The need for exploration Best practice - Exploration performance benchmarkingValue creation from explorationTesting new play concepts and/or exploration modelsReducing exploration risk by developing and/or applying new techniquesAppropriate Mining Technology for Sub Sahara Geology Formation

EXPLORATION: THE NEED AND THE

ADVANCES IN TECHNOLOGY

Quality – Innovation – Future

Feasibility Studies

….an important instrument for mining

project financing

“Feasibility study" means a comprehensive study of a deposit in which all geological,

engineering, operating, economic and other relevant factors are

considered in sufficient detail that it could reasonably serve as the basis for a

final decision by a financial institution to finance the development of the deposit

for mineral production.*

* Definition taken from NI 43-101 (reporting standard for American SXs)

MINE LIFE CYCLE

To learn more about feasibility studies you have to look in more detail to the mining project cycle.

Source: Modified from VenmynMitigate Risk

CorporatePerformance

ExplorationPerformance

DevelopmentPerformance

MiningPerformance

ProcessingPerformance

MarketingPerformance

LocationUncertainty

MiningComplexity

Social &Environmental

Uncertainty

ConstructionUncertainty

Mining Uncertainty

MetallurgicalUncertainty

Market &Commodity

PricingUncertainty

Financial &Economic

Uncertainty

GeologicalUncertainty

Science &TechnologyUncertainty

Mining is a risky business and each stage is impacted by uncertainties

InvestorUncertainty

Social &Environmental

Uncertainty

Social &Environmental

Uncertainty

Social &Environmental

Uncertainty

Social &Environmental

Uncertainty

Social &Environmental

Uncertainty

PoliticalUncertainty

PoliticalUncertainty

InvestorUncertainty

Pervasive,Largely

UncontrollableRisks

Poorly Defined and somewhatControllable

Risks

Direct Controllable

Risks

Global Financial &Economic Risks

“Risk Categories”

The way to address all the

uncertainties and to minimise the risks

incurred into a mining project is the

dilligent preparation of a Feasibility

Study.

• Covers the technical, the economic and financial feasibility.

• Details the design, including field studies, especially in regard to topographical, geological, geotechnical, hydrogeological.

• Details the unit costs of the materials and the various phases of construction close to reality.

• Allows exploring the various possibilities / strategies of funding the project.

• Includes detailed study of the potential environmental impacts and mitigation plans and the costs the cost to be foreseen in the overall budget.

FEASIBILITY STUDY

RELATION BETWEEN RESOURCE AND RESERVES

KEY TOPICS TO BE ADRESSED WITHIN FEASIBILITY STUDIES

• Geology and Resource

• Mine Design and Mineable Reserve

• Metallurgy and Process Facility

• Tailing disposal

• Infrastructure, power supply, water supply

• Civil and major earthworks

• Power supply

• Water

• Support facilities, maintenance, etc.

• Site access, road vs. fly-in fly-out vs. winter road vs. marine etc.

KEY TOPICS TO BE ADRESSED WITHIN FEASIBILITY STUDIES (2)

• Supply costs and shipping of product and impact on working capital

• Project access and transportation

• Environmental impacts and mitigation

• Labour supply and socio-economic issues

• Political stability and conditions

• Environmental constraints and permitting

• Management capability and experience

• Socio-economic impacts

• Project schedule and execution plan

• Capital and operating cost estimates

• Fatal Flaw Analysis

COST CALCULATION : ACCURACY VS TYPE OF STUDY

Life Cycle of a Mining InvestmentVALUE vs RISK

Life Cycle of a Mining InvestmentVALUE vs RISK

RISK REDUCTION WITH ADDED INFORMATION AND CONFIDENCE

Source: Modified from U.S. Global Investors and Venmyn

Highest Financial Risk Exposure

VA

LU

E A

DD

ITIO

N

DISCOVERY

Pre-FEASIBILITY

BANKABLE FEASIBILITY

EXPLORATION PRE-DEVMINE

CONSTRUCTIONMINE

PRODUCTION

5-10% 70-85%10-20%

Development InvestmentAnalysis

(Reality Sets In)

Production Revaluation

Speculation

COMPLIANCE AND REPORTING

• Codes sets out standards and guidelines for Public Reporting of Mineral Asset Valuations e.g. SAMREC;SAMVAL; Ni43-101; JORC etc.

• The code is applicable to the reporting of all styles of solid mineralization/mineral assets.

• The code is based on best practices of the minerals industry and allows for professional judgment in certain instances.

• The objective of the code is that Mineral Asset Valuations should be performed by appropriately qualified persons and all relevant information is fully disclosed.

• ‘Valuation’ in the code is related to the value or worth of a Mineral Asset as opposed to ‘evaluation’ where the objective is an economic assessment of the economic merit of an Asset.

CONCLUSIONS

• Feasibility study is the key instrument to determine whether or not a project will be viable.

• There are different standards for feasibility studies, but its quality remains paramount.

• The bank decides what is bankable.

• Mineral resource is the key factor.

• No duly proven reserves, no project (modifying factors).

• The level of detail in a feasibility study depends basically on implementation route.

• Capital costs: accuracy of estimate vary between ± 25% and ± 10%.

• The cost of a feasibility study is a very low% of the total investment.

• Greater detail in a FS, greater accuracy in calculating the cost of capital.

• Compliance is paramount as its provides credibility.

The success of a project depends on quality, time and expected cost and subsequently depends on

a professional Feasibility Studyand

the experience of the consultant providing the study ?

Our Services

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Measuring systems and products

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Quality – Innovation – Future

Markets we serve

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Geology and Borehole Survey – Exploration

Airborne:gravity, magnetics, EM, radiometrics(?)

Ground: gravity, magnetics, EM, MT, GPR, resistivity, seismics

Indicator minerals: garnet, ilmenite, chromite, diopside, olivine(?), diamond

Geochemistry: Ni, Cr

Remote sensing: hyperspectral(?), satellite, aerial photography

Diamond Drill Bit

Long Space (20") Density Detector Ultrasonic Dip SensorRadioactive Source

Geology and Borehole Survey - Services

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“Full Circumference Mode“

Scanning during rotation of the core

Geology and Borehole Survey - CS3

DMT KAI BATLA ZIMBABWE EXPERIENCE

2012: Geological exploration, Iron Ore

2012-2013: Geological exploration, Manganese and Gold

2014: Geological exploration, Manganese

2014: Due Diligence - Investigation of potential limestone suppliers

2014-2015: Geological exploration, Rare Earth Elements

2014-2015: Due Diligence - Potential Coal Suppliers to

Thank you for your attention

Avinash Bisnath

DMT Kai Batla

Managing Director, Geologist

Avinash.Bisnath@dmt-group.com

Mapadi Molepo

DMT Kai Batla

Geologist

Mapadi.Molepo@dmt-group.com

www.dmt-group.com