Yuanjian Zhu yjzhu@srk.com.au +61408582897

A gold mine is a hole in the ground with a liar on top.

China Overseas Mining Investment Case 3PoliticsLibya civil war, China‘s nearly $ 20 billion project put on hold, CNPC stopped mining. In June 2009, Chinalco's acquisition of Rio Tinto failed, and Rio Tinto unilaterally broke its contract. In September 2012, Chalco's US $ 920 million acquisition of South Gobi Resources Ltd Zijin Mining's acquisition of Congo Copper Mine was thwarted

InfrastructureIn 2008, Sinosteel acquired Weld Range iron ore project in Western Australia for 1.36 billion , and the project was suspended

SocialMyanmar's Letpadaung copper mine shut down twice

ResourceMarry River Iron Mine, Baffin Island, Canada

CostVientiane potash basin, Laos

PriceCITIC Pacific acquires Western Australian

iron ore mineCarrara Project of Ansteel Group

CONTENTS

Introduction of Western Mineral Reporting Standards

Introduction of Independent Technical Report

Data Quality Management Analysis

Resource estimation risk assessment

0 1

02

03

04

Background Classification

Introduction of Mineral Reporting Standards01 Comparison

Grimes Graves, Neolithic Flint Mine

1 3 5

2 4

ChaosA long time after the start of mining, the market for mineral rights trading was small.

DevelopingFrom the beginning to the middle of the 20th century, Africa, the Soviet Union, the United States, and Western Europe successively proposed their own classification standards, with the distinction between Mineral Resources and Ore Reserves.

Perfecting1997 – Russia2003 – CIM2012 – CRIRSCO2012 – JORC2016 – SAMREC

BeginningAt the beginning of the 20th century, British, American, and International Geological Associations successively proposed the Mineral Resource classification standard - the prototype of Mineral Resource classification.

Uniform1973 – the United States1981 – Canada1978 – the United Nations1989 – Australia1997 – Foundation of CRIRSCO

Development of Mineral Standards

Classification of Current Major Mineral Standards

• The Committee for Mineral Reserves International Reporting Standards was established in 1997, and the standard was updated in 2013.

• Emphasize the role of CP / QP• Divided into two categories – Mineral

Resources and Ore Reserves based on economic and confidence levels, each with its own sub-category.

• Members have their own standards, but are roughly similar.

• Conditions for mutual recognition of Qualified Person in different countries

CRIRSCOMajor western countries

• United Nations Framework Classification for Fossil Energy and Mineral Resources was put forward in 1997, and it was updated in 2009.

• Classification from three aspects: known degree of geology, project feasibility and socioeconomic stability

• This classification system is mainly used by China, India and some Eastern European countries.

UNFCChina, India, etc.

The main members of CRIRSCO and their respective standards

AustraliaJORC Code (2012)

CanadaCIM Definition Standards

Brazil CBRR Guide

USA SME Guide

South AfricaSAMREC (2016)

Russia NAEN Code

Europe & UKPERC Code

CRIRSCO International Reporting Template

No specific procedures and methods for Qualified Person to report Mineral Resource and Ore Reserves1

2

3

4

No specific data acquisition and quality assurance procedures

No specific format requirements

Unable to handle individuals / companies that violate standards

Defined minimum standards for public reporting of Exploration Results, Mineral Resources and Ore Reserves 1

2

3

4

Provided a mandatory classification system based on geological confidence and technical-economic considerations

Established a Mineral Resource classification system for Qualified Person / Competent Person’s Code of Conduct

Described uniform, detailed specifications for reporting Exploration Results, Mineral Resources and Ore Reserves.

CRIRSCO Mineral Resource and Ore Reserve Classification System

Geological Confidence Level

Geology Exploration

MethodAssay

Modifying Factors

Environment

Mining

Processing/Smelting

Economy

Law Social/Infrastructure

Government

Resource

Market

Resource

Reserve

Introduction Feature

Competent Person Report

02 Format

ITR/CPR Template

• CRIRSCO’s International Reporting Template

• Each standard specifies the general content• JORC• CIM• SAMREC• SME

• Exchanges have their own legal constraints• ASX listing rules• HKEx Chapter 18• NI-43-101• Guide 7

Feature

• It is a summary of the material technical information of

the project;

• Its readers are public investors or their investment

advisers;

• Report must be concise but contain sufficient technical

information and cautionary language to allow investors to

make informed decisions

Format (JORC)Executive SummaryDisclaimerList of Abbreviations1 Introduction and Scope of Report2 Program Objectives and Work Program2.1 Purpose of the Report2.2 Reporting Standard2.3 Work Program2.4 Project Team2.5 Indemnities2.6 Compliance Statement2.7 Limitations Statement2.8 Forward Looking Statement

3 Property Description and Location3.1 Tenure – tenure type, conditions and renewal

dates3.2 Operational Licenses and Permits3.2.1 Business License3.2.2 Mining License3.2.3 Safety Operational Permit3.2.4 Other Operational Permits4 Accessibility, Climate, Local Resources, Infrastructure and Physiography4.1 Accessibility4.2 Local Resources and Infrastructure4.3 Climate4.4 Physiography

5 Geological Setting and Mineralization5.1 Regional Geology5.2 Deposit Geology5.3 Mineralization5.3.1 Mineralized Zones/Bodies5.3.2 Mineralogical Characteristics

The geological characteristics of the project and what geological factors have a significant impact on controlling the mineralization.The distribution of the identified mineralized bodies, the characteristics of the surrounding rock of the orebody, the geological factors controlling the orebody, the length, width and depth of the mineralized body, and the continuity of mineralization.Mineral composition and ore typeFurther exploration potential

6 Exploration, Sample Preparation, Analyses, and Security 6.1 Exploration History6.2 Trenching [if applicable]6.3 Underground Tunneling [if applicable]6.4 Drilling6.5 Sampling, Sample Preparation and Analyses6.5.1 Sampling6.5.2 Sample Preparation and Analyses6.5.3 Specific Gravity Data6.6 Quality Assurance and Quality Control Programs6.7 Data Verification

7 Mineral Resource Estimates7.1 Introduction7.2 Resource Estimation Procedures7.3 Resource Database7.4 Solid Body Modelling7.5 Specific Gravity7.6 Compositing7.7 Evaluation of Outliers7.8 Statistical Analysis and Variography7.9 Block Model and Grade Estimation7.10 Model Validation and Sensitivity7.11 Mineral Resource Classification7.12 Mineral Resource Statement7.13 Grade Sensitivity Analysis7.14 Previous Resource Estimates (if publicly disclosed)7.15 Exploration Potential and Recommendations (any other issues)

Advanced Projects8 Mining and Ore Reserve Estimates9 Metallurgical and Processing10 Workforce Assessment11 Project Infrastructure12 Occupational Health and Safety13 Capital and Operating Costs14 Economic Analysis15 Environmental Studies, Permitting, and Social or Community Impact16 Risk Assessment17 Conclusions and Recommendations18 References

APPENDIX

CRIRSCO Mineral Resource and Ore Reserve Classification System

A gold mine is a hole in the ground with a CPR on top.

Foundation of Mining Project - Resource

Reserve/LOM

Mining Method

Processing Process

Product Price

Tailings discharge/Environment Rehabilitation

Geology and Resource Section of the Report

Geological Setting and Mineralization (Occurrence of Orebody and Factors Affecting Orebody)

Exploration, Sample Preparation, Analyses, and Security (Quality of Data)

Mineral Resource Estimates (Estimation Method)

Core: Report to readers the results of Mineral Resource estimates and express the reasonableness and reliability of the estimates.

The Basis of Mineral Resource Estimation:

Acquisition Analysis

Data Quality Management Analysis03 Verification

Busang Gold Mine

April, 1994Bre-X release “Good news”. A new

Gold deposit with a thickness of tens of meters was found by exploration,

with grade ranging from 2 g/t to 10 g/t, and the Share Price rose to CA$1.50.

Jan. 1996Bre-X release exploration results for the

No. 61 and No. 62 boreholes stating orebody intersections of 301 m, at an

average grade of 4.42 g/t and 137 m, at an average grade of 5.71 g/t. An updated

Mineral Resource estimated had increased the contained gold 404 t .The

Bre-X share Price rises to CA$95.

Oct. 1995Kilborn Engineering Submitted a

maiden Mineral Resource of 85.5t of contained gold for the Busang Gold Deposit, with the

Bre-X share price rising to CA$47.5

Dec. 1996The Busang Gold Mine’s

Mineral Resources increase several times, reaching 1,780t

of contained gold.

Mar. 1997Before its scam was exposed, the Mineral

Resources were expected to reach 2200-6200t of contained gold, and the

Bre-X share price exceeded CA$ 270.

May, 1993Bre-X announced that it will

implement a joint exploration project of gold mine in the Busang area of Kalimantan, Indonesia. At the same

time the stock is listed in Toronto with a stock price of CA$0.45

The Importance of Data

Rubbish in, rubbish out

Geological Data Type and Acquisition Method

Geological Data

Geological data can reflect local geological conditions however the data needs to be interpreted and modelled in order to understand it’s context.

Geochemical ExplorationGeochemical method to measure anomalies

DrillingObtaining sub-surface data through drilling

Geological MappingField observation and measurement of geological bodies and geological phenomena.

TrenchingObtaining surface or underground data from trenching.

Geophysical ExplorationGeophysical method to measure anomalies

Topographic SurveyObtaining terrain data with specific instruments

Trenching and DrillingDifferent ways to obtain basic data

Quality Evaluation of Exploration Data

RepresentativenessThe amount of data collected should be adequate enough to represent the in-situ deposit.

PrecisionThe data collected must be precise and match that of the in-situ deposit.

AccuracyThe data collected must be accurate and repeatable.

IntegrityData loss should be kept to a minimum.

TimelinessPrompt processing of samples

QA/QC Control Sample

Purpose: Ensure the precision and accuracy of data during sample processing and testing

Core Split TestingCrushing

Podwer DuplicateStandard Sample

Coarse DuplicateCore DuplicateBlank

Blank Sample Performance

Test result of a single blank≤160% Detection LimitBlank Mean≤Detection Limit

• Tests for sample contamination during sample preparation • Coarse crushing, division, grinding, and testing with core samples• With sufficient hardness and large particles.

Standard Sample Performance – Assaying Accuracy

30

32

34

36

38

40

42

44

Ass

ayed

Val

ue (%

)

Sample No.MgO Standard Value ±10% Tolerance Limit

Duplicate Performance – QQ Plot

Gra

de o

f Dup

licat

e (%

)

Grade of Original Sample (%)

Q-Q Plot

.0 10.0 20.0 30.0 40.0 50.0.0

10.0

20.0

30.0

40.0

50.0

MgOy=x

Describe the distribution of quantiles occupied by corresponding grades

Duplicate Performance – Scatter Plot

0

10

20

30

40

50

60

0 10 20 30 40 50 60

Gra

de o

f Ex

tern

al C

heck

ing

Sam

ple

(%)

Grade of Original Sample (%)

TFe Y=X ±10%

Coarse Reject

Duplicate Performance – Thompson-Howarth Plot

0

5

10

15

20

25

30

35

40

45

50

0 10 20 30 40 50 60 70

MgO

Gra

de (

%)

Error (%)

Error E(%) = 100×(S0/C+K)Quantitatively reflect errors of different grades

Duplicate Performance – HARD PlotHalf Absolute Relative Difference = |x1-x2|/(x1+x2)

Analysis of Bulk Density Sample

y = 0.0299x + 2.442R² = 0.6843

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

10 15 20 25 30 35 40 45 50 55 60

Den

sity

(g/c

m3 )

TFe(%)

TFe Linear (TFe)

Data Processing

Delineation of Orebody

Mineral Resource Estimation Risk Assessment04 Method

Assessment

Representation of Data

Sample LengthExploration Density

-Data Preprocessing

Compositing

Different sampling lengths will lead to different weights for each sample and possible different analyte statstics

Pre-compositing

Post-compositing

Clustering

Declustering

Declustering Method

Cell Method Polygon Method Kriging Weight Method

Basic Statistical Analysis of Data

Core: Data Distribution

-4 -3 -2 -1 0 1 2 3 4

Normal Distribution

0 5 10 15 20 25

Lognormal Distribution

Basic Statistical Analysis of DataLi Be

Nb Ta

Analysis of elements can help us understand the mineralization background to a certain extent

Basic Statistical Analysis of Data

0

10

20

30

40

50

60

0 20 40 60 80 100 120 140 160

Tfe

Gra

de(%

)

Sample Depth (m)

Delineation of Geological Bodies

Definition of Orebody

Geological Modelling

Cutoff Type - Grade Continuity

0

1

2

3

4

5

6

7

-50 -30 -10 10 30 501

1.1

1.2

1.3

1.4

1.5

1.6

-150 -100 -50 0 50 100 150

Geological Continuity

Source from Alastair J. Sinclair (2004)

Related Concept of Geostatistics

Statistics: Study the distribution of samples (mean, variance, etc.)Geostatistics: Study the spatial distribution pattern of samples

Assumption:• Random process• Normal distribution• Stationarity

Regionalized Variable: Variables showing a certain spatial distribution• Random• Structural

21.86 25.62

25.61

26,8023.76

T

Related Concept of Geostatistics

Variogram: Analyze sample variation over distanceSemivariogram

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1

0 100 200 300 400 500 600

Gam

ma

(h)

Distance (m)

Range

Nugget

Sill

Selection of Outliner

According to the mean and standard deviation (eg: 3 times standard deviation is less than 0.15%)

Based on cumulative probability curve

Cum

ulat

ive

Prob

abilit

y (%

)

Log Transformed Grade

.01

.1

.2

125

102030405060708090959899

99.899.9

99.99

-3.0 -2.5 -2.0 -1.5 -1.0 -.50 0. .50 1.0 1.5

Sn WO3

Grade Estimation in Orebody

Searching DistanceBlock SizeEstimation Method

Verification of Grade Estimation

Verification of Grade Estimation - Swath Plot

0

5

10

15

20

25

30

35

40

Elevation (per 36 m)

Block Composite

30

31

32

33

34

35

36

37

38

39

40

Ave

rage

Gra

de o

f M

gO (

%)

East (per 400 m)Block Composite

30

31

32

33

34

35

36

37

38

39

North (per 200 m)Block Composite

Resource Classification

How to classify is not specified in JORC.

Geological Continuity

Redrawn from King et al. (1982)

Diamond pipeAlluvial Sn, AuRustenburg Pt StratiformAu DisseminatedAu Vein Au

Porphyry MoPorphyry

CuKing Island W Vein Sn/W

Stockwork W

Stratiform SnStratiform Ni

Stratiform Pb-Zn(Unmetamorphosed)

Volcanic CuPb Zn Au

Redross Ni Mississippi Valley Pb Zn

Broken Hill Pb Zn Andean Pb Zn

PWeipabauxite

Jamaicabauxite

Fe

CoalEvaporite

Hig

hPr

opor

tion

of O

re M

iner

alLo

w

High LowGeologic Continuity

1 ppm1 - 30 ppm0.1%1%

10%

30%

60%

100%

Selection of Cutoff Grade

a cutoff grade is a grade below which the value of contained metal/mineral in a volume of rock does not meet certain specified economic requirements.

𝐶𝐶𝐶𝐶𝐶𝐶 =𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝑝𝑝𝑝𝑝𝑝𝑝 𝑂𝑂𝑝𝑝𝑝𝑝/𝑡𝑡 × 𝐶𝐶𝐺𝐺𝐺𝐺𝐺𝐺𝐺𝐺𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑝𝑝𝑐𝑐𝑡𝑡𝑝𝑝𝑐𝑐𝑡𝑡𝑝𝑝

)⁄𝑃𝑃𝐺𝐺𝑃𝑃𝑃𝑃𝐺𝐺𝑖𝑖𝑐𝑐𝑐𝑐𝑖𝑖.𝑇𝑇𝑐𝑐𝑇𝑇 ( 1 + 𝑇𝑇𝐺𝐺𝑇𝑇) × 𝑅𝑅𝐺𝐺𝑃𝑃𝐶𝐶𝑅𝑅𝐺𝐺𝐺𝐺𝑅𝑅 𝑅𝑅𝐺𝐺𝐶𝐶𝐺𝐺 × (1 − 𝐷𝐷𝑃𝑃𝐷𝐷𝐷𝐷𝐶𝐶𝑃𝑃𝐶𝐶𝐷𝐷 𝑅𝑅𝐺𝐺𝐶𝐶𝐺𝐺

Sensitivity Analysis

Source from Alastair J. Sinclair 2004

0.00

0.20

0.40

0.60

0.80

1.00

1.20

0

1

2

3

4

5

6

7

8

9

10

0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9

Gra

de (g

/t)

Tonn

age

(Mt)

Cut-off Grade (WO3 %)

Resource WO3 Grade

Thank you！yjzhu@srk.com.au +61408586897

Technical Risk Assessment in the Competent Person Report�-Geology and Mineral ResourcesSlide Number 2China Overseas Mining Investment CaseSlide Number 4Slide Number 5Grimes Graves, Neolithic Flint MineDevelopment of Mineral StandardsClassification of Current Major Mineral StandardsThe main members of CRIRSCO and their respective standardsCRIRSCO International Reporting TemplateCRIRSCO Mineral Resource and Ore Reserve Classification SystemGeological Confidence LevelModifying FactorsResourceReserveSlide Number 16ITR/CPR TemplateFeatureFormat (JORC)Slide Number 20Slide Number 21Slide Number 22Slide Number 23Slide Number 24CRIRSCO Mineral Resource and Ore Reserve Classification SystemSlide Number 26Foundation of Mining Project - ResourceGeology and Resource Section of the ReportSlide Number 29Busang Gold MineThe Importance of DataGeological Data Type and Acquisition MethodTrenching and DrillingQuality Evaluation of Exploration DataQA/QC Control SampleBlank Sample PerformanceStandard Sample Performance – Assaying AccuracyDuplicate Performance – QQ PlotDuplicate Performance – Scatter PlotDuplicate Performance – Thompson-Howarth PlotDuplicate Performance – HARD PlotAnalysis of Bulk Density SampleSlide Number 43Representation of DataCompositingClusteringDeclusteringDeclustering MethodBasic Statistical Analysis of DataBasic Statistical Analysis of DataBasic Statistical Analysis of DataDelineation of Geological BodiesCutoff Type - Grade ContinuityGeological ContinuityRelated Concept of GeostatisticsRelated Concept of GeostatisticsSelection of OutlinerGrade Estimation in OrebodyVerification of Grade EstimationVerification of Grade Estimation - Swath PlotResource ClassificationGeological ContinuitySelection of Cutoff GradeSensitivity AnalysisSlide Number 65