was processed using selected drillhole results for calibration. The survey was unable to resolve the internal laterite facies contacts, but was effective in identifying the footwall contacts, indicating a variable bedrock surface, which was then confirmed in the drilling. The survey results were not used in the mineral resource estimates as additional infill lines were required to produce an interpretation of the bedrock contact suitable for integration into the mineral resource model.

9.2 Exploration by Anfield Nickel Corp.

As recommended by Tetra Tech, Inc. in the technical report entitled “Mineral Resource Estimate for the Mayaniquel Project, Guatemala, NI 43-101 Technical Report”, dated May 19, 2009 with an effective date of May 5, 2009 (Tetra Tech Report), initial work by ANC consisted of relogging all BHP core holes to assure consistency of lithological designations and interpretations with previous work. Relogging efforts utilized revised geochemical criteria, (refer to Table 7.1), to standardize all historic drill data and provide a consistent system for geological – geochemical logging going forward.

Core drilling by ANC commenced the third week of January 2010 and terminated in mid-March, 2012. ANC’s targets include the known deposits where drilling is designed to rapidly expand and/or upgrade existing resources by step-out, offset, and infill drilling to complement previous exploration. New discoveries were made in each of the previously untested targets at Nueva Caledonia, Nueva Concepcion, Sechol-Poza Azul, and the Tres Juanes group of deposits.


10.0 Drilling

Beginning in 2004, a total of 4,676 drillholes have been completed in over thirteen different areas totaling 100,021m. Of these, 4,473 are DDH and 203 are RC holes. Drilling has been conducted by three companies:

� Jaguar Nickel

o 13,007m in 856 DDH holes drilled between 2004 and 2005

o Also included are 710 channel samples taken from the exposed walls of drill setups in the Sechol area

� BHP

o 21,019m in 654 DDH holes and 7,306m in 203 RC holes drilled between 2006 and 2008

� ANC

o 58,688m in 2,963 DDH holes drilled beginning in January 2010 to February 28, 2012

Jaguar Nickel’s drilling was carried out, under the supervision of Jaguar staff, by St. Lambert Drilling and R&R Drilling using skid, truck, and track mounted wire-line drills equipped with HQ triple tube core barrels. Each drillhole location was surveyed using independent licensed contractor, Geotodico.

Core recovery was measured and recorded by Jaguar Nickel for each drill run. Recovery was generally poorest in the saprolite and in zones with rocky fragments, where the core material changed abruptly from soft to hard. Minimum acceptable recovery was set to 95% in the limonite and 85% in the saprolite. These recoveries were not always achievable in areas of extreme changes in lithology, in particular near the edges of the laterite. In general, recoveries were satisfactory and the risk of significant bias as a result of core loss is considered to be low. In cases where core recoveries were below expected minimums, the driller was required to redrill.

BHP drilling during 2006 through 2008 utilized both DDH and RC rigs under the supervision of BHP staff using independent drilling contractors Cubanex and Boart Longyear. All drilling was performed using DDH drilling at a grid spacing of 100 by 100m or greater. All infill drilling was performed using RC at a grid spacing of 50 by 50m or less. Any drillholes with less than 90% recovery were required to be redrilled.

BHP’s DDH core samples were selected for geochemical analyses as well as bulk density determinations. RC samples were only run for geochemical analyses.

ANC’s HQ DDH drilling commenced in January 2010 and is now complete. As of the cut-off date for inclusion into the mineral resource estimate with an effective date of March 22, 2012, ANC had drilled 2,963 holes totaling 58,688m in the following ten target areas:

1. Nueva Caledonia 2. Nueva Concepcion 3. Chiis 4. Tres Juanes Norte 5. Tres Juanes Sur 6. Tres Juanes Rio 7. Sechol – El Inicio 8. Sechol – Segundo


9. Sechol – Poza Azul 10. Sechol – Seococ

Significant upside potential remains on undrilled extensions to some deposits, particularly in the Tres Juanes Norte and Sechol – Segundo areas.

The Segundo deposit is open to the north – northwest outside the area of MNSA’s current licenses. The Sechol IV application for an exploration license covers this area, and if this license is granted it will allow further exploration and potential expansion of the Segundo deposit onto new lands. Portions of the Tres Juanes Norte deposit remain open for expansion as well within existing Mayaniquel licenses.

ANC’s drill program is utilizing man-portable rigs supplied by Kluane Guatemala, SA. These rigs require minimal logistical support and have readily gained social acceptance with minimal surface disturbance, which is readily reclaimed. Up to eight drills were utilized during the drilling campaign.

Targets have been grid drilled on 100m centers (inferred resource) with many areas receiving infill drilling to a nominal 70m (indicated resource) configuration. A few zones have been drilled to nominal 50m centers, sufficient for defining a measured resource. To improve geological modeling control and alleviate sampling/contact-designation uncertainties inherent in the RC drilling conducted by BHP, ANC redrilled areas of the Sechol deposit that had been exclusively tested with RC using DDH.

As drillholes are completed, core is transported to the Chulac exploration compound for logging and subsequent processing for assay and density testwork. The vertical holes intersect the flat-lying deposits defining the true thickness of those deposits. The number of drillholes and the associated meters drilled are summarized by area in Table 10.1.


Table 10.1 Distribution of Drilling Data by Area

There are no known drilling, sampling, or recovery factors that could materially affect the accuracy of the drill results. For a further discussion of sampling, see Item 11.0.

# of Drill

Holes

Total length

(m)

Nueva Caledonia

288 6,027 All DD holes drilled by Anfield

Amanecer (includes Nueva Concepcion and Chiis areas)

651 15,590 30 DD holes BHP (1,238m), 621 DD holes Anfield (14,351m)

856 Jaguar DD holes, of which 710 holes have paired channel samples taken at excavation walls of drill setups (13,007m)

139 BHP DD holes (3,930m), 115 BHP RC holes (4,062m)

642 Anfield DD holes: 221 holes El Inicio (3,176m), 165 holes Rio Negro (2,982m), 256 holes El Segundo (3,591m)

Tres Juanes Norte

1,116 21,368 All DD holes drilled by Anfield: 143 holes Chulac-Seococ (north extension of El Inicio, 2,330m), 938 holes at TJ Norte (18,234m), 35 holes at TJ Sur (804m)

Poza Azul 78 1,549 All DD holes drilled by Anfield

Tres Juanes Rio


Chatala 431 13,133 BHP: 343 DD holes, 88 RC holes

El Tunico 88 3,726 BHP DD holes

San Lucas, other

54 2,236 BHP DD holes

4,676 100,021

CommentsModel Area

Total

1,752 30,748

Sechol (includes El Segundo, El Inicio, Rio Negro areas)


11.0 Sample Preparation, Analyses and Security

11.1 Sampling Method and Approach

Drill samples were taken on nominal one meter intervals for the entire length of the drillhole, no less than 0.5m and no more than 1.5m to allow for lithologic contacts. The mineralized zone, which comprises the limonite, transition, and saprolite zones, varies from a few to 40m in thickness. The samples are considered representative of the laterite facies within the particular deposit areas. Descriptive statistics of the sample data is provided in Item 14.3 to show the range of nickel assays, by deposit, for the sample data.

The bullet list below describes the core handling and sampling:

• Drill crew places core in standard wood core box lined with plastic strips. • MNSA personnel at the drill receive core, clean, and discard any obvious foreign

material, and wrap the plastic strip around the core to seal water content. • Once a box is full, approximately three meters of core in three rows, foam rubber strips

are laid over the core and a lid is securely screwed into place. The foam rubber firmly holds the core in place so no movement occurs during transport to the centralized logging and sampling facility located at the Chulac exploration camp.

• Upon arrival to the logging facility, either the same day in the case of nearby drill target areas or at the latest, the second day such as from the Caledonia project area, the lids and foam rubber strips are removed and set aside for recycling back to the field. The plastic strips are pulled away from the core and pushed down the sides of the rows to expose the core. Core residence time in the logging area is never greater than 24 hours.

• Sampling crews then measure and mark the boxes summarizing the beginning and ending core depths contained in the box and calculate core recoveries based on wood blocks marked with depths by the drillers and placed in the boxes during drill advance. Records are kept for each hole number, box number and contained core intervals (Core Box Record Sheet). A separate log is used for core recovery calculations.

• Marked boxes are then digitally photographed in natural light, two at a time with a readily legible header panel indicating area name, specific target name (if different from area name), hole number, depths and date.

• Blocks with written depth information from the drillers are then marked in the form of red flagging tape which is stapled into the box and the depth written in permanent marker. This step insures if any subsequent disruption to the core or blocks occurs, original positions can be found and core so adjusted (particularly an issue in laterite core which will desiccate, losing significant volume and thus be susceptible to sliding during subsequent handling).

• Geologists record the geological characteristics of the core (Geologic Log) and decide sampling intervals, nominal one meter intervals.

• Sample intervals are marked with yellow flagging tape stapled into the boxes marking (with written figures) from – to intervals of the individual samples. One sample tag (tag made of Tyvek paper) is stapled into the box along the sample interval as a permanent record.

• QA/QC samples, determined by pre-printed random QA/QC location sample log sheets (Sample Data Sheets), are located at this time, marked in the boxes by blue flagging tape with written sample type: 1) blank; 2) standard, four different standards based on a range of nickel values and lithology type are in use at the Mayaniquel Project and selection of which to select is based on current lithology where insertion of the standard


is indicated; or 3) duplicate samples, both pulp and coarse reject samples are used. QA/QC sample insertions receive the same style tag as any other sample and align numerically within normal sequence. Up until late April 2010, ANC had been inserting QA/QC samples at a rate of one control sample per five core samples. This rate was later reduced to one in 20.

• Representative core of the various lithologies are selected for density testing (specific gravity calculations) at a minimum rate of two density samples per drillhole. While all lithologies are selected for testing and incorporation into the density database, priority is given to potential ore types i.e. yellow limonite, transition limonite and earthy and rocky saprolite. Sample sites are marked with blue flagging tape again indicating sample type, in this case density. Segments of core with a minimum length of 2.5 times HQ core diameter or roughly 15cm are cut by trowel across the long axis of the core, removed and vacuum sealed in a polyethylene bag for digital scale weight in air and weight in water measurements. Wet bulk density (specific gravity) values are calculated utilizing the following formula:

Where: Wa is weight of the sample and bag in air, Wb is the weight of the bag, Ww is the weight of the sample and bag immersed in water, and 0.9 is the specific gravity of the plastic bag.

ANC’s on-site sample prep laboratory became operational on June 1, 2010, when it became possible to do an identical calculation to derive dry bulk densities. A database of average water content per lithology was also developed for recalculation of current wet bulk densities into dry density figures for incorporation into the final database.

• The hole is then logged with a handheld XRF unit (Bruker model S1 Turbo SD LE) with readings taken approximately every 30cm or three readings per typical one meter sample. Readings mesh with assay sample intervals and averaged results identified on a sample per sample basis (XRF Log Form).

• Core is now ready for sampling. Sampling involves collection of one half of the core, leaving one half as a witness sample as well as a source of future material if required (e.g. metallurgical work, etc.). Sampling most segments of laterite can be accomplished by pushing a broad trowel through the center, parallel to the long axis of the soft core to obtain ½ of the material. Rocky material is broken by hammer and if required, whole pieces of rock are split with a hydraulic splitter located in the sampling area. The sample, bit by bit, is placed in a pre-marked plastic bag and once the entire interval is complete, the corresponding tag is inserted and the bag sealed with a tie. Samples are then delivered to the on-site sample preparation facility located at the Chulac Exploration Camp.

• Samples are then laid out in order, including QA/QC samples, numbers checked and then bagged into rice sacks. Samples prior to June 1, 2010 were being driven by MNSA personnel to Guatemala City for sample preparation by BSi Inspectorate Labs (Inspectorate). Inspectorate created sample pulps which were shipped via DHL to ALS Chemex in Vancouver, ANC’s selected primary analytical laboratory. Since June 1, 2010, sample preparation is completed on site with pulps shipped to ALS Chemex in Vancouver. Inspectorate’s Perth lab and later Vancouver was referee. Both ALS Chemex and Inspectorate are independent of ANC. Lateritic material presents an extraordinary challenge in the preparation process and cleaning of crushers and


pulverizers is required between each sample. Samples shipped averaged roughly 800 per week.

• Once sampled, core boxes are temporarily stored in a warehouse at Chulac. After drilling of individual target areas has been completed, the core will again be covered with foam rubber strips to secure against sliding/jumbling and the boxes capped and transported to a core-storage warehouse located in Guatemala City. This warehouse also houses all coarse reject assay splits as well as a pulp library. Historic core (Jaguar Nickel and BHP, approximately 15,000 boxes) is currently stored in this facility in Guatemala City. Approximately 37,000 boxes of Mayaniquel core are now safely stored in Guatemala City as well.

The dry bulk density values as calculated from the Mayaniquel data shown below in Table 11.1.

Table 11.1 Bulk Density Values

These dry bulk density values were used to calculate tonnages for all the deposit areas. The bulk density values were not modeled into a 3D model, rather the rock code in the 3D model was used to assign a dry bulk density value from the list above.

11.2 Sample Preparation

Drill core samples were recovered by the drilling contractor from the core barrel and placed in wooden core trays at the drill site. Half splits of core were taken for assay at nominal one meter intervals or less to respect lithologic contacts, and where possible to avoid sample lengths of less than 0.5 meters or greater than 1.5m. Soft material was split using a paint scraper while hard core was split with a hydraulic splitter. The remaining half core was placed in sealed wooden trays and stored at the storage facility in Guatemala City.

Sample preparation was carried out by the independently run Inspectorate located in Guatemala City until June 1, 2010. The main laboratory equipment consisted of two walk-in drying ovens, jaw crushers, and ring mills. The crushers and mills are fitted with dust extraction systems. Similar equipment is used at the Chulac sample preparation facility.

Samples in sealed bags were trucked to Inspectorate from the sample collection facility at El Estor. The average initial sample weight was two kilograms. When the samples arrived at Inspectorate, the submittal form was matched to the samples received and the following sample preparation procedure was carried out (the preparation process was the same for Chulac):

• The entire sample was dried for twelve hours at 105°C. • The sample was reduced to 80% passing 2-3 millimeter size (-10 mesh) in a two stage

crushing process. • A 300g split was taken using a riffle splitter and pulverized to 90% passing less than 100

micron size (150 mesh) using a ring and puck pulverizer. • The coarse reject was returned to the plastic sample bag and sealed. • The 300g pulp sample was split into two parts and packaged in plastic bags. • One pulp was returned to the company facilities in Guatemala City along with the

corresponding coarse reject, and the second pulp was forwarded to the ALS Chemex laboratories in Canada for analysis.

• Clean silica sand was pulverized between samples and cleaned with high-pressure air to minimize cross-sample contamination.

Limonite Transition Saprolite

Dry Bulk Density (t/m3) 1.10 1.00 1.10 2.10

Bedrock


11.3 Chemical Analysis

Samples from the Mayaniquel Project were routinely analyzed for Ni, Co, loss-on-ignition (LOI), SiO2, Al2O3, Fe2O3, MgO, CaO, Na2O, K2O, P2O5, MnO, TiO2, Cr2O3, and V2O5 at the ALS Chemex Laboratory in Vancouver, Canada. The Borate Fusion-XRF method was used for assay analysis. Check assays were conducted on selected samples at the Inspectorate in Perth, Australia using the same method. ALS Chemex is ISO/IEC 17025 and ISO 9002 certified. Inspectorate is ISO 9001:2008 certified.

The Borate Fusion-XRF method has been fully validated by ALS for the range of samples typically analyzed. Method validation includes the use of certified reference materials, replicates and blanks to calculate accuracy, precision, linearity, range, and limit of detection, limit of quantification, specificity, and measurement uncertainty. One blank, one duplicate and a matrix-suitable certified or in-house reference material was added per batch of 20 samples by the laboratory. MNSA introduced additional blanks and standard reference material.

11.4 Quality Assurance/Quality Control

The performance of ALS Chemex was monitored by the regular insertion of duplicates, standard reference materials, and blanks into the sample stream by MNSA. The performance of the independent sample preparation laboratories (Inspectorate Guatemala and Chulac) was also monitored by including blank samples and coarse reject duplicates in the sample stream. Results of these check samples were received and tracked by MNSA and reviewed by BDRC, MNSA’s QA/QC consultant.

MNSA established a QA/QC protocol that comprised the use of pulp and reject duplicates, standards, and blanks inserted into the sample batches at regular intervals. Fine duplicates were inserted during sample preparation (independent from the assay laboratory) by splitting of the pulps. A range of nickel standard reference materials (SRMs) of suitable matrix composition, together with blanks, were inserted by MNSA during the core sampling procedure. During the program, check assays were conducted on select samples by a second independent assay laboratory (Inspectorate Perth). See Figures 11.1 and 11.2 prepared by BDRC comparing results.

There was at least one of four different SRMs (identified as Standard 1, 2, 3, and 4), plus duplicates and blanks included in every batch. The SRMs cover the broad range of nickel concentrations encountered at the project and are inserted every 40 samples sequentially independent of the blanks and duplicates. Duplicates were selected from samples with sufficient material and inserted approximately every 40 samples. Blanks were inserted every 40 samples. When batches contain insufficient samples to maintain this frequency, at least one of each of the four SRMs, a duplicate, or a blank were inserted.

Assay results for the primary elements nickel and cobalt and major oxide minerals were compared with the accepted values for standards and blanks. Duplicates were compared with each other. Assay batches were passed or failed according to the following criteria:

� If one Ni or Co SRM falls between two and three standard deviations of the accepted value, and no other failure occurs in the batch, the batch is accepted.

� If an adjacent Ni or Co SRM also falls between two and three standard deviations of the accepted value in a single batch, then the SRMs are classified as a failure. The batch must be re-assayed.

� If a field blank fails in a single batch, then the batch must be re-assayed. � If a Ni or Co SRM falls beyond three standard deviations of the accepted value, then the

batch is classified as a failure and must be re-assayed. � If a field blank contains greater than 0.01% contained Ni then the batch fails and must be

re-assayed.


� If the results of pulp duplicate samples vary by more than ten percent then the batch is classified as a failure and must be re-assayed.

Figure 11.1 Nickel Check Assays between ALS and BSi

Figure 11.2 SiO2 Check Assays between ALS and BSi

11.5 Sample Security

Procedures are in place to ensure sample security. MNSA geologists supervised the placement of drill core into the core trays. MNSA personnel collected the core and transported it to company facilities in Chulac for logging and sampling. Sampling was conducted by MNSA personnel under geological supervision. Samples were packaged in sealed bags assigned with unique sample numbers and transported by road to Inspectorate in Guatemala City for sample preparation. Transportation was by MNSA personnel. Inspectorate and ALS Mexico dispatched sample pulps


directly to ALS Chemex using courier services. Coarse rejects and duplicate pulps were returned to the company facility in Guatemala City where they were stored in a separate building with the remaining drill core.

The author of this section is not aware of any factors in the sample preparation procedures, sample security or chemical analysis that could materially impact the accuracy or reliability of the mineral resource estimate set forth in this Technical Report. MNSA followed industry standard sampling preparation and assaying procedures. It is the author’s opinion that reasonable and adequate procedures were followed to ensure the reliability of the sampling and assay data. The sample analysis and check sampling program have demonstrated that the sample assays are representative of the mineralization and that there appears to be no bias in the sampling.


12.0 Data Verification Data handling procedures were reviewed with ANC personnel during site visits to El Estor. ANC database manager Edwin Sandoval follows well documented procedures in an organized and competent manner that meets or exceeds standards used in the industry. Nickel grades from a series of 20 random ANC drillholes have been validated back to the certified assay certificates. No errors were found. Approximately five percent of the digital data generated by Jaguar Nickel and BHP was verified back to certificates by Tetra Tech, Inc. as part of the Tetra Tech Report completed in 2009.

All deposit areas were visited by the authors and, where possible, active drilling activities were observed. The location of drillhole collars observed in the field, in relation to known landmarks such as buildings, roads, rivers, cut lines, etc., were confirmed on plan maps of the area. All drill collars from prior and current drill campaigns have been surveyed using a total station.

Storage facilities containing drill core from Jaguar Nickel, BHP, and ANC were inspected during site visits and random sample suites of core confirmed the presence of documented lithologic units and sampled intervals.

Historic digital 3D topography data, in the form of 3D contour lines, is available for some of the deposit areas. However, there are local minor discrepancies between this information and some of the surveyed drillhole collars. As a result, local topography has been generated over each deposit area using surveyed collar locations and additional points surveyed with the total station. The resulting triangulated surfaces honor all local drilling and are considered sufficient for use at this relatively early stage of project evaluation. Improved topographic data is required for future mine design work.

Mining activities in the El Estor area are well documented. The fact that the results generated by Jaguar, BHP, and ANC are in line with conditions encountered during historical mining, including the nature of the geology and the overall range of grades present in the deposits, gives added credibility to the project.

Based on the results of the QA/QC program and the verification procedures described above, it is the author’s opinion that the project’s database of sampling, analytical, and test data is of sufficient accuracy and precision to be used for the generation of the mineral reserve and resource estimates included in this Technical Report.


13.0 Mineral Processing and Metallurgical Testing

13.1 Background

Prior work in respect of the Mayaniquel Project, including ANC’s previously filed Technical Report, was based on a single RKEF process flowsheet with ore upgrading to provide a target feed to the plant. The target feed to the RKEF plant and the plant’s selected operating characteristics were determined from extensive physical and chemical characterization of representative laterite material samples from the Mayaniquel site, predictive metallurgical smelting modeling, and small-scale smelting testwork by Mintek. Characteristics and results for five potential feed blends are shown below in Tables 13.1 and 13.2.

Table 13.1 Chemical Characteristics of Blends for Smelting Testwork

Table 13.2 Energy and Grade Recovery Values

Ferronickel alloys were successfully produced from all five blends and the smelting testwork confirmed that the predictions from the metallurgical smelting model were reliable.

Blend 4 was selected as the target feed to produce the 22.5% nickel grade FeNi product. Due to the inherent variability of the laterite materials, selective mining, effective ore upgrading, blending, and good plant operating practices were recognized to be important factors in producing the target FeNi alloy grade.

Using samples of laterites from Mayaniquel, laboratory bench scale testwork was completed at LSA and Mintek, using LIBS and XRF methods, respectively. Results from both Mintek’s and LSA’s work supported the use of sensor-based systems for upgrading low grade laterites to achieve Blend 4 target feed to the RKEF plant shown above. Conceptual designs and costs for the upgrading system were included in the PEA.

Future pilot testing of both the RKEF and ore upgrading processes to confirm the processes and determine operating characteristics was recommended in the PEA as future work to be completed.

Blend 1 Blend 2 Blend 3 Blend 4 Blend 5

Ni head grade % (dry basis) 1.58 1.34 1.33 1.67 2.01

Fe/SiO2 0.56 0.37 0.33 0.61 0.5

SiO2/MgO 1.75 1.71 1.57 1.6 1.57

Fe/Ni 11.97 10.53 9.47 11.69 8.18

Blend 1 Blend 2 Blend 3 Blend 4 Blend 5

Ni head grade % (dry basis) 1.58 1.34 1.33 1.67 2.01

MWh/t calcine* 0.4505 0.509 0.505 0.451 0.538

Ni recovery % 92.5 93.7 94.6 92.7 95.8

Alloy grade, % Ni 22 23 25 22 28

* for assumed pre-heating and pre-reduction conditions


13.2 Ore Upgrading Pilot Testwork

13.2.1 Introduction

MineSense was engaged by ANC to evaluate methods and recommend an appropriate system design and operational parameters to suitably upgrade the nickel laterite resources on their Mayaniquel Project for feed into a RKEF process plant based on using AC electrical furnaces for the pyrometallurgical smelting reduction process.

Mineral resources at Mayaniquel, as defined at various cut-offs, do not meet the time-average preferred feed blend to the process plant defined at 1.67% Ni, with 30.4% Fe2O3, 29.0% SiO2 and 17.6% MgO. Significant upgrading is therefore required to meet the overall project criteria at present estimated tonnage and grade.

A process considering mining by truck/shovel and direct shipping to the process plant of high grade blocks >1.6% Ni cut-off, combined with upgrading of mined blocks <1.6% Ni cut-off through a combination of upgrading by size classification, and sensor-based sorting to further upgrade the nickel content while controlling overall iron content was considered optimal in maximizing resource extraction while optimizing FeNi production.

Figure 13.1 below illustrates the irregular outlines of the mineralized material in one of the typical test pits which supplied feed to the ore upgrading pilot testing facility. The horizontal and vertical variable limits are outlined.

Figure 13.1 Horizontal and Vertical Variability in MNSA Bulk Sample Pit

Design criteria are based on the attainment of the process plant target feed composition from the available mined feed that can’t be used directly. Upgrading of the nickel by rejection of lower Ni grade material and removal of excess iron-containing laterite is required to decrease the Fe/Ni ratio, to thereby meet the target specification of less than 12 Fe/Ni ratio. Considerations include


physical (size) and chemical (in particular Ni and Fe content) variability. Removal of iron rich material low in other elements effectively improves Fe/Ni ratio while simultaneously increasing absolute nickel content. Relative silica and magnesium content is therefore increased, however ratios are largely unchanged. Removal of comparatively silica and magnesium rich, low nickel material through peridotite rejection is expected to further increase absolute nickel concentration, while balancing the effect on Si and Mg of the iron removal stage.

13.2.2 Pilot Scale Testing

Two sensor-based methods for the upgrading of nickel laterites, XRF and LIBS were investigated.

A pilot-scale ore upgrading system was designed, built, and commissioned by MineSense based on previous lab and semi-pilot work completed in 2011 (Figure 13.2).

Figure 13.2 MNSA Bulk Sample Upgrading System

Drillholes selected for testing were JNI-04-118, JNI-04-082, JNI-04-057, JNI-04-015, and JNI-04-23B from original BHP drilling, and drillhole SC-0044 among new drillholes drilled by MNSA. Pits were scanned by handheld XRF during excavation and loading to generate preliminary grade data, and instruct a basic low grade cut-off of 0.8% Ni to be undertaken at the pit sites, then loaded and hauled to site for processing. Pit material from the trucks was dumped and loaded into the pilot plant by loader-backhoe. Based on preliminary analysis of the first campaign results, cut-offs for the material to be treated by the system were established at 1% Ni and 60% Fe2O3 in order to achieve desired chemistries for the smelter pilot plant testwork sample. In total, approximately 520 tonnes of material from six pits of widely differing chemistry was treated over the course of both test campaigns. Initial feed material was below process plant feed specification,


however, not as low a grade as might have been tested. Average LOI of samples treated was 9.72% indicating minor upgrading potential during calcining post sensor-based upgrading stages.

A summary material balance from the primary upgrading stage tested is presented in Table 13.3.

Table 13.3 Primary (Rougher) Upgrading Results

Generally high nickel, low iron material was accepted, and low nickel, high iron material was rejected in the first stage of classification. Misplaced material noted in the rejects was largely due to diverter timing issues related to material handling problems experienced at the feed hopper and at the diverter itself. The first stage concentrate specifications produced were 1.71% Ni with a Fe/Ni ratio of 11.76 and a SiO2/MgO ratio of 1.60. Two additional test campaigns, a low grade waste rejection test and a scavenging test were performed. Results of the bulk treatment, peridotite rejection, and scavenging tests were used to construct an overall metallurgical balance for the upgrading of nickel laterites from the Mayaniquel deposit by XRF means. Rejection of specifically low grade peridotite, as well as the recovery of high grade nickel material rejected for a variety of reasons including material hang-ups in the chute, belt slippage, and diverter timing errors was also tested. Aggregate results of the laterite upgrading pilot, including scavenging stages tested are presented in Table 13.4 (metallurgical ratios in product, SiO2/MgO).

Table 13.4 Final Results – Two Stage Sort

Final accept material, as modeled, at 1.73% Ni and 11.60 Fe/Ni ratio and 1.87 SiO2/MgO ratio is significantly improved in terms of its specification for the RKEF AC furnace smelting process.

After scavenging, final rejects at 1.27% Ni and 40% Fe2O3 are a combination of low nickel high iron (>65% Fe2O3) limonitic material, and low nickel, low iron peridotite material.

Nickel grades in the reject material are high compared to those expected in practice due to the relatively high feed grade into the upgrading process (1.63%) compared to the expected duty of the plant treating 1.2-1.3% Ni material.

Wt % Grade Ni Fe2O3 SiO2 MgO

Head 100.00 1.63 31.12 32.30 16.88 Accept 73.11 1.71 29.20 33.86 17.57 Reject 26.89 1.42 36.34 28.07 15.02

SiO2/MgO

11.76 1.6

Fe/Ni

Sample


Overall confirmation of the effectiveness of XRF sorting to be used to adjust the chemistry of the laterite ores to better meet requirements for processing has been established, and is included in the prefeasibility design as a base case option for upgrading low grade resource material <1.6% Ni cut-off prior to processing.

13.3 Smelter Pilot Testwork

13.3.1 Introduction

IGEO was contracted to conduct a smelting pilot plant testwork campaign on a bulk laterite ore sample blend prepared by MineSense from the Mayaniquel deposit. The objective of the metallurgical smelting campaign carried out in July 2012 was to demonstrate that a selected blended ore feed could be used to produce a FeNi alloy containing the target grade of 22.5% nickel at a recovery of over 90% nickel.

The bulk sample prepared was selected to meet the composition for Blend 4 as developed during the scoping study phase of the project and used as the basis for the process flowsheet design in the PFS. The bulk sample was produced from selected pits and upgraded using the pilot plant supplied to Mayaniquel and operated under supervision of MineSense as described in Item 13.2. A second bulk sample meeting the composition for Blend C was also supplied for possible testwork but was not processed due to time constraints and because it was of a lower priority compared with Blend 4. Blend C has higher SiO2/MgO (1.9 vs 1.6) and Fe/Ni (13.7 vs 11.7) ratios than Blend 4. The second bulk sample was selected to provide for the option of testing more iron-rich limonitic material and material with a higher SiO2/MgO ratio in the pilot plant if time allowed. Bulk sample Blend C has been stored in case this aspect is explored further during the feasibility stage to demonstrate smelting of increased limonitic-containing feed from the Mayaniquel deposit.

IGEO contracted Morro Azul to carry out the testwork at their pilot plant facility. Morro Azul provided experienced operating personnel and other resources required for carrying out the continuous campaign as needed to achieve the objectives. The IGEO team was led by Gustavo Duran and was very well supported by Andre LuÍs Corrêa de Paiva who supervised the campaign.

Dr. Guido Grund, Head of Pyroprocessing and Minerals Division of ThyssenKrupp Polysius AG, and Drs. Nicholas Barcza and Lourens Erasmus attended the campaign to witness and support the running of pilot plant testwork.

13.3.2 Objectives of the Testwork Campaign

The smelting campaign was considered to be one of the key objectives of the PFS. The laboratory-scale work carried out by Mintek generated metallurgical data for the process flowsheet design, but a larger-scale test was required to verify the process and equipment-related parameters used in the PFS. The use of a bulk sample prepared in a manner similar to what is envisaged for the full-scale metallurgical plant was also considered an important part of the PFS. The sample sourcing, upgrading, and preparation procedures are briefly described below and dealt with in more detail in Item 13.2 of this report.

The specific objectives of the testwork were to:

� Homogenize, agglomerate, calcine, pre-reduce, and smelt the bulk sample (Blend 4) to produce FeNi

� Confirm the Ni recovery of over 90% and the FeNi target grade of 22.5% Ni

� Establish the metallurgical process and equipment operating parameters

� Determine the mass and energy balances in order to confirm process design criteria

� Use the data from the results to assist in development of the process description


13.3.3 Ore Sample Selection and Preparation at the Mine

Special sample pits were excavated at the Mayaniquel deposit so that suitable bulk samples of Blends 4 and C could be produced by processing through the upgrading plant at site. The sample preparation is described above.

The selection of Blends 4 and C originates from the scoping study stage of the Mayaniquel Project and was based on the metallurgical testwork and modeling of the smelting characteristics of a range of blends carried out by Mintek. They were selected to cover the indicative composition of blended ores from the exploration work on the El Inicio and Tres Juanes Norte deposits respectively. They were chosen to meet the required smelting criteria to produce a 22.5% Ni grade in FeNi and achieve a Ni recovery of around 90% or more.

Blend 4 feed composition selected as the target for the smelting campaign had a 1.67% Ni content, a SiO2/MgO ratio of 1.6 and a Fe/Ni ratio of 11.7, as shown in table 13.5 below. The LOI in Blend 4, as determined by Mintek during the laboratory-scale testwork was 14.59%. The composition has been subsequently revised based on the average estimated LOI value for the deposit of 10.65% (based on an overall average of exploration samples) as shown in Table 13.6 below. Blend C had a higher Fe/Ni ratio (13.7) than Blend 4, but was not tested during the campaign. The composition of Blend C is also shown in Table 13.6 for comparison. The LOI of Blend C is very close to the estimated average.

Table 13.5 Chemical Composition of Blend 4

A total of 520 tonnes of material from six selected test pits was mined for processing through the upgrading pilot plant to produce the two bulk samples. Bulk Sample 1 was based on achieving a composition close to Blend 4 and providing 125 tonnes for the smelting campaign. Bulk Sample 2 was based on achieving a composition close to Blend C and providing 40 tonnes for the smelting campaign.

The two bulk samples produced from the upgrading plant were blended, sampled, and bagged at site. The composition of the bulk samples, as taken by MNSA and analyzed by ALS Chemex in Vancouver, is compared with the target blend in Table 13.6. There are apparent differences that were investigated during the testwork campaign and reported on below.

Table 13.6 Chemical Composition of Bulk Samples 1 and 2 and Blends 4 and C

13.3.4 Ore Sample, Sampling, Analysis, and Homogenization at Morro Azul

Homogenization

Bulk Sample 1 (representing Blend 4) and Bulk Sample 2 (representing Blend C) , amounting to 120 tonnes and 40 tonnes dry basis respectively, were sent to Morro Azul for testing. The Bulk Sample 1 material was selected for the campaign since there was more sample available and

Blend 4 Ni Fe2O3 SiO2 MgO Al2O3 LOI Fe/Ni

Adjusted 1.70 28.44 32.48 20.29 3.80 10.65 11.71 1.6 Original 1.67 27.96 31.94 19.95 3.74 14.59 11.70 1.6 Blend C 1.55 30.31 34.47 18.12 5.27 10.64 13.70 1.9

SiO2/MgO

Sample Ni Fe2O3 SiO2 MgO Al2O3 LOI Fe/Ni

Bulk Sample 1 1.73 25.34 34.91 20.88 3.86 10.33 10.22 1.67 Blend 4 (target) 1.70 28.44 32.50 20.30 3.80 10.65 11.71 1.60 Bulk Sample 2 1.67 27.66 34.69 18.84 4.08 10.01 11.61 1.84 Blend C (target) 1.55 30.31 34.47 18.12 5.27 10.64 13.70 1.90

SiO2/MgO


target Blend 4 is more representative of the expected feed composition from the mine and upgrading plant.

In order to improve the handling characteristics for further treatment, the material was spread onto a concrete floor in the yard area, and every two hours the ore was moved by a front-end loader to accelerate the sun drying process. This cycle was repeated until the ore showed good handling characteristics.

Sampling

Samples were drawn from the “as received” big bags and from the homogenization piles.

To obtain the samples from the big bags, one bag was selected from every 10 bags for chemical analysis and granulometry determination, the latter to get information for designing the up-front facilities in the PFS. The samples were obtained by introducing a 100mm diameter pipe into the bag up to a depth of 400mm and the material filling the pipe after removal of the pipe was treated for final sample collection.

Around the conical shaped homogenization pile at one meter intervals, one portion of material was drawn and deposited into a container used for collection of the sample material. This procedure was repeated for each meter height until the top of the pile was reached. All increments collected were put together, homogenized, and quartered until the final sample weight reached approximately 10kg to be sent to the laboratory. These samples were used for moisture, granulometry, angle of repose, and bulk density determination.

Analysis (Sample Preparation and Analytical Procedure)

The samples were dried at 120°C and treated in a Jones rifle splitter, ground in a disc mill and pulverized for pressing for XRF determination. The calibration curves were obtained using the results from SGS which procedure is fusion of powdered material.

Agglomeration

The materials used for the agglomeration testwork were collected in the pile used to feed the kiln, prior to mixing with coal reducing agent. Four different moisture contents were tested by adding water prior to feeding the rotary drum. One sample was drawn out every hour for moisture and granulometry determination. The natural agglomeration of the material was also assessed. The agglomeration characteristics were assessed by comparing the granulometry of each material with the wet screen analysis of the representative feed material.

13.3.5 Feed Processing

Coal addition

Coal was screened to a particle size range of 2 and 12.5mm to enhance the control of utilization of the reducing agent (coal) fed into the furnace by minimizing losses of fines in the off-gas. Each bag was analyzed for fixed carbon, ash, volatiles, sulphur, and moisture and stored. This approach allows for a reliable and precise calculation of reducing agent required for the process. The addition and weighing of coal was carried out manually to control the accuracy prior to mixing in a rotating drum.

The ore and coal were manually blended and fed into a rotary drum mixer to improve homogeneity of the charge. Each ore batch weighed approximately two tonnes so that correction in the amount of reducing agent could be made when required. The amount of reducing agent weighed was chosen to meet the calculated target fixed carbon value for reduction of the ore.

The amount of coal varied in the range of 6 to 11% (dry weight coal to dry weight of ore), based on achieving the Ni grade in the metal of 22.5%. During the testwork, the Ni in the metal varied from over 30% Ni and to below 16% which was below the target. The amount of coal was then


adjusted to 9% and the Ni in the metal started increasing up to the end of the testwork. The evaluated results indicate that the ideal amount of coal should be in the range of 7% and 8%, dry basis, for a FeNi metal with 22.5% Ni. The control of the coal addition is a very important aspect of the operation to ensure that the required grade of FeNi is produced at the related Ni recovery level. Coal addition versus time is shown below in Figure 13.3.

Figure 13.3 Coal Addition

Feed rate to rotary kiln

The feed rate to the rotary kiln was fixed at 600kg/h, on wet basis, at a rotating speed of 0.45 rpm. These operating conditions were maintained constant during the whole campaign. The feed rate control was achieved by using a conveyor belt equipped with a weightometer and by setting the belt speed.

Calcining – operating conditions

The calcine produced during the first four hours of operation was stored in a bucket to provide cold calcine as emergency feed to avoid disruptions of feed into the furnace in case of any problem with the hot calcine production. This calcine storage bucket was also used to store calcine when the furnace could not take any feed. This philosophy was implemented during the second week of the testwork campaign to make adjustments to the power feed balance.

The assessment of the calcining operation during this campaign was carried out using the following parameters.

Calcine sampling

The calcine sampling was carried out in two different modes.

The calcine sampling for granulometry determination was done by manually collecting the material at the discharge end of the kiln and depositing it into a container. One sample per hour of approximately one kilogram each was combined over eight hours to form the final sample. The sample was allowed to cool down in the container in an open air atmosphere.

The sample for pre-reduction determination used a container device which was designed to prevent any risk of re-oxidization by ingress of air. The container was fixed to the shell at a position approximately 0.5m from the discharge end and the material was allowed to fill this container completely. The container was closed and the hot calcine was cooled down in a water tank prior to transfer to the laboratory. This sample was analyzed every hour for carbon


determination and pre-reduction. The analysis of the calcine provided the main basis for evaluating the metallurgical performance criteria since the frequent sampling, finer sizing, and greater homogeniety of the calcine ensured that the sampling, and related analytical difficulties with the bulk samples prepared at site and sampled at Morro Azul, were resolved.

Calcine granulometry

The calcine granulometry is important information which gives a good indication on how the material behaves, regarding its physical properties, during calcining. As shown in the agglomeration section, which simulates the drying section of the kiln, the calcine granulometry shows the impact of the process as a whole on the granulometry of the agglomerated material, which results in the calcine. This information will be useful when conveying the feed to the smelting furnace.

Due to the fact that the material has a clayey nature, the feed sample had its granulometry determined by wet screen analysis. The granulometric results indicate the good rate of survival of the agglomerated materials in the calcine.

Residual carbon

Residual carbon analysis was carried out on an hourly basis because this is one of the most important factors affecting the smelting furnace operation. Results are shown below in Figure 13.4.

Figure 13.4 Residual Carbon in the Calcine

Temperature

The temperature profile along the kiln was determined using five thermocouples fixed to the shell of the kiln, resulting in the profile shown in Figure 13.5.


Figure 13.5 Rotary Kiln Thermal Profile

The calcine temperature obtained by the thermocouple positioned at the last well close to the discharge end of the rotary kiln is shown in Figure 13.6.

Figure 13.6 Calcine Temperature


Pre-reduction

The calcine showed excellent quality in terms of temperature, pre-reduction, and granulometry throughout the campaign. The calcine temperature was obtained by two different means in order to accurately evaluate the limitations of the material at high temperatures as well as on the pre-reduction.

The temperatures measured with the thermocouple immersed in the hot calcine in the bin were in the range of 8000C to just over 1000°C with the most reliable readings being when the bin was full of material and the range was 900°C to 1050°C. The temperature values were confirmed by means of an alternative measurement using a quick response thermocouple (QIT). Temperatures of around 1050°C obtained indicated no significant sintering of the calcine which is one of the important considerations for the continuity of the rotary kiln operation.

The average figures which were obtained during the campaign are listed in Table 13.7.

Table 13.7 Rotary Kiln Operating Conditions

Only two relatively short shut downs in the rotary kiln operation occurred due to equipment issues during the campaign. The first was due to a problem with the electric motor for the feed conveyor for the rotary kiln and the second was due to hydration of the refractory bricks next to the slag tap hole. Other events were caused by slag boiling due to operational conditions in the furnace. None of these affected the campaign in any significant way. Pre-reduction performance is shown below in Figure 13.7.

.

Figure 13.7 Pre-reduction of the Calcine

Unit

Pre-reduction 100 * % Fe2+ / Fe 75.80

Diesel consumption Kg/t calcine 97.30

CO2 in the off-gas % 11.30

CO in the off-gas % 0.11

O2 % 1.30

Off-gas temperature °C 311.40

Rotation speed Rev/min 0.50

ValueItem


13.3.6 Smelting Operating Philosophy

The operating philosophy for the pilot plant had the overall objective of simulating commercial operation based on the following key considerations to:

� Target a pre-reduction level higher than 70% to decrease the amount of offgas generated in the reduction reactions in the furnace, increasing the stability of the operation.

� Achieve a calcine granulometry with a maximum of 10% less than 0.2mm which is of major importance to obtaining shielded arc operation and controlling the melting rate.

� Operate with a shielded arc operation in order to minimize heat losses and prevent the furnace roof from overheating.

� Operate with the maximum voltage and arc impedance to limit the risk of slag foaming which could be triggered by the electrodes contacting the slag.

� Control the slag temperature in order to assist in the charging of calcine feed into the furnace.

� Avoid the accumulation of calcine banks on the side-wall of the furnace.

Three different periods were defined based on the operating philosophy during the campaign as discussed below.

Period 1: High voltage operation but with tolerance for lowering the voltage. This was done in order to obtain information on the operating characteristics at different voltages. Arc shielding was a key target.

Period 2: Keep arc shielding and use only the maximum voltage available in the transformer. This condition lasted for around one day.

Period 3: Maintain the high voltage and open the bath so that arc shielding would be strongly avoided. The reason for this was to prevent uncontrolled calcine from being transferred to the melt which was identified as the cause for cooling the slag, triggering slag foaming and three more intense slag boiling events as the slag became too viscous.

13.3.7 Smelting Operating Conditions

Information in Tables 13.8 through Table 13.10, and Table 13.12; and Figure 13.9 and Figure 13.10 was excerpted from Dr. Lourens Erasmus’ smelter pilot plant report.

Furnace operating temperatures

The slag temperatures were obtained during tapping by means of an immersion thermocouple during the slag tapping and are recorded in Figure 13.8.


Figure 13.8 Slag Temperature – 1st and 2nd Periods

Smelting Furnace Feed and Products

Furnace feed, FeNi alloy, and slag are quantified below in Table 13.8. FeNi alloy grades are also shown. The average calcined feed composition was 1.73% Ni, 31.76% Fe2O3, 37.8% SiO2, and 25% MgO (inc CaO) with the SiO2/MgO and FeNi ratios 1.59 and 12.9 respectively.

Table 13.8 Smelting Furnace Feed and Products

Feed to Calcine Tapped Tapped FeNi

Kiln, Wet to EAF Slag FeNi Grade

kg kg kg kg % Ni

Iron heel in furnace 320 - Alloy tap 1 21,850 11,202 6,899 232 20.0 0.31 Alloy tap 2 12,350 8,062 7,562 836 28.3 0.19 Alloy tap 3 15,600 8,933 7,976 650 26.2 0.25 Alloy tap 4 15,600 10,695 10,019 422 37.8 0.20 Alloy tap 5 17,260 11,192 8,567 614 21.6 0.17 Alloy tap 6 14,684 9,006 7,160 186 32.0 0.38 Alloy tap 7 15,930 9,335 8,100 640 35.0 0.17 Alloy tap 8 14,109 8,650 7,068 758 16.6 0.09 Alloy tap 9 12,450 7,877 6,151 848 14.3 0.08 Alloy tap 10 (Including digout)

11,577 8,252 8,466 850 17.0 0.10

151,410 93,204 77,967 6,036 23.5 0.19

Note: 1) Not all the calcine was smelted; 2) alloy grade of the initial taps was diluted by the heel material; and 3) dig-out slag is included in the last slag mass.

Total/Average

% Ni

Losses

Slag


Calcine samples were taken just before the kiln outlet and submitted for analysis to the Morro Azul laboratory. The chemical composition of the calcine, the degree of iron reduction (Fe3+ to Fe2+) and residual carbon content was also measured.

Slag analyses are shown in Table 13.9 and a complete analysis of the FeNi alloy is shown in Table 13.10.

Table 13.9 Daily Slag Analysis

Table 13.10 Metal Analysis

Most of the alloy was drained during the alloy taps. This was confirmed during the dig-out when only slag was recovered after the furnace cooled down.

Metal was tapped once a day and the flow was quite consistent. The temperature, despite the fact that its measurement was not possible it may be said, in comparison with other operations, was good, probably in the range of 1480 – 1500°C.

The amount of metal produced was mostly dependent on the chemistry of the process rather than any other operational factor. The amount of metal produced is shown in Table 13.11.

Ni Fe SiO2 MgO + CaO SiO2 / MgO

% % % % % Tap

04/07/12 0.31 20.01 41.31 26.46 1.56 29.8 16.7 05/07/12 0.19 20.66 40.97 26.60 1.54 9.0 18.7 06/07/12 0.25 20.59 41.02 26.08 1.57 12.3 16.6 07/07/12 0.20 20.87 40.63 26.10 1.56 23.7 23.3 08/07/12 0.17 18.80 42.31 26.67 1.59 14.0 11.5 09/07/12 0.38 17.57 41.26 26.39 1.56 38.5 14.7 10/07/12 0.17 21.99 38.42 25.19 1.53 12.7 21.0 11/07/12 0.09 19.21 39.14 25.18 1.55 9.3 8.5 12/07/12 0.08 12.66 45.66 27.37 1.67 7.3 7.1 13/07/12 0.10 16.31 43.66 27.19 1.61 10.0 9.0

Average 0.19 18.87 41.44 26.32 1.57 16.6 14.7

Slag/Alloy Ratio

CalcDate

FeNi Ni %Fe %

CalcC % S % Si % P % Co % Cu %

04/07/12 20.0 79.1 0.01 0.31 Trace 0.180 0.25 0.17 79.905/07/12 28.3 70.6 0.39 0.23 Trace 0.070 0.33 0.08 85.706/07/12 26.2 73.0 0.13 0.27 Trace 0.057 0.33 0.06 79.307/07/12 37.8 61.4 0.03 0.35 Trace 0.058 0.30 0.08 126.108/07/12 21.6 77.0 0.67 0.30 Trace 0.051 0.39 0.05 55.309/07/12 32.0 66.7 0.37 0.54 Trace 0.043 0.27 0.07 118.710/07/12 35.0 64.1 0.01 0.30 Trace 0.083 0.47 0.08 74.511/07/12 16.6 82.3 0.43 0.27 Trace 0.031 0.35 0.04 47.312/07/12 14.3 84.9 0.30 0.08 Trace 0.035 0.32 0.04 44.713/07/12 17.0 82.1 0.26 0.25 Trace 0.039 0.35 0.05 48.5

Average 23.5 75.5 0.28 0.26 - 0.056 0.35 0.06 68.5

Ni/Co


Table 13.11 Metal Produced

13.3.8 Smelting Campaign Results

Metal Quality and Grade

The metal quality is assessed on the basis of the content of impurities such as C, S, P, which can be refined by means of conventional processes, and Cu and Co which are mainly derived from the reduction conditions in the furnace and therefore, can be modified with different operating conditions.

Sulphur and carbon levels are quite similar to the FeNi obtained in similar operations and will not have any significant impact on the conventional refining design. Phosphorous on the other hand is quite low and will make the refining process faster and lower cost.

Copper and Co, 0.06% and 0.35% respectively, result in Ni/Cu = 390 and Ni/Co = 67 which are well above the limits of 35 and 30 for Ni/Cu and Ni/Co respectively, the current market standards.

The Ni grade in the metal varied from 38% Ni to 14% Ni and readily encompassed the grade of 22.5% Ni which is the target for the project. The product, finally, may be said to be of commercial grade. What is very significant is the extremely wide range of FeNi grades that were achieved during the campaign and that the corresponding recoveries at these various grades were defined for the project design criteria.

Having a good quality calcine and high voltage available in the transformer it was decided to adopt this philosophy of operation at the beginning of the testwork campaign on July 2nd and this condition lasted until July 9, 2012. The characteristics of this mode of operation were too high a Ni content in the slag partly as metal as well as low energy consumption which can be explained by the low level of metallurgical reduction and low Ni recovery. In an attempt to improve the recovery, it was necessary to add more reducing agent to the charge which made the furnace too unstable, leading to intense slag boiling and Ni losses as metal that was entrained in the slag. The explanation for this event is that there was a significant increase in the viscosity of the slag. This was evidenced by the sparks of metal which could be seen during slag tapping as well as the chemical analysis.

The mode of operation was changed and the variables of slag temperature, high voltage, and open bath were strongly controlled. From July 9th until July 12th when the testwork was completed, the furnace remained stable and quite tolerant to carbon addition – residual carbon in the calcine. The evidence of this stability was demonstrated by the Ni in the slag decreasing to extremely low levels such as 0.05%, and the FeNi grade decreasing as low as 14%.

The alternative “open bath – slag temperature control – high voltage” had the advantage of controlling the calcine melting rate into the slag which avoided the temperature dropping and, therefore, minimized the impact of foaming and boiling. Slag foaming was quite frequent and continuous but within acceptable levels which probably contributed to the high electrical resistance. A couple of slag boils were triggered but with minor impact on the operation.

The residual coal in the calcine is quite a sensitive issue for a shielded arc operation, but it was not an issue of concern in this mode of operation and the low Ni grade metal is good evidence of this characteristic.

Tap

Number1º 2º 3º 4º 5º 6º 7º 8º 9º 10º

Date 4-Jul 5-Jul 6-Jul 7-Jul 8-Jul 9-Jul 10-Jul 11-Jul 12-Jul 13-Jul

Weight (kg)

231.6 836 650 422 614 186 640 758 848 850 6,035.6

Total

Weight

(kg)


Slag and metal tapping was regular and flowed readily. It is important to note that during the period of July 9 - 12, there was no metal entrained in the slag during the slag tap.

Metals Recovery

A mass balance was performed using the tapped data. The results are given in Table 13.12. For the mass balance it was assumed that 5% of the calcine and 10% of the slag was not accounted for. Aside from these assumptions, another 10% of the feed was not accounted for in the products.

Table 13.12 Mass Balance

The nickel recovery based on the slag analysis is 90.6%. Based on the tapped alloy it is 88.2% with 2.4% not accounted for whereas 7.5% of the iron, 8.4% of the silica, and 12.1% of the magnesia are not accounted for. The extent of desulphurization during smelting was around 72%.

A mass and energy model was used to duplicate the mass balance. Combining the slag and alloy analysis with the calculated slag/alloy ratio, it was possible to calculate the feed calcine analysis. The calculation is very sensitive to the slag/alloy ratio, which was calculated iteratively by simulating smelting with ore from the previous iteration. The average of these calculated analyses compares well with the average of the daily calcine analysis. The Fe/Ni ratio of 12.8 was higher than what was determined on the bulk sample where the large variability in particle size presented sampling difficulties that resulted in a lower apparent Fe/Ni ratio.

Nickel recovery is shown in Figure 13.9 as a function of alloy grade.

Ni kg Fe kg SiO2 kg MgO kg

Calcine 1,609.0 20,696 35,211 23,334 74.4FeNi 1,419.0 4,302 21.0Slag 150.9 14,843 32,253 20,511

-38.5 -1,550 -2,958 -2,823 -53.4

S kgMB kg

Balance

Ni % Fe % SiO2 kg MgO %

Calcine 100.0 100.0 100.0 100.0 100.0FeNi 88.2 20.8 0.0 0.0 28.2Slag 9.4 71.7 91.6 87.9 0.0

-2.4 -7.5 -8.4 -12.1 -71.8Balance

S %MB %


Figure 13.9 Nickel Recovery and Alloy Grade

13.3.9 Evaluation and Discussion of Results

Benefits of agglomeration and improved granulometry

The benefits of the improved granulometry are significant on both sides – the process and the engineering/maintenance side according to Table 13.13.


Table 13.13 Impact of Granulometry on Process and Engineering

Effect of carbon addition on Fe reduction and Ni recovery

During the testwork, carbon addition influenced Ni recovery and Fe reduction, as depicted in Figure 13.10.

Note: Comma separators to be taken as decimals.

Figure 13.10 Impact of Coal Addition on Ni Recovery and Fe Reduction

Improved Granulometry Poor Granulometry

Granulometry 10% < 0.2 mm Higher than 10% > 0.2 mmMovement of the material in the kiln

Uniform - the material is homogeneous

Unpredictable - the material moves in batches

Temperature profile Steadiness is viable Variable and unsteadyResidence time Regular UnpredictablePre-reduction Steady Poor

LOI Steady and low level Variation in wide rangeRinging Yes, but manageable Yes and out of controlCalcine temperature Steady and manageable Too much variationRecovery Steady PoorSF energy consumption Optimized PoorImpact on EF Optimized PoorNi recovery Optimized LowerAvailability Optimized Lower

Improved Granulometry Poor Granulometry

Granulometry 10% < 0.2 mm Higher than 10% > 0.2 mmDust handling Capex Optimized HigherMaintenance Low impact High impactEnvironmental impact Medium High impactImpact on EF Reduced maintenance High maintenance

Remarks

Remarks

Engineering / Environmental

Issues

Process Issues


Environmental slag and dust toxicity characteristic leaching procedure (TCLP)

The environmental results were favorable with no TCLP limits being exceeded.

Water retention in slag

The maximum percentage of water retained in slag (just after the slag tap) was 24.5%. The dewatering stabilizes when it reaches 4.6% in less than one hour.

Angle of repose and bulk densities

Samples were drawn from as received material in storage and moisture was added in order to get the impact of the moisture variation in the density and angle of repose. Bulk density of ore was between 1.14 and 1.22 t/m3 and angles of repose 30 and 35 degrees slope at 30% and 20% moisture, respectively.

The density values for the kiln feed containing coal were in the range of 1.09 to 1.3 t/m3 and the angles of repose were between 27 and 37 degrees slope.

The granulated slag has a density between 1.61 and 1.81 t/m3 and an angle of repose between 27 and 38 degrees slope. The calcine has a density between 0.7 and 1.31 t/m3 and an angle of repose between 27 and 35 degrees slope.

13.4 Conclusions and Recommendations

Feed preparation performance achieved

The feed preparation for the testwork was carried out with the objective of simulating existing conditions in a commercial scale operation. It is well known that the granulometry of the charge impacts the behavior of the material while processing in the rotary kiln and furnace. Also the 30mm top size has been widely proven in other operations in which IGEO metallurgists have been actively involved in the design.

The consequence of such granulometry are the good quality of the calcine, measured in terms of the extent of pre-reduction and residual LOI that are very important for the stability of the electric furnace operation.

These aspects were satisfactorily achieved during the campaign with the high moisture content (18 to 20%), the main factor contributing to the success of the appropriate material granulometry. The process flowsheet for the project has been based on the mixing/contacting of wet ore and rotary kiln dust in a rotating drum, prior to feeding the secondary screen/crushing as has been successfully demonstrated in other operations processing similar material.

Calcining – Rotary Kiln performance

The calcining operation on a pilot plant scale was successfully demonstrated for treating the Blend 4 feed material. Good results were obtained regarding the calcine integrity even at relatively high temperatures such as 1050°C. No significant ring formation was observed and only a few minor accretions were noted close to the discharge end, probably as a result of the higher operating temperature at about 50°C above the normal level used in an industrial-scale laterite calcining kiln.

Smelting furnace performance

The achievement of an average FeNi grade close to the 22.5% target at an overall recovery close to 90% using a blended feed with a higher Fe/Ni ratio than the target Blend 4, 12.9 based on the calcined feed composition vs the target of 11.7, is a very positive result from the smelting campaign.


The smelting operation showed that the philosophy of having a combination of shielded arc – high voltage - good calcine quality (good granulometry and good pre-reduction) is not sufficient for reaching a steady condition for achieving the desired level of reduction of iron and nickel. Additionally, as more reducing agent was added to improve reduction, the furnace reached a certain degree of saturation in carbon that turned into a continuous boiling of severe intensity under the above operating regime.

Under this condition, the furnace did not show any significant activity and feed was stopped. The reason for this event is the cooling of the slag which increases its viscosity. A small decrease in temperature causes a significant increase in viscosity and this causes upward rising of the slag bath because of the entrained gases. The only possible way to overcome the foaming slag situation is to increase the operating temperature of the slag.

Therefore, the test was quite conclusive in obtaining evidence that the so called “shielded arc – high voltage – good quality calcine” with the calcine, at least, at the level of quality which may be said to be at the upper side of the rotary kiln calcining quality material as was the case during the campaign.

The method of operation - “open arc – no significant bank of calcine accumulation in the furnace – good quality calcine – slag temperature control” – proved to be tolerant to the excess of residual reducing agent in the calcine from which 14% Ni alloy was produced. The operation was steady most of the time and the furnace could be fed almost continuously. The result was that the furnace was responsive and effective in reducing iron and nickel.

The minimum slag temperature required for feeding the furnace was set at 1570°C.

This temperature level of 1570°C is a good indication of the liquidus temperature of the slag that in turn impacts the temperature differential between the slag and metal. The geometry of the furnace with a distance between slag and metal taphole of 0.3m, enabled good metal temperatures to be achieved and therefore fluidity of the metal during tapping.

The nature of the process indicates that copper cooling elements will be required in the slag zone and this is because of the possibility of slag superheat (operating temperatures well above the slag liquidus temperature of more than 100°C in order to facilitate metal tapping). This will make the slag more aggressive to the sidewall refractories. It is very important to stress the importance of the silica to magnesia (SiO2/MgO) ratio in slag on superheating of the slag which has an impact on refractory wear both from the point of view of chemical attack on basic refractories and the physical wear from increased fluidity and circulation of the slag in the bath. The slag circulation velocity is also a factor which must be considered with respect to the furnace diameter or really the distance between the electrode and the furnace wall.

Refining process forecast

It is possible to forecast the requirements for the refining process based on the metal composition obtained during the testwork. The carbon content was around 0.3 to 0.4%, so that a decarburization step of the metal at the tip of the electric furnace tapping launder will be required as has been proposed by IGEO in the PFS for this project. The decarburization will be conducted with a lime-rich slag that will contribute to lowering the already low phosphorous in the crude metal, adding value to the quality of metal.

Desulphurization, on the other hand, will be impacted by the sulphur content in the coal, but, for the currently assumed figure of one percent maximum for sulphur in the fuel, the sulphur removal process will be easily carried out using the conventional technology in steel making.


Sample Representivity

In the Qualified Person’s opinion, test samples chosen for both the ore upgrading pilot testwork and the smelter pilot testwork are representative of the three main lithologies and the overall mineral resources within the Mayaniquel Project deposit areas.


14.0 Mineral Resource Estimates

14.1 Introduction

Mineral resource estimates have been generated for the six deposit areas referred to as Sechol, Nueva Caledonia, Amanecer, Tres Juanes Norte, Tres Juanes Rio, and Poza Azul. The locations of these areas are shown in Figure 14.1 (Nueva Caledonia is not shown in Figure 14.1 as it is located approximately 24km east of Sechol). Note that the property limits initially included the Seococ-Chulac and Poza Azul deposit areas. These license areas have recently been dropped by ANC and, as a result, they are not included in the resource estimation tabulated at the end of this section. However, references and comments regarding the generation of resources in these two areas are still included in this report.

The mineral resource estimates were prepared by Robert Sim, P.Geo and Bruce Davis, FAusIMM. Both Mr. Sim and Mr. Davis are independent Qualified Persons within the meaning of NI 43-101 for the purposes of mineral resource estimates contained in this report. Estimations are made from 3D block models based on geostatistical applications using commercial mine planning software (MineSight® v7.0-3). The project limits are based on the UTM coordinate system (NAD83 zone 16). A nominal block size for each model of 25x25x2mV is considered appropriate for the distribution of sample data and also the shape and scale of the deposits. Sample data is derived from surface drilling programs completed by three operators; Jaguar in 2004-05, BHP in 2006-08, and ANC 2009-present. Throughout the 2009-10 field season, ANC reviewed the BHP drilling and brought the geologic information in-line with that produced by Jaguar. Drilling is completed using vertical holes that are generally spaced on regular 100m grid patterns. Portions of Amanecer, Tres Juanes Norte, Tres Juanes Rio and Sechol are drilled on a tighter drill grid spacing of 50 to 70m, resulting in some higher-class resource designation in these areas.

The resource estimates have been generated for each of the six areas using drillhole sample assay results and the interpretation of a geologic model which relates to the spatial distribution of nickel, iron, silica, alumina, magnesia, and cobalt. Interpolation characteristics have been defined based on the geology, drillhole spacing, and geostatistical analysis of the data. The resources have been classified by their proximity to the sample locations and are reported, as required by NI 43-101, according to the CIM Definition Standards.

Mineral resource estimates for two proximal mineralized areas, Chatala and El Tunico are also included in the mineral resource tables in this Technical Report. These additional mineral resources were originally estimated by Donald Tschabrun, MAusIMM and reported in the technical report entitled “Mineral Resource Estimate for the Mayaniquel Project, Guatemala, NI 43-101 Technical Report”, dated May 19, 2009 with an effective date of May 5, 2009. These mineral resource estimates are considered valid because of the fact that no additional work has been conducted in these areas since this time. Mr. Sim has reviewed and verified these mineral resource estimates for inclusion in this Technical Report.

14.2 Geologic Model, Domains and Coding

The El Estor area of Guatemala hosts numerous nickel laterite deposits over an area measuring some 50km EW by 25km NS. All deposits exhibit similar characteristics resulting from the near-surface leaching and related enrichment of elements brought on primarily through relatively recent weathering in this hot and humid environment.

Statistical evaluation of sample data shows some mineral trends in relation to various lithologic units. However, a simplified designation of what has come to be known over several drilling programs as “LithChemA” (LCA) codes, derived using a combination of logged lithologic


characteristics and chemical compositions, provides a simplified stratigraphic column that forms the basis of the mineral resource models. LCA codes are designated as follows in Table 14.1.

Table 14.1 LithChemA (LCA) Codes

The parameters listed above are initially calculated for each sample interval and then final LCA designation is made by ANC’s Chief Geologist based on drill core observations.

A series of points are generated in drillholes representing the top occurrence of each of the LCA domains. The locations of these points are reviewed in vertical section and edits are made as required (i.e. geologic interpretation of domains requiring local simplification in areas where multiple, or alternating zones may be present). Points are also generated in drillholes if LCA units are missing, resulting in an interpretation that “pinches out” as required. At Nueva Caledonia, the geologic interpretation of domains is generated through triangulation of these interpreted points into a series of surfaces that are extended for 100m beyond perimeter drillholes. These surfaces are merged into a series of 3D wireframe solids representing the shape and location of each of the five LCA domains. At Sechol, Amanecer, Tres Juanes Norte, Tres Juanes Rio, and Poza Azul, the LCA domain boundaries are generated in such a manner that they mimic the topographic surface to some degree. This is achieved by interpolating the thickness of each LCA domain and then subtracting the resulting values from the topographic surface elevation. The resulting models have been thoroughly checked to ensure they are an appropriate reflection of the underlying drilling data as well as the surface topography.

Three dimensional digital (contour line) topographic data is available for the Sechol, Amanecer, Tres Juanes Norte, Tres Juanes Sur and Poza Azul areas. These maps were generated using existing air photos and, although they are reasonably accurate representations of the topographic surfaces, there are some minor discrepancies between the contour data and the surveyed drillhole collars. To account for this discrepancy, digital terrain surfaces have been estimated in areas where drilling has occurred using the surveyed drillhole collar locations. These estimated surfaces have been merged with surrounding contour data, resulting in a 3D surface that correlates with all drillhole collars and retains the character of the surrounding areas for mine planning purposes.

The topographic surfaces overlying Nueva Caledonia have been generated through triangulation of drillhole collars plus additional surveyed points picked up throughout the drilled areas. Triangulated topographic surfaces are considered sufficient for use in estimating mineral resources in these areas.

In July 2012, ANC had a new LiDAR topographic surface produced over the majority of the project area. Comparisons show the new LiDAR surface to be similar in shape and location in relation to the previous topographic digital terrain model. The effects of the new LiDAR surface on the resource models were tested in the Amanecer area. Following recalculation, the base case resource increased by 100,000 tonnes (+0.7%) in the indicated category and decreased by only 3,000 tonnes (-0.1%) in the inferred category with no change in average grade in either class. These differences are in line with expectations for all model areas and are considered to be well within the overall degree of accuracy of the resource estimate. Since there are no material

LCA Domain Code MgO Fe2O3 K2O

Leach 1 Topsoil <7% >35% >0.02%

Limonite 2 Oxidized Zone <7% >35%

Transition 3 Transition between LIM and SAP 7-15% 22-35%

Earthy 15-20% 11-35%

Rocky 20-32% 11-35%

Bedrock 5 Unaltered Bedrock >32% <11%

4Saprolite


changes to resources using the newer LiDAR topographic surface, it was decided to retain the March 2012 mineral resource models as significant time and effort had already been invested in developing mine plans presented in Item 16.0 of this report.

14.3 Available Data

The drillhole database comes from three sources: Jaguar Nickel in 2004-05 (856 holes), BHP in 2006-08 (857 holes) and ANC from 2009 to the final date delivered on February 28, 2012 (2,963 holes). The distribution of drillholes in the various model areas is shown in Figure 14.1 and summarized in Table 14.2.

Figure 14.1 Isometric View of Drillhole Collars in Various Deposit Areas

At Sechol, Jaguar Nickel routinely sampled the wall exposed during excavation of drill setups in this area of typically steep terrain. These samples range from 0.3 to 6.2m in length and average 1.7m and are given a “CH” designation in the drillhole names. This information is primarily located in the upper LX and LIM units (see Table 14.4 for definition of interpolation domains) and provides additional sampling coverage through this portion of the stratigraphy.


Table 14.2 Distribution of Drilling Data by Model Area

BHP drilled 115 RC holes in the Sechol area. Data was compared to proximal DDH holes using a series of scatter and quantile-quantile (QQ) plots generated for all elements. The results show that the data generated in RC holes to be slightly lower grade than DDH samples but the differences are not practically significant. The results indicate that RC data can be combined with DDH holes for resource modeling purposes. The distribution of DDH versus RC drillholes at Sechol is shown in plan in Figure 14.2.

# of Drill

Holes

Total length

(m)

Nueva Caledonia


Amanecer (includes Nueva Concepcion and Chiis areas)

651 15,590 30 DD holes BHP (1,238m), 621 DD holes Anfield (14,351m)

856 Jaguar DD holes, of which 710 holes have paired channel samples taken at excavation walls of drill setups (13,007m)

139 BHP DD holes (3,930m), 115 BHP RC holes (4,062m)

642 Anfield DD holes: 221 holes El Inicio (3,176m), 165 holes Rio Negro (2,982m), 256 holes El Segundo (3,591m)

Tres Juanes Norte

1,116 21,368 All DD holes drilled by Anfield: 143 holes Chulac-Seococ (north extension of El Inicio, 2,330m), 938 holes at TJ Norte (18,234m), 35 holes at TJ Sur (804m)

Poza Azul 78 1,549 All DD holes drilled by Anfield

Tres Juanes Rio


Chatala 431 13,133 BHP: 343 DD holes, 88 RC holes

El Tunico 88 3,726 BHP DD holes

San Lucas, other

54 2,236 BHP DD holes

4,676 100,021

CommentsModel Area

Total

1,752 30,748

Sechol (includes El Segundo, El Inicio, Rio Negro areas)


Figure 14.2 Plan View of DDH and RC Drillholes at Sechol

The distribution of drillholes and the extents of each model area are shown in Figure 14.1. Nueva Caledonia is not shown in Figure 14.1 as it is located approximately 24km east of Sechol. Note that neighboring areas have been subdivided into separate block models in order to reduce the size of the digital files, allowing for more efficient use of the modeling software. .

Samples have been analyzed for a suite of elements of which Ni%, Fe2O3%, SiO2%, Al2O3%, MgO%, and Co% have been imported into MineSight® and estimates have been made in the resource models.

Data was provided by ANC in a series of Excel spreadsheet files. These original files underwent the following edits prior to loading into MineSight®:

• Organize columns in desired order. • Round variables to desired and consistent precision as required. • Convert “-“ values (i.e., <DL (detection limits)) to zero grade. • Delete any lines that have no data (i.e., missing core intervals); these are ignored during

modeling. • Several calculated recovery (rec%) values were >100%; these are set to 100%. • Some DDH names at Sechol are >10 characters which are not accepted in MineSight.

Accordingly, (i) the reference “JNI” was changed to “J”; (ii) all “-“ and “_” characters were removed; and (iii) all spaces in drillhole names were removed.

Additional data includes logged geology data (lithology), designation of LCA codes, recovery data, and bulk density data.


Individual sample intervals range from 0.08 to 6m and average one meter in length. Standard samples are taken in one meter lengths, but can be altered to conform to geologic contacts.

A review of core recovery data shows that values range from 1% to 100% with an overall average of over 95%. Less than one percent of the sample intervals have recoveries below 50% and 84% of the samples have recoveries above 90%. There are no indications of any correlation between grade and recovery. There have been no adjustments or exclusions of data related to core recoveries prior to the development of the resource model.

The distribution of drilling data summarized by area is listed in Table 14.2. Drilling is conducted using vertical holes that are generally spaced on regular 100m grid patterns. Portions of Amanecer, Sechol, Tres Juanes Norte, and Tres Juanes Rio are drilled on a tighter drill grid spacing of 50 to 70m, resulting in some higher-class resource designation in these areas.

The basic statistical summary of the assay sample database by area is listed in Table 14.3.


Table 14.3 Statistical Summary of Sample Assay Data by Model Area

# Samples Total Length Mean

(1) (m) (2)

Ni (%) 30,052 30,529.3 0.000 4.13 0.79 0.70

Fe2O3 (%) 30,052 30,529.3 0.100 81.00 21.36 19.31

SiO2 (%) 30,052 30,529.3 0.130 96.10 35.14 12.57

Al2O3 (%) 30,045 30,522.1 0.000 33.90 3.83 5.02

MgO (%) 30,052 30,529.3 0.000 42.83 24.22 13.82

Co (%) 30,052 30,529.3 0.000 0.54 0.03 0.04

Ni (%) 6,069 5,994.7 0.000 3.37 0.68 0.56

Fe2O3 (%) 6,069 5,994.7 6.310 78.20 23.64 19.20

SiO2 (%) 6,069 5,994.7 2.320 66.30 33.45 12.11

Al2O3 (%) 6,069 5,994.7 0.050 38.10 6.19 7.16

MgO (%) 6,069 5,994.7 0.260 41.90 22.33 14.55

Co (%) 6,069 5,994.7 0.000 0.48 0.04 0.04

Ni (%) 14,807 15,370.8 0.000 4.49 0.68 0.47

Fe2O3 (%) 14,807 15,370.8 1.910 81.20 25.30 21.02

SiO2 (%) 14,807 15,370.8 1.970 85.60 31.38 13.79

Al2O3 (%) 14,807 15,370.8 0.000 40.90 6.37 8.25

MgO (%) 14,807 15,370.8 0.200 42.90 21.41 15.35

Co (%) 14,807 15,370.8 0.000 0.51 0.04 0.04

Ni (%) 19,998 21,188.8 0.001 5.46 0.78 0.62

Fe2O3 (%) 19,998 21,188.8 3.740 79.50 26.06 21.54

SiO2 (%) 19,998 21,188.8 2.150 79.70 31.10 14.32

Al2O3 (%) 19,998 21,188.8 0.030 39.70 6.27 7.69

MgO (%) 19,998 21,188.8 0.100 43.10 21.38 15.11

Co (%) 19,998 21,188.8 0.001 0.91 0.04 0.04

Ni (%) 1,383 1,536.9 0.000 3.45 0.64 0.61

Fe2O3 (%) 1,383 1,536.9 0.070 81.60 22.31 18.37

SiO2 (%) 1,383 1,536.9 0.950 92.70 42.85 15.83

Al2O3 (%) 1,383 1,536.9 0.010 29.50 3.03 4.49

MgO (%) 1,383 1,536.9 0.250 40.50 18.08 14.66

Co (%) 1,383 1,536.9 0.000 0.86 0.04 0.05

Ni (%) 5,424 5,610.8 0.000 3.04 0.61 0.41

Fe2O3 (%) 5,424 5,610.8 0.140 79.10 23.36 16.54

SiO2 (%) 5,424 5,610.8 1.750 98.40 34.60 11.54

Al2O3 (%) 5,424 5,610.8 0.030 39.10 8.51 7.49

MgO (%) 5,424 5,610.8 0.000 40.80 19.02 13.27

Co (%) 5,424 5,610.8 0.000 0.31 0.03 0.03

2. Statistics are weighted by sample length.

1. A small number of sample intervals have been split at geology contacts when the data is loaded into MineSight®. Therefore, the total number of samples listed may be higher than the original data provided by ANC.

Sechol

Nueva Caledonia

Amanecer

Tres Juanes Norte

Poza Azul

Tres Juanes Rio

ElementArea Std DevMin Max


14.4 Compositing

Compositing of drillhole samples is carried out in order to standardize the database for further statistical evaluation. This step eliminates any effect related to the sample length which may exist in the data.

In order to retain the original characteristics of the underlying data, a composite length is selected which is a reasonable reflection of the average original sample length. The generation of longer composites results in some degree of smoothing which could mask certain features of the data. As stated previously, standard samples average approximately one meter in length. As a result, a standard composite length of one meter has been applied to the sample data.

Drillhole composites are length-weighted and have been generated “down-the-hole”, meaning that composites begin at the top of each hole and are generated at one meter intervals down the length of the hole. Several holes were randomly selected and the composited values were checked for accuracy. No errors were found.

14.5 Exploratory Data Analysis

Exploratory data analysis (EDA) involves the statistical summarization of the database in order to better understand the characteristics of the data that may control grade. One of the main purposes of this exercise is to determine if there is evidence of spatial distinctions in grade which may require the separation and isolation of domains during interpolation. The application of separate domains prevents unwanted mixing of data during interpolation and the resulting grade model will better reflect the unique properties of the deposit. However, applying domain boundaries in areas where the data are not statistically unique may impose a bias in the distribution of grades in the model.

A domain boundary, which segregates the data during interpolation, is typically applied if the average grade in one domain is significantly different from that of another domain. A boundary may also be applied where there is evidence that there is a significant change in the grade distribution across the contact.

14.5.1 Basic Statistics by Domain

Summary statistics are evaluated using a series of boxplots. Review of logged lithology types indicate that some significant differences in major oxide grades exist, but less so for nickel content. Boxplots of the five interpreted LCA-based domains show marked differences in grade of all elements between domains. The results indicate that the interpreted LCA domains represent unique grade populations. An example of the distribution of nickel in the Sechol area is shown in Figure 14.3.

The mineralized portions of each of the model areas occur in localized patches (some of which are given unique names such as El Inicio, El Segundo, and Rio Negro at Sechol as shown in Figure 14.1). Segregation of these is primarily the result of erosion. Statistical evaluations between these different sub-areas show that there are no significant differences in the nature of the contained mineralization. As a result, data from each of the model areas has been combined for EDA analysis and the generation of variograms for the various elements (however, sample data is not mixed across sub-areas during block grade interpolations).


Figure 14.3 Boxplot of Nickel by Domain Type

14.5.2 Contact Profiles

The nature of grade trends between two domains is evaluated using a contact profile which graphically displays the average grades at increasing distances from the contact boundary. Contact profiles which show a marked difference in grade across a domain boundary are an indication that the two data sets should be isolated during interpolation. Conversely, if there is a more gradual change in grade across a contact, the introduction of a “hard” boundary (i.e. segregation during interpolation) may result in much different trends in the grade model – in this case the change in grade between domains in the model is often more abrupt than the trends seen in the raw data. Finally, a flat contact profile indicates no grade changes across the boundary. In the case of a flat profile, “hard” or “soft” domain boundaries will produce similar results in the model.

Several series of contact profiles were generated to evaluate the change in grades that occur across all LCA domains. In almost all cases, there are abrupt changes in grade when one migrates across a contact between two domains. These results are strong indications that mixing of data across LCA contacts during interpolation is not warranted. Examples of contact profiles for nickel across domains at Sechol are shown in Figure 14.4.

For comparison purposes, additional contact profiles were generated across the raw logged lithologic types. Local grade changes are evident but, in general, the results support the combining of lithologic groups that takes place during the designation of LCA domains (i.e., combining the various types of limonite into a single LCA-limonite domain).


Figure 14.4 Contact Profiles for Nickel Grades across Main Domain Types

Contact profiles generated between earthy and rocky saprolite show that differences exist for some elements which may require segregation. However, rocks in the saprolite zone are probably relatively small features (often rocks will be <30cm in size) which cannot be appropriately interpreted at the current drillhole spacing. It is also likely that these will not be segregated during mining activities. Therefore it is considered impractical to attempt to separate earthy and rocky saprolite at this stage of model development.

14.5.3 Indicator Variogram Continuity

A series of indicator variograms were developed using logged lithology types versus domains interpreted using LCA designations. In general, the variograms produced using LCA domains show better continuity in comparison to those generated by logged lithology type. This is an indication that LCA domains encompass sample data which is more uniform and continuous in comparison to the raw logged lithologic groups.

14.5.4 Modeling Implications

The results of the EDA show that domains interpreted using LCA types result in groups of data which are distinct and should be segregated during block grade interpolation. Similar properties exist between domains in all five model areas.

14.5.5 Conclusions

Table 14.4 lists the domains used during block grade interpolations. Data contained within each of these domains are distinct and remain separated by “hard” boundaries.

Table 14.4 Summary of Interpolation Domains

Leach/Soil (LX)Limonite (LIM)

Transition (TRN)Saprolite (SAP)Bedrock (BRK)

Element Domains

All (Ni, Fe2O3, SiO2, Al2O3,

MgO, Co)All hard boundary domains


Note that the leach and bedrock domains are not expected to generate potentially economic resources. However, for completeness, grade estimates have been conducted in these domains which will provide information for mine planning and material handling.

14.6 Bulk Density Data

ANC routinely conducts bulk density measurements. When dry, some samples actually float and, as a result, a dry method has been utilized as described below.

• Samples are dried in an oven at 110°C for 16 hours (tests show that 16 hours is required to remove all water from samples).

• Samples are weighed (Wa). • Volume of sample is determined using measurements taken using calipers

(V= π * r2*L).

Bulk Density = Wa/V

ANC has collected a total of 1,743 dry bulk density measurements during the program. There is insufficient data to allow for density estimations in model blocks so average values have been assigned within LCA domains as listed in the table below. Note that saprolite densities are slightly higher at Sechol and Nueva Caledonia due to the fact that these contain a higher rocky component.

Table 14.5 Summary of Dry Bulk Density Values

Bulk density values are similar to those used in previous resource estimates and are also similar to values experienced during past production activities in the area.

14.7 Evaluation of Outlier Grades

Histograms and probability plots of the distribution of all elements were reviewed in order to identify the presence of potentially anomalous outlier grades in the composited drillhole database. The distributions of all elements tend to be very consistent throughout the grade range, with only rare examples that could be considered to be possibly anomalous. In the absence of any significant outlier samples, there have been no top-cutting measures applied to the database prior to model interpolations.

14.8 Trend Controls and Relative Elevations

The distributions of the various elements in the deposit are closely related to a combination of surface weathering mechanisms and topographic features. A series of “trend” planes have been generated in the center of each LCA domain (trend planes are the average between hanging wall (HW) and footwall (FW) contacts of each domain) which are used to control search orientations during block grade interpolations. Referred to as “relative elevations”, these values are matched during grade interpolations resulting in search orientations that conform to the natural undulations present in each deposit area. The resulting models retain more of the inherent banded nature

Leach Limonite Transition Saprolite

Sechol 1.00 1.10 1.00 1.15 2.10 Nueva Caledonia 1.00 1.10 1.00 1.15 2.10 Nueva Concepcion 1.00 1.10 1.00 1.10 2.10 Tres Juanes 1.00 1.10 1.00 1.10 2.10 (densities in t/m3)

BedrockDeposit Area


present in the deposits. Without relative elevations, simple search ellipses would be very difficult to orient during interpolation, resulting in excessive smoothing (averaging) of sample data. Using relative elevations also tends to reproduce vertical grade trends within the domains.

14.9 Variography

The degree of spatial variability and continuity in a mineral deposit tends to depend on both the distance and direction between points of comparison. Typically, the variability between samples increases as the distance between samples also increases. If the variability is related to the direction of comparison, then the deposit is said to exhibit anisotropic tendencies which can be summarized by an ellipse fitted to the ranges in the different directions. The semi-variogram is a common function used to measure the spatial variability within a deposit.

The components of the variogram include the nugget, the sill and the range. Often samples compared over very short distances (even samples compared from the same location) show some degree of variability. As a result, the curve of the variogram often begins at a point on the y-axis above the origin – this point is called the “nugget”. The nugget is a measure of not only the natural variability of the data over very short distances but also a measure of the variability which can be introduced due to errors during sample collection, preparation and assaying.

The amount of variability between samples typically increases as the distance between the samples becomes greater. Eventually, the degree of variability between samples reaches a constant, maximum value. This is called the “sill” and the distance between samples at which this occurs is referred to as the “range”.

The spatial evaluation of the data in this Technical Report has been conducted using a correlogram rather than the traditional variogram. The correlogram is normalized to the variance of the data and is less sensitive to outlier values, generally giving cleaner results.

Correlograms were generated by domain, for the distribution of all elements in the four model areas using the commercial software package Sage 2001© developed by Isaacs & Co. Limited data at Tres Juanes did not allow for the generation of separate correlograms by domain. Correlograms were generated for each element using all combined sample data. Variograms have been generated using the relative elevations described in Item 14.8. Examples of the results for nickel are summarized in Tables 14.6 through 14.12.

Table 14.6 Sechol Nickel Variogram Parameters

Range

(m)AZ Dip

Range

(m)AZ

0.094 0.66 0.246 24 82 0 947 320 018 352 0 700 50 015 90 90 15 90 90

0.039 0.598 0.363 210 13 0 947 341 031 103 0 873 71 015 90 90 15 90 90

0.018 0.8 0.182 78 1 0 3,154 86 041 91 0 1,033 356 015 90 90 15 90 90

(Correlograms conducted on 1m DH composite data)

NuggetDomainDip

2nd Structure

Saprolite

Transition

LimoniteSpherical

Spherical

Spherical

1st Structure

S2S1


Table 14.7 Nueva Caledonia Nickel Variogram Parameters

Table 14.8 Amanecer-Nueva Concepcion Nickel Variogram Parameters

Table 14.9 Amanecer-Chiis Area Nickel Variogram Parameters

Range

(m)AZ Dip

Range

(m)AZ

0.15 0.584 0.266 248 33 -16 934 39 -1190 311 23 409 324 85

9 92 61 83 129 50.15 0.163 0.687 647 315 0 846 28 2

92 45 29 328 166 8742 45 -61 139 298 2

0.073 0.725 0.202 268 118 1 1,793 113 -476 209 6 485 28 5514 17 83 316 20 -35


2nd Structure

DipDomain Nugget S1 S2

1st Structure

LimoniteSpherical

TransitionSpherical

SaproliteSpherical

Range

(m)AZ Dip

Range

(m)AZ

0.024 0.71 0.266 215 305 0 862 57 067 35 0 573 327 08 90 90 8 90 90

0.058 0.659 0.283 398 147 0 2,961 279 091 57 0 538 9 08 90 90 8 90 90

0.046 0.751 0.202 83 37 0 451 69 032 127 0 107 339 08 90 90 8 90 90


2nd Structure

Dip

LimoniteSpherical

TransitionSpherical

Domain Nugget S1 S2

1st Structure

SaproliteSpherical

Range

(m)AZ Dip

Range

(m)AZ

0.004 0.85 0.146 103 139 0 3,500 41 032 49 0 1,292 311 08 90 90 8 90 90

0.042 0.773 0.185 319 65 0 1,754 7 058 155 0 607 97 08 90 90 8 90 90

0.041 0.842 0.117 281 11 0 3,189 25 039 101 0 613 115 08 90 90 8 90 90


TransitionSpherical

Domain Nugget S1 S2

1st Structure 2nd Structure

Dip

LimoniteSpherical

SaproliteSpherical


Table 14.10 Poza Azul Nickel Variogram Parameters

Table 14.11 Tres Juanes Norte Nickel Variogram Parameters

Table 14.12 Tres Juanes Rio Nickel Variogram Parameters

Range

(m)AZ Dip

Range

(m)AZ

0.112 0.665 0.223 189 332 0 1,562 92 015 62 0 918 2 010 90 90 10 90 90

0.021 0.718 0.26 172 318 0 1,637 255 081 48 0 1,446 345 010 90 90 10 90 90

0.005 0.8 0.194 58 316 0 5,730 95 025 46 0 1,849 5 010 90 90 10 90 90


TransitionSpherical

Domain Nugget S1 S2


Dip

LimoniteSpherical

SaproliteSpherical

Range

(m)AZ Dip

Range

(m)AZ

0.025 0.745 0.23 136.7 6 0 932.7 87 056.5 96 0 640.5 357 012.0 90 90 12.0 90 90

0.004 0.628 0.368 250.5 332 0 402.7 331 096.7 62 0 83.3 61 012.0 90 90 12.0 90 90

0.034 0.712 0.254 98.9 324 0 1,694.2 334 039.3 54 0 750.5 64 012.0 90 90 12.0 90 90


TransitionSpherical

Domain Nugget S1 S2


Dip

LimoniteSpherical

SaproliteSpherical

Range

(m)AZ Dip

Range

(m)AZ

0.033 0.474 0.493 246 348 0 811 350 050 78 0 319 80 08 90 90 8 90 90

0.009 0.84 0.151 147 89 0 4,639 360 087 359 0 647 90 011 90 90 11 90 90

0.022 0.646 0.332 208 75 0 5,170 343 058 165 0 238 73 017 90 90 17 90 90


Domain Nugget S1 S2

SaproliteSpherical


Dip

LimoniteSpherical

TransitionSpherical


14.10 Model Setup and Limits

Block models for each of the six areas were initialized in MineSight®, the dimensions which are defined in Table 14.13. The block model extents are shown in Figure 14.1. The selection of a nominal block size measuring 25x25x2mV is considered appropriate with respect to the drillhole distribution and the deposit type and scale.

Blocks in the model have been coded on a majority basis with the LCA-based domain codes. During this stage, blocks are assigned to a specific domain if >50% of the block occurs within the boundaries of that domain.

The proportion of blocks which occur below the topographic surfaces are also calculated and stored within the model as individual percentage items. These values are utilized as a weighting factor in determining the in situ resources for the deposit.

Table 14.13 Block Model Limits

14.11 Interpolation Parameters

The block model grades for all modeled elements have been estimated using Ordinary Kriging (OK). The interpolation parameters for all elements and domains are similar, with only minor deviations in specific cases where less smoothing was required. Ordinary Kriging estimations have been validated using the Hermitian (Herco) Polynomial Change of Support method (also referred to as the Discrete Gaussian correction). This method is described in more detail in Item 14.12.

The OK models have been generated with a relatively limited number of samples in order to match the change of support or Herco grade distribution. This approach reduces the amount of

Minimum Maximum Block Size (m)

Sechol

East 213300 218800 25 220North 1706700 1711550 25 194Elevation 70 870 2 400

Nuevo Caledonia


Amanecer


Tres Juanes Norte


Poza Azul


Tres Juanes Rio


Area/Direction # Blocks


smoothing (averaging) in the model and, while there may be some uncertainty on a localized scale, this approach produces reliable estimations of the recoverable grade and tonnage for the overall deposit.

The interpolation parameters are summarized as follows:

- Search ellipse 500m in the X, Y directions and 20mV based on relative elevations. - Interpolation runs use a maximum of six composites from one drillhole, minimum of one

and maximum of 24 composites are used to interpolate the grade of a block. Therefore, the four closest drillholes are used to interpolate the grade of a block. These criteria are typically met within a maximum distance of 100m from blocks in the model. These interpolation parameters are adjusted in order to achieve the desired degree of smoothing in the grade models.

- Clustering of data is controlled using an octant search (maximum of one drillhole per octant).

- Composites are length weighted during interpolation.

14.12 Validation

The results of the modeling process were validated through several methods. These include a thorough visual review of the model grades in relation to the underlying drillhole sample grades, comparisons with the change of support model, comparisons with other estimation methods, and grade distribution comparisons using swath plots.

Visual Inspection

Detailed visual inspection of the block models has been conducted in both section and plan to ensure the desired results following interpolation. This includes confirmation of the proper coding of blocks within the various domains.

Model Checks for Change of Support

The relative degree of smoothing in the block model estimates was evaluated using the Discrete Gaussian or Hermitian Polynomial Change of Support method (described by Journel and Huijbregts, Mining Geostatistics, 1978). With this method, the distribution of the hypothetical block grades can be directly compared to the estimated OK model through the use of pseudo-grade/tonnage curves. Adjustments are made to the block model interpolation parameters until an acceptable match is made with the Herco distribution. In general, the estimated model should be slightly higher in tonnage and slightly lower in grade when compared to the Herco distribution at the projected cut-off grade. These differences account for selectivity and other potential ore-handling issues which commonly occur during mining.

The Herco (Hermitian correction) distribution is derived from the declustered composite grades which have been adjusted to account for the change in support as one goes from smaller drillhole composite samples to the large blocks in the model. The transformation results in a less skewed distribution but with the same mean as the original declustered samples.

It is expected that selectivity during mining will be made primarily based on nickel grades. However, for completeness purposes, Herco plots have been generated for all elements in all deposits. An appropriate degree of correspondence is evident in all models. Examples from several of the nickel models are shown in Figure 14.5.


Comparison of Interpolation Methods

For comparison purposes, additional grade models were generated using both the inverse distance weighted (ID) and nearest neighbor (NN) interpolation methods (the NN model was made using data composited to two meter intervals). The results of these models are compared to the OK models at a series of cut-off grades in a series of grade/tonnage graphs. Examples from the nickel models are shown in Figure 14.6. Overall, there is very good correlation between models.

Figure 14.5 Examples of Herco Plots for Nickel Models


Figure 14.6 Examples of Grade/Tonnage Comparison of Nickel Models

Swath Plots (Drift Analysis)

A swath plot is a graphical display of the grade distribution derived from a series of bands, or swaths, generated in several directions through the deposit. Grade variations from the OK model are compared using the swath plot to the distribution derived from the declustered NN grade model.

On a local scale, the NN model does not provide reliable estimations of grade, but on a much larger scale, it represents an unbiased estimation of the grade distribution based on the underlying data. Therefore, if the OK model is unbiased, the grade trends may show local fluctuations on a swath plot, but the overall trend should be similar to the NN distribution of grade.

Swath plots have been generated in three orthogonal directions for all elements in all models. Examples from the Sechol nickel model are shown in Figure 14.7. The degree of smoothing in the OK model is evident in the peaks and valleys shown in the swath plots. The more erratic fluctuations in the transition zone are due to the relatively low volumes of this material present in each deposit area. Overall, there is good correspondence between the models in all elements.


Figure 14.7 Nickel Swath Plots by Easting

14.13 Resource Classification

The mineral resources for the various deposits have been classified in accordance with the CIM definition standards for mineral resources and mineral reserves (CIM, 2010). The classification parameters are defined in relation to the distance to sample data and are intended to encompass zones of reasonably continuous mineralization.

The parameters are based on the results of a geostatistical study of uncertainty which define categories based on confidence limits. Measured resources are defined as material in which the predicted nickel grade is within ±15% on a quarterly basis, at a 90% confidence limit. In other words, there is a 90% chance that the recovered metal for a quarter-year of production will be within ±15% of the actually achieved production. Similarly, indicated resources include material in which the yearly metal production is estimated with ±15% at the 90% confidence level.

The method of estimating confidence intervals is an approximate method that has been shown to perform well when the volume being predicted from samples is sufficiently large (Davis, 1997). In this case, the smallest volume where the method would most likely be appropriate is the production from one quarter. Using these guidelines, an idealized block configured to approximate the volume produced in one month is estimated by OK using a series of idealized grids of samples. Relative variograms for nickel grades are used in the estimation of the block (relative variograms are used rather than ordinary variograms because the standard deviations from the kriging variances are expressed directly in terms of a relative percentage). Note: This study assumes an annual production rate of 2.5M tonnes of ore.

The kriging variances from the ideal blocks and grids are divided by 12 (assuming approximate independence in the production from month to month) to get a variance for yearly ore output or divided by four to get quarterly variances. The square root of this kriging variance is then used to construct confidence limits under the assumption of normally distributed errors of estimation.

The results of the evaluation show similar results for all deposit areas with annual production estimated within ±15% at the 90% confidence limit with holes spaced at 70m intervals. Quarterly production forecasts, at similar confidence levels, can be made based on drilling spaced at 50m intervals.


A portion of the eastern side of Sechol, referred to as El Inicio, has been drilled with DDH on a nominal 50m grid pattern. This area exhibits a degree of confidence in the continuity and grade of resources that it is deemed to be in the measured category. Other parts of El Inicio are also drilled with holes at 50m spacing but some of these are older RC drillholes. Although tests show that RC holes provide similar results compared to the diamond core drilling, it is felt that there may be some local variances in this type of sample data and, as a result, these areas remain classified in the indicated category.

These results are used to define the classification criteria listed below:

Measured Resources – Model blocks with nickel grades estimated by a minimum of three diamond core holes located within a maximum average distance of 35m. This is achieved with drillholes at a nominal spacing of 50m.

Indicated Resources – Model blocks with nickel grades estimated by a minimum of three drillholes located within a maximum average distance of 50m. This is achieved with drillholes at a nominal spacing of 70m.

Inferred Resources – Model blocks which do not meet the criteria for indicated resources but are within a maximum distance of 75m from a single drillhole.

14.14 Mineral Resources

Mineral resources are summarized at several nickel cut-off grades for comparison purposes in Tables 14.14 - 14.16. The base case cut-off grade of 1.0% Ni is considered appropriate based on assumptions derived from deposits of similar type, scale and location. A base case cut-off for resource estimation used $5.00/lb Ni, $4.50/t mining cost, and $100/t processing costs, parameters similar to those anticipated to be used in developing the mine plan.

There has been no additional work carried out in the Chatala and El Tunico areas and mineral resources originally reported in the technical report entitled “Mineral Resource Estimate for the Mayaniquel Project, Guatemala, NI 43-101 Technical Report”, dated May 19, 2009 with an effective date of May 5, 2009 (Tschabrun, 2009) have been included in these mineral resource tables. (Note that Tschabrun, 2009 does not estimate mineral resources at 1.2% or 1.4% Ni cut-off grades. It appears that there will be little to no mineral resources present at these higher threshold cut-off grades and, as a result, they have been excluded from the mineral resource tables). Mr. Sim has reviewed and verified these mineral estimates for inclusion in this Technical Report.

The mineral resource estimate includes nickel limonite mineralization as metallurgical testwork completed to date has shown that up to 30% of the FeNi plant’s feed material can be comprised of limonitic mineralization without appreciable loss of recoveries or quality of product. There are no limonite estimates for Chatala and El Tunico.

Due to the relatively small amount of sub-economic material overlying the resource, it is felt that all of the reported resources show reasonable prospects for economic extraction. Listed below are the estimated mineral resources. Mineral resources that are not reserves have no demonstrated economic viability. Mineral reserve estimates are presented in Item 1.9 and 15.2 of this Technical Report.

In order to be consistent with previous reporting, the Amanecer model has been tabulated in two areas; Nueva Concepcion, located in the western part of the model, and Chiis, located in the eastern part of the model area.

There are no known factors related to metallurgical, environmental, permitting, legal, title, taxation, socio-economic, marketing or political issues which could materially affect the mineral resource.


Table 14.14 Mineral Resource Summary (0.8% Ni Cut-Off)

Mineral resource estimates have been completed using a data cut-off at February 28, 2012 and an effective date of March 22, 2012.


Sechol 2,790 1.18 274 1.81 4,119 1.75 7,183 1.53

Total 2,790 1.18 274 1.81 4,119 1.75 7,183 1.53


Sechol 7,283 1.06 1,296 1.49 17,720 1.46 26,298 1.35


Tres Juanes Rio 1,405 1.00 783 0.99 3,249 1.09 5,436 1.05

Tres Juanes Sur 492 1.27 16 2.12 300 1.48 808 1.37

N Concepcion 2,805 1.02 325 1.15 3,799 1.08 6,929 1.05

Chiis 7,185 1.03 188 1.11 8,461 1.28 15,834 1.16

Total 33,501 1.08 3,465 1.32 56,230 1.37 93,196 1.26


Sechol 2,259 1.05 822 1.30 8,679 1.32 11,760 1.27

Chiis 1,199 1.02 135 0.97 2,143 1.12 3,477 1.08

N Concepcion 420 1.02 70 1.12 1,491 1.03 1,982 1.03

N Caledonia 6,739 1.00 1,635 1.28 11,982 1.30 20,356 1.20


Tres Juanes Rio 2,056 1.07 837 0.95 3,111 1.10 6,003 1.07

Tres Juanes Sur 1,740 1.26 78 1.95 707 1.89 2,526 1.45

Chatala [2] 2,170 0.97 3,890 0.99 6,060 0.98

Tunico [2] 10 0.92 2,890 1.15 2,900 1.15

Total 17,343 1.06 6,009 1.13 40,675 1.24 64,027 1.18



Indicated

AreaTotal

Ni%

Measured

AreaTotal

Ni%

SaproliteTransitionLimonite



Inferred [1]

AreaTotal

Ni%


Table 14.15 Mineral Resource Summary (1.0% Ni Cut-Off "Base Case")



Sechol 2,350 1.23 267 1.83 3,909 1.79 6,526 1.59

Total 2,350 1.23 267 1.83 3,909 1.79 6,526 1.59


Sechol 4,712 1.15 1,197 1.54 15,605 1.54 21,514 1.45


Tres Juanes Rio 655 1.12 298 1.16 1,908 1.24 2,861 1.20

Tres Juanes Sur 488 1.27 16 2.12 280 1.52 784 1.38

N Concepcion 1,315 1.14 228 1.25 2,282 1.19 3,826 1.18

Chiis 4,152 1.12 116 1.24 6,868 1.36 11,136 1.27

Total 21,752 1.17 2,615 1.46 45,941 1.47 70,307 1.38


Sechol 1,351 1.15 707 1.36 6,966 1.43 9,024 1.38

Chiis 587 1.11 31 1.20 1,390 1.24 2,008 1.20

N Concepcion 208 1.15 40 1.31 749 1.16 997 1.17

N Caledonia 3,166 1.11 1,348 1.37 9,299 1.41 13,812 1.34


Tres Juanes Rio 1,423 1.14 281 1.06 1,708 1.27 3,413 1.20

Tres Juanes Sur 1,704 1.26 78 1.95 704 1.89 2,487 1.46

Chatala [2] 540 1.24 1,360 1.18 1,900 1.20

Tunico [2] - - 1,660 1.34 1,660 1.34

Total 10,504 1.16 3,259 1.33 28,023 1.40 41,786 1.33



Inferred [1]


Ni%

Indicated


Ni%

Measured


Ni%


Table 14.16 Mineral Resource Summary (1.2% Ni Cut-Off)


The limits of resources above the base case cut-off grade of 1% Ni are shown in Figure 14.8.


Sechol 1,229 1.35 261 1.85 3,617 1.85 5,107 1.73

Total 1,229 1.35 261 1.85 3,617 1.85 5,107 1.73


Sechol 1,324 1.30 1,042 1.60 12,634 1.64 15,000 1.61


Tres Juanes Rio 120 1.28 111 1.31 877 1.40 1,108 1.38

Tres Juanes Sur 336 1.34 16 2.12 234 1.60 586 1.47

N Concepcion 346 1.32 134 1.37 902 1.35 1,382 1.34

Chiis 723 1.27 49 1.45 4,668 1.49 5,440 1.46

Total 7,105 1.34 1,971 1.58 33,574 1.61 42,650 1.56


Sechol 358 1.31 477 1.49 5,146 1.55 5,982 1.53

Chiis 111 1.29 13 1.47 674 1.41 798 1.39

N Concepcion 62 1.34 28 1.42 264 1.31 353 1.32

N Caledonia 483 1.28 919 1.49 6,610 1.54 8,011 1.52

Tres Juanes Norte 781 1.35 188 1.45 2,841 1.64 3,810 1.57

Tres Juanes Rio 369 1.25 9 1.23 967 1.42 1,346 1.37

Tres Juanes Sur 1,129 1.33 78 1.95 688 1.91 1,895 1.57

Total 3,294 1.32 1,711 1.50 17,190 1.56 22,195 1.52


Inferred [1]


Ni%

Indicated


Ni%

Measured


Ni%


Figure 14.8 Plan View of the Distribution of Base Case Resources

Average values for all elements by material type are combined and listed in Table 14.17.


Table 14.17 Mineral Resource Summary of All Elements (1.0% Ni Cut-Off)

14.15 Comparison with Previous Estimate

The previous resource models were presented in a technical report entitled “Technical Report for the Mayaniquel Project, Guatemala”, dated July 22, 2011, with an effective date of April 12, 2011 produced by Dr. Bruce Davis, FAusIMM and Robert Sim, P. Geo. Table 14.18 compares previous with current resources at a 1% Ni cut-off grade.

Changes to the mineral resource estimate in 2012 compared to the mineral resource estimate in 2011 are due to the following reasons:

• Additional drilling by ANC at Sechol has upgraded a portion of El Inicio to the measured category and has also upgraded a significant amount of the resource from the inferred to the indicated category;

• A substantial amount of drilling at Tres Juanes Norte has resulted in a large increase in indicated and inferred resources;

• New drilling at Tres Juanes Rio has almost doubled the total resource in this area; • Although there has been no new drilling at Nueva Concepcion and Chiis, reinterpretation

of the geologic model has resulted in minor changes to the resources in this area; • There has been no new drilling at Tres Juanes Sur, but the geologic model has been

refined and there have been modifications to the classification of resources with a portion upgraded to the indicated category; and

• ANC has dropped the ground that hosts the Chulac-Seococ and Poza Azul resource areas.

ktonnes Ni% Fe2O3% SiO2% Al2O3% MgO%

Limonite 2,350 1.23 59.35 12.29 9.81 2.03 0.11 Transition 267 1.83 32.82 33.33 4.79 12.77 0.05 Saprolite 3,909 1.79 18.65 38.65 2.63 23.77 0.02

Total 6,526 1.59 33.89 28.94 5.30 15.49 0.05


Limonite 21,752 1.17 61.87 9.48 9.17 2.15 0.10 Transition 2,615 1.46 37.51 30.48 6.16 11.05 0.06 Saprolite 45,941 1.47 18.04 38.87 2.39 25.89 0.03

Total 70,307 1.38 32.32 29.47 4.63 17.99 0.05


Limonite 10,504 1.16 61.07 10.10 9.35 2.34 0.10 Transition 2,719 1.35 33.69 32.98 6.72 12.28 0.05 Saprolite 25,003 1.41 18.16 39.06 2.78 25.40 0.03

Total * 38,226 1.34 31.06 30.67 4.87 18.13 0.05 * Table excludes resources for Chatala and El Tunico.

Inferred

Type Co%

Measured

Type Co%

Indicated

Type Co%


Table 14.18 Mineral Resources – May 2011 vs. March 2012 (1.0% Ni Cut-Off)

ktonnes Ni% ktonnes

Measured

Sechol - 6,526 1.59

Total Measured - 6,526 1.59

Indicated

Sechol 16,486 1.52 21,514 1.45 Tres Juanes Norte 8,119 1.44 30,187 1.41 Tres Juanes Rio - 2,861 1.20 Tres Juanes Sur - 784 1.38 N Concepcion 3,606 1.19 3,826 1.18 Chiis 11,078 1.27 11,136 1.27

Total Indicated 39,288 1.40 70,307 1.38

Inferred

Sechol 22,498 1.40 9,024 1.38 Chiis 2,103 1.21 2,008 1.20 N Concepcion 914 1.15 997 1.17 N Caledonia 13,812 1.34 13,812 1.34 Tres Juanes Norte 1,555 1.43 6,486 1.38 Tres Juanes Rio 3,094 1.20 3,413 1.20 Tres Juanes Sur 3,103 1.42 2,487 1.46 Poza Azul 3,152 1.43 - Chulac-Seococ 4,136 1.28 - Chatala 1,900 1.20 1,900 1.20 Tunico 1,660 1.34 1,660 1.34

Total Inferred 57,927 1.35 38,226 1.34

March 2012May 2011

Ni%Area


15.0 Mineral Reserve Estimates

15.1 Introduction

MDA completed the mine planning portion of this Technical Report. This work was completed after reviewing the PEA for the project with William Rose, who completed the mine planning portion of the PEA study. The project plans to use conventional open pit mining methods.

15.2 New Grade Models

Drilling has continued to increase measured and indicated resources concentrated in the Sechol and Tres Juanes Norte areas of the licenses since the PEA was completed in July 2011. New grade models were completed for this PFS incorporating the new drillholes. Tables 14.15 and Table 14.17 illustrate the materials contained in the new grade models received by MDA to be used for this study, using a 1% nickel cut-off grade. It should be noted that only the deposits containing most of the measured and indicated resources, Nueva Concepcion, Sechol, and Tres Juanes Norte were incorporated into the PFS mine plan and inferred mineral resources were treated as waste. Each of the grade models contained blocks that were 25x25x2 meters. The block model contained information on grades, density, percent topography, rock type, and resource classification of each block.

Drilling has continued to delineate additional material grading over 1% Ni that has not been included in the grade models.

15.3 Whittle Pit Optimization

The costs and recovery information developed for the PEA were used to optimize pits to determine a mine plan for the Nueva Concepcion, Sechol, and Tres Juanes Norte deposit area grade models using only those mineral resources contained within the measured and indicated categories. Table 15.1 illustrates pit optimization parameters.

Table 15.1 Whittle Pit Optimization Parameters

15.4 Mining Panels

The mine plan contemplates a series of panels or area outlines that were used to plan production from the pit, similar to pit phases. The pit shells were divided based initially on the PEA panel definitions and then expanded where required to include measured and indicated materials from the new grade models within the mining licenses. There are 24 mining panels in Sechol, nine mining panels in Tres Juanes Norte, and two mining panels in Nueva Concepcion. Figures 15.1 through Figure 15.3 show the mining panels for the Nueva Concepcion, Sechol, and Tres Juanes Norte respectively.

Pit Slope Mining Cost Processing Cost Metal Recovered Nickel Price Selling Cost

$4.50 $100.00 $5.00 $0.21per tonne mined per tonne ore per pound per pound

40o 90%


Figure 15.1 Nueva Concepcion Mining Panels


Figure 15.2 Sechol Mining Panels


Figure 15.3 Tres Juanes Norte Mining Panels

15.5 Dilution and Ore Loss

The drillhole data was investigated for the Sechol and Tres Juanes Norte deposits to determine the amount of bedrock boulders present in each deposit. The drill data indicated 5% for Sechol, and 6% for Tres Juanes Norte to be present by volume. Since the assay data for these boulders has been included in the drillhole composites used to estimate the deposit resources, this internal dilution has been included in the resource estimate. It is likely that most of this material can be removed during mining, or at the upgrading plant. The method of block grade estimation also includes some dilution, generally considered to be about 10%.

Material is planned to be mined by several classifications, based on grade and rock type:

� High-Grade Ore – High-grade ore is defined as material equal to or greater than 1.6% Ni. This material is mostly saprolite-rich material containing favorable Fe:Ni and SiO2:MgO ratios and is suitable for direct shipping to the ore blending stockpiles.


� Low-Grade Ore – Limonite-rich – This material averages 1.1% to 1.3% Ni and requires upgrading and iron removal prior to shipping to the ore blending stockpiles. The limonite-rich material overlies the saprolite-rich material.

� Low-Grade Ore – Saprolite-rich – This material averages 1.2% to 1.4% Ni and requires upgrading prior to shipping to the ore blending stockpiles.

� Waste – Waste is defined as material below 1% Ni. Topsoil is separated from waste materials and placed in several stockpiles for reclamation.

High-grade material is trucked or conveyed to the ore blending stockpile. Low-grade material is upgraded prior to shipping to the ore blending stockpile. About 35% of the low-grade material will be rejected and returned to the mining panels in the ore upgrading process. Waste can generally be backfilled in areas that have been mined.

MDA believes that adequate dilution is included in the model for high-grade materials, but has added 5% dilution and accounted for 5% ore loss after dilution to the low-grade materials. Note that the tables group the two low-grade materials into one group. The added dilution is at the average grade of the waste materials for each panel.

15.6 Mineral Reserve Classification

Table 15.2 shows a summary of the mineral reserve estimates for the deposits, based on the diluted grades and the optimized pit contours.

Mineral reserves have been estimated as at October 24, 2012. Mr. N. Prenn, P.E. is the independent Qualified Person within the meaning of NI 43-101 for purposes of the mineral reserve estimates. The mineral reserves have been reported as required by NI 43-101 in accordance with the CIM Definition Standards.

Mineral reserves presented in Table 15.2 include amounts that have been identified as mineral resources. Mineral resources that are not mineral reserves have no demonstrated economic viability.


Table 15.2 Deposit Mineral Reserves

Tonnes Ni Fe2O3 SiO2 MgO Al2O3 Co Tonnes Ni Fe2O3 SiO2 MgO Al2O3 Co Tonnes Ni Fe2O3 SiO2 MgO Al2O3 Co

000's % % % % % % 000's % % % % % % 000's % % % % % %Overburden 27.7 1.06 46.59 19.46 3.35 14.41 0.073 0.0 0.00 0.00 0.00 0.00 0.00 0.000 27.7 1.06 46.59 19.46 3.35 14.41 0.073

Limonite 2,331.5 1.19 58.68 12.97 2.09 9.87 0.105 44.1 1.67 56.56 15.22 2.72 7.88 0.097 2,375.7 1.20 58.64 13.01 2.10 9.83 0.105

Transition 73.1 1.50 32.34 36.02 11.67 5.07 0.046 191.4 1.95 33.30 32.01 13.09 4.75 0.047 264.5 1.83 33.03 33.11 12.70 4.84 0.047

Saprolite 1,376.3 1.38 19.23 38.82 23.11 2.89 0.026 2,456.6 2.03 19.12 38.15 23.58 2.69 0.024 3,832.9 1.80 19.16 38.39 23.41 2.76 0.025

Bedrock 182.9 1.17 11.71 39.01 30.67 1.94 0.014 5.3 1.79 9.80 39.99 32.37 1.53 0.011 188.1 1.19 11.66 39.04 30.72 1.93 0.014

3,991.5 1.26 42.36 23.54 10.83 7.04 0.072 2,697.4 2.02 20.72 37.34 22.51 2.92 0.027 6,688.9 1.57 33.63 29.11 15.54 5.38 0.054

Overburden 153.4 1.11 45.90 20.89 4.37 13.12 0.063 0.5 1.47 43.33 22.47 6.47 12.37 0.061 153.9 1.11 45.89 20.89 4.38 13.11 0.063

Limonite 4,562.0 1.12 59.93 11.72 2.29 9.65 0.108 29.1 1.67 50.18 21.13 4.35 8.70 0.075 4,591.1 1.12 59.86 11.78 2.31 9.64 0.108

Transition 770.3 1.36 34.45 35.54 10.65 5.25 0.053 400.8 1.85 36.55 32.05 11.45 4.86 0.053 1,171.1 1.53 35.17 34.34 10.93 5.12 0.053

Saprolite 9,165.1 1.32 19.12 39.82 23.65 2.63 0.028 5,562.2 1.92 18.38 38.90 24.86 2.23 0.026 14,727.2 1.55 18.84 39.47 24.11 2.48 0.027

Bedrock 405.6 1.19 11.07 39.60 31.80 1.49 0.021 13.1 1.56 8.80 40.51 33.62 0.76 0.036 418.7 1.21 11.00 39.62 31.86 1.47 0.022

15,056.4 1.26 32.32 30.88 16.53 4.97 0.054 6,005.7 1.91 19.72 38.36 23.89 2.43 0.028 21,062.1 1.44 28.73 33.02 18.63 4.24 0.046

19,047.9 1.26 34.43 29.35 15.34 5.40 0.058 8,703.0 1.94 20.03 38.05 23.46 2.58 0.028 27,751.0 1.47 29.91 32.07 17.89 4.52 0.048

Overburden 67.2 0.98 46.38 18.82 2.69 16.05 0.058 67.2 0.98 46.38 18.82 2.69 16.05 0.058

Limonite 10,043.4 1.17 62.66 8.03 2.01 9.84 0.097 369.1 1.72 57.08 14.22 2.76 8.18 0.093 10,412.5 1.19 62.46 8.25 2.04 9.78 0.097

Transition 471.4 1.33 44.56 23.36 9.45 7.47 0.065 273.5 1.89 37.75 28.76 11.92 5.99 0.059 744.9 1.54 42.06 25.34 10.36 6.93 0.063

Saprolite 11,451.8 1.29 19.27 37.52 25.65 3.02 0.028 6,272.6 1.99 18.83 37.68 25.76 2.49 0.028 17,724.3 1.54 19.11 37.58 25.69 2.83 0.028

Bedrock 198.4 1.20 11.10 39.89 32.41 1.59 0.016 55.1 1.91 9.14 41.47 33.39 0.66 0.014 253.5 1.36 10.68 40.23 32.62 1.39 0.016

22,232.1 1.24 39.42 23.86 14.62 6.22 0.060 6,970.3 1.97 21.52 36.12 24.06 2.91 0.033 29,202.4 1.41 35.15 26.79 16.87 5.43 0.053

Overburden 30.1 1.04 50.76 16.15 3.18 13.28 0.098 30.1 1.04 50.76 16.15 3.18 13.28 0.098

Limonite 4,690.5 1.11 60.72 10.66 2.42 8.23 0.131 13.8 1.76 61.51 12.99 2.62 4.36 0.084 4,704.2 1.11 60.72 10.67 2.42 8.22 0.130

Transition 253.6 1.26 40.22 26.39 11.17 6.21 0.093 6.3 1.72 39.27 27.31 12.73 3.76 0.062 259.9 1.28 40.20 26.42 11.21 6.15 0.092

Saprolite 6,267.0 1.27 19.67 36.83 25.91 2.64 0.061 1,140.0 1.82 17.83 37.75 27.24 1.37 0.032 7,407.0 1.36 19.39 36.97 26.12 2.45 0.057

Bedrock 515.9 1.17 12.15 39.12 32.37 1.54 0.049 18.4 1.75 10.33 39.96 33.57 0.46 0.020 534.3 1.19 12.09 39.15 32.41 1.50 0.048

11,757.1 1.20 36.24 26.21 16.45 4.93 0.089 1,178.4 1.82 18.33 37.44 26.97 1.40 0.033 12,935.4 1.26 34.61 27.23 17.40 4.61 0.084

49,045.6 1.24 36.48 26.58 15.65 5.53 0.065 14,154.3 1.93 20.50 37.18 24.23 2.58 0.031 63,199.9 1.39 32.90 28.96 17.57 4.87 0.057

53,037.1 1.24 36.92 26.35 15.28 5.64 0.065 16,851.7 1.94 20.53 37.21 23.95 2.64 0.030 69,888.8 1.41 32.97 28.97 17.37 4.92 0.057Proven + Probable for All

Totals

Proven Sechol Totals

Probable Sechol Totals

Probable Tres Juanes Norte Totals

Probable Nueva Concepcion Totals

All Material

Area Rock

Low-Grade Material High-Grade Material

Probable for All Totals

Class

Proven + Probable

Sechol Totals

Proven

Probable

Probable

Probable

Sechol

Sechol

Tres Juanes Norte

Nueva Con-

cepcion


15.7 Upgrading Factors

Factors for upgrading facility performance were developed by Dr. Andrew Bamber of MineSense. The ore upgrading facility will process the low-grade materials and reject even lower grade portions to make an upgraded feed to the process plant. The ore upgrading facilities are planned to reject 35-36% of the feed which will be returned to the mining panels as backfill. The upgrading factors were applied to each panel in each deposit, based on the average grade of the panels. The upgraded material will be sent to the ore blending stockpile for processing. Upgrading factors were developed from pilot plant upgrading operations at the mine site.

15.8 Discussion on Potentially Impacts to Mineral Reserve Estimates

As in the case for most mining projects, the extent to which the estimate of mineral reserves may be affected by mining, metallurgical, infrastructure, permitting and other factors could vary from major gains to total losses of mineral reserves. There are no known issues to the Qualified Person of this section expected to materially affect the mineral reserve estimates.

Potential risks that could affect the overall performance of the Mayaniquel Project, including the results of the economic evaluation, are identified in Item 25.2 of this Technical Report.


16.0 Mining Methods

16.1 Mining Methods

The Mayaniquel Project plans to use conventional open pit mining methods. Each panel is planned to be mined from the top elevation of the panel proceeding to the lowest elevation in the panel to be mined. In general, the six meter bench elevations will be mined along contours on the extent of each panel. Initially a portion of the panel will be cleared of vegetation with topsoil stockpiled in about 60m elevation increments. Mining will proceed on this portion and then the next lower portion of the panel will be mined. As topography allows, portions of the panel will be backfilled.

16.1.1 Main Panel Access Roads

Main panel access roads are established prior to initial work in an area. These roads are generally 15m wide, including a safety berm and drainage ditch. The main pit roads are designed to be 15m wide, suitable for articulated 40 tonne truck travel, or 8x4 40 tonne trucks. The roads are designed with a maximum grade of 10%. In areas where local communities will use these roads, a wider road will be established with local community travel outside of the main panel access roads for mine traffic. The main panel access roads will be surfaced with 8-10cm of crushed rock.

The rock for road surfacing will be obtained by mining one of several quarry locations closest to the road. A portable crusher, generator set, and mining equipment has been included to mine, crush, and distribute crushed rock to the roads. The quarries would have the capacity to produce 200,000 tonnes of road base material annually and operate during the first 15 years of the mine life. It is anticipated that the quarries would have adequate material stockpiled for remaining requirements at that point. All blasting in the quarry will be completed by a blasting contractor. In addition, blasting will occasionally be required for road building and in the mine for access roads. As mining in the panels proceeds, the main panel access roads will require relocation to allow mining ore located below the roads.

Temporary local roads will be established along bench contour elevations off of the main panel access roads. Most material will be mined working off the local panel roads.

16.1.2 Vegetation and Topsoil Removal

Vegetation removal crews will remove vegetation and topsoil from the portion of a panel being mined. Scrapers are planned for topsoil removal. In some areas little or no topsoil may be present, based on the drillhole logs. Surface water diversion systems will be constructed to minimize and control erosion. Commercial timber will be harvested and placed in stockpiles for community use. Shredded vegetation will be used for reclamation. Once the first portion of a panel has been mined and backfilled, reclamation can proceed in mined portions. The area cleared and grubbed for each panel by period has been prorated by the percentage of total panel tonnage mined during each period.

16.1.3 Detailed Development Drilling

Auger drilling is planned on 10m spacing for each panel ahead of mining. The auger drills will be mounted on a low-ground-pressure vehicle. The annual area drilled in each panel was prorated based on the tonnage mined in each panel.

16.1.4 Mining Plan

The mine plan contemplates that mining will commence in the Sechol deposit. The Sechol deposit is located along three ridge lines called El Inicio, El Segundo, and Rio Negro, from east to


west. Initial Sechol production is planned from panels located in the El Inicio area. A six month to one year period of preproduction will be required to establish roads, clear and grub, and remove topsoil from the initial mining area. Some preproduction ore mining will be required to establish ore blending stockpiles. Typically three panels will be mined at any time to supply the upgrading facility and the process plant.

The local climate will have a major impact on the mining operation. Annual rainfall in the mine area totals about four meters. The mine is planned to operate only 300 days per year, with weather delays and holidays expected to total 65 days per year. Labor has been scheduled for two-twelve hour shifts per day, with planned overtime of eight hours per week. Operating labor is planned for 365 days per year. A large stockpile of upgraded material and high-grade ore will be placed close to the process plant to have plant feed during weather delays.

Low-grade ore (between 1.0 and 1.6% Ni) will be sent to the ore upgrading facility prior to processing in the process plant. The upgrading facilities will reject about 35% of the material sent for upgrading, which is loaded into trucks and returned to the panels. The upgraded low-grade material is sent to the ore blending stockpiles for processing. Initially the upgraded Sechol material will be trucked to the ore blending stockpiles. High-grade ore (>1.6% Ni) will be trucked directly to the ore blending stockpiles for processing. The process plant will require 1.33 million tonnes of a mixture of upgraded low-grade material and high-grade material annually.

A second process train is planned to be operational in year five of the operation. To supply this train, a second “preproduction mining period” will be started in Tres Juanes Norte during year four. A new ore upgrading facility and pipe conveyor will be installed during year four. The main panel roads will be established to the Tres Juanes Norte panels. During this preproduction period, portions of the initial Tres Juanes Norte panels will be cleared and grubbed, topsoil stripped, and some preproduction material will be processed at the new Tres Juanes Norte ore upgrading facility. This train will have the same capacity as the initial train or 1.33 million tonnes of upgraded product or high-grade material. Material from Tres Juanes Norte will be conveyed to the ore blending stockpiles starting in year five.

The initial ore upgrading facility located in the Sechol El Inicio area will be moved closer to the ore blending stockpiles to treat all Sechol deposit panels at the end of year six. When production from all the Sechol deposit panels has been completed in year 16, this ore upgrading facility will be moved again to a location close to the Nueva Concepcion deposit for the remainder of mine life. High-grade production from Tres Juanes Norte and Nueva Concepcion and upgraded material from the Nueva Concepcion upgrading facility will also be trucked to the conveyor for transport to the ore blending stockpiles.

Several materials will be mined from the deposits:

� Topsoil

� Waste

� Limonite-Rich Low-Grade Ore

� Saprolite-Rich Low-Grade Ore

� High-Grade Ore (essentially all saprolite-rich)

16.1.4.1 Topsoil and Waste Mining

Topsoil will be mined by scrapers and stockpiled close to the next area to be reclaimed or placed on backfilled panels. The remaining mining will be done using excavators or front end loaders dumping into 40 tonne articulated trucks or 40 tonne 8x4 wheel drive trucks. Waste materials will be placed in stockpiles if no panel area is available for backfilling or backfilled in panels when possible.


The waste and limonite-rich material will present difficult mining conditions. This material will be easily moved, but will likely have high water content and removing the material from the buckets and trucks will be problematic. Waste and limonite-rich materials generally overlay saprolite-rich materials, however, in a number of drillholes, saprolite-rich materials occur at the surface. There is generally a significant chemistry difference between limonite-rich materials and saprolite-rich materials. The limonite-rich material has a lower nickel, silca, and MgO content and higher iron content than the saprolite-rich materials. At times some of the limonite-rich ore-grade material may need to be stockpiled (as “waste”) if there is not enough saprolite-rich ore-grade material to blend with. This will occur in the first several months of mine start-up.

Pit walls will be left as close to vertical as possible to minimize erosion potential prior to backfilling.

16.1.4.2 Ore Mining

Low-grade material will be trucked to the ore upgrading facilities. It should be noted that the mine may be limited by the upgrading facility, as stockpiling low-grade material in front of the upgrading facility is not desired by the design personnel. MDA believes that mining operations will require stockpiling some material ahead of the ore upgrading facility, which could be placed in limonite-rich or saprolite-rich material stockpiles, which should help blending. A careful and detailed examinatin of stockpiling will be required to prevent the operation from incurring considerable cost due to the inablility to mine as desired, and ore production may fall short of desired targets.

Reject from the upgrading facilities will be trucked and returned to mining panels. Upgraded material from the initial Sechol upgrading facility will be trucked to the ore blending stockpiles. When the Sechol upgrading facility is moved closer to the ore blending stockpiles, upgraded material will be conveyed to the stockpiles. All upgraded material from the Tres Juanes Norte upgrading facility will be conveyed to the ore blending stockpiles. All upgraded material from the Nueva Concepcion upgrading facility will be trucked to the Tres Juenes Norte conveyor to the ore blending stockpiles.

All high-grade material from the Sechol deposit panels will be trucked to the ore blending stockpile. All high-grade material from the Tres Juanes Norte deposit or Nueva Concepcion panels will be trucked to the Tres Juanes Norte conveyor for transport to the ore blending stockpile.

16.2 Reclamation

All mining panels will be backfilled concurrently using mining waste and upgrading facilty reject materials. Topsoil will be placed on top of the backfilled materials with shredded organic material and blended with the surrounding terrain. The waste, reject, and topsoil available for backfilling Sechol and Tres Juanes Norte deposits panels will be 50-70% of the original volume removed, while the Nueva Concepcion will be 80-90% of the original volume removed. A fleet of dozers, scrapers, loaders, and trucks will be utilized for backfilling.

After regrading and replacing topsoil, the mined out panel areas will be revegetated with a priority given to the native species of trees and plants that provide a food source for the area wildlife. Some areas may be suitable for planting selected crops for human consumption. Areas prone to erosion may require construction of erosion barriers, diversions, and other minimizing or control structures.

16.3 Mine Development and Production Schedule

A number of production schedules were generated for the PFS. The final production schedule is based on a start-up in the Sechol El Inicio panels, ultimately feeding 1.33 million tonnes per year of upgraded and high-grade material to the ore blending stockpile. Production is expected to


double in year five to a maximum capacity of 2.66 million tonnes per year of upgraded and high-grade material, after commissioning a second process plant train.

The panel mining sequence was kept about the same as in the scoping study. For the FS, it is suggested that panels with less than 250,000 tonnes of ore be incorporated into other panels, and some of the larger panels in Tres Juanes Norte and Nueva Concepcion with excess of three million tonnes of ore be subdivided into smaller panels.

The production scheduled for year one proved to be difficult to achieve at target process plant feed ratios due to excess limonite-rich ore being present at the top of the mining panels. For this reason slightly less than 500,000 tonnes of limonite-rich low-grade material was treated as waste and used as backfill. In comparison, the PEA study treated most of the limonite-rich low-grade material as waste.

Tables 16.1 through 16.4 show the production schedule for mining the Sechol, Tres Juanes Norte, Nueva Concepcion, and total project respectively. Table 16.5 and Table 16.6 show the production schedule of feed to the process plant, assuming that all of the high-grade material is processed in the year mined. Note that after year 16, the mine will be short of high-grade material which increases the desired ratios. MDA believes that additional high-grade materials will be developed to decrease these ratios in the later years.


Table 16.1 Sechol Deposit Mining Production Schedule

High-Grade to Stockpile Low-Grade to Upgrader Total Ore Mined Waste Total Strip

Tonnes Ni Fe2O3 SiO2 MgO Al2O3 Co Tonnes Ni Fe2O3 SiO2 MgO Al2O3 Co Tonnes Ni Fe2O3 SiO2 MgO Al2O3 Co Tonnes Tonnes Ratio

000's % % % % % % 000's % % % % % % 000's % % % % % % 000's 000's O:WPre-

production21 1.94 22.22 36.24 21.76 3.24 0.030 59 1.19 54.38 14.00 5.61 9.22 0.105 81 1.39 45.86 19.89 9.89 7.63 0.085 59 140 0.73

Qtr 1 67 2.05 21.25 36.16 22.60 2.95 0.029 117 1.28 51.46 16.90 7.46 7.58 0.091 185 1.56 40.42 23.94 12.99 5.88 0.068 104 289 0.57 Qtr 2 125 2.04 23.71 35.06 21.47 3.31 0.033 175 1.24 48.55 18.97 9.22 7.28 0.079 299 1.57 38.21 25.67 14.32 5.63 0.060 106 279 0.35 Qtr 3 208 1.98 22.59 36.62 21.40 3.20 0.030 235 1.24 47.31 19.18 10.04 7.27 0.079 443 1.59 35.69 27.38 15.38 5.36 0.056 80 388 0.18 Qtr 4 245 2.05 20.73 37.45 22.57 2.90 0.026 235 1.25 43.07 22.89 11.24 6.89 0.070 480 1.66 31.66 30.33 17.03 4.85 0.047 60 379 0.12

Year 1 645 2.03 21.96 36.59 21.98 3.08 0.029 761 1.25 46.93 19.93 9.82 7.20 0.078 1,406 1.61 35.47 27.57 15.40 5.31 0.055 350 1,335 0.25 Qtr 1 152 2.07 20.62 38.09 22.24 2.94 0.025 230 1.26 42.69 22.84 11.31 7.07 0.070 382 1.58 33.88 28.93 15.68 5.42 0.052 57 327 0.15 Qtr 2 182 2.05 19.65 37.26 23.72 2.75 0.024 232 1.28 34.09 28.04 16.17 5.53 0.054 414 1.62 27.75 32.09 19.49 4.31 0.041 37 279 0.09 Qtr 3 238 2.04 19.81 37.79 22.74 2.79 0.025 238 1.25 37.73 25.88 13.58 6.26 0.065 476 1.65 28.75 31.84 18.17 4.52 0.045 61 332 0.13 Qtr 4 163 2.11 20.05 37.81 23.01 2.85 0.026 256 1.29 37.31 25.58 14.19 6.29 0.066 419 1.61 30.60 30.33 17.61 4.95 0.050 43 331 0.10

Year 2 735 2.07 19.99 37.73 22.94 2.82 0.025 955 1.27 37.92 25.59 13.83 6.28 0.064 1,690 1.62 30.12 30.87 17.79 4.78 0.047 198 1,269 0.12 Year 3 815 2.04 21.24 37.59 21.66 2.98 0.029 1,043 1.29 42.66 23.77 10.09 7.23 0.074 1,859 1.62 33.26 29.83 15.17 5.36 0.054 211 2,070 0.11 Year 4 252 1.88 18.79 39.19 23.17 2.70 0.025 621 1.27 31.06 30.94 16.21 5.64 0.049 872 1.44 27.52 33.32 18.22 4.79 0.042 146 1,018 0.17 Year 5 625 2.03 18.89 36.40 25.43 2.51 0.025 986 1.22 41.64 22.94 12.18 6.83 0.077 1,610 1.54 32.82 28.16 17.32 5.16 0.057 136 1,746 0.08 Year 6 888 1.90 18.25 38.08 25.68 2.47 0.025 1,113 1.27 35.06 27.22 16.02 5.67 0.061 2,001 1.55 27.60 32.04 20.30 4.25 0.045 162 2,163 0.08 Year 7 683 1.92 21.13 36.55 23.47 2.49 0.030 1,244 1.25 33.27 29.71 15.95 5.07 0.060 1,927 1.49 28.97 32.14 18.62 4.15 0.049 500 2,428 0.26 Year 8 501 1.87 20.02 38.24 23.84 2.33 0.033 1,369 1.25 30.72 32.42 17.03 4.54 0.058 1,869 1.42 27.85 33.98 18.86 3.95 0.051 549 2,419 0.29 Year 9 550 1.96 19.02 38.38 23.92 2.37 0.032 1,106 1.27 36.61 27.15 13.78 6.27 0.065 1,656 1.50 30.77 30.88 17.15 4.98 0.054 477 2,133 0.29 Year 10 606 2.03 17.87 40.06 24.03 1.92 0.029 1,277 1.24 32.99 30.55 15.90 5.09 0.057 1,884 1.49 28.13 33.61 18.52 4.07 0.048 659 2,542 0.35 Year 11 620 1.89 19.60 39.79 22.46 2.78 0.028 1,244 1.28 24.21 38.61 18.84 4.02 0.040 1,864 1.48 22.68 39.01 20.04 3.61 0.036 433 2,297 0.23 Year 12 384 1.90 18.48 39.02 25.15 2.27 0.025 1,168 1.27 29.34 33.26 18.02 4.57 0.048 1,552 1.43 26.65 34.69 19.79 4.00 0.042 289 1,842 0.19 Year 13 360 1.84 22.42 37.63 22.49 2.91 0.029 1,278 1.25 31.06 31.53 18.00 4.56 0.048 1,637 1.38 29.16 32.87 18.98 4.20 0.044 445 2,082 0.27 Year 14 225 1.78 21.42 38.12 23.55 2.22 0.029 1,277 1.27 28.87 34.52 18.16 3.92 0.042 1,503 1.35 27.76 35.06 18.97 3.67 0.040 768 2,271 0.51 Year 15 526 1.84 21.69 39.16 22.19 2.39 0.028 1,391 1.28 27.45 34.93 18.93 3.95 0.036 1,916 1.43 25.87 36.09 19.82 3.52 0.034 564 2,480 0.29 Year 16 242 1.76 21.34 37.55 22.98 2.75 0.028 1,588 1.22 40.16 24.48 13.63 6.03 0.066 1,829 1.29 37.67 26.21 14.86 5.60 0.061 521 2,350 0.28 Year 17 23 1.70 20.90 39.46 23.36 2.65 0.025 103 1.26 24.83 36.11 20.86 3.63 0.032 125 1.34 24.12 36.72 21.31 3.45 0.031 15 141 0.12 Year 18 - - - - - - - - - - - - - - - - - - - - - - - Year 19 - - - - - - - - - - - - - - - - - - - - - - - Year 20 - - - - - - - - - - - - - - - - - - - - - - - Year 21 - - - - - - - - - - - - - - - - - - - - - - - Year 22 - - - - - - - - - - - - - - - - - - - - - - -

Totals 8,700 1.94 20.04 38.05 23.46 2.58 0.028 18,583 1.26 33.93 29.61 15.66 5.31 0.057 27,282 1.48 29.50 32.30 18.14 4.44 0.048 6,691 33,973 0.25

Period


Table 16.2 Tres Juanes Norte Deposit Mining Production Schedule



000's % % % % % % 000's % % % % % % 000's % % % % % % 000's 000's O:WPre-

production- - - - - - - - - - - - - - - - - - - - - - -

Qtr 1Qtr 2Qtr 3Qtr 4

Year 1Qtr 1Qtr 2Qtr 3Qtr 4

Year 2Year 3 - - - - - - - - - - - - - - - - - - - - - - - Year 4 61 1.93 20.83 34.81 25.48 2.94 0.033 493 1.23 47.35 17.53 10.73 7.40 0.077 554 1.31 44.41 19.44 12.37 6.91 0.072 333 888 0.60 Year 5 413 1.89 24.24 34.43 22.61 3.45 0.035 1,168 1.26 43.03 21.11 12.97 6.71 0.064 1,581 1.43 38.12 24.59 15.49 5.86 0.057 386 1,967 0.24 Year 6 522 2.01 22.71 34.98 23.39 3.19 0.033 1,168 1.23 46.15 18.82 11.56 7.28 0.070 1,690 1.47 38.92 23.81 15.21 6.01 0.058 634 2,324 0.38 Year 7 448 2.05 22.70 34.91 23.48 3.24 0.036 1,244 1.22 46.51 18.15 10.85 7.92 0.073 1,692 1.44 40.21 22.58 14.20 6.68 0.063 601 2,293 0.36 Year 8 553 2.04 21.83 35.63 23.87 3.07 0.034 1,259 1.23 49.27 16.02 9.36 8.42 0.074 1,812 1.48 40.90 22.00 13.79 6.79 0.062 551 2,363 0.30 Year 9 670 2.04 20.73 36.14 24.73 2.81 0.032 1,186 1.26 45.27 18.64 11.78 7.71 0.069 1,856 1.54 36.41 24.96 16.45 5.94 0.055 553 2,409 0.30 Year 10 449 2.01 20.44 36.19 25.16 2.79 0.031 821 1.26 43.24 20.26 12.57 7.63 0.067 1,270 1.53 35.18 25.89 17.02 5.92 0.054 390 1,660 0.31 Year 11 475 2.03 24.48 33.88 22.46 3.40 0.039 1,208 1.27 43.97 19.94 11.87 7.90 0.069 1,683 1.48 38.46 23.87 14.86 6.63 0.061 522 2,205 0.31 Year 12 639 1.93 23.87 34.80 22.66 3.42 0.037 1,296 1.26 38.00 24.35 15.13 6.88 0.058 1,935 1.48 33.33 27.80 17.62 5.74 0.051 328 2,263 0.17 Year 13 525 2.02 20.32 36.55 25.17 2.42 0.029 1,095 1.24 40.78 23.06 14.11 6.22 0.061 1,620 1.49 34.15 27.43 17.70 4.99 0.051 436 2,056 0.27 Year 14 570 2.01 18.77 37.08 26.35 1.90 0.027 985 1.24 37.13 24.83 16.22 5.80 0.051 1,556 1.52 30.40 29.32 19.94 4.37 0.042 438 1,994 0.28 Year 15 205 1.97 19.43 36.87 26.14 2.15 0.027 915 1.24 31.16 29.93 18.79 4.67 0.044 1,120 1.38 29.02 31.20 20.13 4.21 0.041 252 1,371 0.22 Year 16 87 1.75 20.02 37.23 24.19 3.29 0.027 1,241 1.23 30.78 30.13 19.25 4.39 0.044 1,328 1.27 30.07 30.59 19.57 4.31 0.043 977 2,305 0.74 Year 17 172 1.81 18.79 38.57 24.85 2.76 0.026 1,825 1.21 33.44 28.64 17.93 4.43 0.049 1,997 1.26 32.17 29.50 18.53 4.28 0.047 908 2,905 0.45 Year 18 235 1.90 19.27 36.85 26.36 2.19 0.032 1,533 1.24 37.45 24.53 16.59 5.41 0.058 1,768 1.33 35.03 26.17 17.89 4.98 0.055 586 2,354 0.33 Year 19 185 1.81 25.82 34.60 20.35 3.42 0.043 1,326 1.21 37.73 26.64 14.97 5.42 0.060 1,511 1.28 36.27 27.62 15.63 5.18 0.058 1,208 2,719 0.80 Year 20 235 1.92 21.04 38.75 22.76 3.02 0.033 1,606 1.22 38.29 26.20 14.76 5.55 0.058 1,841 1.31 36.09 27.80 15.78 5.23 0.055 759 2,600 0.41 Year 21 514 1.80 19.31 40.05 23.80 2.89 0.031 1,843 1.25 32.06 30.16 17.82 5.04 0.049 2,357 1.37 29.28 32.32 19.13 4.57 0.045 856 3,213 0.36 Year 22 12 1.75 16.43 39.99 26.49 2.64 0.023 19 1.42 17.43 39.12 26.42 3.06 0.024 30 1.55 17.05 39.45 26.44 2.90 0.024 - 30 -

Totals 6,970 1.97 21.52 36.12 24.06 2.91 0.033 22,232 1.24 39.42 23.86 14.62 6.22 0.060 29,202 1.41 35.15 26.79 16.87 5.43 0.053 10,718 39,921 0.37

Period


Table 16.3 Nueva Concepcion Deposit Mining Production Schedule



000's % % % % % % 000's % % % % % % 000's % % % % % % 000's 000's O:WPre-

production- - - - - - - - - - - - - - - - - - - - - - -

Qtr 1Qtr 2Qtr 3Qtr 4

Year 1Qtr 1Qtr 2Qtr 3Qtr 4

Year 2Year 3 - - - - - - - - - - - - - - - - - - - - - - - Year 4 - - - - - - - - - - - - - - - - - - - - - - - Year 5 - - - - - - - - - - - - - - - - - - - - - - - Year 6 - - - - - - - - - - - - - - - - - - - - - - - Year 7 - - - - - - - - - - - - - - - - - - - - - - - Year 8 - - - - - - - - - - - - - - - - - - - - - - - Year 9 - - - - - - - - - - - - - - - - - - - - - - - Year 10 - - - - - - - - - - - - - - - - - - - - - - - Year 11 - - - - - - - - - - - - - - - - - - - - - - - Year 12 4 1.71 20.29 35.67 24.92 3.49 0.033 255 1.12 50.13 16.37 8.67 7.39 0.110 259 1.13 49.66 16.68 8.93 7.33 0.109 876 1,135 3.38 Year 13 1 1.62 17.90 37.82 26.92 1.80 0.028 475 1.14 44.96 20.46 11.78 6.13 0.105 476 1.14 44.88 20.51 11.83 6.12 0.105 556 1,032 1.17 Year 14 17 1.81 20.32 36.32 25.25 2.35 0.038 547 1.20 41.53 22.72 13.08 6.07 0.099 564 1.22 40.91 23.12 13.43 5.96 0.097 306 870 0.54 Year 15 57 1.76 21.77 35.53 24.90 1.91 0.037 659 1.20 40.47 23.59 14.48 5.05 0.094 716 1.24 38.97 24.54 15.31 4.80 0.089 490 1,206 0.69 Year 16 29 1.75 18.31 36.45 27.76 1.18 0.032 912 1.18 38.55 24.19 14.99 5.54 0.095 941 1.19 37.93 24.56 15.38 5.40 0.093 787 1,728 0.84 Year 17 27 1.70 27.04 33.37 21.73 2.25 0.043 1,361 1.21 35.12 26.70 17.20 4.99 0.084 1,388 1.22 34.96 26.83 17.29 4.94 0.083 1,460 2,848 1.05 Year 18 254 1.81 17.98 37.25 27.17 1.36 0.030 1,825 1.22 33.35 27.88 18.41 4.54 0.084 2,079 1.29 31.47 29.03 19.48 4.15 0.077 1,615 3,694 0.78 Year 19 323 1.86 17.39 37.84 27.65 1.20 0.033 1,738 1.21 40.73 23.00 14.41 5.17 0.099 2,061 1.31 37.08 25.32 16.48 4.55 0.088 1,643 3,704 0.80 Year 20 336 1.81 17.88 37.71 27.33 1.39 0.032 1,825 1.21 38.55 25.18 14.77 5.20 0.094 2,161 1.30 35.34 27.13 16.72 4.60 0.084 1,414 3,575 0.65 Year 21 130 1.85 18.85 38.18 26.09 1.46 0.033 1,971 1.22 25.67 33.51 22.04 3.43 0.071 2,101 1.26 25.25 33.80 22.29 3.31 0.069 1,084 3,185 0.52 Year 22 - - - - - - - 188 1.10 36.98 26.62 14.42 5.97 0.094 188 1.10 36.98 26.62 14.42 5.97 0.094 228 416 1.21

Totals 1,178 1.82 18.33 37.44 26.97 1.40 0.033 11,757 1.20 36.24 26.21 16.45 4.93 0.089 12,935 1.26 34.61 27.23 17.40 4.61 0.084 10,459 23,394 0.81

Period


Table 16.4 Mayaniquel Mining Production Schedule



000's % % % % % % 000's % % % % % % 000's % % % % % % 000's 000's O:WPre-

production21 1.94 22.22 36.24 21.76 3.24 0.030 59 1.19 54.38 14.00 5.61 9.22 0.105 81 1.39 45.86 19.89 9.89 7.63 0.085 59 140 0.73

Qtr 1 67 2.05 21.25 36.16 22.60 2.95 0.029 117 1.28 51.46 16.90 7.46 7.58 0.091 185 1.56 40.42 23.94 12.99 5.88 0.068 104 289 0.57 Qtr 2 125 2.04 23.71 35.06 21.47 3.31 0.033 175 1.24 48.55 18.97 9.22 7.28 0.079 299 1.57 38.21 25.67 14.32 5.63 0.060 143 442 0.48 Qtr 3 208 1.98 22.59 36.62 21.40 3.20 0.030 235 1.24 47.31 19.18 10.04 7.27 0.079 443 1.59 35.69 27.38 15.38 5.36 0.056 112 554 0.25 Qtr 4 245 2.05 20.73 37.45 22.57 2.90 0.026 235 1.25 43.07 22.89 11.24 6.89 0.070 480 1.66 31.66 30.33 17.03 4.85 0.047 111 590 0.23

Year 1 645 2.03 21.96 36.59 21.98 3.08 0.029 761 1.25 46.93 19.93 9.82 7.20 0.078 1,406 1.61 35.47 27.57 15.40 5.31 0.055 470 1,876 0.33 Qtr 1 152 2.07 20.62 38.09 22.24 2.94 0.025 230 1.26 42.69 22.84 11.31 7.07 0.070 382 1.58 33.88 28.93 15.68 5.42 0.052 76 458 0.20 Qtr 2 182 2.05 19.65 37.26 23.72 2.75 0.024 232 1.28 34.09 28.04 16.17 5.53 0.054 414 1.62 27.75 32.09 19.49 4.31 0.041 65 480 0.16 Qtr 3 238 2.04 19.81 37.79 22.74 2.79 0.025 238 1.25 37.73 25.88 13.58 6.26 0.065 476 1.65 28.75 31.84 18.17 4.52 0.045 81 557 0.17 Qtr 4 163 2.11 20.05 37.81 23.01 2.85 0.026 256 1.29 37.31 25.58 14.19 6.29 0.066 419 1.61 30.60 30.33 17.61 4.95 0.050 64 483 0.15

Year 2 735 2.07 19.99 37.73 22.94 2.82 0.025 955 1.27 37.92 25.59 13.83 6.28 0.064 1,690 1.62 30.12 30.87 17.79 4.78 0.047 287 1,977 0.17 Year 3 815 2.04 21.24 37.59 21.66 2.98 0.029 1,043 1.29 42.66 23.77 10.09 7.23 0.074 1,859 1.62 33.26 29.83 15.17 5.36 0.054 211 2,070 0.11 Year 4 313 1.89 19.19 38.33 23.62 2.75 0.026 1,113 1.25 38.27 25.00 13.79 6.42 0.062 1,426 1.39 34.08 27.93 15.94 5.61 0.054 479 1,906 0.34 Year 5 1,038 1.98 21.02 35.61 24.31 2.89 0.029 2,154 1.25 42.40 21.94 12.61 6.77 0.070 3,191 1.48 35.44 26.39 16.41 5.50 0.057 522 3,713 0.16 Year 6 1,409 1.94 19.90 36.93 24.83 2.74 0.028 2,281 1.25 40.74 22.92 13.74 6.49 0.065 3,691 1.51 32.78 28.27 17.97 5.06 0.051 796 4,486 0.22 Year 7 1,131 1.97 21.75 35.90 23.47 2.79 0.032 2,489 1.24 39.89 23.93 13.40 6.49 0.066 3,619 1.47 34.22 27.67 16.55 5.33 0.056 1,102 4,721 0.30 Year 8 1,053 1.96 20.97 36.87 23.86 2.72 0.033 2,628 1.24 39.61 24.56 13.36 6.40 0.066 3,681 1.45 34.27 28.08 16.36 5.35 0.056 1,100 4,781 0.30 Year 9 1,220 2.00 19.96 37.15 24.36 2.61 0.032 2,292 1.26 41.09 22.75 12.75 7.02 0.067 3,512 1.52 33.75 27.75 16.78 5.49 0.055 1,030 4,542 0.29 Year 10 1,055 2.02 18.97 38.41 24.51 2.29 0.030 2,099 1.25 37.00 26.53 14.60 6.09 0.061 3,154 1.51 30.97 30.50 17.91 4.82 0.050 1,049 4,203 0.33 Year 11 1,095 1.95 21.72 37.23 22.46 3.05 0.033 2,452 1.27 33.94 29.42 15.40 5.93 0.054 3,547 1.48 30.17 31.83 17.58 5.04 0.048 955 4,503 0.27 Year 12 1,028 1.92 21.84 36.38 23.60 2.99 0.032 2,718 1.25 35.42 27.43 15.77 5.93 0.059 3,746 1.44 31.69 29.89 17.92 5.13 0.051 1,494 5,240 0.40 Year 13 886 1.95 21.17 36.99 24.09 2.62 0.029 2,847 1.23 37.12 26.43 15.47 5.46 0.063 3,733 1.40 33.33 28.93 17.51 4.78 0.055 1,437 5,169 0.38 Year 14 812 1.94 19.54 37.36 25.55 2.00 0.028 2,810 1.25 34.23 28.83 16.49 5.00 0.056 3,623 1.40 30.94 30.74 18.52 4.33 0.050 1,513 5,135 0.42 Year 15 787 1.86 21.11 38.30 23.41 2.29 0.028 2,965 1.25 31.49 30.87 17.90 4.41 0.051 3,752 1.38 29.31 32.43 19.05 3.97 0.046 1,306 5,058 0.35 Year 16 357 1.76 20.78 37.39 23.66 2.75 0.028 3,741 1.21 36.65 26.28 15.83 5.36 0.066 4,099 1.26 35.27 27.25 16.51 5.14 0.063 2,285 6,383 0.56 Year 17 222 1.79 20.02 38.02 24.31 2.68 0.028 3,289 1.21 33.86 28.07 17.72 4.64 0.063 3,511 1.25 32.99 28.70 18.14 4.51 0.061 2,383 5,894 0.68 Year 18 490 1.86 18.60 37.06 26.78 1.76 0.031 3,358 1.23 35.22 26.35 17.58 4.94 0.072 3,848 1.31 33.11 27.72 18.75 4.53 0.067 2,200 6,048 0.57 Year 19 508 1.84 20.47 36.66 24.99 2.01 0.037 3,065 1.21 39.43 24.58 14.65 5.28 0.082 3,572 1.30 36.74 26.29 16.12 4.81 0.075 2,851 6,423 0.80 Year 20 571 1.85 19.18 38.14 25.45 2.06 0.033 3,431 1.22 38.43 25.66 14.76 5.36 0.077 4,002 1.31 35.68 27.44 16.29 4.89 0.071 2,173 6,175 0.54 Year 21 644 1.81 19.22 39.68 24.26 2.60 0.031 3,814 1.23 28.76 31.89 20.00 4.21 0.060 4,458 1.32 27.38 33.02 20.62 3.98 0.056 1,940 6,398 0.44 Year 22 12 1.75 16.43 39.99 26.49 2.64 0.023 207 1.13 35.20 27.76 15.51 5.71 0.087 219 1.16 34.21 28.41 16.10 5.55 0.084 228 447 1.04

Totals 16,848 1.95 20.53 37.20 23.95 2.64 0.030 52,572 1.24 36.77 26.42 15.40 5.61 0.065 69,420 1.41 32.83 29.04 17.47 4.89 0.057 27,868 97,288 0.40

Period


Table 16.5 Process Production Schedule – High Grade and Sechol Upgrader Feed

High Grade to Refinery Low-Grade to Upgrader - Sechol Upgraded to Refinery - Sechol


000's % % % % % % 000's % % % % % % 000's % % % % % %

Pre-production

21 1.94 22.22 36.24 21.76 3.24 0.030 59 1.19 54.38 14.00 5.61 9.22 0.105 36 1.48 46.19 13.91 5.61 9.22 0.105

Qtr 1 67 2.05 21.25 36.16 22.60 2.95 0.029 117 1.28 51.46 16.90 7.46 7.58 0.091 38 1.59 45.07 14.57 6.25 8.08 0.098 Qtr 2 125 2.04 23.71 35.06 21.47 3.31 0.033 175 1.24 48.55 18.97 9.22 7.28 0.079 123 1.57 40.67 18.41 9.17 7.22 0.080 Qtr 3 208 1.98 22.59 36.62 21.40 3.20 0.030 235 1.24 47.31 19.18 10.04 7.27 0.079 96 1.56 39.97 18.02 9.47 7.30 0.081 Qtr 4 245 2.05 20.73 37.45 22.57 2.90 0.026 235 1.25 43.07 22.89 11.24 6.89 0.070 91 1.55 38.10 20.20 10.70 7.07 0.074

Year 1 645 2.03 21.96 36.59 21.98 3.08 0.029 761 1.25 46.93 19.93 9.82 7.20 0.078 348 1.56 40.29 18.35 9.33 7.30 0.081 Qtr 1 152 2.07 20.62 38.09 22.24 2.94 0.025 230 1.26 42.69 22.84 11.31 7.07 0.070 174 1.56 37.15 21.88 11.51 6.91 0.069 Qtr 2 182 2.05 19.65 37.26 23.72 2.75 0.024 232 1.28 34.09 28.04 16.17 5.53 0.054 149 1.58 34.68 24.05 13.42 6.36 0.063 Qtr 3 238 2.04 19.81 37.79 22.74 2.79 0.025 238 1.25 37.73 25.88 13.58 6.26 0.065 97 1.57 34.17 24.74 13.83 6.22 0.064 Qtr 4 163 2.11 20.05 37.81 23.01 2.85 0.026 256 1.29 37.31 25.58 14.19 6.29 0.066 173 1.58 33.98 24.82 13.88 6.24 0.064

Year 2 735 2.07 19.99 37.73 22.94 2.82 0.025 955 1.27 37.92 25.59 13.83 6.28 0.064 594 1.57 35.12 23.75 13.06 6.47 0.065 Year 3 815 2.04 21.24 37.59 21.66 2.98 0.029 1,043 1.29 42.66 23.77 10.09 7.23 0.074 519 1.60 37.70 23.24 10.88 7.04 0.072 Year 4 313 1.89 19.19 38.33 23.62 2.75 0.026 620 1.27 31.06 30.94 16.21 5.64 0.049 697 1.59 32.29 26.83 13.79 6.28 0.059 Year 5 1,038 1.98 21.02 35.61 24.31 2.89 0.029 986 1.22 41.64 22.94 12.18 6.83 0.077 677 1.53 38.41 21.64 11.29 6.80 0.076 Year 6 1,409 1.94 19.90 36.93 24.83 2.74 0.028 1,113 1.27 35.06 27.22 16.02 5.67 0.061 625 1.59 34.02 25.08 14.61 5.67 0.061 Year 7 1,131 1.97 21.75 35.90 23.47 2.79 0.032 1,244 1.25 33.27 29.71 15.95 5.07 0.060 769 1.57 33.05 25.55 14.74 5.13 0.060 Year 8 1,053 1.96 20.97 36.87 23.86 2.72 0.033 1,369 1.25 30.72 32.42 17.03 4.54 0.058 803 1.56 30.97 27.55 15.43 4.62 0.058 Year 9 1,220 2.00 19.96 37.15 24.36 2.61 0.032 1,106 1.27 36.61 27.15 13.78 6.27 0.065 719 1.57 34.89 24.55 13.27 5.87 0.064 Year 10 1,055 2.02 18.97 38.41 24.51 2.29 0.030 1,277 1.24 32.99 30.55 15.90 5.09 0.057 805 1.55 33.02 25.14 14.43 5.26 0.058 Year 11 1,095 1.95 21.72 37.23 22.46 3.05 0.033 1,244 1.28 24.21 38.61 18.84 4.02 0.040 800 1.58 26.15 28.79 15.67 4.32 0.044 Year 12 1,028 1.92 21.84 36.38 23.60 2.99 0.032 1,168 1.27 29.34 33.26 18.02 4.57 0.048 816 1.59 28.51 27.81 15.33 4.50 0.047 Year 13 886 1.95 21.17 36.99 24.09 2.62 0.029 1,277 1.25 31.06 31.53 18.00 4.56 0.048 886 1.56 30.55 28.19 16.10 4.55 0.048 Year 14 812 1.94 19.54 37.36 25.55 2.00 0.028 1,278 1.27 28.87 34.52 18.16 3.92 0.042 923 1.58 29.13 29.84 15.62 4.02 0.043 Year 15 787 1.86 21.11 38.30 23.41 2.29 0.028 1,391 1.28 27.45 34.93 18.93 3.95 0.036 936 1.60 27.55 28.09 16.50 3.95 0.036 Year 16 357 1.76 20.78 37.39 23.66 2.75 0.028 1,588 1.22 40.16 24.48 13.63 6.03 0.066 1,060 1.52 36.00 23.94 13.09 5.97 0.065 Year 17 222 1.79 20.02 38.02 24.31 2.68 0.028 103 1.26 24.83 36.11 20.86 3.63 0.032 67 1.57 24.83 36.11 19.60 3.63 0.032 Year 18 490 1.86 18.60 37.06 26.78 1.76 0.031 - - - - - - - - - - - - - - Year 19 508 1.84 20.47 36.66 24.99 2.01 0.037 - - - - - - - - - - - - - - Year 20 571 1.85 19.18 38.14 25.45 2.06 0.033 - - - - - - - - - - - - - - Year 21 644 1.81 19.22 39.68 24.26 2.60 0.031 - - - - - - - - - - - - - - Year 22 12 1.75 16.43 39.99 26.49 2.64 0.023 - - - - - - - - - - - - - -

Totals 16,848 1.95 20.53 37.20 23.95 2.64 0.030 18,583 1.26 33.93 29.61 15.66 5.31 0.057 12,079 1.57 32.42 26.00 14.28 5.31 0.057

Period


Table 16.6 Process Production Schedule – TJN Upgrader and Total Feed

Low-Grade to Upgrader - TJN Upgraded to Refinery - TJN Total to Refinery


000's % % % % % % 000's % % % % % % 000's % % % % % %

Pre-production

- - - - - - - - - - - - - - 57 1.65 37.24 22.25 11.64 6.98 0.077 15.76 1.91

Qtr 1 106 1.88 29.85 28.36 16.69 4.80 0.054 11.09 1.70 Qtr 2 248 1.80 32.13 26.79 15.36 5.25 0.056 12.47 1.74 Qtr 3 304 1.85 28.08 30.75 17.63 4.50 0.046 10.63 1.74 Qtr 4 336 1.91 25.43 32.79 19.36 4.03 0.039 9.30 1.69

Year 1 993 1.86 28.38 30.20 17.55 4.56 0.047 10.66 1.72 Qtr 1 327 1.80 29.44 29.44 16.51 5.06 0.049 11.46 1.78 Qtr 2 331 1.84 26.43 31.31 19.08 4.38 0.042 10.07 1.64 Qtr 3 336 1.91 23.98 34.00 20.16 3.78 0.036 8.80 1.69 Qtr 4 336 1.84 27.24 31.11 18.30 4.60 0.046 10.37 1.70

Year 2 1,330 1.85 26.75 31.48 18.52 4.45 0.043 10.15 1.70 Year 3 - - - - - - - - - - - - - - 1,334 1.87 27.64 32.01 17.47 4.56 0.045 10.34 1.83 Year 4 493 1.23 47.35 17.53 10.73 7.40 0.077 315 1.55 43.84 17.53 10.73 7.40 0.077 1,325 1.65 31.94 27.33 15.39 5.71 0.056 13.55 1.78 Year 5 1,168 1.26 43.03 21.11 12.97 6.71 0.064 677 1.59 40.22 21.11 12.97 6.71 0.064 2,393 1.74 31.38 27.55 17.41 5.08 0.052 12.62 1.58 Year 6 1,168 1.23 46.15 18.82 11.56 7.28 0.070 625 1.54 42.99 19.02 11.68 7.23 0.069 2,659 1.76 28.64 29.94 19.34 4.48 0.045 11.36 1.55 Year 7 1,244 1.22 46.51 18.15 10.85 7.92 0.073 769 1.54 43.52 18.32 11.02 7.78 0.072 2,668 1.73 31.28 27.85 17.37 4.90 0.052 12.65 1.60 Year 8 1,259 1.23 49.27 16.02 9.36 8.42 0.074 803 1.54 45.58 16.51 9.72 8.28 0.074 2,659 1.71 31.42 27.91 17.04 4.97 0.053 12.84 1.64 Year 9 1,186 1.26 45.27 18.64 11.78 7.71 0.069 719 1.57 42.98 18.16 11.31 7.84 0.070 2,659 1.77 30.23 28.60 17.83 4.91 0.051 11.95 1.60 Year 10 821 1.26 43.24 20.26 12.57 7.63 0.067 789 1.58 41.00 19.56 12.15 7.70 0.068 2,650 1.75 29.80 28.76 17.77 4.81 0.050 11.94 1.62 Year 11 1,208 1.27 43.97 19.94 11.87 7.90 0.069 773 1.59 40.75 19.94 11.87 7.90 0.069 2,668 1.73 28.56 29.69 17.36 4.84 0.047 11.52 1.71 Year 12 1,550 1.24 40.00 23.04 14.07 6.96 0.066 816 1.56 37.74 23.04 13.99 6.96 0.066 2,659 1.71 28.77 29.66 18.11 4.67 0.047 11.81 1.64 Year 13 1,570 1.21 42.05 22.27 13.41 6.19 0.074 886 1.53 40.10 22.39 13.37 6.31 0.073 2,659 1.68 30.61 29.19 17.85 4.49 0.050 12.76 1.63 Year 14 1,533 1.22 38.70 24.08 15.10 5.89 0.068 923 1.54 38.23 23.69 14.48 5.99 0.069 2,659 1.68 29.36 30.00 18.26 4.09 0.047 12.27 1.64 Year 15 1,574 1.22 35.05 27.28 16.99 4.83 0.065 936 1.54 35.56 26.32 15.91 5.13 0.066 2,659 1.66 28.46 30.49 18.34 3.87 0.044 12.04 1.66 Year 16 2,000 1.21 34.32 27.42 17.31 4.91 0.067 1,242 1.52 34.63 26.97 15.79 4.97 0.067 2,659 1.55 33.31 27.16 15.77 5.07 0.061 15.03 1.72 Year 17 3,339 1.21 34.00 27.92 17.70 4.66 0.063 2,370 1.52 34.10 27.57 16.09 4.71 0.064 2,659 1.55 32.69 28.66 16.86 4.51 0.060 14.81 1.70 Year 18 3,358 1.23 35.22 26.35 17.58 4.94 0.072 2,169 1.54 33.29 26.34 16.34 4.92 0.071 2,659 1.60 30.58 28.31 18.26 4.34 0.064 13.37 1.55 Year 19 3,065 1.21 39.43 24.58 14.65 5.28 0.082 2,160 1.52 38.61 24.19 13.43 5.24 0.081 2,668 1.58 35.15 26.56 15.63 4.63 0.072 15.58 1.70 Year 20 3,431 1.22 38.43 25.66 14.76 5.36 0.077 2,088 1.53 37.83 24.91 13.38 5.36 0.077 2,659 1.60 33.83 27.75 15.97 4.65 0.068 14.83 1.74 Year 21 3,814 1.23 28.76 31.89 20.00 4.21 0.060 2,006 1.55 28.47 30.57 18.91 4.26 0.061 2,650 1.61 26.22 32.78 20.21 3.86 0.054 11.40 1.62 Year 22 207 1.13 35.20 27.76 15.51 5.71 0.087 687 1.52 29.77 29.96 18.08 4.54 0.066 699 1.52 29.55 30.13 18.22 4.51 0.065 13.57 1.65

Totals 33,989 1.23 38.32 24.68 15.25 5.78 0.070 21,753 1.54 36.94 24.37 14.46 5.78 0.070 50,680 1.68 30.41 29.03 17.57 4.62 0.054 12.66 1.65

PeriodFe/Ni

Ratio

SiO2/

MgO

Ratio


16.4 Mine Personnel

16.4.1 Mine Staff

The estimated mine and engineering staff is shown in Table 16.7, while the hourly staff is shown in Table 16.8. The mine is scheduled to operate two 12 hour shifts per day, 7 days per week. Four rotating crews are required on a rotating schedule. The quarry for the main panel access road surfacing will operate during a 12 hour day shift, 7 days per week, while road construction will work two 12 hour shifts per day, 7 days per week. The initial preproduction main panel access road construction and clearing and grubbing and topsoil stripping will be completed by a contractor.

16.5 Mine Equipment

A detailed list of equipment was developed for the operation, based on a 300 day operating schedule.

16.5.1 Drilling

Auger drilling will be completed to develop detailed development plans and completed on 10m centers. The drilling requirements were prorated based on the ratio of tonnes mined during a period divided by the total tonnes mined within a panel. The total drillholes completed within an area were subtracted from the total area requirements. A Diedrich auger drill will be mounted on a low-ground pressure Ardco K 4x4 transport unit for auger drilling use. Average auger drillhole depth is 16m for Sechol, 20m for Tres Juanes Norte, and 24m for Nueva Concepcion.

Air track drilling has been included in the quarry, and as needed in the mine.

16.5.2 Blasting

Contract blasting is included for the quarry. If blasting is required for roads and in the pits, it will be completed by the contract blaster.

16.5.3 Loading

Primary loading will be completed by excavators equipped with 6.7m3 buckets. The buckets are slightly oversized due to the low density of the material being mined. An excavator is planned for each active panel. The excavators are backed up by a 6.9m3 loader. The excavators or loaders will fill a 40 tonne truck fleet with material. Loading equipment was scheduled to operate 4,944 hours per year or 412 shifts per year. Both the loader and excavator require six buckets to fill a truck.

16.5.4 Hauling

Hauling will be completed by a fleet of 40 tonne trucks. The trucks are either 40 tonne articulated trucks or 40 tonne 8x4 trucks. The articulated truck capacity is about 32m3 with a tailgate. This capacity should be expanded to 35-36m3 to reach a normal 40 tonne payload with 30% moisture. Both the normal articulated truck bed and the 8x4 truck bed will need to be expanded to carry a 40 tonne payload.

Detailed haul cycles to the ore upgrading facility location, typical waste haul, or ore blending stockpiles were calculated for each panel. Cycle times were also calculated to return reject material to the center of each panel. Each truck was scheduled to operate about 420 shifts per year.


Table 16.7 Mayaniquel Mine Department Salary Staff


Table 16.8 Mayaniquel Mine Department Hourly Staff

Man

-1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Years

Mine Operation

Drill Operators 8 8 8 8 12 12 12 12 12 12 12 12 12 12 12 12 8 8 8 8 8 8 4 220Loader and Excavator Operators 24 44 44 38 38 50 54 58 58 60 60 60 58 58 58 64 52 40 40 40 40 40 12 1066Haul Truck Drivers 32 52 52 48 48 80 88 84 84 88 84 84 92 80 76 76 64 64 64 80 92 116 68 1664Dozers Operators 16 60 52 32 36 44 52 52 52 68 76 56 52 52 52 60 48 44 44 44 44 40 8 1068Grader Operators 12 24 24 24 28 32 32 32 32 36 36 36 32 32 32 36 28 28 28 28 28 28 8 644Scraper Operator 8 8 8 8 8 12 12 16 16 16 16 16 16 16 16 16 16 16 16 16 16 16 8 304Compactor Operator 8 40 36 16 20 24 24 24 24 36 44 28 24 24 24 32 20 20 20 20 20 20 4 544Water Truck Driver 4 8 8 8 8 8 12 12 12 12 12 12 12 12 12 12 12 8 8 8 8 8 4 216Mulcher Operator 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0Crusher Operator 12 12 12 12 12 12 12 12 12 12 12 12 12 12 12 12 0 0 0 0 0 0 0 180Utility Operators 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 88Laborer 0 12 12 12 12 20 28 24 28 24 24 28 36 48 48 40 48 44 40 44 48 60 0 680Trainee/Spare 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 2 2 0 80

132 276 264 214 230 302 334 334 338 372 384 352 354 354 350 368 304 280 276 296 310 342 120 6754

Mine Maintenance Mechanics 35 68 65 53 57 75 81 81 81 90 93 84 84 80 79 85 68 62 62 67 70 77 31 1593Electricians 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 2 86Welders 8 10 14 14 15 24 24 24 24 24 24 24 24 24 24 24 24 24 24 24 19 15 8 455Lt. Veh. Mechanics 8 8 9 11 9 9 9 9 9 9 9 9 11 11 11 11 11 10 9 9 8 8 6 205Apprentice 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 88Servicemen 7 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 7 196Tireman 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 2 86

70 107 109 99 102 129 135 135 135 144 147 138 140 136 135 141 124 117 116 121 118 121 60 2709

202 383 373 313 332 431 469 469 473 516 531 490 494 490 485 509 428 397 392 417 428 463 180 9463

59 59 59 90 90 90 90 90 90 90 90 90 114 114 114 114 114 113 89 88 69 69 57 1983

202 383 373 313 332 431 469 469 473 516 531 490 494 490 485 509 428 397 392 417 428 463 180 9463

261 442 432 403 422 521 559 559 563 606 621 580 608 604 599 623 542 510 481 505 497 532 237 11446Total Mine

Total Hourly

Total Salaried

PositionYear

Subtotal Mine Operations

Subtotal Mine Maintenance

Total Mine Operations


16.5.5 Support

Mine support equipment is divided into the following categories:

� Panel mining support equipment

� Clearing and grubbing and topsoil removal equipment

� Quarry equipment for road base

� Main panel access road equipment

� Local access road equipment

16.5.5.1 Panel Mining Support Equipment

Panel mining support equipment includes water trucks, graders, dozers, and loaders at the ore upgrading facilities. Other small mining equipment was also included.

16.5.5.2 Quarry/Road Base Quarry Equipment

A 600kw generator and a portable crushing plant capable of crushing 200,000 tonnes per year were included in the quarry equipment. In addition, an air track drill, two loaders and four trucks were also included. Blasting in the quarry is planned to be contracted.

16.5.5.3 Main Panel Access Road Construction Equipment

The main panel access road construction equipment includes dozers, chippers, compactors, and graders. Table 16. 9 below shows main panel access road construction in kilometers per year.

Table 16.9 Main Panel Access Road Construction by Year

16.5.5.4 Local Access Road Equipment

One crew of road construction equipment was assigned to each active panel consisting of a dozer, grader, and compactor.

16.5.6 Equipment List

The list of mine equipment is summarized in Table 16.10. The list shows the total pieces of mine equipment required by year. The list includes some mine equipment that is leased in years 1, 2, 9, 10, 20, and 21.

Year -1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15Total

kms

Main Panel Access Road Const (km)

10.836 9.080 6.930 10.360 1.950 1.300 4.400 44.856

Note: Main panel access roads constructed by a contractor not included in table. Additional main panel roads may be added in feasibility study to minimize local road construction.


Table 16.10 Mine Equipment List

-1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22

Augur Drill - 152mm 1 1 1 1 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 1Scraper 2 2 2 2 2 3 3 4 4 4 4 4 4 4 4 4 4 4 4 4 4 2 26.9 cm Loader (Mining) 1 2 2 2 3 4 4 4 4 4 4 5 5 5 5 5 5 5 5 5 4 4 16.7 cm Excavator 2 3 3 3 5 6 6 6 6 6 6 8 8 8 8 8 8 6 6 6 6 4 2600 kw Generator 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1Portable Crushing Plant 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1Hydraulic Drill 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 14 cm Mass Excavator 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 16.9 cm Loader (Support) 5 7 7 7 9 10 10 10 10 10 10 11 11 11 11 11 11 10 10 8 8 5 240 Tonne Articulate Truck 3 3 3 3 3 8 9 9 9 9 9 9 11 11 11 11 11 11 11 12 14 18 1240 Tonne 8 x 4 (Mining) 1 2 2 2 2 5 6 6 6 6 6 6 7 7 7 7 7 7 7 8 9 12 840 Tonne 8 x 4 (Support) 8 8 8 8 8 8 9 10 10 10 10 10 10 10 10 10 10 10 10 8 8 5 2Dozer D9 1 1 1 1 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 1Dozer D8 8 14 13 8 8 10 13 13 13 16 18 13 13 13 13 13 13 13 13 13 13 13 2Grader 16 1 1 1 1 2 2 2 2 2 2 2 3 3 3 3 3 3 3 3 3 3 3 1Grader 12 5 5 5 5 7 8 8 8 8 8 8 8 8 8 8 8 8 8 8 8 8 8 2Water Truck 1 2 2 2 2 2 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 1Lube Truck 1 1 1 1 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2Fuel Truck 1 1 1 1 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2Mechanics Truck 1 1 1 1 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2Welding Truck/Crane 1 1 1 1 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 220 T Rough Terrain Crane 1 1 1 1 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 245 T Hydraulic Crane 1 1 1 1 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2Light Plant 7 7 7 7 14 14 14 14 14 14 14 14 21 21 21 21 21 21 21 21 21 14 7Rockbreaker 1 1 1 1 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 1Tool Carrier 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1Roller Compactor 7 12 11 7 7 7 7 7 7 9 11 7 7 7 7 8 8 8 8 8 8 8 2Flatbed 2 2 2 2 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 2Lowboy 1 1 1 1 1 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 1Crew Van 11 11 11 11 22 22 22 22 22 22 22 30 30 30 30 30 30 30 30 25 22 22 16Skid Loader 1 1 1 1 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2Forklift 5 Tonme 1 1 1 1 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2ATV 1 1 1 1 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2Radios & Base Station 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1WiFi Communications 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1GPS & Technology 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1

Note: Dozers Leased (Yr 1-6, Yr 2-5, Yr 9-3, Yr 10-5); Compactors Leased (Yr 1-5, Yr 2-4, Yr 9-2, Yr 10-4); and Trucks Leased (Yr 20-3, Yr 21-10).

EquipmentYear


17.0 Recovery Methods

17.1 Introduction

The project consists of a greenfield FeNi pyrometallurgical processing facility with a production capacity of 40,000 tonnes per annum of nickel in FeNi from laterite ore, at full capacity, utilizing the RKEF process. It will start-up line one at the beginning of year one while the second line will start-up at the beginning of year five, incorporating lessons learned during line one ramp-up.

The plant will have one primary and one secondary crushing station, one ore homogenization facility and two production lines, each one comprised of one rotary dryer, a tertiary crushing station, a rotary kiln, an 80MW (nominal) smelting electric furnace and a refining ladle furnace, coupled to a metal granulation and metal conditioning area and a metal recovery from refining slag plant.

17.2 Process Selection

The RKEF route was compared against the FBDC furnace process and has been reviewed in the light of the recent FeNi projects as well as the results of the pilot plant testwork campaign carried out at Morro Azul under the coordination of IGEO and with the involvement of ANC representatives.

Engineering design issues have shown to be of major importance to the performance of nickel laterite smelting projects. Some of the new approaches which have been implemented in key equipment which were supplied for recent projects in Brazil did not result in expected enhancements to the project performance. It was therefore decided that well proven solutions should be employed in the design of most aspects of the metallurgical plant for the Mayaniquel Project. The list of these design considerations is quite significant. The RKEF route has gone through a long learning curve while the FBDC route has still to progress up the learning curve once the Xstrata Koniambo project in New Caledonia is operational (currently anticipated in 2013).

Operationally, the RKEF route has shown the significant benefits of the lessons learned and that complex metallurgical projects such as FeNi smelting must rely on experienced personnel. Fortunately there is a reasonable quantity of experienced personnel in the FeNi RKEF business that has grown rapidly in several regions such as Brazil over the past five years.

The FBDC route, on the other hand, and specifically for FeNi, has more limited expertise available in view of the fact that the first large-scale operation is still under construction and a reasonable time must be allowed before future projects contemplate the FBDC route. This is the main reason for not pursuing this approach for the Mayaniquel Project.

The pilot plant testwork campaign has successfully demonstrated that the metallurgical treatment of a 120 tonne bulk sample of blended ore from Mayaniquel Project can be completed in accordance with project design parameters. The operation of both the rotary kiln and the electric furnace was carried out on a continuous basis during a campaign at the Morro Azul testwork plant. The primary objective of producing an alloy grade close to 22.5% with a nickel recovery of 90% was met. The result of the operation of the pilot plant indicates that the decision for selecting the RKEF process for the Mayaniquel Project is justified.

17.3 Process Description

17.3.1 ROM Reception and Crushing

In the ore reception circuit, only one production line will be constructed with a capacity of 578.4 t/h (wet) that is sufficient for feeding the two production lines.


Process plant feed material will be reclaimed from the ore reception shed, by a front-end loader for feeding onto a shaking grizzly, positioned on top of a chute.

It will then be extracted by a conveyor belt, and further discharged into a 200-mm-gap, sizer-type crusher. The crushed material will be discharged onto a conveyor belt and then sampled before being discharged onto the dust mixing drum feed conveyor. Ore mixed with dust will be conveyed to a vibrating screen with 80mm mesh opening and the oversize fraction will be crushed by an 80-mm-gap roll crusher.

The product will be combined and conveyed to an ore stacker. The storage yard will feature two piles, each with a capacity of 62,500 wet tonnes of ore, sufficient for eight days’ total plant feed capacity; when one pile is being loaded, the other pile is feeding the plant. The process block diagram is shown in Figure 17.1.

Figure 17.1 Process Block Diagram

17.3.2 Ore Drying and Tertiary Crushing – ONE LINE

From the ore drying and tertiary crushing step onward, there will be two independent lines.

The effect of the recycled dust mixed in the ore will ensure that the material flows readily through any chute in the circuit. A steady feed rate thereby improves the operational control of the drying process, which is a key requirement for optimizing energy utilization, as well as facilitating material agglomeration.

The dryer will be designed to burn pulverized coal, with heavy fuel oil as backup, and will optimize the agglomeration process. Therefore, it will feature a retention dam at the discharge to attain a filling degree of approximately 20% of the total volume. Heat transfer will be controlled and the


offgas temperature will be such that it avoids condensation in the electrostatic precipitator, which will be used for collecting dust present in the offgas.

Dryer product will be produced with a moisture content of 18-20%. This target moisture is known from experience to facilitate the agglomeration process in the dryer, as well as to minimize or avoid dust emission losses at transfer points, screening, and any other handling operations. The pilot scale plant testwork also supports this level of moisture as a basis for effective agglomeration of the Mayaniquel material tested.

Dried ore from each dryer will be screened on a vibrating screen (one per line) with 30mm mesh opening. The oversize will be crushed in a roll crusher with 30mm setting. Crusher product will be combined with the screen undersize, and then conveyed to the kiln feed bin.

17.3.3 Metallurgical Plant

The key figures used as the design basis for the project are shown in Table 17.1.

Table 17.1 Design Basis Parameters

17.3.4 Reclaiming

The material reclaimed from the kiln feed bin will be combined with the reducing agent in the form of coal from the crushed coal storage bin. The three main processes that occur in the rotary kiln are: drying, calcining, and pre-reduction. The kiln will be constructed with three retention dams.

The retention time in the kiln is generally around three hours. The kiln will be equipped with lifters at the feed end section. The lifters improve the thermal transfer between the hot offgases and the feed, thereby assisting in recovering energy from the offgas stream. This importantly assists in increasing the thermal efficiency of the rotary kiln which has a relatively low overall thermal efficiency.

Heat will be supplied by a burner, which is designed to use pulverized coal and can also use fuel oil for start-up, as a backup, or in case it is necessary, to stabilize the kiln environment. The burner can also operate purely on fuel oil, thus providing flexibility in future decisions on the most economic fuel to be utilized.

The hot calcine at the kiln discharge will pass through a trommel screen device for removing any oversize material that may cause blockages in downstream equipment.

The kiln offgas is conveyed to the electrostatic precipitator at approximately 300°C. Collected dust will be pneumatically conveyed to the dust recycling bin at the secondary crushing plant.

Unit

RKEF combined availability % 90Plant throughput - year 1 to year 4 t/year, dry 1,330,000Plant throughput - year 5 to end t/year, dry 2,660,000Coal consumption in the dryer kg/t of new dry ore 24Coal consumption in the rotary kiln kg/t of new dry ore 83Ore grade %Ni 1.71Overall recovery %Ni 90Ni production - year 1 to year 4 t/year 20,000Ni production - year 5 to end t/year 40,000Furnace power (per furnace) MW 81Energy consumption in the furnace kWh/dry t calcine 544Ni grade in the metal % 22.50Refinery Ladle furnaceFinal product Granulated FeNi

Item Value


Key characteristics of the calcining section are shown in Table 17.2.

Table 17.2 Calcining Characteristics

17.3.5 Smelting

Both furnaces will feature two transfer cars, each car will provide for two calcine containers. The calcine transfer car will move the container to the lifting position, where a lifting tower (one per car) will perform the hoisting to the top of the furnace feed bins.

The power required for smelting 145.1 tonnes of calcine per hour is 81MW, on the basis of a specific power consumption of 544kWh/t calcine. For this level of power input and the smelting characteristics envisaged for the operation, a round furnace with three electrodes connected to 3-single phase AC transformers is considered to be most suitable.

Metal tapping will be carried out through one of two tapholes, positioned at one side of the furnace. Slag will be tapped at the opposite side of the furnace by means of one of two tapholes, and will be granulated with water. Water will be ducted to a cooling system and dam, from where it will be pumped to an elevated reservoir with a capacity of 10,000m³.

The furnace process (primary) offgas will be collected by a dedicated system at a temperature of 1000-1200°C at the furnace roof outlet. It will be cooled using dilution air from the secondary dust extraction system and then conveyed to a baghouse, designed for obtaining a high efficiency of particulate collection that will comply with the World Bank environmental standards.

The hot calcine discharge transfer points into the transfer containers and into the furnace feed bins will also have a dedicated (secondary) dust extraction system. Dedusting gases collected from the metal and slag tapping positions will be used for cooling primary offgas, and then undergo the same handling process.

Key characteristics of the smelting process are shown in Table 17.3.

Unit

Ore feed rate Wet t/h 269.1

Feed rate moisture content % 18.0

Reductant coal feed rate Wet t/h 11.7

Calcine throughput t/h 148.0

Pre-reduction (100*Fe2+/Fetotal) % 70.0

Kiln length m 140.0

Kiln diameter m 6.2

Item Value


Table 17.3 Smelting Characteristics

A more detailed process block flow diagram with mass and energy balance data is shown in Figure 17.2 and Figure 17.3.

Unit

Furnace power MW 81

Calcine feed rate t/h 148

Energy consumption kWh/t calcine 544

Geometryof the furnace Round

Number of transformers 3 - single phase

Slag region cooling Copper elements

Metal production t/FeNi/h 11.6

Item Value


Figure 17.2 Block Flow Diagram


Figure 17.3 Process Mass and Energy Balance Data


17.3.6 Refining

Furnace metal mainly contains carbon, phosphorous, and sulfur as impurities which must be lowered to pre-established specification levels. During tapping, FeSi may be added to generate energy in the ladle by reaction with oxygen blown into the metal through a refractory-lined or water-cooled lance, depending on whether the metal is being tapped or blown.

Nitrogen will be blown into the metal through a porous plug at the ladle bottom for agitating the metal, in order to ensure an even temperature distribution through the melt and improve reaction kinetics. Nitrogen blowing is important for enhancing process reactions, and is therefore maintained through the entire refining process.

Once free of the oxidizing slag, the bath will then be deoxidized with FeSi and aluminum, and a lime-rich slag will be formed for the desulfurization process.

The oxidizing slag will be granulated with water, and the reducing slag will be collected in slag pots, to be deposited on a specific area for quenching (hydration). This yields spontaneous breaking of the slag blocks and facilitates recovery of any entrained metal.

Metal characteristics are defined according to the typical specifications shown in Table 17.4.

Table 17.4 Metal Characteristics

17.3.7 Metal Granulation and Conditioning

Refined metal in the ladle at 1630°C will be transferred to the granulation facility and will be positioned at a specific place by the overhead crane or on a tilting platform. Metal will flow through a sliding gate installed at the bottom of the ladle, at a flow rate of 1.5-2.0 t/min or from the lip of the ladle into a tundish, which will feed the hot metal onto a rotating or stationary disc.

Key characteristics of the granulation process are shown in Table 17.5

Table 17.5 Granulation Characteristics

17.4 Ancillary Facilities

17.4.1 Coal Preparation

The coal preparation plant will be designed for supplying both the pulverized fuel coal and reductant and will have capacity for supplying both lines from the start of operations.

Typical figures for coal consumption are represented by the years two and six and are shown in Table 17.6.

Element Ni Si C P S Cu Co

Unit % % % % % Ni/Cu Ni/Co

Crude Metal 22.2 Trace < 0.5 < 0.1 < 0.4 > 40 > 30

Refined Metal 22.5 Trace < 0.04 < 0.02 < 0.04 > 40 > 30

Item Granulation Rate Granulation Time Metal Temperature

Value 1.5 - 2,0 25 - 35 1,630

Unit t/min min °C


Table 17.6 Coal Consumption

Coarse coal will be conveyed to a ball mill, to reduce top size to 170 mesh (or 90 µm). Clean calcining offgas will be used to dry the ground coal to 0.5% moisture, so that it can be used as kiln and dryer fuel. In the absence of clean offgas, an oil-fired hot gas generator will be available. Pulverized coal (coal mill product) will be classified in a dynamic separator and sent to the coal milling baghouse. While coarse particles will be returned to mill feed, pulverized coal will be pneumatically conveyed to the consumption points (dryer 1, kiln 1 and, in the future, dryer 2, kiln 2 as well, one bin/dosing system per point). Feed bins and Coriolis/Pfister dosing pumps will feed the dryer/kiln burners individually.

17.4.2 Dust Handling Systems

Dust from the drying, calcining, smelting, and refining stages typically contains relatively high nickel grades. Therefore, in order to obtain high metallurgical recoveries for the overall plant (i.e., above 90%), it is important to implement a successful, proven, and reliable dust handling and recovery system. Dust will be mainly generated (thus collected) in the following points: dryer Electrostatic Precipitators (ESPs), kiln ESPs, furnace baghouses (primary and secondary), and refinery baghouse. Dust will be conveyed and handled as follows.

For layout and process reasons, refinery dust will be discharged into a bucket, which will be recycled to primary crushing as required, by truck. Each processing line will be able to operate independently from each other. Smelter dust will be pneumatically conveyed to the kiln dust bin, located underneath the kiln ESP.

Another pneumatic conveying system will convey kiln and smelter dusts together to the central dust bin, located upwards from secondary crushing. Dryer dust will be collected independently and also conveyed to the central dust bin. From the central dust bin, dust will be wetted and added to the dust mixing drum, in order to be recycled back to the process.

17.5 Utilities

The utilities and services for the project are:

17.5.1 Fuel Oil Storage

Fuel oil will be used in start-up and flame stabilization conditions in both dryers and kilns. Oil will also be used for the emergency/start-up hot gas generator at coal milling.

17.5.2 Diesel Storage

Diesel will be used by plant and mine mobile equipment. One area for each site (mine and plant) is envisaged.

17.5.3 LPG Storage

Low Pressure Gas (LPG) will be consumed in dryer and kiln pilot burners, last-minute pre-heaters, ladle dryers, ladle pre-heaters, refined FeNi drying, the metallurgical laboratory, and the canteen. Therefore, two storage areas are envisaged: one for the non-process areas, and another for the process areas. It is suggested a loan-for-use basis agreement to be pursued with the supplier.

Fuel Coal to the

Rotary Dryer

Fuel Coal to the

Rotary Kiln

Coal for

Reduction

t/year t/year t/year

One line (Yr 2) 31,251 110,375 93,087 234,713

Two lines (Yr 6) 62,480 220,275 186,111 468,866

t/year

TotalConsumption


17.5.4 Water Systems

Water is constituted by a closed circuit for cooling purposes with demineralized/softened water and slag granulation water.

17.5.5 Söderberg Paste Handling

Söderberg paste will be imported in big bags. It will be reclaimed from a storage shed by front-end loader and will be hoisted to the electrode floor for manual handling.

17.5.6 Refinery Reagents Handling

Refinery reagents will be imported and brought to site in big bags whenever possible. An exception will be lime, which can be found locally.

17.5.7 Compressed Air

Compressed air will be used for instruments, dust conveying, and general purposes. Plant air systems will be independent from instrument air systems. All compressors will be the same size, to minimize spare inventory.

17.5.8 Oxygen and Nitrogen

Oxygen and nitrogen are used in the oxidizing stage of the process, dephosphorization (de-P), and decarburization (de-C), and, when required, chemical heating by reaction with ferrosilicon and/or aluminum will be added to the melt. It will be bought locally on a loan-for-use basis and only one storage area and associated facility are envisaged.

17.6 Nickel Recovery and Process Production

The revenue from the nickel and iron units produced annually have been determined from the quantity of FeNi produced annually using the Ni grade and Ni recovery values as well as the amount of feed provided to the process plant from the mine production schedule. The prices used have been based on market studies and forecasts by analysts and agreed by ANC, as presented in Item 19.0.

The FeNi production on an annual basis is largely determined by the total amount and average chemical composition of the blended laterite feed into drying, calcining, and smelting process stages. The target nickel content of the FeNi for the Mayaniquel Project was chosen as 22.5% since the market study carried out by Heinz Pariser indicated that this grade is favorable in terms of the iron credits. Furthermore this Ni grade can also result in higher nickel recovery of around 93% based on the proposed target Blend 4 composition for Mayaniquel laterite. This Ni recovery value has been determined by laboratory and pilot plant-scale smelting testwork. The related pyrometallurgical process modelling carried out allows for the recovery values to be calculated over a fairly wide range of compositions and, in particular, variable Fe/Ni ratios.

In practice the blended feed composition varies in terms of Ni grade, and the Fe/Ni and SiO2/MgO ratios due to the differences in the geology of various areas of the Mayaniquel deposits that are mined over the life of the project. The blending of the feed for processing at the process plant takes place from material in the ore blending stockpiles. These stockpiles comprise higher Ni grade material (direct smelt) with a Ni content of around 1.9% that is mined and transported directly to the ore blending stockpiles at the process plant, as well as upgraded ore that is processed through the ore upgrading facilities to produce a Ni content of 1.55% from a feed grade of 1.24%. The blended process plant feed in the process plant production schedule is based on the ratio of these two feed streams and therefore has a Ni grade of 1.68% Ni which is similar to target Blend 4 (1.7% Ni at a LOI of 10.65%).

The SiO2/MgO ratio of 1.65 in the blended feed in the overall LOM production schedule is also similar to Blend 4, namely 1.6 but somewhat higher ratios close to 2 are reached in a few years.


These higher ratios will require close monitoring and control of the furnace lining and furnace operating temperature because the slag that is formed has a lower melting point than the target of 16000C.

The recovery of Ni is a function of the Ni head grade, the Fe/Ni ratio, the amount of reducing agent (coal) added, and the resulting proportions of iron and nickel oxides that are reduced to produce the 22.5% Ni target grade in the FeNi alloy. The head grade of 1.68% Ni in the blended feed was expected to achieve a 92% Ni recovery in the smelting pilot plant testwork campaign based on the Fe/Ni ratio of 12.9 in the calcined feed, which is higher than the chosen target values for Blend 4, namely 11.7. However the higher recovery value of 93% achieved during the smelting pilot plant testwork campaign is largely due to the favorably low nickel level achieved in the furnace slag of 0.1% Ni.

There are other Ni losses that need to be accounted for in the overall Ni recovery value for the process stages of the process plant. These Ni losses occur during the material handling in the drying and calcining stages (typically <1%) mostly as minor spillages and as dust. There are also small losses during the refining of the FeNi as fume and into the refining slag in spite of recycling. These losses are minimized by processing of the refining slag to recover entrained metal so that the value is typically <1%.

The overall estimated additional Ni losses to those incurred in the smelting stage have therefore been adjusted by 2% which is reasonably conservative. The 93% Ni recovery in the smelting stage was therefore lowered to 91% for a Fe/Ni ratio of 11.7 to take account for these losses and was used in the graph below. The variation in Ni recovery over the range of Fe/Ni ratios is based on the smelting results and data from the modeling work by Mintek during the scoping study stage.

Figure 17.4 below shows the relationships between the Ni recovery and Fe/Ni ratio for the smelting pilot plant testwork results and modeling work at a Ni grade of 22.5% and including the 2% handling and refining losses.


Figure 17.4 Nickel Recovery v Fe/Ni Ratio at a Nickel Grade of 22.5%

These values also take into account the important results of the pilot-scale smelting campaign carried out at Morro Azul as part of this PFS phase of the project. Figure 17.5 shows the relationship between the FeNi alloy grade and the Ni recovery from the smelting testwork results and modeling showing the 93% Ni recovery achieved at a Ni grade of 22.5%.

The average Fe/Ni ratio of 12.9 in the calcined feed to the smelting furnace during the campaign was in fact higher than the Fe/Ni ratio in target Blend 4 of 11.7 so that the recovery of 93% achieved was actually better than expected for this higher Fe:Ni ratio.

The nickel recovery values from the relationship shown in Figure 17.5 with the Fe/Ni was used to calculate the tonnes of nickel produced for each year of the metallurgical production schedule based on the tonnes of blended feed. The amount of FeNi produced was then derived from the 22.5% Ni content by simple proportioning.

The amount of FeNi produced annually was then used to calculate the revenue based on the projected Ni and Fe (in FeNi).


Figure 17.5 Nickel Recovery v FeNi Grade at a Nickel Grade of 22.5%


18.0 Project Infrastructure

18.1 Roads

The project is located approximately 120km from Guatemala City and approximately 167km west of the port of Santo Tomas on the Caribbean Sea. As part of the development of the project a number of roads need to be developed prior to, and during operations. The facility roads have been broken into three sections: main access, mine roads, and ancillary plant roads that are described below in more detail.

18.1.1 Main Access Road

The scoping study considered using existing highways exclusively for access to the Mayaniquel Project, without constructing bypasses around communities or making improvements to existing roadways. This approach was considered to be marginally adequate for MNSA’s intended application under regional conditions at the time.

Since then, the new owners of the Fenix nickel laterite property adjacent to El Estor have advanced their project, including initiating ore haulage by truck to the port for ocean shipment. Additionally, ANC’s expected transport needs have increased as a result of adding a second process production line (rotary kiln and electric furnace) in the third and fourth years of production, effectively doubling the amount of coal, other operating consumables, and FeNi alloy to be transported between the port and plantsite.

Recognizing the stressing of the existing infrastructure due to the Mayaniquel Project’s use, as well as use by other parties, ANC evaluated various transport options, including:

� Rail

� Conveyor (pipe and standard belt)

� Aerial tram

� Truck

� Various combinations of the above

Evaluation included conceptual definition, quantification, capital and operating cost estimation, assessment of potential environmental impacts, and community impacts. In the final analysis, truck transport remained the only feasible means of providing reliable and cost effective transport between the process plant and the port.

Various options for utilizing and improving existing road infrastructure were considered. Conceptual plans form the basis for the initial capital, operating, and sustaining capital costs included in Item 21.0. Highlights of the plans are:

� Construct numerous bypasses around small communities and agricultural operations

� Provide an asphalt surface for 74km of existing road and new bypasses in total to reduce dust and road maintenance

� Construct approximately 10km of new road (excluding bypasses), including construction of two new bridges

� Maintain or improve storm water runoff through the design and installation of diversion channels and culverts where required on the new road sections, bypasses, and improved sections of existing roads


The remaining 82km of the 167km total distance between the port and plantsite consists of publicly maintained asphalt highways of sufficient width and condition for Mayaniquel’s intended use.

Costs for maintenance of the new and improved sections of road have been included in project costs, including repaving at an assumed frequency based on need.

18.1.2 Mine Haul Roads and Bypass Road

As part of the development of three mine licenses, Ausenco was tasked with the design of haul roads outside of the mining panels. These roads connect the orebodies to various facilities such as ore upgrading facilities and truckshops. Because of the large area that contains the three licenses, the external haul roads are built over the life of the mine to support mining requirements and to minimize disturbance, impact to the communities, and sediment transport.

The project has three classifications of haul roads that depend on the type of use and terrain: Class 1 type haul roads are to support both mine and local traffic and the platforms are 20m wide; Class 2 type haul roads are to support mine traffic only and are 15m wide; and Class 3 type roads are to support mine traffic or local traffic in very steep terrain and are eight meters wide to reduce construction costs. The roads have been designed to support maximum speeds of 30km per hour.

All haul roads consider platforms whose widths include 0.5m high safety berms with 1:1 (H:V) slopes; and diversion canals along the inside slopes of the roads that are one meter deep with slopes of 1:1 (H:V). Haul roads with local traffic will have the safety berm between the two flows of traffic. A 0.2m thick aggregate road base will be constructed utilizing material processed at onsite quarries. As part of annual maintenance, approximately 10 to 15cm of additional road base will be placed to account for losses over the year.

Figures 18.1-18.3 show the typical cross sections for Class 1 through Class 3 roads described above.

Figure 18.1 Class 1 – Typical Road Section (Mine and Local)


Figure 18.2 Class 2 – Typical Road Section (Mine Only)

Figure 18.3 Class 3 – Typical Road Section (Mine or Local)

Based on field investigations, the general soil profiles along the haul road alignments consist of topsoil, soil, and weathered bedrock. Therefore, the roads can be constructed with standard equipment without explosives. The majority of the haul roads are located on hillsides with cross slopes steeper than 1.5:1 (H:V) which do not allow for typical cut to fill construction. Therefore, the majority of roads will be constructed on cut sections, the material removed will be placed in local stockpiles, and revegetated to prevent sediment migration issues.

As discussed previously, the haul roads will be constructed over the life of the project based on the mining schedule of the panels located in the three licenses. A total of 15 haul roads are required to be constructed to access all the mine panels (refer to Table 18.1).


Table 18.1 Haul Roads

According to the proposed mine plan, mining will start in the northeastern part of the Sechol license area. The haul road (Road 1) to access this area will need to be constructed by a contractor prior to mine operations commencing. The majority of the haul roads planned to be constructed for the site are 15m wide, with the exception of three roads that have combined local and mine traffic which are 20m wide to accommodate local traffic. Road 7 has multiple use traffic, but is 15m wide instead of 20m. This road will not be used to haul ore, but will see light haul truck traffic to move these vehicles between license areas and service centers.

In the eastern part of the Sechol license area public road 29 accesses communities to the north of public road 7E and is well traveled by local residents. It also travels through the middle of one of the main ore deposits in which mining will commence at the start of operations. To improve safety and prevent conflicts between mining operations and local traffic, a bypass road will be constructed for local traffic (refer to Table 18.2). This road needs to be constructed prior to mining operations beginning and will be located on the east side of this mining area.

Table 18.2 Bypass Road

18.1.3 Ancillary Plantsite Roads

The mine and process production facilities will have a number of internal roads to transport materials and personnel between facilities. These internal roads will be 10m wide with a 300mm aggregate base course. Drainage culverts and surface water diversion canals will direct storm water runoff away from roads and facilities.

18.1.4 Ore Transfer Conveyor

In order to minimize truck traffic and community impacts, particularly as the haul distances become longer from the Tres Juanes Norte deposit area, an overland pipe conveyor (conveyor belt is rolled into a shape of a pipe, thereby totally enclosing material and minimizing dust and

Haul Road Mine Year Platform Width (m) Length (m)Min. Horizontal

Radius (m)

1 Preproduction 15 3,600 40

3 2 15 8,900 40

4 9 15 3,300 40

5 10 15 3,600 40

6 2 15 3,200 40

7 2 15 5,800 40

8 2 15 2,400 40

9 13 20 1,400 40

10 10 20 6,100 40

11 11 15 1,900 40

12 2 20 5,600 40

13 2 15 1,600 40

14 16 15 2,800 40

15 2 15 1,600 40

16 15 15 4,000 40

Bypass Road Mine Year Platform Width (m) Length (m)Min. Horizontal

Radius (m)

2 Preproduction 8 6,800 25


spillage) will be constructed between Tres Juanes Norte and the process plant. All high grade ore from the mine and upgraded ore from the upgrading facility will be conveyed, rather than hauled, to the process plant.

18.2 Water Supply

Based on the project water balance completed by IGEO, approximately 559m3/hr (or 0.155m3/s) is required.

The basis for the PFS is to utilize a small portion of flow from two area streams. They are the Rio Seococ and the Rio Seocoquito. These streams have good water quality with low total suspended solids (sediment). The average annual flows for both streams for the average and dry years were calculated based on local data (refer to Tables 18.3 and 18.4).

Table 18.3 Estimated Monthly Stream Flow (average rainfall year)

Table 18.4 Estimated Monthly Stream Flow (dry rainfall year)

Assuming that Mayaniquel can use a maximum of 40% of the flow from the streams, the maximum flow available from streamflow during the dry season will be 0.12 m3/s (average year) and 0.08m3/s (dry year). However, there will be a shortage of 0.07m3/s (or 252m3/hr) during the driest month in the dry year. Based on the dry year approximately 336,900m3 additional water is required from another source.

Therefore, to ensure a sufficient water supply to operate during the dry season a water reservoir will be constructed with a capacity to supply the project with over two months of water, i.e., 832,000m3 from high wet season flows.

This water supply system consists of a low head intake weir, gate valve, 12-inch buried steel pipe to convey water from the intake (stream) to a flow control box at the reservoir, and an overflow that allows excess water to return to the stream.

A water supply pump station will be placed at the reservoir to supply water to the project water storage and distribution system.

J F M A M J J A S O N D

Rio

Seococ

Rio

Seocoquito

Total 20.0 0.4 0.3 0.3 0.6 1.3 2.0 3.1 3.0 3.1 1.3 0.9 0.6 1.4

Stream

1.0 0.4 0.6 0.9 0.2 0.3 14.0 0.2 0.4

Catchment

Area (km2)

Monthly Stream Flow (m3/s) Annual

Mean

(m3/s)

0.4 0.4 0.2

2.2 2.1 2.2 1.4 0.9

0.1 6.0 0.2 0.4 0.1 0.1 0.9 0.9 0.9 0.6 0.3

J F M A M J J A S O N D

Rio

Seococ

Rio

Seocoquito

Total 20.0 0.3 0.2 0.3 0.4 1.1 1.7 2.7 2.5 2.7 1.0 0.8 0.4 1.1

Annual

Mean

(m3/s)

StreamCatchment

Area (km2)

Monthly Stream Flow (m3/s)

14.0 0.2 0.1 0.2 0.3 0.8 1.2 0.8

6.0 0.1 0.1 0.1 0.1 0.3 0.5 0.8 0.7

1.9 1.8 1.9 0.7

0.3

0.6 0.3

0.8 0.3 0.2 0.1


18.3 Coal Storage Facility

Similar to the coal staging area at the port, a coal storage facility consisting of a laydown area for 50,000 tonnes of coal and a leachate collection pond will be constructed adjacent to the rotary kiln and furnace. The laydown area will consist of: a compact soil liner overlaid by 30cm of aggregate with a series of subdrain pipes; a gabion barrier to contain the coal within the facility limits; and a perimeter surface drain to capture any surface runoff from the facility and divert it, along with the subdrain pipes’ discharge to the leachate collection pond. The leachate collection pond, located next to the coal storage facility, is lined with a geomembrane liner to reduce the chances of effluent from the coal area infiltrating into the environment. The runoff from this facility will be captured in the leachate collection pond and will evaporate or be collected and treated for discharge into the environment.

18.4 Slag Storage Facility

The slag storage facility is located on the east side of the fresh water storage pond. The slag production rate is 1.02 million tonnes per year for the first four years, then ramps up to 2.04 million tonnes per year for the remaining life of the project. The facility is situated on a gentle slope of 1 to 2% that drains to the south. The facility will be built in yearly stages to minimize disturbed area and soil erosion.

The initial storage area has a capacity for approximately 1.33 million tonnes (or 1.5 years) and occupies approximately 67,900m2. The ultimate facility will occupy approximately 998,000m2 and has a capacity for 40 million tonnes (22 year life). In addition, a containment berm will be built around the storage facility to preclude migration of slag out of the facility and to direct runoff to the stormwater pond. The storage facility will include a composite liner system consisting of low permeability soil liner and a two millimeter HDPE geomembrane liner to protect the groundwater below these facilities. A series of perforated drainage pipes will be placed on the geomembrane to capture water that has infiltrated the slag and convey it to the stormwater pond. The slag will be transported to the storage facility using trucks and stacked at angle of repose, with setback benches to produce an overall exterior slope of 3:1 (H:V). The maximum height of the slag in the storage facility will be approximately 60m.

Rainfall that comes in contact with the slag will be collected and conveyed to a stormwater pond. The initial phase has a stormwater storage capacity for 143,000m3. Depending on the water quality, the water will be reused or allowed to evaporate. If there is any excess water it can be treated through the wastewater treatment plant. The pond will have 2:1 (H:V) side slopes with a safety berm. Similar to the slag storage facility, the pond has a composite liner to reduce potential infiltration of runoff that has come in contact with the slag.

18.5 Security and Fencing

A Guatemalan security firm will provide contracted security for the Mayaniquel Project, starting at the time of preproduction. The contractor will make personnel available to provide security for the plantsite, as well as the offsite facilities such as the port staging area and mine support facilities. The security team’s responsibilities will be to: maintain a 24/7 presence at the site access guardhouse to authorize access to incoming personnel and perform loss-control checks of outgoing personnel; maintain perimeter security; and conduct roving patrols around the site.

Facilities will be encircled by minimum two meter high chainlink fencing to control access for personnel safety and loss control reasons. Primary access to the Mayaniquel Project will be from a regional highway through the site access guardhouse located at this entrance. Security checkpoints will also be constructed at other entrances to the Mayaniquel Project.


18.6 Water Treatment and Minesite Sewage

Based on analytical results from samples taken from streams selected for the water supply source, current treatment technologies will be more than adequate to render the water suitable for its intended use, whether for process make-up water, road or material handling dust control, or human consumption. Settling, filtration, clarification, and chlorination are some of the technologies which will likely be considered individually or in some combination during the next phase of project development.

To the extent possible, surface flows will be diverted around mining and processing areas, thereby negating the need for any form of treatment.

Precipitation falling on mining or processing areas will be collected in ponds to allow settlement of any total suspended solids due to erosion. The water will be used to fulfill mining or processing needs, reducing the amount of freshwater make-up required from the water supply source. If excess inventories accumulate, water will be sampled, and treated if necessary to meet Guatemalan water quality standards before release to the environment.

Process water will be retained within process circuits for reuse.

Commercially available packaged sewage treatment plants will be installed at the main process facilities, the mine support facilities, and the camp. Effluent will be required to meet Guatemalan regulations for discharge, or undergo additional treatment until it meets these standards or will be recycled for reuse. Technical details will be developed during the next phase of project development.

18.7 Employee Housing and Transportation

Twenty-five percent of the total construction and operations workforces have been assumed to live within surrounding communities. Demand for housing to accommodate the remainder of the workforces will almost certainly exceed supply, particularly during both the initial 30 month construction period and the 24 month plant expansion construction period in operating years three and four. As a result, the cost of purchasing and maintaining a camp facility to house a peak of 1,946 workers in preproduction year -1 has been planned. Current plans are to locate the camp within two kilometers of the plantsite. Maintenance, laundry, and catering services will be provided by a professional catering contractor.

Benefits to this approach are:

� Not overloading community resources

� Maintaining some degree of separation of construction workers and community residents

� Ensuring a consistent opportunity for rest and nourishment to maintain work productivity and safety

Since the camp will be purchased and maintained in operation at least through production year four to support the expansion, current plans include housing the operations workforce in the camp, as well, although there will likely be some degree of separation and difference in amenities for the operations accommodations.

Written quotations for specific camp facilities and services, and catering were obtained from qualified vendors. Utilities and services such as power, water, water treatment, and sewage treatment were also included. These costs form the basis for project capital and operating costs as discussed in Item 21.0 of this Technical Report.


Transportation between accommodations and work locations for regularly scheduled shifts will be provided by vans and buses, utilizing existing commercial service, private service contracted by MNSA, or company-operated buses and vans. Movement of workers about the project site will be by company-supplied pickups, vans, or buses.

For management, supervisory, or technical staff subject to call-out during off-hours, company vehicles will be assigned for transportation between accommodations and work locations.

Studies of available housing and transportation services in surrounding communities will be completed during the next phase of project development, with particular attention to community concerns regarding the potential impact on the area’s cottage industries, as well as an interest in taking advantage of local business opportunities.

MNSA will be sensitive to the impacts of sudden and substantial increased demand on the existing infrastructure and supply of available goods and services. Aware of the possible need for constructing additional housing, water supply and treatment, sewage treatment/disposal, and/or electrical distribution capabilities, MNSA will remain sensitive to the impact on availability and pricing of goods and services for members of the local communities.

18.8 Fire Protection

Mine equipment maintenance, process facilities, and camp accommodations will be ringed by buried firewater mains supplied from electric motor-driven firepumps with diesel engine-driven firepumps as emergency backup. The firepumps will draw water from dedicated reserve storage in adjacent water storage tanks.

Above-ground fire hydrants will be strategically located near facility entrances, based on risks. Hydrant locations will enable any potential fire to be fought from two separate hydrants. Hose cabinets containing hydrant wrenches and specified lengths of fire hose will be located immediately adjacent to each fire hydrant.

Wet standpipes with attached fire hose reels will be strategically located within certain key access doors in risk areas.

At least one fire hydrant will be located within easy hose reach of fuel storage and dispensing facilities. A foam generator for attachment to the fire hose will be stored in a cabinet adjacent to the fire hydrant.

Large wheel-mounted CO2 fire extinguishers will be located in maintenance areas where cutting and burning operations take place.

Smaller, handheld wall mounted fire extinguishers, specific to the risk, will be mounted outside electrical rooms, kitchen areas, and throughout office, accommodation, and warehouse areas. Additionally, depending on Guatemalan code requirements, insurance underwriter requirements, and a detailed risk assessment, offices, accommodation units, and warehouses may also employ dry or wet pipe sprinkler systems.

Sleeping areas in accommodation units and unmanned areas such as electrical rooms and warehouses will be equipped with smoke detectors, heat detectors, and carbon monoxide alarms.

18.9 Communications

MNSA has offices in El Estor, the Chulac exploration camp and in Guatemala City. Office locations, including the plant facilities, mine facilities and port areas, will be added as the project advances.

No detailed plans are in place regarding communications, but it is envisioned that all offices will be linked through a satellite telecommunication system with the main hub located in Guatemala City.


The interconnected system will provide access to each location’s local area network as well as the local PBX telecom system at each location.

Radios will equip all process, mine, and administration vehicles and cellular phones will be provided to necessary personnel.

A detailed study of connectivity options will be developed in the next phase of the project.

18.10 Sanitary Landfill

General non-hazardous waste material generated at the mine, camp, and process facility will be disposed of in a sanitary landfill. Historical data from other projects of similar size were utilized to provide an order-of-magnitude cost estimate. The general design will be to international standards and will consist of excavating a series of panels three to five meters deep utilizing a dozer. The panels will have a composite liner system, consisting of compacted low permeability soil liner and 1.5mm HDPE geomembrane. On top of the liner system there will be a leachate collection system consisting of an aggregate drainage blanket and drainage pipes to a sump. The sump will periodically be emptied and the effluent will be processed through the wastewater treatment plant. To prevent local access to the site, a perimeter security fence with a gate will be installed.

Daily operations in the landfill will include the placement of the waste along with the placement of a daily soil cover from the soil stockpile to reduce unwanted infestation by rodents or insects, and to preclude windblown trash beyond the landfill boundaries.

18.11 Port Staging Facility

During construction and operation of the Mayaniquel Project, there will be equipment and materials transported by ship. The port chosen with acceptable loading and unloading capabilities is the Santo Tomas de Castilla port located in the town of Los Achiotes on the Caribbean Sea (refer to Figure 18.4). The mine will access the port facility by highway CA9.

Within the confines of the port there is land located on the south side which is available for development of staging facilities. This option was chosen for the added security within the port facility, as well as the close proximity for efficient unloading and avoidance of demurrage charges. The staging facility occupies 31,200m2 that houses:

• Access control shed • Truck scale • Coal storage area • Warehouse • Leachate pond for coal storage area

The staging facility will be surrounded by security fencing to control entry into the facility. At the main gate an access control shed will be constructed and manned by security personnel. In addition, there will be a truck scale located just inside the entrance to weigh all incoming and outgoing vehicles.

The coal storage area has a capacity to store 30,000 metric tonnes of coal. The laydown area consists of a compacted soil overlaid by an aggregate base with drainage pipes that discharge into the leachate collection pond. This system captures any runoff from the coal and conveys it to the pond. In addition to the leachate collection system, the coal stockpile will be covered by tarps to prevent rainfall migrating through the coal and generating runoff contaminated with coal.


As part of the facility a 6,200m2 warehouse will be constructed for storage of the FeNi alloy in bulk bags that will be containerized at this facility for ongoing ocean shipment. The warehouse will also be used to store other items of value to be shipped to the mine.

Behind this facility there will be a leachate collection pond. This pond will be lined with a geomembrane liner and will capture any surface runoff from the coal staging area. The runoff will evaporate and the pond will need periodic cleaning. If necessary, the pond can be emptied and the water taken to a local treatment plant for processing.


Figure 18.4 Santo Tomas Port Staging Facility


18.12 Power Supply

18.12.1 Updated Preliminary Power Supply Study

Electro Consulting (Electro) of Guatemala City originally completed a Preliminary Power Supply Study for the Mayaniquel Project PEA during the period December 2010-May 2011.

Using updated electrical load requirements provided by IGEO, the process and infrastructure engineer, and current conditions within the Guatemalan energy sector, Electro provided a comprehensive update to its earlier report. This update will serve as the basis for the information presented in this section.

18.12.2 Guatemalan Energy Market – General

Generators and traders (those who legally broker the purchase and sale of energy between generators and consumers) are allowed freedom in the market. Private generators, traders, and grand consumers (those requiring more than 100kWh) are allowed to enter freely into contracts for the sale or purchase of energy or capacity. However, transmission and distribution companies are not subject to price regulation. A private distribution arrangement, one that operates privately and does not use public assets, allows the involved parties to negotiate terms and conditions for their particular situation.

The General Law of Electricity establishes the MEM as the governing body, the National Commission of Electricity and Energy (CNEE) as the regulating body, and the Spot Market Administrator (AMM) as the market administrator.

18.12.3 Current Conditions

18.12.3.1 Availability of Power Generation

Guatemala currently has 2200MW installed power generation with a maximum demand of 1500MW, leaving a reserve of 700MW available for new users. Coupled with the interconnection capabilities described below, more than enough power generation capacity exists to meet the Mayaniquel Project’s needs.

18.12.3.2 Transmission System

Guatemala has made it a priority to upgrade its transmission system. TRECSA, a Guatemalan subsidiary of a Colombian contractor, was awarded the contract to design, supply, and install all remaining segments required for upgrading the complete national high voltage transmission system to 230kV.

One leg of the 230kV loop within northeastern Guatemala will pass within one kilometer of the preferred plantsite location. TRECSA has recently reported 62% completion of the entire project, with final completion scheduled during the third-quarter of 2013. The available capacity of this line will be 400MW.

Additionally, an existing 69kV transmission line passes adjacent to the preferred plantsite. This line has 25MW of remaining capacity.

The new 230kV line and dedicated Mayaniquel Project substation will be used to provide power to the rotary kilns, electric furnaces, and associated equipment and facilities. The existing 69kV line will provide power for earlier and lower power requirement needs, such as construction power, the construction mancamp, mine operation and maintenance facilities, and the ore upgrading facility.

18.12.3.3 Estimated Project Power Requirements

The execution plan which forms the basis for this PFS provides for development of the project in two stages as shown in Table 18.5.


Table 18.5 Stages for Power Requirements

18.12.3.4 International Interconnection Capability

On August 28, 2012, Guatemala officially announced initiation of commercial operations of three international interconnections, bringing the total operating interconnections to four, all at or exceeding 230kV (Mexico is 400kV). All five Central American countries are interconnected with at least 230kV capabilities and capacity to transport up to 200MW per link. This allows a consumer to purchase power from any generator connected anywhere on the grid, thus enhancing competition and the opportunity to acquire power at a favorable price.

18.12.3.5 Changes to Laws/Regulations and Market Operations

Due to the international interconnections described above, Guatemalan rules and regulations must be adapted to the Laws of the Mercado Electrico Regional (MER).

In accordance with the MER Treaty signed by Central American countries, MER must be gradually implemented and, in the case of Guatemala, the most important difference between MER and the Local Market is the Generators Dispatch; in Guatemala it is based on an economic dispatch at a minimum cost, while in MER, it is based on Price Dispatch.

The most important effect this has for Mayaniquel is the fact that an electrical study must also be submitted in El Salvador before the Regional Operational Entity of MER (EOR). This study must model the electrical loads of the Mayaniquel Project, especially the furnaces, and demonstrate that these loads will not cause important distortions in the electrical system of Central America.

18.12.4 Power Supply Options

The PEA considered the following options:

� Directly invest in a power plant to become a self-sufficient generator

� Enter into a Power Purchase Agreement with an existing trading company or generator operating in Guatemala

� Purchase power directly from the spot market as a grand consumer

� Utilize the Energy Purchase Option (described below)

The only change to the above-listed options is now the Mayaniquel Project can seek a competitive Power Purchase Agreement from a trading company or generator connected to the interconnected grid anywhere within Central America.

Stage Construction OperationEstimated Power

Requirement

1

Single train (one rotary kiln and one electric furnace) processing 1.33 million tonnes feed and producing 20,000 tonnes ferronickel product per year

Preproduction Years (1-3)

Operating Year 1

105MW

2

Addition of a second train identical to the above, resulting in total processing of 2.66 million tonnes feed and producing 40,000 tonnes ferrnonickel product per year

Operating Years (3-4)

Operating Year 5

210 MW

Description


18.12.5 Recommended Power Supply Option

Electro’s recommendation remains unchanged from the PEA. MNSA should use the Energy Purchase Option. Doing so will allow MNSA to select the lowest price between the spot market and its Power Purchase Agreement with a specific generator on a weekly basis. This will provide MNSA with a price ceiling to cover the risks of sudden spot market volatility, while providing the opportunity to take advantage of lower spot prices resulting from excessive rain for hydroelectric generation and completion of other lower cost plants.

18.12.6 Average Power Cost

Wholesale prices continued to increase throughout 2011 due to rain conditions (hydroelectric availability), exports of power to other Central American countries, and the cost of heavy fuel oil to generating plants.

The average spot price to date in 2012 is $0.144 per kWh. The 2012 average is mostly the result of higher consumption and an increase in exports to Central America.

The above prices are considered short term pricing. Electro considers prices offered to the largest energy distributors in Guatemala as a more appropriate basis for longer term pricing. Using a combination of projections for carbon, hydroelectric, and natural gas (a new option in Guatemala), all future pricing forecasts through 2026 support an average power cost of $0.08/kWh, excluding VAT. The possibility of obtaining a VAT exemption should be explored by submitting a formal petition to authorities.

18.12.7 Implementation Schedule

Design, regulatory review and approval, procurement, and construction of the main substation and transmission lines should commence a minimum of 24 months before the required energization of the power supply.


19.0 Market Studies and Contracts

19.1 Market Studies

An original market study entitled “The World Ferronickel Markets” was completed by Heinz Pariser Alloy Metals & Steel Market Research (Pariser) of Xanten, Germany during the fourth quarter of 2010; it was issued in January 2011 and formed the basis for the Mayaniquel Project PEA in July 2011.

Again under contract with ANC, Pariser updated its original findings in September 2012 (Pariser, September 2012) in a report entitled “Ferronickel Markets Update”. Pariser again provided further information in November 2012 (Pariser, November 2012).

19.2 Product Use, Demand, and Supply

The process plant described in this Technical Report will produce a 22.5% nickel FeNi alloy product. Ferronickel is almost exclusively used in producing stainless steel. Largely driven by China, the rapid growth in demand for stainless steel through 2011 declined in 2012, but is expected to return to long term steady state growth, albeit at a lesser rate than the peak in 2011.

When production was curtailed by many producers during the 2008-2010 worldwide financial crisis, the shortage was partially offset by nickel pig iron (a substantially lower grade, unrefined nickel and iron product), particularly in China. While nickel pig iron production is expected to continue to increase and production from new FeNi plants will begin to contribute to supply, overall demand for FeNi products will support a return to rising prices in the longer term.

19.3 Nickel Price Forecasts

Price forecasts considered in establishing the basis for the economic evaluation presented in Item 22.0 of this Technical Report, are listed below.

a) Pariser November 2012, shown below in Table 19.1 b) Merrill Lynch, Global Metals Weekly, July 27, 2012, shown below in Table 19.2


Table 19.1 Alternative Nickel Price Forecast

Table 19.2 Base Metals Price Forecast

Information from Pariser and the Merrill Lynch forecast were averaged to produce an alternate forecast for the nickel in the FeNi product as shown below in Table 19.3.

Long-term Trend

2000-2025

Nominal Deflated in US $/lb2000 3.92 5.18 6.33 1.56 2001 2.70 3.47 6.60 1.63 2002 3.07 3.82 6.88 1.70 2003 4.37 5.30 7.15 2.08 2004 6.27 7.43 7.43 2.67 2005 6.69 7.72 7.71 3.34 2006 11.00 12.39 7.98 4.21 2007 16.89 18.55 8.26 6.11 2008 9.58 10.25 8.53 7.39 2009 6.65 6.95 8.81 5.85 2010 9.89 10.22 9.08 6.26 2011 10.38 10.59 9.36 7.45 2012 9.63 7.94 7.15 2013 9.91 8.16 7.35 2014 10.18 8.21 7.39 2015 10.46 8.12 7.31 2016 10.73 8.40 7.64 2017 11.01 8.67 7.79 2018 11.29 8.95 7.93 2019 11.56 9.23 8.08 2020 11.84 9.50 8.22 2021 12.11 9.78 8.37 2022 12.39 10.06 8.51 2023 12.66 10.33 8.66 2024 12.94 10.61 8.80 2025 13.21 10.89 8.95

Heinz H Pariser, Alloy Metals & Steel Market Research

ProductionNi Price

Forecast

Nickel PriceYear

Cost Estimate

FeNiLong Term

Expectations

Outlook

Historic

USD 2012 2013 2014 2015

$ 3QE 4QE 1QE 2QE 3QE 4QE E E E E

/t 1,900 2,250 1,900 2,250 2,400 2,400 2,076 2,200 2,225 2,250 2,599

/lb 86 102 86 102 109 109 94 100 101 102 118

/t 7,400 850 7,000 7,500 8,250 7,500 8,018 7,813 7,500 7,438 6,779

/lb 336 385 318 340 374 340 364 354 340 337 308

/t 1,900 2,200 2,100 2,300 2,550 2,750 2,041 2,338 2,750 2,800 2,282

/lb 86 100 95 104 116 125 93 106 125 127 104

/t 16,750 18,750 17,500 18,000 18,500 18,000 18,067 18,250 18,000 19,000 20,943

/lb 760 851 794 817 839 817 820 828 817 862 950

/t 1,950 2,200 2,000 2,200 2,550 2,650 2,025 2,363 2,650 2,750 2,124

/lb 88 100 91 100 116 120 92 107 120 125 96

*Source: Merrill Lynch: Company reports, CRU, Woodmac, Bloomberg, Reuters, Metal Bulletin, BofA Merrill Lynch Global

Commodity Reseach

20132012Base

Metals

LT

Price

Zinc

Nickel

Lead

Copper

Aluminum


Table 19.3 Average Price Forecast for Nickel in FeNi Alloy

19.4 Iron Credit Forecast

The value of iron in FeNi was based on the chosen 22.5% nickel grade. One tonne of FeNi contains 775 kg of Fe and 225 kg of Ni, so the ratio of Fe/Ni is 3.44. One tonne of nickel therefore is associated with 3.44 tonnes of iron. The value of one tonne of nickel must therefore include the selling price of iron per tonne multiplied by this factor of 3.44. This is how the selling price of Ni in FeNi was calculated using the iron price of $400 per tonne. Market data on the prices for 40% and 25% grades of FeNi were used to calculate the price in $/t FeNi for the 22.5% Ni grade shown in Figure 19.1 below, and the price in $/t Ni including the iron credit in the FeNi is shown in Figure 19.2 below. The nickel price used was $8.50/lb and iron price $0.18/lb as described in 19.5 below.

Ryans Morgan H H Pariser Merryll

Notes Stanley (Updated) Lynch BOA*

2008 21,100 21,100 21,100

2009 14,663 14,645 14,654

2010 21,825 21,893 21,859

2011 22,895 22,897 22,896

2012 19,800 17,500 18,067 17,784

2013 18,170 21,800 18,000 18,250 18,125

2014 18,295 18,100 18,000 18,050

2015 17,900 19,000 18,450

2016 18,510 19,648 19,079

2017 19,120 20,296 19,708

2018 19,730 20,943 20,337

2019 20,340

2020 20,950

2021 21,560

2022 22,170

2023 22,780

2024 23,390

2025 24,000

22,170 20,943 21,557

10.06 9.50 9.78

*http://www.businessinsider.com/morgan-stanley-commodity-outlook-2012-3?op=1

Source: Heinz H. Pariser and Merrill Lynch

2019 to 2025Average price $/t

Average price $/lb

YearAverage HHP

and ML/BOA


Figure 19.1 FeNi Price in $/t FeNi Alloy as a Function of FeNi Grade

Figure 19.2 Ni Price in $/t in FeNi as a Function of Ni Grade


19.5 Economic Evaluation Product Pricing Basis

While the forecasts shown above support a higher nickel price, for purpoes of the economic analysis “Base Case”, to use a more conservative long term nickel price of $8.50/lb and an iron credit at $0.17/lb for five years before moving to $0.18/lb iron credit for the long-term has been used for the Technical Report economic analysis.

Though not used as the basis for the PFS economics, the consensus long term nickel price of $8.94/lb nickel, as determined by 23 market analysts shown below in Table 19.4, was considered. The impact of using this pricing instead of the $8.50/lb nickel can be seen in Table 22.4.

Table 19.4 Analyst Consensus Commodity Prices

Nic Barcza, PhD, PrEng, has reviewed the above-listed reports and, as author and Qualified Person of this section, has confirmed that the results support the assumptions of nickel price and iron credit forecasts used in the economic analysis in this Technical Report.

19.6 Contracts

As FS activities recommended in Item 26 commence, there will be contracts for the indicated services when a FS is initiated.

2012 2013 2014 2015 2016 LT

01-Oct-12 BAML 8.14 8.28 8.17 8.62 8.91 9.50 01-Oct-12 Salman Partners 7.72 7.13 7.17 8.39 8.24 01-Oct-12 Canaccord 8.18 8.00 8.50 8.50 8.75 9.00 24-Sep-12 Citi 8.33 9.87 11.07 10.89 9.07 17-Sep-12 BMO 8.17 8.50 8.50 8.50 8.50 17-Sep-12 Scotia 8.17 8.00 8.00 8.00 10.50 10.50 17-Sep-12 National Bank 7.96 8.00 8.00 8.00 8.00 17-Sep-12 Credit Suisse 10.44 8.14 01-Oct-12 Haywood 7.85 8.00 8.00 8.25 8.50 8.50 17-Sep-12 Macquarie 7.91 8.28 9.58 11.00 12.00 11.00 16-Sep-12 RBC 8.00 8.75 9.50 10.00 11.00 10.49 14-Sep-12 UBS 7.92 8.55 9.30 9.30 9.30 8.20 06-Sep-12 TD 8.30 9.00 8.50 8.50 8.50 04-Sep-12 Morgan Stanley 8.06 8.30 9.00 9.50 10.50 11.89 04-Sep-12 Cormark 8.11 8.00 7.50 07-Sep-12 CIBC 8.00 8.50 8.50 7.50 03-Sep-12 Deutsche Bank 8.29 8.85 9.07 8.85 8.62 8.17 01-Sep-12 Goldman 7.99 8.00 8.50 9.00 9.25 9.24 31-Aug-12 JP Morgan 8.11 8.73 30-Aug-12 Nomura 7.99 9.38 9.00 9.00 9.00 9.00 20-Aug-12 Dahlman Rose 9.00 9.25 13-Aug-12 Numis 8.37 8.90 8.50 08-Aug-12 GMP Securities 8.00 9.25 8.38 8.38 8.38 7.50

8.26 8.57 8.78 9.04 9.56 8.94

Source: Thomson One Analytics/CIBC

Nickel Price ($/lb)FirmDate

Average


20.0 Environmental Studies, Permitting, and Social or Community

Impact

20.1 Environmental Baseline

MNSA began environmental baseline data collection to support exploration and development in 2009. The intent of baseline data collection was to first and foremost document existing conditions at the site. Baseline data collection has included historical information from previous owners of the site, other sources (i.e., governmental agencies), and new data. MNSA intends to utilize this information to document compliance, develop environmental protections, and design appropriate mitigation measures to initially satisfy Guatemalan regulatory requirements of the MEM during exploration. At the same time, MNSA is also collecting environmental data to support mine development permitting through MARN. Environmental baseline data has also been collected to satisfy international lending (World Bank/International Finance Corporation (IFC)) requirements to support project financing options and alternatives.

To support this effort, MNSA hired a full time environmental, health and safety manager and contracted Tetra Tech, an internationally recognized mining and environmental consulting firm, to design a program that would satisfy international requirements. Consultoria Technologia Ambiental, SA (CTA) was then hired to follow-up with satisfying both WorldBank/IFC and Guatemalan requirements.

To date, MNSA has completed three EIAs to support the Sechol, Tres Juanes, and Amanecer exploitation licenses. Additional work is ongoing and needed to support design, permitting, and compliance for the entire project.

Environmental baselines for the areas of interest to the Mayaniquel Project include the following primary disciplines:

• Surface water, • Springs inventory, • Air quality, • Sound pressure level and noise, • Groundwater, • Meteorological data, • Archeology, • Aquatic biology, • Vegetation and wildlife, and • Socioeconomics and community consultation

20.2 Permitting

The permitting requirements anticipated to develop and operate the Mayaniquel Project are shown in Table 20.1. Table 20.2 presents the regulatory authority, objectives, and additional information regarding each permit.


Table 20.1 Permitting Requirements and Regulations

Sechol I

ITre

s Juan

esAm

anece

rPro

cess

Pla

ntPi

pe Conve

yourPow

er lin

eH

aul R

oadPort

Fac

ility

Aquatic

transp

ort (f

resh

wate

r)

Permitting Requirements and Regulations

(Click on each name for details)

• • • Reconnaissance, Exploration and Exploitation license

• • • • • • • • • Environmental Studies

• • • • • • • • Municipal construction Permit

• • • • Land Acquisition

• • • • • • • • • Environmental License & Environmental Bond- Insurance

• • • • Technical Closure Commitment and Environmental Recovery

• • • • • • • Forestry License

• • • • Importation Licenses, Transport and Operation of Density Gauges and Dosimetry Agreements

• • • • Operator Licenses y Nuclear Protection

• • • Licenses for Storing, Use and Transport of Industrial Explosives and Powder Kegs

• • • • • • Export Credentials

• • • • • License for the Storage of Fuel for Self-Consumption

• • • • Frequencies Usufruct Titles

• • • • • • Electrical Permits

• • • • • License to Import and Use Raw Materials and Chemical Precursors

• Hydrogeological Study

• Discharge and waterwaste reuse

• • • • • • • Cultural Heritage Protection

• • • • • • • • Requirements for public road use (when applicable)


Table 20.2 Permits - Regulatory Authorities and Objectives

Permit Responsible authority/

Legal bases Objective Comments

Reconnaissance,

Exploration, and

Exploitation licenses.

MEM/

Articles: 121 literal b and 125 of the political

constitution of Guatemala; 7, 8, 9, 17, 19, 20,

21, 24, 27, 41, 71 of the Mining Law

To obtain the appropriate authorization from the

Ministry of Energy and Mines, during the different

project phases required by any mining project,

such as recognition (recognizing areas to

determine the location of mineral), exploration

(field work, drilling and sampling to assess the

level of mineralization ), and exploitation

(extracting the mineral found in an area of

interest).

Any application relating to mining permits should

be presented to the General Direction of Mining

with accompanying documents, schedules and

data required by Article 41 of the Mining Law.

Steps to obtain permits:

1. Application to the General Mining Direction.

2. Cadastre Review MEM.

3. Supervision (inspection).

4. EIS approval.

5. Legal advice by MEM.

6. Attorney General's Office.

7. Resolution.

EIS (prior to operation

phase):

- Process & Power Plant

Minor category EIS:

Fuel Storage tanks

- Power substation, - electric

transmission lines, Pipe

conveyor,

- constructions of additional

hauling roads,

- constructions at Port

facilities,

- Others facilities needed for

the project

MARN/

Article 28 of Government decree 431-2007

Assessment, control and environmental

monitoring. Articles 72, 74, 78 Government

decree 33-2008 (updated 431-2007). Article 8

Protection and Improvement of the

Environment Law. EIS Terms of reference

To obtain permits for specific project activities or

facilities not included at all, or without enough

detail into the EIS, or because the separate EIS is

requested in a specific regulation.

Approximate time required is variable:

Process & power plant – 1 – 1.5 year

Fuel Storage - 2 months,

Power substation - 8 months,

Power lines - 3 months,

Pipe conveyor - 3 months,

Haul road construction - 3 months,

Port facilities - 3 months

*Some of these may be permitted simultaneously,

and together with a process plant EIS.

Municipal Construction

Permit

Local Municipality/

Articles 34, 35 literal b, 53 literal d, 67, 68

literal e, 72, 146, 147, 148, of the Municipal

Code.

Article 68 of the Municipal Code states that

these are competencies of each municipality:

e) Approval of building permits for

construction, public or private, in each

municipality.

To start with the construction works. The request should be presented to the Mayor

and City Council representatives, accompanied by

the construction plans (signed and stamped by a

certified professional). Also, it should pay a fee

for establishment, according to the municipal rate

and the valuation determined by the Municipality.

This permit, in municipalities that do not have

Building Regulations, must be granted by a Council

resolution approving the plans, setting a fee and

emitting the permit.

Permit within 30 days.

Land Acquisition National Land Registry/

Articles: 39 of the political Constitution of

Guatemala, 464, 473, 612, 617, 618, 620, 622,

624, 633, 634, 635, 637, 703, 715 of the Civil

Code, 7, 8, 17 of the Mining Law.

To acquire land. When the property is registered in the National

Land Registry, land acquisition may be made

directly through a public deed.

In cases of possession, it is necessary to prove the

availability of the property through possession

affidavits, in order to have a legal document that

specifically allows for sale.

Timing depends on individual and group

negotiations that allow fixing the maximum

purchase price.

Environmental License &

Environmental Bond-

Insurance

MARN/

Articles: 1, 2, 4, 8, 9, 10, 11, 12, 13, 31, 32 and

33 of Decree 68-86, Law for the Protection

and Improvement of the Environment, 7, 11,

12, 19, 21, 40, 41, 73, 23-2003 Government

Agreement that contains the Regulation of

Evaluation, Control and Environmental

Monitoring. Guatemala Congress 27-96 Flora

Any resolution approving environmental

assessments, establishes the amount to be cover

with a bond, which is related to implement the

mitigation measures and EMPs described in the

EIS.

The objective is to assure that the project

The following should be presented once the

approbatory resolution is notified:

2. Environmental commitments compliance bond.


and Fauna Red List complies with good environmental practices. Also, the following should be requested:

Ask for the mining project's environmental license

to be extended.

Average term: 2 to 4 months.

The requirement of environmental insurance is

subject to MARN´s decision.

Mine Closure and

Environmental Recovery

Approbatory resolutions of the Environmental

Impact Study and the Mining Exploitation

License; article 31 of the Mining Law; 22, 27,

34 of Decree 114-97, Executive Body Law.

To guarantee the obligations of the mining

exploitation license owner, support the technical

management of the mining rights and ensuring,

with a compliance bond, the technical closure or

early release of a mining right.

Addressing of the direct agreement to MEM and

MARN.

Establish the compliance bond amount according

to the project's size and technical closure cost.

Forestry License INAB/

Articles: 1, 2, 3, 4, 5, 6, 9, 48, 49, 50, 51, 52,

55, 56, 58, 66, 67, 68, 70, 87, 97 of Decree

101-96, Forestry Law; 36, 37, 41, 45, 48, 50,

51 Forestry Law; 1, 2 of the Rules of Forestry

Products Transit.

Every mining project must have a forestry license

to implement forestry management plans in its

region.

To have INAB's authorization prior to

implementation of the forestry plan.

Forestry management application to INAB's

regional headquarters. Depending on the project

and its area for reforestation there are two

options:

1. Forestry management plan application.

2. Accredit the property of the real estate.

Option A

3. Establish a compliance bond according to the

project size, guaranteeing reforestation.

4. Designation of a forestry regent.

5. Registration of sending notes and chainsaws.

After the forestry management plan is approved,

INAB will extend the license certificate

Option B

Paying a fee equivalent to 10% of the volume of

the standing timber (current value is

approximately 2,400 USD per hectare).


Importation Licenses,

Transport and Operation of

Density Gauges and

Dosimetry Agreements

MEM/

Government decree 55-2001, Radiologic

Safety and Protection Rules; Law Decree 11-

86, Nuclear Law; Government Agreement

476-2001.

Every metal mining project must have density

gauges capable of tracking the extracted metals

and their values.

Apart from having defined a mine with a specific

metal, it is possible to detect radioactive material

in minimal proportions, and the density of the

obtained material.

Requests have to be made to the General

Direction of Energy.

Operations manuals, references to the equipment

to be imported, radioactive sources, and custom

of entry should also be presented.

Determine the use to be given to the equipment,

means of transport, and the qualified technical

personnel to handle the equipment.

After the inspection is performed by DGE, the

operation license of the equipment should be

granted.

Average term: 5 months.

Operator Licenses and

Nuclear Protection

MEM/

Government Decree 55-2001, Regulation of

Safety and Radiation Protection; Law Decree

11-86, Nuclear Law; Government Agreement

476-2001.

Register the technical personnel qualified for the

management of the nuclear density gauges, which

generally consist of operators and those

responsible for radiation protection.

The staff is authorized exclusively by DGE for the

management of the equipment.

Requests are addressed to DGE.

The following must be incorporated: personal

data, medical records, studies, and credits for

basic studies of radiation and handling of

equipment courses provided by the Energy Bureau

or by a specialized company with the approval of

MEM.


Average Term: 3 to 4 months

Licenses for Storing, Use and

Transport of Industrial

Explosives and Powder Kegs

MINDEF/

Decree 123-85 Stagnant Species Law;

Government Agreement 14-74, Rules for the

import, storage, transport and use of

explosives for industrial purposes and

detonators.

The use, transport, and storage of such explosives

are legal for industrial purposes following

compliance with the laws of the country and the

approval of the Ministry of National Defense.

The application is addressed to the Ministry of

National Defense, crediting the commercial entity

that will be responsible for the management of

such material and powder kegs.

The application incorporates data from the Project

description, in accordance with national and

international regulations, such as: distance from

villages, casting type, columns, lightning rods,

drainage, ventilation, etc.

The file is sent to the National Army´s Engineers

Corps (CIEG), which evaluates the blueprints and

carries out the work inspection.

With the favorable conclusion from CIEG, the file

is addressed to the Legal Department and the

resolution is issued.

Average Term: 12 months.

Export Credentials Articles: 41, 85 of Mining Law. Owner of the mining right is obligated by law to

obtain appropriate export credentials.

The application must be filed with the General

Bureau of Mining, attaching a copy of the mining

exploitation license, a description of the estimated

quantity of ore to be exported annually, and the

countries to which it will be exported.

This file is addressed to the mining control, mining

rights and legal departments. The credential is

extended with the approval signatures of the

General Bureau of Mining, the Miner Control

Department, and the Department of Mining

Rights.


Discharge and wastewater

reuse

MARN/

Government decree 236-2006 Regulation of

discharges and wastewater reuse and sludge

disposal. This decree contains the water

quality guidelines for water discharge. It

enables MARN to follow up on these matters.

If water discharges and or wastewater reuse is

foreseen.

A technical report should be prepared, including

wastewater quality data. This report has to

include new water quality data collected twice a

year. This has to be prepared during the

operation.

Average time: 3 months.

License for the Storage of

Fuel for self-consumption

MEM/

Articles: 18, 30 of the Marketing of

Hydrocarbons Law; 14, 15, 16, 49, 50 and 51

of the Rules of the Marketing of Hydrocarbons

Law.

Because of their magnitude, mining projects

usually require in their process plant or for their

vehicles and machinery, the handling of diesel in

large volumes, making it more cost-effective to

have their own storage and fueling stations than

to have a supplier of that service.

The marketing of hydrocarbons law allows that

any legal person wishing to have an operation

with this type of infrastructure can request a

license to the DGH, prior compliance with legal

and technical requirements for the type of work.

Request to the General Bureau of Hydrocarbons

complying with documentation, EIS and blueprints

established in the corresponding regulation.

When all the legal requirements are met, the

authorizing license for the construction is granted,

leaving the operation license pending. The case

goes to the legal department, which in turn sends

it to the Department of Engineering and

Operations for the technical inspection of

construction, industrial and environmental safety.

If it meets the requirements for this type of work,

the corresponding operation license is granted

upon payment of bond.

Average term: 12 months.

Frequencies Usufruct Titles SIT/

Article: 57, of Decree No. 94-96,

Telecommunications Law.

Usually, within the perimeter covering a mining

right, constant communication is required making

it necessary to install radio telecommunications

which requires a frequency.

These frequencies and scope ranges are

authorized by the National Superintendence of

telecommunications. Radio frequencies are

Usually a company that specializes in

communications is hired to install antennas and

enable portable radios, who in turn, as bodies

registered with the SIT, acquire radio frequencies

available in the area of the mining project.

Once the titles of usufruct of frequencies are

obtained from the SIT, the documents are


owned by the State, so only the State can give

them in usufruct.

endorsed to be registered as an authorized user of

the assigned frequencies.

Average term: 6 months

Electrical Permits Article: 4 of the General electricity law;

Regulation of the administrator of the

wholesale market; National Commission of

electric power technical standards; Rules for

operative and commercial coordination of the

administrator of the wholesale market.

All mining projects will require the provision of

energy in accordance with the size and needs of

the project.

It requires a technical study that can determine

the impacts, according to the rules of access and

use in the transport of energy capacity.

There are entities properly registered with the

administrator of the wholesale market which

specialize in the development of such studies.

Once the power study is complete, it is submitted

to the National Commission of Electric Power. This

is later addressed to national technical bodies,

such as: the administrator of the wholesale

market (AMM) and the Company of Control and

Transport of Electric Energy ETCEE.

With the favorable resolution of these electric

entities the project must:

1. Obtain the CNEE approval to demand

connection to the network.

2 Register as a large user in the MEM and AMM.

3. Allow AMM meters.

4. Contract for the supply of energy and power.


License to Import and Use

Raw Materials and Chemical

Precursors

Government Agreement 54-2003, Rules for

the Control of Precursors and Chemical

Substances; Rules 2-2001 and 15-2001 of the

MSPAS/Ministry of Health.

In accordance with the design of the mine and the

mineral to be exploited, there must be a license to

import and use precursors and raw materials, with

their corresponding certificates.

The purpose is to have the authorization of the

Ministry of Public Health and Social Welfare

(MSPAS) for legality in the importation and use of

chemicals that, because of their special handling

and potential hazard, require a license that is

obtained by registration in the MSPAS.

In accordance with the described rules, an

application must be filed with the General Bureau

of Regulation, Monitoring and Control of Health,

who through its department of regulation and

control of pharmaceutical products authorizes the

inscription and registration of the company as an

importing entity of precursor chemicals for their

own consumption.

The following must be incorporated: the listing

and manual of use of chemicals, the process in

which they will be used, declaration of

commitment and appointing of a Regent

Pharmacist in charge of forwarding reports to the

MSPAS of use and inventory of the chemicals.


Hydrogeological Study MARN/

EIS Terms of reference.

Depending on the Plant site design and the water

supply intended for operation.

Based on MARN´s ToR it should include:

1.Estimated required capacity and estimated

water demand

2. Estimated current and future demands

3.Anticipation of permanent and seasonal

population growth, industrial, agricultural,

recreational uses of water: quantity, quality

Regional geology. (description and map)

4. Regional hydrogeology.

5. Detailed local geology (scale 1:10,000) and

stratigraphic synthesis, geological mapping,

Geological sections. Blocks, diagrams.

6. Local geophysics

7. Tectonics

8. Climatology, hydrology and hydrogeology

Cultural Heritage Protection Articles 4-17 Republic Congress 81-98 Law for

the Protection of Cultural Heritage of the

Nation.

For new or previously described (on EIS or public

databases) cultural heritage sites located within

project footprint.

This law promotes the national conservation of

cultural heritage.

Requirements for public

road use (when applicable)

Government decree (619-2003). Article 145,

146, 151. Municipal Code.

All matters related to adequate use of public

roads are regulated through this agreement.

To promote adequate use of public roads. Applicable when an overload or special use

(oversize cargo, hauling roads, etc.) is anticipated.

Average term: depending on the magnitude of

transport and necessary changes to public roads.


20.3 Conceptual Closure

An essential part of the Mayaniquel Project is the development of a closure plan that outlines activities for decommissioning and mitigating its impacts both during operation and once mining and processing activities have ceased. The preparation of a rehabilitation and closure strategy prior to the development of the project is an integral part of the closure design process. This approach to project planning recognizes that mining represents a temporary use of the land and that appropriate closure of the operation is in line with the sustainable use of available resources.

Since the project was acquired and exploration began, MNSA has been conducting reclamation activities on exploration roads, access, and drill sites. This work has been reviewed by an independent reclamation expert, Kit Walther, to assess reclamation practices, review reclamation/revegetation successes, and make recommendations for future mine development reclamation.

The following sections focus on the closure activities that will be carried out for the mine, processing facilities, and aggregate quarries. As explained in the following sections, closure will be concurrent with the mining activities, mainly through reclamation, with final closure to occur once mining ceases. Post closure monitoring will also take place to document and ensure proper reclamation of all impacted areas.

The following sections present a description of the closure activities that will take place for the mine, mineral processing facilities, and aggregate quarries for the project.

20.3.1 Mine Closure

Mined-out areas will be reclaimed concurrently with open pit operations. Overburden, waste rock and uneconomic lateritic material from the open pits will be hauled to mined-out areas and regraded to blend with surrounding topography. Stockpiled topsoil/growth medium will then be spread over the regraded surface, which will subsequently be revegetated. This activity will generally be a continuous/concurrent process, with some exceptions when new development begins in a mineral exploitation area.

In general, the onsite access roads will be retained during the early years of closeout to maintain access to work areas undergoing closure reclamation activities. Lockable gates and appropriate signs will restrict use of the access roads required for closure activities. Once closure activities are completed, certain roads may be turned over to the local communities to assist in the transportation of people and goods in the area. Some roads will also be necessary during the closure and post-closure phases for access to monitoring and maintenance points. If neither public nor technical needs exist for a certain road, it will be scarified and covered with subsoil and topsoil as needed to support vegetation. Main closure activities follow.

20.3.1.1 Backfilling

Waste (uneconomic material) limonite, transition, saprolite, and ore upgrading reject material will be placed atop bedrock in mined-out areas. Overburden material will generally be placed over exposed bedrock or other materials that are not mined. Overburden and waste material may be hauled from the mining cuts directly to backfill areas, taken from previously constructed stockpiles, or taken from a combination of both sources.

New disturbance areas will be kept to the minimum required to support mine operations. Reclamation of disturbed areas, re-contouring with mine waste, and placing topsoil/growth medium will commence as soon as possible after mine operations in an area are completed.

20.3.1.2 Topsoil/Growth Medium Replacement

Dozers will be used to regrade the backfilled material to blend with the surrounding terrain. Scrapers, dozers, and soil compactors will be used to place and spread topsoil/growth medium on


the regraded surface in preparation for final reclamation. The surface will be roughened to provide an optimum seed bed. Soil samples will be taken to determine if special soil enhancement (fertilization) is needed. The area will then be covered with mulched material to provide nutrients for revegetation purposes.

20.3.1.3 Revegetation

After regrading and topsoil replacement, mined-out areas will be revegetated with a priority given to native species of trees and plants that provide cover, protection, and a food source for wildlife. Depending on terrain and post mining land use, some areas may be suitable for farming selected crops for human consumption. Composted, previously shredded vegetation may be used to enrich and help stabilize the soil. Areas prone to erosion may require the construction of barriers, diversions, and other engineered structures in addition to the use of vegetation to stabilize soils.

During any given time period, there will be some areas that will be temporarily disturbed and not involved with reclamation activities (regrading, topsoil replacement, and revegetation). These areas include: the truck shop/administration facility and ore upgrading facilities; long-term stockpiles for topsoil/growth medium, mined waste (uneconomic) material, and shredded vegetation; aggregate quarries; and open pits in which ore mining operations are active.

MNSA has developed a test plot revegetation program to refine species selection to best determine what will grow at different slope, aspect and elevation conditions.

20.3.1.4 Topsoil/Growth Medium Management

Topsoil/growth medium management is essential to ensure a successful rehabilitation program through interim and final closure. If topsoil management/stockpiling is not practiced, sufficient material to reclaim mined-out areas will not be available. Good topsoil management ensures a soil medium that promotes growth of an organic cover and helps to prevent erosion.

Vegetation and topsoil will be removed to allow access to the underlying mineral resources. Overburden will also be removed in some areas and if it is suitable for use as growth media, it will be handled in a manner similar to topsoil.

Diversion canals will be placed around the perimeter of the stockpiles to prevent surface run-on from coming in contact with potential sediment sources. Sediment control measures will be established to prevent migration of sediment offsite.

20.3.1.5 Waste Rock (Uneconomic) Material Management

Uneconomic rock, or waste materials, will be generated and placed in waste rock stockpiles. Some stockpiles will be located within the active mining area and will be considered temporary facilities, and some stockpiles will be located outside of the active mining area and will be considered semi-permanent facilities. As part of the uneconomic waste rock material management strategy, the internal stockpiles will be used to the maximum extent possible to reduce the overall disturbance area.

To minimize the rehandling of waste material, it will be placed in mined-out areas as backfill as much as possible. During preproduction and the first few years of operation, waste rock material will be stored in temporary stockpiles until areas are mined out and available to be backfilled. The waste rock material will be placed and regraded to conform with the final closure slope configuration.

Both temporary and semi-permanent waste material stockpiles will have external slopes of 2:1 (H:V) to 3:1 (H:V) depending on the physical properties of the waste material. These stockpiles will be typically less than 40m in height, with benches every 10m. Diversion canals will be excavated around the perimeter of the stockpiles to reduce erosion and to prevent surface run-on and runoff from coming into contact with potential sediment sources.


As mentioned above, the final surface of the waste rock material stockpiles will be graded to conform to pre-mining terrain and any tie-in slopes will be flared to have a smooth transition between the two surfaces. Stockpile slopes that will be exposed to heavy precipitation will be covered with mulch and/or vegetative cover. If the stockpile has not had waste material placed on it for four months or more, it will also be covered with mulch and/or vegetative cover. Permanent slopes will be reclaimed as part of progressive/concurrent closure, which includes placement of topsoil/growth medium and vegetative cover.

20.4 Mineral Processing Facilities Closure

Decommissioning/demolition of industrial structures related to the ore upgrading facilities, mine support, and processing areas of the project will generally follow this sequence:

• Completion of all electromechanical installations/equipment decommissioning and removal of such equipment from the project site;

• Dismantling of internal metallic structures (e.g., walkways, hand rails, and platforms) by dismounting or by oxy-acetylene or arc cutting of reinforcing or support elements;

• Removal of metal shrouds or shields by dismounting or by oxy-acetylene/arc cutting; • Removal of catwalks, ladders, and stairways; • Removal of insulation materials; • Removal of metal-framed doors and windows; • Removal of metal sheathing and roofing; • Disassembling of structural steel beams and joists; and • Demolition of vertical walls, cut-off walls, or berms made of concrete slabs or blocks via

jackhammers or picks mounted on an excavator arm or other hydraulic equipment.

The onsite electrical power lines will be maintained during closure as long as necessary for the operation of several facilities, including mine support. Once the electrical power line no longer provides any use to the project site, it will be dismantled, and salvaged, and the area reclaimed. However, the power lines can be left in place for use by the community if needed.

20.5 Aggregate Quarries Closure

Quarries will be reclaimed once the need for aggregate for road construction/maintenance is satisfied. Basic reclamation will include activities described previously for mine closure, including backfilling, topsoil/growth material replacement, and revegetation.

20.6 Safety and Security

Safety and security objectives include the following:

• A safe and secure environment for humans and wildlife for the long term; • Stabilization of areas of subsidence created by mineral extraction workings; • Stabilization of slopes so that no hazard to the public remains after final closure. • Temporary restriction of access to specific areas where appropriate, to protect remaining

equipment or facilities, or to ensure undisturbed development of vegetation which needs care and maintenance over several years.

After reclamation/closure, there will be no restrictions of access by the public, as all hazards to safety, property, and health resulting from the mining activities will have been removed. Site maintenance and security will be ongoing activities during closure and will be subject to periodic monitoring. Ongoing maintenance of the vegetation, including re-seeding, if required, will be carried out to ensure successful revegetation. It is anticipated that ongoing vegetation maintenance will diminish with time, due to ideal growing conditions at the site. Drainage systems


will be maintained to ensure their continued integrity and proper function. Plant operators will continue to maintain the wastewater treatment facilities, if any.

Site security during the early years of closure will be an important concern, with varying numbers of contractors and workers onsite, and fewer mine employees overseeing the project. Security measures will include the use of lockable gates and signs, as well as regular security checks.

20.7 Final Closure and Environmental Monitoring

Final closure activities will commence when it can be demonstrated that a steady self-sustaining state of physical, chemical, and biological stability has been reached. Achieving applicable water quality discharge criteria is included and once met, site run-off and drainage may be released directly to the environment, without mitigation/treatment.

The environmental monitoring program developed for operations will be modified and submitted to MARN to obtain feedback for managing the known and potential impacts resulting from construction, operation, and closure of the project. The following objectives were included during the development of the environmental monitoring program for the project:

• Development of supplemental baseline data; • Ensuring that construction, operation, and closure activities proceed as required and

environmental data are current; • Determining and maintaining the effectiveness of mitigation measures; • Evaluating the accuracy of the impact predictions for residual impacts; • Evaluating the accuracy of risk predictions; • Comparing changes in the environment with existing baseline (pre-development)

conditions and distinguishing project-related impacts from natural events, including seasonal changes;

• Detecting any unacceptable impacts to enable the implementation of supplementary mitigation and/or contingency measures in a timely manner;

• Providing project-specific data on field performance of various cover materials, combinations and thickness, as well as revegetation species for closure;

• Determining the effectiveness of reclamation measures carried out as part of closure; • Ensuring compliance with applicable environmental regulations and guidelines (local and

international); • Ensuring compliance with permit/license requirements; • Ensuring accountability through a system of routine reporting to mine management,

including summary reports being sent to applicable regulatory agencies; and • Investigating environmental incidents or accidents, and identifying follow-up

requirements; and documenting and responding to public or regulatory agencies’ concerns.

20.8 Closure Costs

A cost estimated for closure budgeting purposes is approximately US$9.625 Million (USD), based on historical experience at other mining properties. Activities described in the closure plan include: structure dismantle, site grading, topsoil replacement, revegetation, contingency efforts, and monitoring. This cost has been applied to the total planned disturbed area to obtain an estimated closure cost for use in years 22-27 (although costs will be expended in years 22-27, the total cost of $9.65 million USD is shown in year 22 for cash flow purposes). Concurrent reclamation costs are included in mine operating costs.


20.9 Socioeconomic Conditions

20.9.1 Summary

MNSA is advancing the Mayaniquel Project, which includes the mining exploitation applications of Sechol, Tres Juanes, and Amanecer. All of these areas are located in the municipalities of Panzós, Cahabón, and Senahú in the department of Alta Verapaz in eastern Guatemala.

The project components also include the mining facilities, processing plant, associated transmission lines, and transportation infrastructure required for construction and/or operations. The project is currently in prefeasibility phase.

This socio-economic conditions section covers the following issues:

• Current status and performance of the project; • National and international social performance requirements for mining exploitation; • Area of influence of the project; • Social context for the project; • Social management of the project; and • Main stakeholders.

It should be pointed out that the information contained herein will be modified and/or complemented in accordance with the progress of the project.

20.9.2 Current Project Status

MNSA has submitted applications and EIAs for three exploitation licenses (Sechol, Tres Juanes, and Amanecer) in 2011 and 2012. All three license applications are being reviewed by the Guatemalan government. The EIA for Sechol was approved in December 2011.

MNSA has initially focused on negotiating agreements for land access, local employment, and making social investment. As the project has advanced, MNSA has begun supporting efforts to resolve land conflicts among the local communities around the proposed mine area, as well as to secure community land rights.

The project has also been sharing information and consulting the public regarding the ongoing exploration in the area and the potential mine development. The project has maintained fairly significant local support within the communities where it is working.

Both the exploration group and the public affairs unit of MNSA have been involved in managing these social issues. The public affairs team comes primarily from the local ethnic group (q´echi´) and speaks the local language (q´echi´).

20.9.3 Legal Requirements

The legal and regulatory framework for the development of the Mayaniquel Project on a national and international level is described as follows:

a) Environmental Protection and Improvement Law – Decree N° 68-86. This law aims to protect ecologic balance and environmental quality while seeking to improve the Guatemalan population’s quality of life. EIAs are deemed necessary for any activity that due to its characteristics may damage the natural resources or the environment itself.

b) MARN terms of reference guide to prepare an Environmental Impact Assessment. These regulations are provided by the MARN’s General Bureau of Environmental Management and Natural Resources (2004) and indicate the minimum issues and content to be developed in an EIA for projects ranging from high to a moderate-to-high environmental impact.


c) MARN Terms of Reference (TdR) to guide the public participation process. This is a non-binding document which provides guidelines to organize the public participation process within the environmental assessment framework. It includes the basic elements found in other countries on planning and documentation and recommends transparency and good faith in receiving public comments and opinions. It indicates that the public participation report shall detail the methodology used by the proponent and approved by the MARN, in addition to submitting the results obtained and agreements reached with the public.

d) Environmental assessment, control and follow-up regulations – Government Agreement N° 23 – 2003. These regulations detail the characteristics of environmental assessment instruments on a national level. They also define mechanisms of environmental control and follow-up aimed at validating the compliance with mitigation measures defined in environmental assessments.

Regarding the Public Participation Process, the regulations state that the MARN must encourage the participation process along the various stages of the project, while the proponent must get the population involved at the project’s earliest possible stage.

On the other hand, these regulations stress the need to record and document all the activities carried out to involve and/or consult the public when submitting the EIA, as well as to propose participation mechanisms to be implemented during the project audit stage. Finally, it mentions the obligation to prepare and execute a Public Participation Plan.

e) International Finance Corporation Performance Standards (IFC). The World Bank’s Group Policy and Performance Standards regarding Social and Environmental Sustainability (IFC, 2006) is an essential reference for the design and application of a community relations policy. This document details a series of standards, requirements and minimum criteria to be used for the development of investment projects, which will be used as a reference provided that they can be applied to the project’s specific case. With regards to social performance, there are three standards with particular relevance for the Mayaniquel Project. They are:

• Performance Standard Nº 1: Social and Environmental Assessment and Management Systems

• Performance Standard Nº 5: Land Acquisition and Resettlement • Performance Standard N° 7: Indigenous Peoples

f) Equator Principles. These are principles adopted by a broad set of international

financial institutions regarding requirements for social and environmental impact and performance of the projects that they finance. They are based on IFC Performance Standards.

MNSA has designed the project to meet all applicable Guatemalan laws and regulations, as well as adopted the World Bank IFC Performance Standards and Equator Principles for social and environmental sustainability and performance.

20.9.4 Area of Influence

The direct and indirect areas of influence for the proposed mining areas are shown in Table 20.3 and Table 20.4 and the area of influence for potential access roads is shown in Table 20.5.


Table 20.3 Direct and Indirect Areas of Influence

Table 20.4 Area of Influence for Potential Access Roads

20.9.5 Social Context

The most relevant issues of the social context are listed below.

a. Economy based on subsistence agriculture. Populations within the area of influence are noted for their agriculture-based subsistence economy, whose main crop is corn destined for personal consumption. These populations possess no significant specialized productive infrastructure (such as irrigation canals, grain storage, stockpile centers, etc.) which could improve the crops’ quality and productivity. Only a small portion of production consisting basically of achiote, coffee, fruit trees and cardamom, is destined for sale to the general public at local markets and fairs, as well as to intermediaries.

b. Human Rights. Guatemala is in a post-conflict context, having been engaged in civil war until the mid-1990s. In this context, conflicts may rapidly escalate to violence. The Panzós municipality witnessed the largest massacre registered on a national level, where violent actions were conducted by the Army against the inhabitants of this municipality during the civil war.

c. Indigenous peoples. Almost all of the inhabitants in the area of influence belong to the q’echí ethnicity that maintains Mayan cultural practices and speak their own language.

d. Land rights and conflicts. Except for 11 Soledad parcels titled to individual owners and the individual owners in Nueva Concepción, the property or possession of the land within the area of influence is communal. However, in general, the communities do not have the property titles of the land they occupy. The National Land Trust has been unable to provide them with property deeds since the land boundaries have yet to be defined or because of conflicts between communities over land. These land conflicts have been

Areas of Study Populations

The communities of Chiis, Colonia Mitch, Chinasir, Nueva Concepción, Sillab II, Corralpec, Rubelpec, Buena Vista, Releb'ik Tzúltaká, Seococ Sillab, Taquinco La Esperanza, and Setzacpec. The Cooperative of Chulac and the four communities it includes: Chulac Centro, Seococ, Sajomté, and Laguna Chulac.Individual land owners located in the vicinity of the project, including: La Soledad), Rio Negro (Ibañez finca), and landowners of Setzacpec. Colonia Girardi, Soledad Barrio, Taqhinco Searanx, Tambul, Seguamo, Chicuc, Seasir, Salac, Sepamac, Los Limones, Chinaacoc, Chimaxyat, and Mercedes Secanquim.Municipalities of Panzós, Senahú, and CahabónAlta Verapaz Department

Indirect Area

Direct Area

Areas of Study Populations

Settlements along new road route in the municipalities of Panzos, El Estor, and Los AmatesSettlements along existing road through the municipalities of Morales and Puerto Barrios

Indirect Area Alta Verapaz and Izabal Departments

Direct Area


further agitated due to population mobility during the war as well as the importance of land rights among the indigenous population.

e. Limited presence of the State and social services. The State’s presence in the area of influence is limited. There are elementary schools, health centers, and the Mi Familia Progresa National Program, which provides a cash bond to the lowest income families in exchange for children attending school and receiving periodic medical check-ups.

f. Low educational level. The majority of the population in the area of influence has completed elementary studies but over half are illiterate. In addition, less than five percent of the population has a trade, none of which is directly related to mining activities.

g. Expectations. Expectations of the population in the area of influence are oriented towards job opportunities and social investment funding (infrastructure, funding for local projects, etc.). These expectations are grounded on a social context of poverty, where 75% of the population lives below the poverty level with a job market that offers limited opportunities.

h. Environmental concerns. Many stakeholders are concerned with the potential environmental impacts that mining may generate, in particular regarding impacts on land, water, and air.

20.9.6 Social Management

MNSA has established social management plans for the proposed mining areas. These plans will be expanded to include other project areas as they advance. The main activities of these plans are presented below:

Land Access. The nickel resources are located close to the surface. As the proposed mining advances, the resources can be extracted quickly from a given area and the land can be restored within a few years and returned to local use. As a result, instead of purchasing land used by the local q´echi´ communities, MNSA intends to help those communities resolve land conflicts and directly acquire their own land rights; MNSA would then negotiate short-term use agreements in the specific areas where there are economically viable resources. As part of these access agreements, MNSA intends to provide more productive temporary replacement lands in the area of influence. Similarly, where houses would be affected, MNSA intends to work with the local communities and households to negotiate temporary resettlements. MNSA may in some cases acquire lands that are not owned or possessed by q´echí communities.

Local employment and training. The project will prioritize local employment and invest in training in order to increase the number of local workers capable of skilled and semi-skilled work. For mining and restoration activities, MNSA will prioritize hiring workers from the neighboring communities. When workers do not have the necessary skills, it will prioritize hiring from the indirect area of influence. MNSA also intends to support basic literacy programs in the communities surrounding its mining areas to increase opportunities for local workers to attain work. MNSA will maximize hiring of workers for its proposed process plant and other facilities from the direct and indirect areas of influence of that project infrastructure, to the extent possible.

Local suppliers. MNSA will seek to provide opportunities and support capacity building for businesses within the direct and indirect areas of influence of its mining development.

Local development. MNSA intends to work together with stakeholders to support local development initiatives. It will help the local communities establish their own development programs and will seek opportunities to work together with the communities to help them meet their objectives. As MNSA advances its mine planning, it will also look to support regional planning and development activities.


Code of Conduct. MNSA has established a Code of Conduct to ensure that its personnel and contractors show respect for local culture and behave in a professional, ethical, and transparent manner.

Consultation. MNSA will seek to inform and engage stakeholders on the project’s development in order to build understanding of the opportunities and risks.

Complaint resolution. MNSA will seek to respond to concerns and complaints raised by stakeholders in a timely manner.

Participatory monitoring. MNSA will work with project stakeholders to design and implement participatory monitoring activities of the project´s development. Monitoring will include both social and environmental issues that are concerns to the local stakeholders.

20.9.7 Main Stakeholders

MNSA has engaged or informed key stakeholders on local, municipal/regional, and national levels with regards to its exploration activities and proposed exploitation, specifically for the Sechol, Tres Juanes, and Amanecer license areas. The level of contact with the various stakeholders is flexible and greatly dependant on the activities scheduled for the project.

On a local level these stakeholders include:

a) COCODES Representatives of the approximately 22 communities and districts within the project’s area of influence,

b) Pro-Land Management Committees, Governing Board of Cooperatives, c) Directors and teachers of educational institutions, d) Drinking water committees, e) People in charge of the arbitration center, f) Local church representatives, and g) Mayan elders and priests.

On a municipal/regional level it includes:

a) Senahú and Panzós Mayors, b) Senahú and Panzós educational supervision, c) Senahú and Panzós health centers, d) Land fund, e) Representatives from the Mi Familia Progresa (MIFAPRO) National Program, f) Choice Humanitarian NGO, g) Ak´kután NGO, h) ACUS NGO, i) JADE NGO, j) Mercy Corps NGO, k) Amigos de la Paz (ADP) Association – NGO, l) Cadastral Registry Information – RIC, m) Turcios Lima Foundation, n) Cahabon Catholic Church o) Panzós Catholic Church p) Senahú Catholic Church, q) Authority for the Sustainable Management of the Lake Izabal and Dulce River drainage

basin (AMASURLI) r) Secretaria de Asuntos Agrarios s) Gobernación de Alta Verapaz t) Morales Catholic Church u) Arzobispado de Las Verapaces


On a national level there is a liaison with:

a) Ministry of Environment and Natural Resources, b) Ministry of Energy and Mines, c) Ministry of Economy, d) President of the Republic’s Office, and e) Guatemalan Congress.

This list is of a referential nature and it corresponds to the current development of MNSA’s activities in the area. The number of stakeholders may increase as the project advances and expands.

MNSA seeks to engage stakeholders in order to learn how it can best improve its current activities and future plans. It recognizes that a stakeholder’s willingness to provide feedback or recommendations does not indicate a stakeholder’s acceptance of the proposed project.


21.0 Capital and Operating Costs

21.1 Capital Cost Estimate

21.1.1 Summary

The capital cost estimate prepared for the Mayaniquel Project PFS and this Technical Report assumes greenfield pyrometallurgical processing facilities capable of processing a nominal 1,330,000 dry tonnes of nickel laterite ore per annum for the first four years of operation. From year five through the end of mine life in year twenty two, the plant will nominally process 2,659,000 dry tonnes of ore per annum.

The key objectives of the capital cost estimate are to:

• Support the economic evaluation of the project; • Support the identification and assessment of the processes and facilities that will provide

the most favorable return on investment; and • Provide guidance and direction for the next phase of more detailed studies.

The total estimated initial cost to design, procure, construct, and commission the facilities described in this Technical Report is $946 million USD. Table 21.1 summarizes the capital costs by major area. Sustaining captial costs associated with the commissioning of the second train as well as LOM sustaining capital costs are discussed in Item 22.9.


Table 21.1 Summary of Initial Capital Costs (US$000’s)

Description Cost Total

Mine 6,120 Ore Upgrading 14,866 Ore Preparation 81,820 Calcining 63,620 Smelting 130,313 Refining 36,196 Reagents and Consumables 21,519 Utilities 57,594 Ancillary Facilities 19,468 Site Development 58,740 Offsite Facilities 2,393 Contractor Common Distributables 8,542

Total Contracted Directs 501,190

EP - Non Design/Supply Packages 28,213 EP - Design/Supply Packages 5,808 E,CQA and Testing - Geotechnical Facilities 4,915 CM - All Facilities 29,572 Vendor Representatives/Commissioning/Inspections/Testing (QA/QC) 16,305 Equipment Spare Parts and Initial Fills 18,487

Total Contracted Indirects 103,300

Preproduction Mine Development 9,937 Mine & Plant Mobile & Ancillary Equipment & Light Vehicles 44,345 Staff & Employee Housing 27,436 Furniture, Office Equipment, Software, & Communications 679 Medical, Security & Safety 1,690

Total Owner Direct Cost 84,086

Preproduction Employment & Training 13,433 Project & Construction Management 6,130 Construction Catering and Camp Power 20,832 ROW, Land Acquisition, Legal, Permits, and Fees 7,537 Insurance 5,252 Corporate Travel & Services 3,763 Environmental 5,190 Security, Medical, and Communication Expenses 6,245 Community Development 13,998

Total Owner Indirect Cost 82,380

Subtotal Project Cost 770,957 Freight, Duties & Taxes 61,464 Contingency 113,637

Total Initial Capital Costs (US$000) 946,058$


21.1.2 Exclusions and Clarifications

The following items are not included in the capital estimate:

• Costs incurred prior to completion of a positive Feasibility Study; • All Owner’s taxes, other than income tax, including any financial transaction tax,

withholding tax or value-added tax (VAT); • Reclamation costs, which are included in the financial analysis; • Future foreign currency exchange rate fluctuations; • Working capital and sustaining capital, which are included in the financial analysis; • Interest and financing costs; • Risk due to political upheaval, government policy changes, labor disputes, permitting

delays, weather delays, or any other force majeure occurrences.

The estimate is expressed in third-quarter 2012 United States dollars. No provision has been included to offset future escalation.

Where source information for the process plant estimate was provided using currency conversions, these amounts have been converted at the following rates:

Table 21.2 Currency Conversion Rates

21.1.3 Estimating Methodology

The process plant and its ancillary facilities capital cost estimate was developed by IGEO by factoring a two-kiln line FeNi project in Brazil which comprises the same process flowsheet concepts proposed for the Mayaniquel Project. This RKEF smelter estimate was escalated from mid-2010 costs to the third-quarter 2012 costs.

21.1.4 Contingency

A contingency of 13%, or $113.6 million, has been included in the initial capital cost. This contingency is based on the level of definition that was used to prepare the estimate. IGEO provided a high level of confidence for its estimate of the process plant, refinery, and other battery limit scope. Of the total direct cost, the vast majority of the estimate is based on actual costs of a similar plant that IGEO recently designed and constructed, as well as current written quotations provided by major equipment suppliers.

Contingency is an allowance to cover unforeseeable costs that may arise during the project execution, which reside within the scope-of-work but cannot be explicitly defined or described at the time of the estimate, due to lack of information. It is assumed that contingency will be spent. However, it does not cover scope changes or project exclusions.

21.1.5 Accuracy

The PFS estimate included in this Technical Report has been developed to a level sufficient to assess/evaluate the project concept, various development options, and the potential overall project viability. After inclusion of the recommended contingency, the capital cost estimate is considered to have a level of accuracy in the range of minus ten percent (-10%) plus twenty five percent (+25%). This is based on the level of contingency applied, the confidence levels of IGEO, Ausenco Vector, MDA, and MTB in their respective estimates, on its estimate accuracy, and an assessment comparing this estimate to standard accuracy levels on prefeasibility study estimates.

U.S.Guatemalan

Quetzales

European

Euros

Brazilian

Reals

British

Pounds

All Other

Currency

$1.00 8.00 GTQ 0.79 E 2.03 BRL 0.63 GBT 8/31/12 Published Rate


The Qualified Person for this section has reviewed and approved for inclusion in this Technical Report the capital cost estimates.

Table 21.3 Project Contingency

21.1.6 Execution Plan and Schedule

As part of the PFS, an execution schedule was considered that would commence if a positive Feasibility Study (FS) is completed and a development decision on the Mayaniquel Project is made. The schedule begins at the start of engineering and extends through to metallurgical commissioning of the FeNi process plant, which is planned to be an overall preproduction period of 36 months, and continues on through nine months of production ramp-up to 100% production.

Although detailed construction logic was not completed at this stage of the project development, a summary level schedule was developed using major activity durations, including manufacturing and delivery durations for all major process equipment packages provided by IGEO and ThyssenKrupp Polysius (Polysius) based on recent and current projects.

Overall durations for construction, as well as the time required following receipt of the critical long- lead items mentioned above, has also been provided by IGEO based on recent and current projects and information provided by major equipment suppliers in written quotations. Construction manhours were estimated by factoring a recently completed similar project by IGEO

The addition of a second production line will require an additional two years of construction during operating years three and four.

Estimated direct construction and operation jobs for the first and second lines are summarized below in Table 21.4.

Table 21.4 Estimated Construction and Operations Jobs

21.2 Operating Cost Estimate

21.2.1 Summary

Operating costs have been estimated for mining, ore upgrading, ore conveyance, processing, infrastructure maintenance, general and administrative (G&A), and mine reclamation and closure. Methodologies and further details are summarized in sections that follow. Table 21.5 shows the LOM operating cost by area. The Qualified Person for this section has reviewed and approved for inclusion in the Technical Report the operationg cost estimate.

Estimate Area Contingency Amount

Process and Infrastructure 20% 79,850 Geotechnical Facilities 18.5% 13,034 Mine 5% on equipment only 1,835 Owner's Costs 10% 11,982 Indirect Costs 10% 6,936

Total Contingency (US$000) 13% 113,637$

Note: Contingency applied to subtotal project cost, including freight, duties, and taxes rounded.

Construction Operation Construction Operation

Preproduction 1-3 Years 1-22 Years 3 & 4 Years 5 - 22

Direct Construction 1,000 700

Permanent Operations 800 150

Second LineFirst Line

Estimated Jobs


Table 21.5 LOM Operating Cost Summary

21.2.2 Mining

Mine operating costs are based on Owner mining and were developed by MDA. Tables 21.6 and 21.7 show the LOM operating cost summary for mining.

Table 21.6 LOM Mine Operating Cost Summary – Mining by Operation

Table 21.7 LOM Mine Operating Cost Summary – Mining by Expense Element

Total Life of

Mine Cost

Average

Annual Cost

LOM Cost per

Tonne Ore

x 000 x 000 (Smelter Feed)

Mining 590,195 27,709 11.65 Ore Upgrading 93,644 4,396 1.85 Ore Conveyance 13,302 624 0.26 Processing 4,165,162 195,548 82.19 Infrastructure Maintenance 15,107 709 0.30 General and Administration 535,877 25,159 10.57 Mine Reclamation & Closure 9,625 ** 0.19

Total Operating Cost (USD) 5,422,912$ 254,145$ 107.00$


** No Average Annual Cost indicated as cost is considered incurred after LOM in Year 22 and after.

Description

Total Life of

Mine Cost

Average

Annual Cost

LOM Cost per

Tonne of Ore


General Mine Expense & Engineering 119,623 5,616 2.36 Drilling 13,335 626 0.26 Loading 58,937 2,767 1.16 Hauling 175,761 8,252 3.47 Support 220,523 10,353 4.35 Contract Mining 2,016 95 0.04

590,195$ 27,709$ 11.65$


Operation

Total Operating Cost for Mining (USD)

Total Life of

Mine Cost

Average

Annual Cost

LOM Cost per

Tonne of Ore


Salaries & Wages 219,961 10,327 4.34 Fuel & Power 199,941 9,387 3.95 Supplies, Consumables, R&M Parts 156,324 7,339 3.08 Contract 2,016 95 0.04 Equipment Lease 11,953 561 0.24

590,195$ 27,709$ 11.65$


Description

Total Operating Cost for Mining (USD)


21.2.3 Ore Upgrading Facilities

The operating cost estimate associated with the ore upgrading facility was developed by MineSense based upon its flowsheets.

Table 21.8 provides a LOM operating cost summary of the ore upgrading facility.

Table 21.8 LOM Operating Cost Summary – Ore Upgrading

21.2.4 Processing

Table 21.9 provides a summary of LOM operating costs for processing.

Table 21.9 LOM Operating Cost Summary – Processing

IGEO completed detailed estimates for input to process operating costs. Methodologies for the major criteria are shown below:

Labor - Manpower was defined on the basis of three eight-hour shifts per day requiring five teams. The workforce was split into seven groups for which similar current salary levels were provided by MNSA. The all-inclusive burdened salary was a result of the direct salary, 45% burden for statutory requirements and benefits, 15% productivity bonus applied to the direct salary, and a fixed value of US$45.45/month.

Electric Energy - The energy consumption adopted in this PFS was based on a similar project and information provided by the major equipment suppliers.

For smelting, the figure of 544 kWh/tonne calcine was used on the basis of the thermal balance carried out by Tenova Pyromet, which was validated by IGEO. For the auxiliary services, the calculation was carried out on the basis of the electrical load list supplied by key equipment suppliers. Estimates of electrical consumption for other general loads wer provided by IGEO, as used. The price used for the opex calculation was based on the recommendation provided by Electro of $80.00 /MWh (exclusive of VAT).

Total Life of

Mine Cost

Average

Annual

Cost

LOM Cost

per Tonne

of Ore


Power 6,254 294 0.12 0.12 Labor 3,490 164 0.07 0.07 Loader 43,723 2,053 0.86 0.83 Maintenance 40,176 1,886 0.79 0.76

Total Ore Upgrading Cost (USD) 93,644$ 4,396$ 1.85$ 1.78$


LOM K-Tonnes of Ore to Ore Upgrading: 52,572

Description

Cost per

Tonne of Ore

to Ore

Upgrading

Total Life of

Mine Cost

Average

Annual Cost

LOM Cost per

Tonne of Ore


Labor Salaries and Wages Fixed 262,564 12,327 5.18 Process Consumables Variable 3,760,395 176,544 74.20 Maintenance - Plant Equipment Variable 142,204 6,676 2.81

4,165,162$ 195,548$ 82.19$


Description

Total Operating Cost for Processing (USD)


Coal - Coal is used for reduction and firing the calcining and drying process. The coal selected for this PFS was a result of a technical assessment carried out by the review team on the different coal types identified by Pincock, Allen and Holt (PAH). Thermal coal at a price of US$113/t delivered to site from the United States was selected as the supply for the project.

The amount of coal for reduction was based on the testwork campaign carried out at Morro Azul.

The consumption of coal in the rotary kiln and rotary dryer was calculated by Polysius and validated by IGEO.

Other Consumables - Materials such as electrode paste, electrode casing, O2 lancing, lime, FeSi, CaSi, Al, etc, were based on consumption in similar operations. The price was mostly obtained by the Morro Azul supply department and was considered to be at port in Brazil. Pricing for local consumables was provided by MNSA.

21.2.5 Infrastructure Maintenance Summary

Table 21.10 provides a LOM operating cost for mine infrastructure maintenance compiled by Ausenco.

Table 21.10 LOM Operating Cost Summary - Infrastructure Maintenance

21.2.6 General and Administrative

The G&A operating costs are described below and are shown in Table 21.11.

A preproduction staffing organization chart was developed to identify all G&A staff and labor positions. The final month of preproduction provided the fixed annual labor cost at start-up. Each staff and wage labor title was assigned a pay level provided by MNSA for Guatemala labor rates plus burden. Three positions were estimated at expatriate rates, which are included for the duration of the life of mine: General Manager, Operations Manager, and Marketing Manager. The balance of G&A expenses were provided by ANC or estimated by MTB based on similar recently completed studies.

Total Life of

Mine Cost

Average

Annual Cost

LOM Cost per

Tonne of Ore


Main Access Road 12,060 566 0.24 Sediment Management Maintenance 3,047 143 0.06

Total Infrastructure Maintenance Cost (USD) 15,107$ 709$ 0.30$

LOM = 21.3 years LOM K-Tonnes Ore (Smelter Feed): 50,680

Description


Table 21.11 LOM Operating Cost Summary – G&A

21.2.7 Mine Reclamation

Reclamation of mining areas will be performed concurrently throughout the project life. As one mining area excavation is completed, it will be reclaimed with material, including topsoil, from the preparation of the next area to be mined.

As the nickel deposits are largely soil based, mine waste material will be largely overlying topsoil and low grade limonitic soils. Provisions have been made in the mine plan and operating costs to account for the storage of both topsoil and low grade limonitic soils and the recontouring and re-vegetation of mined areas with these soils once the deposits have been mined. It is expected that this process will allow areas that have been mined to largely return to their pre-mined state of vegetation.

These progressive reclamation costs are included in the mine operating costs. As a result of the continuing reclamation, no bonding is anticipated. An allowance of $9.625 million is included for final reclamation and closure and is shown in the final year of the financial model. This estimate was provided by ANC’s environmental consultant as an all-in unit cost per hectare of disturbance, applied to the estimated total project disturbance area.

21.2.8 C-1 Cash Costs (net of iron credits)

The C-1 cash costs were calculated on the sum of the following cost items in the cash flow:

• Total operating costs • Royalty costs • Transportation costs

Less: Fe (iron) credits

To calculate the cash cost per pound of nickel, total costs less the Fe credit, were divided by the number of pounds of nickel to be sold in the corresponding cost period. Life of mine total cash cost was calculated from the Mayaniquel economic model’s cash flow forecast values. Figure 21.1 provides a graph of the annual C-1 cash cost per pound of nickel for each year in the life of mine. The figure was produced by ANC, confirmed by MTB, and reviewed and approved by the Qualified Person for this section for the inclusion in this Technical Report.

Total Life of

Mine Cost

Average

Annual Cost

LOM Cost per

Tonne of Ore


Camp Operations 93,340 4,382 1.84 Communications, IT, and Vehicles 14,457 679 0.29 Community Development 99,526 4,673 1.96 Corporate Services and Consultants 37,062 1,740 0.73 Environmental, ROW, Permits and Fees 34,907 1,639 0.69 Insurance 112,848 5,298 2.23 Labor Expense 107,462 5,045 2.12 Safety, Security, and Medical 36,276 1,703 0.72

Total General & Administrative Cost (USD) 535,877$ 25,159$ 10.57$

LOM = 21.3 years LOM K-Tonnes Ore (Smelter Feed): 50,680

Description


Table 21.12 C-1 Cash Costs

Figure 21.1 C-1 Cash Costs Net of Iron Credits

Description LOM Amount Cumulative Amount

Operating Cost $5,422,912,147Royalties $595,537,248Transportation $174,882,447 Subtotal Cash Cost w/o Credits $6,193,331,843Fe (iron) credits ($1,038,064,996) Subtotal Cash Cost w/ Credits $5,155,266,847

Total Nickel to be Sold

C-1 Cash Cost

1,688,703,615 pounds

$3.05 per pound of nickel

$2.00

$2.50

$3.00

$3.50

$4.00

$4.50

$5.00

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22

$/lb Ni sold

Year of Operation

Mayaniquel Annual C-1 Cash Costs


22.0 Economic Analysis

22.1 General Criteria

MTB, under the supervision of the Qualified Person for this section, completed a prefeasibility-level economic evaluation of the Mayaniquel Project in Guatemala for ANC. Key objectives of developing the economic model were to:

• Gather information from various professionals in related disciplines including mine development, engineering, and metallurgy, among others

• Assimilate and quantify elements as necessary for meaningful comparison • Identify and balance components in the model to determine the most favorable return on

investment • On a high level, simulate operation over the expected life of the project • Allow for assessment of the project’s potential economic viability • Support management in the financial decision-making process • Provide a foundation for the next phase of project advancement

Methodology involved in developing the economic model is explained in the following sections and technical parameters are provided as applicable. Summations of key project data are presented in tables extracted from the model. For quick reference, a listing of select model inputs is given in Table 22.1.


Table 22.1 Economic Model Inputs

Construction Period

Preproduction Period

Mine Life (after Preproduction)

LOM Ore (Ktonnes)

LOM Smelter Feed Grade (% Ni)

LOM FeNi Alloy (Ktonnes)

LOM FeNi Alloy Grade (% Ni)

LOM FeNi Alloy Grade (% Fe)

Avg. Annual Process Production Rate Nickel (DMT)

Avg. Annual Process Production Rate Iron (DMT)

Market Price Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 Yr 6 >

Iron Byproduct Credit ($/lb Fe) 0.17 0.17 0.17 0.17 0.17 0.18

Iron Byproduct Credit (Average LOM $/lb Fe)

Nickel Price ($/lb Ni) 8.50 8.50 8.50 8.50 8.50 8.50

Nickel Price (Average LOM $/lb Ni)

Cost and Tax Criteria

Estimate Basis

Inflation/Currency Fluctuation

Leverage

Income Tax - Guatemala as of 1/1/2015

Depreciation

Value Added Tax (VAT) Payment/Recovery

Royalties

BHP Royalty on Ni NSR less Beneficiation Costs

Commencing 3 years after commercial production

Government Royalty on Gross Mining Revenue

1% mandated plus 2% voluntary assumed

Transportation Charges for FeNi Alloy

Ocean Shipping and Port Charges (US$/dmt)

Assuming containerization of product

Payment Terms

Provisional within 7 days after Bill of Lading

Settlement within 8 weeks after Bill of Lading

Description Values

8.50

0.18

25%

100% Equity

None

3rd Qtr 2012 USD

50,680

21.3 years

3 years

30 months

125,000

Straight Line

51.37

3.0%

1.5%

Excluded

10%

90%

36,500

1.68

77.0

22.5

3,404


22.2 Production Summary

At the foundation of the economic model, data was drawn from the mine production and process production schedules, which were produced by MDA and Dr. Nicholas Barcza, respectively and are summarized in Table 22.2. The Qualified Person for this section has reviewed and approved the production schedules for inclusion into this Technical Report.

Table 22.2 Process Production Schedule

22.3 Gross Income from Mining

Market prices for Ni and credits on the Fe byproduct were based upon results of a marketing study update conducted by Heinz H. Pariser in August 2012 and recent projections by various financial institutions. In spite of the forecasts identifed above and described in greater detail in Item 19.0, a more conservative price of $8.50/lb Ni for all years has been used in this Technical Report. Table 22.3 shows market prices for Ni and Fe to be applied to the previously calculated annual production of Ni and Fe in the FeNi alloy to yield total gross revenue.

Table 22.3 Nickel and Iron Market Prices

Total Ore

Processed

FeNi Alloy

Produced

Tonnes x 000 Tonnes x 000 Tonnes x 000 Lbs x 000 Tonnes x 000 Lbs x 000

1 868 66 15 32,802 51 112,257 2 1,330 100 23 49,773 77 170,336 3 1,334 102 23 50,649 79 173,332 4 1,325 87 19 42,918 67 146,875 5 2,393 167 37 82,667 128 282,905 6 2,659 190 43 94,109 146 322,061 7 2,668 185 42 91,574 142 313,386 8 2,659 182 41 90,368 140 309,259 9 2,659 190 43 94,427 147 323,152

10 2,650 187 42 92,875 144 317,838 11 2,668 187 42 92,846 144 317,740 12 2,659 183 41 90,964 141 311,300 13 2,659 179 40 88,559 137 303,068 14 2,659 178 40 88,395 137 302,506 15 2,659 176 40 87,326 136 298,849 16 2,659 161 36 80,033 124 273,890 17 2,659 161 36 79,727 124 272,843 18 2,659 168 38 83,521 130 285,829 19 2,668 163 37 80,834 125 276,630 20 2,659 166 37 82,342 128 281,791 21 2,650 173 39 85,634 133 293,059 22 881 53 12 26,361 41 90,214

LOM 50,680 3,404 766 1,688,704 2,621 5,779,119

Byproduct: Iron Payable Metal in Alloy:

Nickel Year

(USD) Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 & after

$/lb Ni 8.50 8.50 8.50 8.50 8.50 8.50

$/lb Fe 0.17 0.17 0.17 0.17 0.17 0.18


A consensus price forecast by 23 analysts (Table 19.6 in Item 19) suggested a long-term price of $8.94/lb Ni would be appropriate. The impact of using $8.94/lb Ni pricing is illustrated in Table 22.4.

Table 22.4 Nickel Market Price Comparison

22.4 Transportation

Three components of transportation are included in the economic model. Dry metric tonnes (DMT) are assumed as alloy contains less than 0.5% moisture. Two separate logistics studies provided the basis for shipping rates. Electro estimated road freight at $10.21/DMT for daily hauling of FeNi alloy from the mine site for storage and further handling at the port facility. Their rate was indexed for fuel pricing and assumes that trucks (purchased by MNSA and included in initial and sustaining capital cost estimates) will carry coal from the port on their return trip to the mine. Inland freight to the export port, ocean freight, and associated handling costs are included in the coal unit cost.

Separate port charges are incurred for the containerization of FeNi alloy at the port for eventual loading onto shipping vessels. Ocean freight for transport of FeNi alloy to European ports was estimated by Pariser. All transportation costs were deducted from total gross revenue to obtain NSR.

22.5 Royalties

The BHP Royalty is calculated as 1.5% of nickel NSR further reduced by other allowable deductions for beneficiation of the ore, including costs for ore upgrading, ore conveyance and smelter processing. Commencing three years after the quarter in which commercial operation (defined as an average of 65% of production capacity sustained over a 90 day period) is achieved, BHP royalty payments are due by end of month following each quarter. Other terms in the royalty agreement provide for the annual determination of a threshold market price for nickel (currently at $4.59/lb.), below which royalties are waived. The BHP Royalty does not apply to revenue from iron byproduct.

In addition, a royalty imposed by the Guatemalan government is calculated as three percent of gross revenue and paid annually each January for the prior year. While not officially mandated, the mining sector in Guatemala voluntarily agreed to raise the royalty from 1% to 3% on non-precious metals, hence the 3% royalty value has been used in the economic evaluation for the Mayaniquel Project. Additionally, voluntary royalty payments are suspended if the price of the metal falls below an established threshhold. Deduction of total royalties from the calculated NSR yields gross income from mining.

IRR 19.9% IRR 21.2%Disc NPV Disc NPV4.0% 2,740,274,140$ 4.0% 3,052,004,523$ 6.0% 1,957,024,617$ 6.0% 2,201,514,014$ 8.0% 1,387,064,749$ 8.0% 1,581,801,418$ 10.0% 966,979,159$ 10.0% 1,124,320,536$ 12.0% 653,709,275$ 12.0% 782,520,337$

$8.50/lb Ni $8.94/lb Ni

ANC Consensus


22.6 Operating Costs

Operating cost estimates as previously described in Item 21.2 of this Technical Report served as input to the economic model.

22.7 Depreciation and Income Tax

Gross income from mining is reduced by total annual operating costs, leaving net profit before depreciation. In calculating depreciation, all initial and sustaining capital costs were assigned to asset classes as defined under Guatemalan tax laws, according to tax advice that was provided by a major accounting firm in Guatemala. Asset types are itemized in Table 22.5 according to asset class and corresponding annual depreciation allowed.

Table 22.5 Depreciation

After deduction of depreciation expense, Guatemalan income tax was calculated on net profit before taxes using the rate of 25%, which takes effect January 1, 2015. Subtracting income taxes from net profit before taxes leaves net profit after taxes. Because depreciation is a non-cash expense, it is added back after determination of income tax liability for purposes of the cash flow estimate.

22.8 Initial Capital Costs

Initial capital cost estimates as previously described in Item 21.1 of this Technical Report served as input to the economic model. Of the total, nearly $18.5 million is set aside for spare parts, consumables, and initial fills and scheduled for expenditure in Preproduction Year -1, but recaptured in Year 22 at end of mine life. The remaining capital costs are expended over the three years preceding production: 20% in Year -3, 35% in Year -2, and 45% in Year -1.

22.9 Sustaining Capital Costs

Acquiring additional assets, increasing facility capacities, or replacing assets are considered sustaining capital costs over the life of the project. Such expenditures fall into six main categories for the Mayaniquel Project, the largest of which is nearly $533 million estimated for the addition of a second processing train. Determining each piece of equipment’s useful life upon acquisition allows for its replacement capital cost to be scheduled in the last year of its useful life. Additional mining equipment will also be required as a result of constantly increasing haul distances as the property is mined out. Both primary and ancillary equipment will be needed as well as miscellaneous items (e.g., mine software, XRF analyzers, and shop equipment). Sustaining capital costs are summarized in Table 22.6.

Asset Class Annual Depreciation

Buildings and Improvements 20 year 5%Machinery and Equipment 5 year 20%Furniture and Fixtures 5 year 20%Vehicles 5 year 20%Tools 4 year 25%Trees and Vegetation 7 year 14%Computer Equipment and Software 3 year 33%Other Depreciable Assets 10 year 10%

Description


Table 22.6 Sustaining Capital Cost Summary

22.10 Working Capital

Defined as the highest amount of funding needed during the initial operating period, working capital is used to cover expenses prior to the cumulative revenue exceeding the cumulative expenses, or the point at which the operation becomes self-sustaining in its cash flow. Using the plant production schedule ramp-up as shown in Table 22.7, revenue was estimated on a weekly basis by multiplying the proportionate amount of contained Ni in FeNi alloy by the price for nickel, as well as the corresponding iron credits.

Mining

Mine and Ancillary Equipment 225,248 Quarry 49,436 Internal Mine Haul Roads 51,979 Clearing and Grubbing 63,350 Equipment Maintenance Wages 23,950

Infrastructure

Coal Transport Equipment 16,220 Electrical 902

Ore Upgrading Facility

Move Sechol Upgrading Facility to Sechol 2 location 3,195 Move Sechol Upgrading Facility to Tres Juanes location 3,195

Plant

Plant Miscellaneous 40,000 Train 2 Incremental Capital 532,975

Geotechnical Facilities

Sediment Management Capital Costs 23,891 Lower Sechol Haul Road 7,049 Ore Upgrade and Mine Operations Facilities 4,566 Slag Storage Facility 20,528 Conveyor Corridor 4,347

Owner's Cost

Mobile Equipment - Mine 8,225 Mobile Equipment - Plant G&A 19,832 Camp Catering 8,532 Insurance 2,772

1,110,191$

Life of Mine CostDescription

Total Sustaining Capital Costs (US$000)


Table 22.7 Plant Production Ramp-Up Schedule

Projected revenue receipt was based upon shipments every fourth week, assuming receipt of 90% of funds one week after issuance of the shipping bill of lading, with the 10% balance of funds received eight weeks after shipping. Four weeks for ocean transport plus four weeks for delivery, assaying, and accounts payable functions are allowed for.

Average weekly expenditure rates were estimated from the operating costs based on year 1 production ramp-up. The hourly labor cost was estimated as being incurred on a weekly basis; staff labor cost on a bi-weekly basis; and all other expenses were timed to be expended one month after being invoiced.

The largest deficit of funds would occur in week 13, for an estimated amount of $9,674,498. This working capital cost was recorded in the cash flow model in year 1, with recovery at the end of mine life in year 22.

22.11 Base Case Analysis

The results of this PFS estimate payback to occur early in the sixth year of mine life, approximately 5.7 years after start of production. The payback period is impacted by the significant expenditures of incremental capital in years three and four to double plant production.

The base case financial model was developed from information described in this section. Based upon this information, the Mayaniquel Project is estimated to have an after-tax IRR of 19.9%. Assuming a discount rate of eight percent over an estimated mine life of 21.3 years, the after-tax NPV is estimated to be $1,387,064,749. Base-case NPV’s at various discount rates are presented in Table 22.8.

Table 22.8 NPV at Various Discount Rates

22.12 Base Case Sensitivity Analysis

Table 22.9 reflects the sensitivities for IRR and NPV in 5% increments of negative and positive deviation from the Base Case for metallurgical recovery, nickel price, operating cost, and initial capital costs.

Quarter 1 Quarter 2 Quarter 3 Quarter 4 Total Year 1

% of Year 1

Production9.79% 20.74% 31.11% 38.36% 100.00%

% of Nominal

Annual

Production

Quarter 1 Quarter 2 Quarter 3 Quarter 4 Total Year 1

Mine 31.76% 74.45% 91.44% 101.00% 74.66%

Smelter 25.57% 54.14% 81.21% 100.16% 65.27%

Discount Rate 4% 6% 8% 10% 12%

NPV

(US$Millions)$2,740.3 $1,957.0 $1,387.1 $967.0 $653.7


Table 22.9 Sensitivity Analysis of IRR and NPV

Graphical representations follow of the sensitivities of NPV and IRR to the incremental changes in nickel and iron prices in Figures 22.1 and 22.2 and capital cost versus operating cost in Figures 22.3 and 22.4, respectively. Also, NPV and IRR sensitivities are illustrated in Figures 22.5 and 22.6 in relation to varying metallurgical recovery rates.

Figure 22.1 NPV Sensitivity Analysis – Metal Prices

Base Case Variance -20% -15% -10% -5% Base +5% +10% +15% +20%

$/Lb Ni Price 6.80 7.23 7.65 8.08 8.50 8.93 9.35 9.78 10.20 $/Tonne Ni Price 14,991 15,928 16,865 17,802 18,739 19,676 20,613 21,550 22,487 IRR 13.8% 15.4% 17.0% 18.5% 19.9% 21.2% 22.4% 23.6% 24.8% NPV @ 8% ($M) 614 808 1,001 1,195 1,387 1,575 1,763 1,951 2,139

$/Lb Fe Credit 0.14 0.15 0.16 0.17 0.18 0.19 0.20 0.21 0.22 $/Tonne Fe Credit 316.80 336.60 356.40 376.20 396.00 415.80 435.60 455.40 475.20 IRR 19.5% 19.6% 19.7% 19.8% 19.9% 20.0% 20.1% 20.2% 20.2% NPV @ 8% ($M) 1,332 1,345 1,359 1,373 1,387 1,401 1,415 1,428 1,442

Unit Operating Cost ($/T) 90.95 96.30 101.65 107.00 112.35 117.70 123.05 128.40 LOM Operating Cost ($M) 4,609 4,881 5,152 5,423 5,694 5,965 6,236 6,507 IRR 21.4% 20.9% 20.4% 19.9% 19.3% 18.8% 18.2% 17.6% NPV @ 8% ($M) 1,606 1,533 1,460 1,387 1,313 1,237 1,161 1,085

Capital Cost ($M) 804 851 899 946 993 1,041 1,088 1,135 IRR 22.3% 21.4% 20.6% 19.9% 19.2% 18.5% 17.9% 17.3% NPV @ 8% ($M) 1,510 1,469 1,428 1,387 1,346 1,305 1,264 1,223

Metallurgical Recovery 86% 87% 88% 89% 90% 91% 92% IRR 18.7% 19.0% 19.3% 19.6% 19.9% 20.1% 20.4% NPV @ 8% ($M) 1,223 1,264 1,305 1,346 1,387 1,428 1,468

-

500

1,000

1,500

2,000

2,500

-20% -15% -10% -5% Base +5% +10% +15% +20%

NP

V @

8%

Mil

lio

ns

Mayaniquel Metal Prices

Nickel Price

Iron Credit


Figure 22.2 IRR Sensitivity Analysis – Metal Prices

Figure 22.3 NPV Sensitivity Analysis – Capital v Operating Costs

Figure 22.4 IRR Sensitivity Analysis – Capital v Operating Costs

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

-20% -15% -10% -5% Base +5% +10% +15% +20%

IRR

Mayaniquel Metal Prices

Nickel Price

Iron Credit

-

500

1,000

1,500

2,000

2,500

-20% -15% -10% -5% Base +5% +10% +15% +20%

NP

V @

8%

Mil

lio

ns

Mayaniquel Capital v Operating Costs

Capital Cost

Operating Cost

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

-20% -15% -10% -5% Base +5% +10% +15% +20%

IRR

Mayaniquel Capital v Operating Costs

Capital Cost

Operating Cost


Figure 22.5 NPV Sensitivity Analysis - Metallurgical Recovery

Figure 22.6 IRR Sensitivity Analysis – Metallurgical Recovery

22.13 Economic Model

The cash flow model immediately follows in Table 22.10.

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

86% 87% 88% 89% 90% (Base

Case)

91% 92%

IRR

Mayaniquel Recovery

Recovery


Table 22.10 Cash Flow Model


23.0 Adjacent Properties Mayaniquel is located in a highly prospective nickel region with neighboring areas to ANC’s holdings licensed to other companies. Adjacent holdings of prospective land are held by:

� Compania Guatemalteca de Niquel (CGN) (an indirect wholly-owned subsidiary of Solway Investment Group Limited (Solway), which acquired the property from HudBay Minerals Ltd. (HudBay) in 2011. The property was formerly owned by Skye Resources and operated as Exmibal by INCO between 1978 and 1981) – areas northwest and south of Lake Izabal now known as the Fenix Project; and,

� Nichromet Guatemala S.A. – areas north of CGN and ANC’s license areas.

In March 2010, HudBay published an updated technical report (Fenix Report) for their Fenix Project announcing a new higher-grade resource. They subsequently concluded a drilling program and were reported to be updating their feasibility study aimed at making a renewed construction/production decision later in 2010 (March 31, 2010 press release). The authors of this Technical Report have not been able to verify the information in the Fenix Report and the information in the updated Fenix Report is not necessarily indicative of the mineralization on the Mayaniquel Project.

In August 2011, Solway announced completion of its purchase of CGN. CGN’s new President outlined the company´s plans to complete detailed engineering and quickly start production. These plans included rolling out the project in three stages: 1) over 18 months achieve 35,000 tons annual production of FeNi; 2) over 30 months, expand production to 75,000 tons annual production; and 3) between the fourth and fifth years, double annual production to 150,000 tons (August 27, 2011 press release). As of November 2012, CGN had not yet started production at its plant.

The authors of this Technical Report have not been able to verify the information in Solway’s August 27, 2011 press release and the information in such press release is not necessarily indicative of the mineralization or the development and production plans, for the Mayaniquel Project.


24.0 Other Relevant Data and Information The authors and Qualified Person are unaware of any other data or information that would be relevant to this Technical Report which is not already contained in one of the existing sections of this Technical Report.


25.0 Interpretations and Conclusions This section presents the conclusions and recommendations of the authors and Qualified Persons for the Mayaniquel PFS and this Technical Report.

25.1 Interpretations and Conclusions

• The mineral resource estimate with an effective date of March 22, 2012 is based on drillhole data through February 28, 2012. The resources have increased substantially since the previous mineral resource estimate with an effective date of July 2011 prepared by SIM and BDRC due to a continuation of the drilling program.

• Additional drilling by ANC in the Sechol deposit upgraded resources from indicated to measured category as well as upgrading a significant amount of resource from the inferred to indicated category. Drilling in the Tres Juanes Norte and Tres Juanes Rio areas also resulted in increasing indicated and inferred resources.

• The mineral resource estimate includes nickel limonite mineralization as metallurgical testwork completed to date has shown that up to 30% of the FeNi plant’s feed material can be comprised of limonitic mineralization without appreciable loss of recoveries or quality of product.

• Due to the relatively small amount of sub-economic material overlying the resource, it is felt that all of the reported resources show reasonable prospects for economic extraction.

• LiDAR topographic mapping was completed by ANC in July 2012. The mineral resource estimate and significant mine planning had previously been completed using the older topography. Portions of the mineral resource estimates were reestimated using the new topography to evaluate potential impacts. The Qualified Person for the mineral resource estimate determined that use of the new topography versus the old topography resulted in no material change to the mineral resource estimate.

• Significant upside potential remains on undrilled extensions to some deposits, particularly the Tres Juanes Norte and Sechol-Segundo areas.

• Reliability of the sample assay data is within acceptable limits for mineral resource estimation.

• There are no known factors related to metallurgical, environmental, permitting, legal, title, taxation, socio-economic, marketing or political issues which could materially affect the mineral resource estimate.

• Ore upgrading pilot plant testwork confirmed the effectiveness of XRF upgrading to adjust the chemistry of the laterite ores to better meet target process plant feed characteristics.

• The objective of the metallurgical smelting pilot plant campaign carried out in July 2012 was to demonstrate that a selected blended ore feed could be used to produce a FeNi alloy containing the target grade of 22.5% nickel at a recovery of 90%. Test results confirmed that the process would produce the target FeNi alloy product at greater than 90% nickel recovery over a range of varying feed characteristics.

• Test samples chosen for both the ore upgrading pilot testwork and the smelter pilot testwork are representative of the three main lithologies and the overall mineral resource within the Mayaniquel Project deposit areas.

• The results of the Technical Report estimate that a mine at the Mayaniquel Project will be a low cost operation. The Mayaniquel Project benefits significantly from a higher grade starter


pit, (plant feed grade 1.86% Ni for the first three years of operations), the low strip ratio, relatively easy terrain, positive metallurgy (average nickel recoveries of 90%), amenability of material to physical upgrading, close proximity to major infrastructure, and large reserve base.

• Overall, the Mayaniquel Project is economically viable and has robust project economics at this stage of development and warrants further work, advancing to the next stage of development. The exploration program continues to demonstrate the potential for future growth of the resource. Risks, as well as significant opportunities, can be evaluated in the feasibility stage of the project.

25.2 Risks and Opportunities

A number of risks and opportunities have been identified for the Mayaniquel Project. Potential risks that could affect the performance of the project include:

• Long term depressed nickel pricing. • Substantially higher power costs in Guatemala than currently forecast. • Substantially higher coal costs than currently considered. • Failure, or under-performance, of the ore upgrading technology to produce upgraded ore

to meet smelter feed expectations. • Unfavorable changes to exchange rates between the USD, Euro, and local currency. • Extended delivery schedules for critical project components due to increases in demand

or diminished manufacturing capability. • Civil unrest leading to disruption of project activities. • Community concerns and issues resulting from the location of the access roads. • Political changes affecting regulatory requirements or the general business climate. • Shortage of skilled labor due to other developing projects. • Tropical storms. • Earthquakes and other geohazards. • Increased inflation and substantial escalation of project equipment, bulk materials, and

consumables costs. • Failure to obtain or maintain necessary permits and approvals of governmental

authorities.

Substantial opportunities for improving the Mayaniquel Project’s performance exist. They include:

• Higher nickel pricing than used as a long term forecast in the financial model. • Continued expansion of the mineral resources. • More effective ore upgrading technologies than conceptually envisioned. • Favorable currency exchange rate variations. • Successful commercial operation of the Koniambo Nickel Project FBDC furnace

technology, industry acceptance, and potential incorporation into the Mayaniquel Project.

During the next phase of project development, feasibility, a number of risks will be investigated further and possibly reduced or eliminated. Similarly, further investigation and determination of some opportunities may allow them to be incorporated in the project.


26.0 Recommendations Based on the results of this PFS, the authors recommend that ANC complete a Feasibility Study to further define the Mayaniquel Project in order to: more accurately assess its economic viability; support permitting activities; and, ultimately, support project financing should the FS results be positive. In addition, the authors recommend that ANC and MNSA continue their community relations program with stakeholders of the Mayaniquel Project.

An estimate of the costs to complete the FS is summarized below in Table 26.1.

Table 26.1 Recommended Future Work

Estimated Cost

US$000

1. Upgrade Mineral Resource Classification

a) 2,500

b) 100

Subtotal Resource Update 2,600

2. Complete Feasibility Study

a) 160

b) 1,602

c) 220

d) 2,914

e) 1,975

f) 493

g) 810

Subtotal Feasibility Study 8,174

3. 2,000

12,774$ Total Estimated Cost for Recommended Future Work

Task

Infill drilling, including sample preparation, assaying, and all related site support activities

Updated resource model/estimate, including QA/QC

Mine design, including geotechnical investigation, preparation of initial capital, sustaining capital, and operating cost estimates

Metallurgical testing and flowsheet development, including ore upgrading pilot testing and high Fe/Ni pilot smelting test

Hydrological, hydrogeological, and geotechnical field investigations

Process, geotechnical, and infrastructure design, including preparation of cost estimates

Environmental and permitting activities, including collection of baseline data, completion of EIS document, and oversight

Energy, Logistics, and Marketing Studies

Study management and coordination, execution planning and scheduling, owner's cost estimating, and economic evaluation

ANS/MNSA Continue its community relations program with project stakeholders throughout preparation of the Feasibility Study


27.0 References Carrasco de Groote, J.P., Mayaniquel, S.A. – Legal Standing and Status of Mining Licenses. February 28, 2012.

Davis, B., Some Methods of Producing Interval Estimates for Global and Local Resources. SME Preprint 97-5, 4p, 1997.

Davis, B., FAusIMM, and Sim, R., P. Geo. Technical Report for the Mayaniquel Project, Guatemala, NI 43-101 Technical Report for Anfield Nickel Corp. BD Resource Consulting, Inc. and SIM Geological Inc., dated November 3, 2010, with an effective date of September 1, 2010.

Electro Consulting, S.A., Preliminary Power Supply Study, January 12, 2011.

Electro Consulting, S.A., Update Preliminary Power Supply Study, September 18, 2012.

Elias, M. CSA Australia Pty. Ltd., 2001.

Erasmus, L., Morro Azul Smelting Campaign, 21 August 2012.

Hatch. Scoping Study of the Proposed Process for the Sechol Ni-Co-Mg Laterite Project. December 23, 2003.

IGEO – Mineração Inteligente Ltda, Projeto Mayaniquel Prefeasibility Study, November 2012.

Journel, A. G., and Huijbregts, Ch. J., Mining Geostatistics, Academic Press, 1978.

Pariser, Heinz H., Ferronickel Markets - Update, September 2012.

Pariser, Heinz H., Summary Ferronickel Market Review, November 2012.

Pawlowsky-Glahn and Olea, Geostatistical Analysis of Compositional Data, Oxford University Press, 2004

Process Research ORTECH. Process Scoping Program for the Extraction of Nickel and Cobalt from Lateritic Ore through Chloride Leaching, Solution Purification and Hydroxide Precipitation. October 27, 2003.

Ross, A. F., FAusIMM. Sechol Project, Guatemala, NI 43-101 Technical Report for Jaguar Nickel, Inc. Snowden Mining Industry Consultants. Amended September 19, 2005.

Tschabrun, D. B., MAusIMM. Mineral Resource Estimate for the Mayaniquel Project, Guatemala, NI 43-101 Technical Report for Anfield Ventures, Inc. Tetra Tech, dated May 19, 2009 with an effective date of May 5, 2009.

Valls. Summary Report of the Geology and Mineral Resources of the Sechol Nickel – Magnesium Laterite Deposits. Guatemala, Central America. Mineral Concession LEXR-314. Valls Geoconsultant Report. May 2002.


28.0 Date and Signature Pages

NEIL B. PRENN Mine Development Associates

210 S. Rock Boulevard, Reno, Nevada, U.S.A. 89502

Telephone: 775-856-5700

Email: [email protected]

CERTIFICATE OF QUALIFIED PERSON

I, Neil B. Prenn, P.E., do hereby certify that:

1. I am employed as Principal Engineer of:

Mine Development Associates 210 S. Rock Boulevard Reno, Nevada 89502

2. I graduated from the Colorado School of Mines with an Engineer of Mines degree in

1967.

3. I am a Registered Professional Mining Engineer in the state of Nevada (#7844) and a member of the Society of Mining Engineers and Mining and Metallurgical Society of America.

4. I have practiced my profession as a mining engineer continuously for 46 years.

5. I have read the definition of “qualified person” set out in National Instrument 43-101 (“NI 43-101”) and certify that by reason of my education, affiliation with a professional association (as defined in NI 43-101) and past relevant work experience, I fulfill the requirements to be a “qualified person” for the purposes of NI 43-101. My relevant work experience includes 16 years with Cyprus Mines Corporation, two years with California Silver, and 24 years with Mine Development Associates, including numerous resource and reserve calculations.

6. I am responsible for the preparation of Items 1, 2, 3, 4, 5, 6, 15, 16, 18, 20, 21, 22, 23, 24, and portions of Items 25, 26 and 27 of the technical report titled “Canadian National Instrument 43-101 Technical Report Prefeasibility Study, Mayaniquel Project, Guatemala”, dated December 7, 2012, with an effective date of October 24, 2012, (the “Technical Report”).

7. I personally inspected the Mayaniquel property from March 7-8, 2012.

8. I have had no prior involvement with the Mayaniquel property prior to the Technical Report.


9. As of the effective date of the Technical Report, to the best of my knowledge, information and belief, the Technical Report contains all scientific and technical information that is required to be disclosed to make the Technical Report not misleading.

10. I am independent of Anfield Nickel Corp. applying all of the tests in Section 1.5 of NI 43-101.

11. I have read NI 43-101 and Form 43-101F1 and the Technical Report has been prepared in compliance with that instrument and form.

Dated this 7th day of December, 2012.

/original signature and seal on file/

_

Neil B. Prenn, P.E.


ROBERT SIM, P.Geo. SIM Geological Inc.

6810 Cedarbrook Place, Delta, British Columbia, Canada V4E 3C5

Telephone: 604-596-6339 Fax: 604-596-6367



I, Robert Sim, P.Geo., do hereby certify that:

1. I am an independent consultant of:

SIM Geological Inc. 6810 Cedarbrook Place Delta, British Columbia, Canada V4E 3C5

2. I graduated from Lakehead University with an Honours Bachelor of Science (Geology) in 1984.

3. I am a member, in good standing, of the Association of Professional Engineers and Geoscientists of British Columbia, License Number 24076.

4. I have practiced my profession continuously for 26 years and have been involved in mineral exploration, mine site geology and operations, mineral resource and reserve estimations and feasibility studies on numerous underground and open pit base metal and gold deposits in Canada, the United States, Central and South America, Europe, Asia, Africa and Australia.

5. I have read the definition of “qualified person” set out in National Instrument 43-101 (“NI 43-101”) and certify that by reason of my education, affiliation with a professional association (as defined in NI 43-101) and past relevant work experience, I fulfill the requirements to be a “qualified person” for the purposes of NI 43-101.

6. I am responsible for the preparation of Item 14 and portions of Items 7, 8, 9, 10, 25, 26, and 27 of the technical report titled “Canadian National Instrument 43-101 Technical Report Prefeasibility Study, Mayaniquel Project, Guatemala” dated December 7, 2012, with an effective date of October 24, 2012 (the “Technical Report”).

7. I personally inspected the Mayaniquel property on June 19, 2012.

8. I have had prior involvement with the property that is the subject of the Technical Report. I was a co-author of previous NI 43-101 technical reports titled “Technical Report for Mayaniquel Project, Guatemala”, effective date September 1, 2010 and “Canadian National Instrument 43-101 Technical Report Preliminary Economic Assessment, Mayaniquel Project, Guatemala” dated July 22, 2011, with an effective date of April 12, 2011.


9. As of as of the effective date of the Technical Report, to the best of my knowledge, information and belief, the Technical Report contains all scientific and technical information that is required to be disclosed to make the Technical Report not misleading.


11. I have read NI 43-101 and Form 43-101F1, and the Technical Report has been prepared in compliance with that instrument and form.


/original signature and seal on file/

_____________________________________ Robert Sim, P.Geo.


BRUCE M. DAVIS BD Resource Consulting, Inc.

4253 Cheyenne Drive, Larkspur, Colorado, U.S.A. 80118

Telephone: 303-694-6546



I, Bruce M. Davis, PhD, FAusIMM, do hereby certify that:

1. I am an independent consultant of:

BD Resource Consulting, Inc. 4253 Cheyenne Drive,

Larkspur, Colorado, U.S.A. 80118

2. I graduated from the University of Wyoming with a Doctor of Philosophy degree in Statistics with an emphasis in Geostatistcs in 1978. I hold a Bachelor of Science degree in Mathematics and a Master of Science in Statistics from Brigham Young University.

3. I am a Fellow of the Australasian Institute of Mining and Metallurgy (Registration No. 211185). Further I am a member of the PDAC (#216302), the International Association for Mathematical Geology (#148), and the SME (#742830) (all in good standing).

4. I have practiced my profession as a geostatistician continuously for 32 years. I have training in the theory and practice of sampling particulate materials and have designed and executed mineral sampling programs since 1978. Similarly, by reason of my statistical training I have conducted assay quality control and data verification programs throughout my time as a practicing geostatistician.

5. I have read the definition of “qualified person” set out in National Instrument 43-101 (“NI 43-101”) and certify that by reason of my education, affiliation with a professional association (as defined in NI 43-101) and past relevant work experience, I fulfill the requirements to be a “qualified person” for the purposes of NI 43-101.

6. I am responsible for the preparation of Items 11 and 12, and portions of Items 7, 8, 9, 10, 14, 25, 26 and 27 of the technical report titled “Canadian National Instrument 43-101 Technical Report Prefeasibility Study, Mayaniquel Project, Guatemala”, dated December 7, 2012, with an effective date of October 24, 2012, (the “Technical Report”).

7. I personally inspected the Mayaniquel property on June 19, 2012.

8. I have had prior involvement with the property that is the subject of the Technical Report. I was a co-author of previous NI 43-101 technical reports titled “Technical Report for the Mayaniquel Property, Guatemala”, effective date September 1, 2010 and “Canadian National Instrument 43-101 Technical Report Preliminary Economic Assessment, Mayaniquel Project, Guatemala” dated July 22, 2011, with an effective date of April 12, 2011.


9. As of the effective date of the Technical Report, to the best of my knowledge, information and belief, the Technical Report contains all scientific and technical information that is required to be disclosed to make the Technical Report not misleading.


11. I have read NI 43-101 and Form 43-101F1 and the Technical Report has been prepared in compliance with that instrument and form.


/original signature on file/

_

Bruce M. Davis, PhD, FAusIMM


NICHOLAS A. BARCZA 116 Eighteenth Street, Parkhurst, Johannesburg, 2193 South Africa

Telephone: 44.791.710.7104 or 27.82.574.6682



I, Nicholas A. Barcza, do hereby certify that:

1. I am an independent Metallurgical Engineering consultant. 2. I graduated from the University of Witwatersrand, Johannesburg, South Africa with a

Doctor of Philosophy with a degree in Metallurgical Engineering in 1977. 3. I am an Honorary Life Fellow, in good standing, of the Southern African Institute of

Mining and Metallurgy.

4. I have practiced my profession continuously for 35 years and have been involved in metallurgical engineering studies, feasibility studies on numerous metallurgical projects and operations in precious base and ferrous metals in South Africa, Russia, Kazakhstan, Australia, and North, Central, and South America.

5. I have read the definition of “qualified person” set out in National Instrument 43-101 (“NI

43-101”) and certify that by reason of my education, affiliation with a professional association (as defined in NI 43-101) and past relevant work experience, I fulfill the requirements to be a “qualified person” for the purposes of NI 43-101.

6. I am responsible for the preparation of Items 13, 17, 19 and portions of 21, 25, 26 and

27 of the technical report titled “Canadian National Instrument 43-101 Technical Report Prefeasibility Study, Mayaniquel Project, Guatemala”, dated December 7, 2012, with an effective date of October 24, 2012, (the “Technical Report”).

7. I personally inspected the Mayaniquel property from May 21-25, 2012. 8. I have had prior involvement with the property that is the subject of the Technical Report.

I was a co-author of a prior NI 43-101 technical report titled “Canadian National Instrument 43-101 Technical Report Preliminary Economic Assessment, Mayaniquel Project, Guatemala” dated July 22, 2011, with an effective date of April 12, 2011 (the “Technical Report”).

9. As of as of the effective date of the Technical Report, to the best of my knowledge,

information and belief, the Technical Report contains all scientific and technical information that is required to be disclosed to make the Technical Report not misleading.


10. I am independent of Anfield Nickel Corp. applying all of the tests in Section 1.5 of NI

43-101.

11. I have read NI 43-101 and Form 43-101F1, and the Technical Report has been prepared in compliance with that instrument and form.


/original signature on file/

_____________________________________ Nicholas A. Barcza, PhD, Pr. Eng., HLF SAIMM

prefeasibility study mayaniquel projectcanadian national instrument 43-101 technical report...

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