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SABODALA GOLD PROJECT

SENEGAL, WEST AFRICA

TECHNICAL REPORT

for

TERANGA GOLD CORPORATION

Prepared by AMC Mining Consultants (Canada) Ltd

In accordance with the requirements of National Instrument 43-101, “Standards of Disclosure for

Mineral Project”, of the Canadian Securities Administrators

Qualified Persons: P R Stephenson, PGeo, BSc (Hons) FAusIMM (CP), MCIM, FAIG J M Shannon, P Geo, BA Mod, MA B O’Connor, PGeo, BSc A Riles, BMet (Class 1), Grad Dipl Prof Management A Ebrahimi, PEng, PhD, MASc, BASc

AMC 710022

Amended 7 October 2010 and 1 November 2010

Effective Date 27 September 2010

TERANGA GOLD CORPORATION Technical Report, Sabodala Gold Project

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DISTRIBUTION LIST 1 copy to Mr J Williams, Mineral Deposits Limited, Melbourne 1 copy to Mr BH Van Brunt, Mineral Deposits Limited, Melbourne 1 copy to AMC Vancouver office


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SUMMARY

Introduction, Location and Ownership

This Technical Report on the Sabodala Gold Project (“the Project”) in Senegal, West Africa has been prepared by AMC Mining Consultants (Canada) Ltd (“AMC”) of Vancouver, Canada on behalf of Teranga Gold Corporation of Toronto, Canada as part of its initial public offering on the TSX. It has been prepared in accordance with the requirements of National Instrument 43-101 (NI 43-101), “Standards of Disclosure for Mineral Projects”, of the Canadian Securities Administrators “(CSA”) for lodgment on CSA’s “System for Electronic Document Analysis and Retrieval” (“SEDAR”). It is proposed that Mineral Deposits Limited (“MDL”) will transfer its wholly owned Mauritian subsidiaries SGML (Capital) Limited and Sabodala Gold (Mauritius) Limited which, at the time of the transfer, owns 100% of Sabodala Mining Company SARL (“SMC”) and 90% of Sabodala Gold Operations SA (“SGO”), and its approximate 15% holding in Oromin Explorations Ltd., to a Canadian company, Teranga Gold Corporation (“Teranga Gold”) subject to approval by MDL shareholders. A Restructure and Demerger Deed relating to shares in Sabodala Gold (Mauritius) Limited and SGML (Capital) Limited and common shares in Oromin Explorations Ltd. will transfer ownership to Teranga Gold.

The Project, which poured its first gold in March 2009, is located 650 km east of the capital Dakar within the West African Birimian geological belt in Senegal, and about 90 km from major gold mines and discoveries in Mali. The area has only recently been opened for mining and exploration and is emerging as a significant new gold camp, with more than 10 M ounces of resources already reported as being discovered. With 2.25 M ounces of gold in Measured and Indicated Resources including 1.46 M ounces of gold in Mineral Reserves, and an additional 0.77 M ounces of gold in Inferred Resources, the Project currently has a life of up to ten years. Production in FY2011 is forecast at 130,000-140,000 ounces of gold, processed at the Sabodala plant which has a current capacity of 2 Mtpa. The plant is currently being expanded to double its capacity, with scheduled completion in mid 2011; this will deplete reserves at an accelerated rate. An aggressive exploration program is continuing with the aim of increasing resources, and increasing mine life.

MDL executed its Mining Convention with the Government of Senegal on March 23, 2005, and by way of a subsequent Supplementary Deed January 22, 2007, was granted a ten year (renewable) Mining Concession. Sabodala Mining Company (“SMC”), a company incorporated in Senegal, being a 100% subsidiary of Sabodala Gold (Mauritius) Limited (“SGML”), acts as operator for the exploration of the Project on behalf of MDL under the Mining Convention. SGML is a wholly owned subsidiary of Nimbus Gold Pty. Ltd., which in turn is 100% owned by MDL. SGML established an operating company, Sabodala Gold Operations S.A. (“SGO”), to mine the Sabodala deposit. The Senegalese Government has a 10% free carried interest in SGO. Commencing May 2, 2007, MDL is exempt from all property, company and value added taxes for a period of eight years, which expires in May 2015.

The total property consists of the Mining Concession of approximately 33 km² which is held by MDL on a ten year (renewable) basis, and seven exploration leases which are grouped into four different project areas which surround the mine property. All permits are granted by ministerial decree and are subject to a Mining Convention signed between SMC and the state of Senegal. The exploration permits are held in a combination of full SMC ownership and earn-in joint ventures where SMC is


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the funding and managing party. The current permits in which MDL have an interest cover a total of 1,364 km2, with three new requests for exploration permits covering a total of 91 km2 lodged.

Geology and Mineralization

The property and the surrounding exploration concessions are located in the 2213 to 2198 Ma age Kedougou-Kenieba Inlier, which lies within the Paleoproterozoic age Birimian Terrane of the West African Craton. The inlier is divided into the volcanic dominated Mako Supergroup to the west, and the sediment-dominated Diale-Dalema Supergroup to the east. The boundary between the belts may be tectonic, with the original stratigraphic relationship not preserved and the overlying sediments appear to be overturned. The Mako and Diale-Dalema sequences are intruded by a series of variably deformed granitoid intrusions that range in age from 2160 to 2000 Ma. Felsic and intermediate composition dykes are often spatially associated with shear zones hosting gold mineralization, and locally are host to significant gold mineralization themselves.

A north-northeast lithologic grain is seen associated with major crustal shear zones. These include a north-northeast trending shear zone which lies east of the Sabodala property area. High strain zones and possible second and third order shear zones to the Main Transcurrent Shear Zone may control the localization of gold mineralization.

Lateritic weathering combined with duricrust formation is still active in the region. Oxidation depth in the region is highly variable, but is generally several tens of meters.

At Sabodala mafic volcanic rocks are mainly present with a large granitic intrusion occupying the north-western portions of the property. Lithologies generally trend north-northeast to northeast with steep dips, although local variations are apparent, which may be locally important trap sites for mineralization.

Principal structures on the Sabodala property form a steeply west-northwest dipping, north-northeast trending shear zone network which has previously been referred to as the “Sabodala Shear Zone”. This includes the Niakafiri, and Masato shear zones, which are high strain zones developed in altered ultramafic units. There are also shear zones that are linked to them by north to northwest trending splays. These include the “Ayoub’s Thrust”, which is focused along the ultramafic sill that lies on the west side (hangingwall) of the Sabodala deposit.

These gold deposits show many characteristics consistent with their classification as orogenic (mesothermal) gold deposits.

Several styles of mineralization are seen in the area and the deposits which have Mineral Resources and their styles will be briefly discussed below.

Gold mineralization at the Sabodala deposit occurs in a variety of vein sets; a combination of continuous grey quartz shear veins along shear zone surfaces in the Main Flat and Northwest shear zones; in sets of quartz-carbonate-albite-pyrite extension veins, in coalescing extension and shear vein domains which form zones of quartz-carbonate matrix breccia; and in areas of pervasive tan to pink coloured carbonate-albite-sericite-pyrite alteration which surrounds and links between veins, shear zones and breccias. Multiple generations of veins are evident,


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At Niakafiri, and Niakafiri West significant areas of mineralization are hosted by north-northeast trending, steep west-northwest dipping carbonate altered shear zones along the Niakafiri Shear Zone, shear zones which splay off this structure to the west, and along the Masato shear zone which lies 400 to 500 m east of and parallel to the Niakafiri Shear zone.

The Soukhoto and Faloumbo areas contain widely spaced east-northeast trending and steeply dipping quartz veins which vary from 5 to 50 cm thick, and which have strike lengths of at least several tens of meters. The veins comprise white quartz with local prismatic fill, and have thin foliated envelopes suggesting that they are developed in minor shear zones. They are hosted in foliated mafic volcanic rocks.

The Gora Deposit lies approximately 25 km northeast of the Sabodala processing plant and occurs within the Sonkounkou exploration permit held by Axmin and in which SMC is earning a majority interest. Gold mineralization at Gora occurs in quartz shear veins which trend north-northeast with moderate to steep east-southeast dips, in a northeast trending sequence of turbiditic sandstone, siltstone and mudstone which is at least locally overturned. Two principal and additional veins are locally 50 to 100 m apart, defining a veining corridor at least 100 m wide in plan view, and veining extends for at least 700 m along strike.

Exploration and Data Management

SMC has been using a phased approach to the exploration of concessions. This initially utilizes airborne geophysics integrated with field geology (regolith and outcrop mapping) to identify major prospective structures, lithologies and alteration zones. This is followed by surface geochemistry, and termite mound sampling to delineate gold bearing corridors and targets. In addition Rotary Air Blast (RAB) drilling of prospective structures where extensive transported materials render surface sampling of low effectiveness in the target generation phase, is employed.

After a phase of prioritization and ranking, target testing utilizes trenching in areas of shallow soil cover to map the gold bearing zones and provide a first pass evaluation of their potential, and Reverse Circulation (RC) and diamond drilling to systematically test the defined targets.

Where significant mineralization is identified, systematic RC and diamond drilling is employed to ascertain dimension and quality of the target area.

Geological mapping has been conducted largely by SMC staff geologists on selected prospects in all project areas, with some regional scale mapping being completed by Geoter, as part of 400 x 100m soil geochemical grid covering 90% of the Property.

MDL has drilled a total of 200,600 m of diamond core and RC drill holes in the Sabodala Mining Concession from 2005 to 2010 inclusive and a proportion has been used in the estimation process. Management of the drilling programs, including logging, sampling, and data verification, was contracted to RSG Global through to 2007, since when drilling supervision has been undertaken by SGO.

Drillhole collars are surveyed, diamond drillholes are downhole surveyed and core is orientated so as to collect structural data. Information collected during logging includes lithology, alteration, mineralization and base of oxidation. structural geology, geotechnical features including core recovery, rock quality designation (RQD), fracture frequency and infill, and hardness. Diamond drill core recovery averages 98% while RC recovery averages around 85%.


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All drill core is photographed before it is sampled or disturbed during logging, and is photographed wet and dry. Drilling is orientated to best intersect the veins close to true width, bearing in mind several orientations to the structures.

The SMC geological database is centralized, and has built in validation features. A Database Manager is the custodian of the data. Sample preparation and analysis was executed at the SGS-Kayes laboratory in Kayes, Mali.

The data has been collected in a diligent fashion and in AMC’s opinion is suitable for Mineral Resource estimation work.

Mineral Resources and Mineral Reserves

Measured and Indicated Mineral Resources as of 1 July 2010 have been estimated for Sabodala and Niakifiri and total 52.63 M tonnes at a grade of 1.33 g/t Au for 2.254 M ounces of gold, and this is tabulated below. Note the Mineral Resources include Mineral Reserves which are shown later in this section.

Table 1 Measured and Indicated Mineral Resources

Measured Indicated Measured and Indicated

M tonnes

Grade g/t Au

M oz Au

M tonnes

Grade g/t Au

M oz Au

M tonnes

Grade g/t Au

M oz Au

Sabodala 28.517 1.41 1.294 13.375 1.34 0.575 41.892 1.39 1.869

Niakifiri 0.278 1.74 0.016 10.463 1.10 0.370 10.741 1.12 0.386

Total 28.795 1.41 1.310 23.838 1.23 0.945 52.633 1.33 2.254 Notes: 1. CIM definitions were used for Mineral Resources 2. The cut offs applied are 0.35 g/t or 0.30 g/t for oxide and 0.50 g/t for fresh material

3. Measured Resources include stockpiles which total 2.613 M tonnes @ 1.26 g/tAu for 106,000 ounces

Due to the stockpiling policy a total of 2.61 M tonnes at 1.26 g/t Au for 106,000 ounces of gold remain on stockpiles and form part of the Measured Resource above. In addition there are Inferred Mineral Resources for five deposits including the two main ones above, which total 22.66 M tonnes at 1.06 g/t Au for 0.77 M ounces of gold. These are shown in the table below.

Table 2 Inferred Mineral Resources

Inferred

M tonnes Grade g/t Au

M Oz Au

Sabodala 7.310 1.22 0.287

Niakifiri 7.248 0.88 0.205

Niakifiri West 7.144 0.82 0.188

Soukhoto 0.566 1.32 0.024

Gora 0.387 5.60 0.070

Total 22.655 1.06 0.774

Note: the cut offs applied are 0.35 g/t or 0.30 g/t for oxide and 0.50 g/t for fresh material


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Scott Wilson Roscoe Postle Associates Inc. (SWRPA) was retained by MDL in 2009 to complete a Resource Block Model on the Sabodala deposit. This block model was a follow up to an earlier model which was the subject of the Technical Report by SWRPA in November 2007. While this model was built to assess the viability of underground mining, at Sabodala it was reblocked and forms the basis for the resource figures above, and the Mineral Reserve figures for Sabadola.

The Sabodala model incorporates current geological thinking taking cognizance of information collected during mining. Capping levels were determined for each domain prior to compositing, and after analysis final capping levels were determined after taking reconciliation data into account. One meter composites were employed and the block model was constructed for underground work but was later reblocked to 10m x 10m x 5m. Estimation of gold grades was by ordinary kriging.

The other models have good geological interpretations and are estimated in accordance with the quantity of data, level of knowledge and classified accordingly.

Mineral Reserves have been estimated for the two block models which have Measured and Indicated Resources. This work has been carried out by mine personnel aided by information obtained from the existing operation. However the operating costs used have been calculated for the higher production rate of the expansion case planned for the Project.

The Proven and Probable Mineral Reserves for the Sabodala and Niakafiri deposits were based on the Measured and Indicated Resources that fall within the designed pits. The total Proven and Probable Mineral Reserves for the project at 1 July 2010 are 29.88 M tonnes at 1.52 g/t Au for a total of 1.46 Moz Au. This includes 2.61 M tonnes at 1.26 g/t Au for 106,000 ounces on stockpiles.

Table 3 Mineral Reserves

Proven Probable Proven and Probable

M tonnes

Grade g/t Au

Moz Au

M tonnes

Grade g/t Au

M oz Au

M tonnes

Grade g/t Au

M oz Au

Sabodala 18.657 1.60 0.959 4.014 1.75 0.225 22.671 1.62 1.184

Niakafiri 0.231 1.76 0.013 6.980 1.17 0.262 7.212 1.19 0.275

Total 18.888 1.60 0.972 10.994 1.38 0.488 29.882 1.52 1.460

Notes: 1. CIM definitions were used for Mineral Reserves

2. Mineral Reserves are reported at the marginal cut-off grade for each pit. 3. Mineral Reserves are estimated using an average long term price of US$900 per ounce for pit design.

There is a small quantity of Inferred Resources contained within the two pits that is not material.

Geotechnical parameters for Sabodala have been provided by Mining One Consultants. There is no geotechnical information available for Niakafiri and the Sabodala geotechnical model was used for Niakafiri design. The Niakafiri deposit is adjacent to the Sabodala village. There is no known community and social issue with the relocation of the village and costs associated with this movement have been included in the Project estimates.

The cut off’s for the two pits vary according to the haul distance from the plant.


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Mining

Mining of the Sabodala open pit is carried out by owner operated conventional truck and shovel open pit mining. The loading fleet planned is made up of two PC3000 shovels, one PC2000 shovel and two WA900 wheel loaders. The PC3000’s utilize 15m3 buckets, the PC2000 10m3 bucket and the WA900’s 10.5m3 buckets to load 15 HD785-7 haul trucks. One of the PC3000’s and five of the HD785’s are part of the 2010 mine expansion to increase mining capacity ahead of the proposed mill expansion. The new equipment will be in production before the end of 2010. Manpower consists of 96 operators currently, a further 33 when the extra equipment is operational, and with an additional 15 for vacation allowance.

The mine plan discussed in Section 22 uses two cut-off grades for production assumptions. The higher cut-off grade is used to define material that can be treated economically in the plant at the time of production, whereas the material above the incremental cut-off grade will be mined and stockpiled and, depending on the economics of production at the time, will be treated at the end of the mine life.

The mining schedule is driven by balancing the truck hours required to deliver ore to the ROM pad and waste to the dumps annually vs. the loading capacity. Ore in excess of process plant requirements is to be selectively stockpiled throughout the life of the operation.

Based on the mining schedule the average cost of mining is US$2.00 per tonne. This mining cost is based on a diesel cost of $0.84 per liter, a 500 FCFA per USD exchange rate and a US$1.25 per Euro exchange rate.

Mining phases or Pit stages are sequenced to maximize gold production annually.

Sabodala mine will continue to produce ore up to year 2016. Niakafiri pit starts operation in year 2014 and will finish in year 2017.

Table 4 Mine Production Schedule

Yearly Summary Unit FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 Total

Waste Tonnes Mined t 21,163,112 18,841,232 27,845,531 26,869,464 20,654,821 18,936,785 134,310,944

Hi‐grade (+2 g/t) Ore Mined t 403,822 1,010,879 1,656,885 954,025 1,277,269 1,323,687 6,626,566

Hi‐grade (+2 g/t) Ore Grade g/t 3.47 3.26 2.96 2.82 3.00 2.78 2.99

Med‐grade (1.5‐2g/t) Ore Mined t 222,433 525,925 838,525 635,388 678,640 1,019,948 3,920,858

Med‐grade (1.5‐2g/t) Ore Grade g/t 1.73 1.72 1.75 1.71 1.76 1.73 1.73

Lo‐grade (1‐1.5g/t) Ore Mined t 444,351 1,088,650 1,151,747 929,439 1,111,587 1,562,270 6,288,044

Lo‐grade (1‐1.5g/t) Ore Grade g/t 1.21 1.22 1.23 1.23 1.23 1.23 1.23

Marginal (0.5‐1g/t) Ore Mined t 1,310,239 2,112,642 1,486,025 1,650,604 1,902,159 1,972,106

Marginal (0.5‐1g/t) Ore Grade g/t 0.70 0.71 0.73 0.70 0.71 0.90

Mined Total t 23,543,956 23,579,327 32,978,712 31,038,920 25,624,475 24,962,950 161,728,341

Mined Waste t 21,163,112 18,841,232 27,845,531 26,869,464 20,654,821 19,084,939 134,459,098

Mined Ore (+0.5g/t) t 2,380,845 4,738,095 5,133,181 4,169,456 4,969,655 5,878,011 27,269,242

Ore Grade g/t 1.36 1.49 1.73 1.46 1.56 1.55 1.54

Strip ratio t:t 8.89 3.98 5.42 6.44 4.16 3.25 5.38

SG t/m³ 2.74 2.74 2.77 2.73 2.56 2.31 2.65

Ore Oxide Percentage % 56% 14% 5% 24% 21% 39% 25%

Mined Ounces oz 104,197 226,345 285,101 195,443 249,269 293,644 1,353,999


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Processing and Engineering

Metallurgical testwork on the Sabodala ore has determined it to be a medium to hard silicified breccia with the gold being fine-grained, mainly associated with pyrite but with some liberated gold also present.

Gold extractions in the 85-90% range at an optimal grind size of 75µ (80% passing size) were readily achieved in the laboratory with some potential enhancement with gravity concentration. In anticipation of actual closed circuit grinding resulting in improved liberation, it was decided to defer installation of a gravity circuit and a simple crush, SABC, CIL circuit was designed to treat a minimum of 2Mtpa with a predicted recovery of 91.4% .

The major equipment includes:

Primary crusher: Nordberg C140S single toggle jaw crusher

SAG mill: Outotec 7.3 m diameter x 4.3 m EGL, 4,000 kW

Ball mill: Outotec 5.5 m diameter x 7.85 m EGL, 4,000 kW

Recycle crusher: Metso HP200SX Cone Crusher

CIL circuit: 9 x 1,240 m3, with compressed air injection

Elution circuit: 5 t batch capacity, split AARL Elution

Tailings thickener: Outotec 23 m diameter High Rate Thickener

Preliminary tests on Niakafiri ore showed it to be very similar to Sabodala but, in view of the greater oxide content there and at other potential satellite orebodies, some initial tests were carried out to determine amenability to heap leaching. Although additional work is required, the oxide ore appears to be heap leachable with 90% recoveries obtained on agglomerated ore at an 8mm crush size.

Actual plant performance has exceeded throughput predictions (286 tph for 09/10 vs 240 tph design) and generally vindicated the expectations regarding recovery with 91% achieved without a gravity circuit. A recovery model has been developed showing 92.8% for oxide ore and with a head grade dependent algorithm for fresh ore of the form 86.7% + 1.55 Au(g/t), capped at 94.5%. For a typical 75/25 fresh/oxide blend and head grades of 2g/t the predicted recovery of 90.6% is in line with plant performance.

It is planned to expand the Sabodala mill in two phases:-

Phase 1: A partial secondary crushing facility with new stockpile/reclaim facilities to screen out and crush critical-size material thus debottlenecking the SAG mill, and a 4.0 mtpa Wet Plant with a second ball mill and additional CIL capacity to deliver overall capacity of 3.5 Mtpa

Teranga technical and site operating personnel and Aurifex consultants are of the opinion that the existing primary crusher will be capable of delivering approximately 4.0 mtpa (based on a 75% fresh:25% oxide feed), on the basis that the crusher gap is opened, the secondary crusher and associated stockpile reclaim is installed and the feed blend contains sufficient fines (these bypass the crusher and allow higher throughputs). The crusher gap increase, together with the addition of the secondary crusher and secondary reclaim, should allow for feed rates approaching 6Mtpa


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based on 100% oxide feed. These assumptions have yet to be verified in practice and will require further plant surveys and subsequent modelling as per AMC recommendations.

Phase 2: Primary crushing upgrade with either a larger jaw crusher or a new gyratory crushing facility to complete the overall expansion to 4Mtpa

The benefits in staging the expansion include:

Deferrment of capital

Minimal downtime incurred to tie in new equipment

Flexibility depending on future ore blends

Table 5 Capital Costs for the Plant Expansion

Upgrade Option Phase 1

Cost (US$M)


Cost (US$ M)

4.0 mtpa wet plant 40.4 Jaw crusher option 8.2

Secondary crushing facility 7.6 Gyratory crusher option 18.3

Power Station engine 7.9

Totals 55.9 26.5

It is noted that the capital estimates were developed to a level of accuracy of ±30%, and are valid as of the last quarter 2009

Environmental

An Environmental and Social Impact Statement (ESIS) for the Sabodala Gold Project was completed in July 2006 by Tropica Environmental Consultants, and an Environmental and Social Management and Monitoring Plan (ESMMP) was developed by Earth Systems in September 2007.The ESMMP committed SMC to preparation of a stand-alone Rehabilitation and Mine Closure Plan in the first year of operations.

Estimated closure costs for the Sabodala Project are US$16.22M.

Project Metrics

Table 6 Key Project Metrics

Item Assumption and Metrics

Total Metres Drilled 200,000, 116,214 RC, 84,387 core

Mineral Reserve Proven – 18.9 Mt at 1.60 g/tAu Probable -11.0 Mt at 1.38 g/tAu

Mining Rate 24 -32 Mtpa.

Total Material mined 162 Mt

Mining Method Truck and excavator

Owner / Contractor Owner Mining


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Item Assumption and Metrics

Processing Method CIL

Processing Rate 2.4 – 4.5 Mtpa over time

Mine Life 6 years from 2011, milling 8 years

Ounces gold produced / annum 130K oz in 2011 to max of 230K,

Total Capex $118 M from 2011

NPV @ 5% $279.0 M

Capital Cost

The total proposed capital expenditure with an annual break down is shown in US$M’s in the table below.

Table 7 Capital Costs over Time

Department Total 2011 2012 2013 2014 2015 2016 2017 2018

Mining 32.71 3.69 8.74 11.11 5.60 2.59 0.90 0.10

Processing 85.83 28.77 53.10 1.06 2.08 0.14 0.06 0.58 0.04

Total 118.54 32.46 61.84 12.17 7.68 2.73 0.96 0.68 0.04

Operating Costs

The total operating costs are shown in table form below, along with unit cost ranges, and total G & A costs.

Table 8 Total Operating Costs

Activity Total US$M

Unit cost in US$’s US$M/a

Max Min

Mining 330.2 2.2 2.0

Processing 396.2 15.0 13.0

G & A 95.2 10-12

Refining and Freight 6.4

By product credits (3.2)

Total 824.8

Economic Analysis and Mine Life

The Mineral Reserves and the mining schedule with the expanded mill scenario form the basis of the financial model. The following financial and market related assumptions have been included in the financial model:

Spot gold price of US$1200 per ounce through FY 2011 and US$1100 per ounce thereafter, as forecast by SGO. AMC notes that this level of pricing is higher than that used for other


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contemporary studies but also acknowledges that it does not unfairly reflect the current gold market situation. Project sensitivity to variation in gold price, among other factors, is discussed below.

Deferred hedge payments through FY 2011

Royalty payments of 3% to the government of Senegal

Corporate taxes of 25% beginning in 2015

No allowance for closure costs or salvage

Table 9 Cash Flow Model

Sabodala Gold Operation

Fiscal Year 2011 2012 2013 2014 2015 2016 2017 2018 2019 Total

Ore mined '000t 2,381 4,738 5,133 4,169 4,970 5,878 27,269

Waste mined '000t 21,163 18,841 27,846 26,869 20,655 18,937 134,311

Total mined '000t 23,544 23,579 32,979 31,039 25,624 24,815 161,580

Strip ratio 8.9 4.0 5.4 6.4 4.2 3.2 4.9

Ore mined grade g/t 1.36 1.49 1.73 1.46 1.56 1.42

Ounces mined ounces 104,102 226,976 285,511 195,714 249,254 268,356

Ore milled '000t 2,428 2,831 3,674 3,983 4,118 4,498 4,353 3,999 29,882

Grade g/t 1.85 2.04 1.90 1.71 1.78 1.74 0.96 0.50 1.52

Contained gold ounces 144,398 185,655 224,421 218,960 235,661 251,611 134,349 64,283 1,459,340

Recovered gold ounces 130,389 167,728 202,289 197,255 212,090 228,671 119,777 57,510

Recovery % 90.3% 90.3% 90.1% 90.1% 90.0% 90.9% 89.2% 89.5%

Gold production ounces 130,389 167,728 202,289 197,255 212,090 228,671 119,777 57,510 1,315,709

1 troy ounce = 31.103

Revenue

Hedge sales ounces 0 70,000 88,500 88,000 0 0 0 0 246,500

Spot sales ounces 130,389 97,728 113,789 109,255 212,090 228,671 119,777 57,510 1,069,209

Total sales ounces 130,389 167,728 202,289 197,255 212,090 228,671 119,777 57,510 1,315,709

Hedge sales price US$/oz $846 $846 $810 $790

Spot sales price US$/oz $1,200 $1,100 $1,100 $1,100 $1,100 $1,100 $1,100 $1,100

Average sales price US$/oz $1,200 $994 $973 $962 $1,100 $1,100 $1,100 $1,100 $1,056

Hedge sales revenue US$m 0.0 59.2 71.7 69.5 0.0 0.0 0.0 0.0

Spot sales revenue US$m 156.5 107.5 125.2 120.2 233.3 251.5 131.8 63.3

Revenue US$m 156.5 166.7 196.9 189.7 233.3 251.5 131.8 63.3 1,389.6

Costs

Mining (US$/t mined) 2.20 2.10 2.00 2.00 2.00 2.00 2.00 2.00

Processing (US$/t milled) 15.00 14.00 13.00 13.00 13.00 13.00 13.00 13.00

General & Admin (US$pa) 12.0 10.0 10.0 10.00 10.00 10.00 10.00 10.00 16.2

Operating Costs

Mining US$m 51.8 49.5 66.0 62.1 51.2 49.6 0.0 0.0 0.0 330.2

Processing US$m 36.4 39.6 47.8 51.8 53.5 58.5 56.6 52.0 0.0 396.2

General & Admin US$m 12.0 10.0 10.0 10.0 10.0 10.0 10.0 7.0 16.2 95.2

Refining & Freight US$m 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.0 6.4

By-product credits US$m (0.4) (0.4) (0.4) (0.4) (0.4) (0.4) (0.4) (0.4) 0.0 (3.2)

Oil hedge realised

Operating costs US$m 100.6 99.5 124.1 124.3 115.2 118.5 67.0 59.4 16.2 824.8

Royalty 3.0% 4.7 5.5 6.7 6.5 7.0 7.5 4.0 1.9 0.0 43.8

Total Costs US$m 105.3 105.1 130.8 130.8 122.2 126.0 70.9 61.3 16.2 868.6

Cash cost per ounce US$/oz 808 626 647 663 576 551 592 1,066 660

Profit & Loss

Revenue US$m 156.5 166.7 196.9 189.7 233.3 251.5 131.8 63.3 0.0 1,389.6

Costs US$m (105.3) (105.1) (130.8) (130.8) (122.2) (126.0) (70.9) (61.3) (16.2) (868.6)

EBITDA US$m 51.2 61.6 66.1 58.9 111.1 125.5 60.8 2.0 (16.2) 521.0

Cash Flow

Capital expenditure US$m (32.4) (61.8) (12.3) (7.7) (2.7) (1.0) (0.7) (0.0) 0.0 (118.5)

Project f inance etc (13.7) (11.8) (9.8) 0.0 (2.2) (15.2) 0.0 0.0 0.0 (52.7)

Net Cash Flow US$m 5.0 (12.0) 44.0 51.3 106.2 109.3 60.1 1.9 (16.2) 349.7Undiscounted Cash Flows 5.0 (12.0) 44.0 51.3 106.2 109.3 60.1 1.9 (16.2) 349.7

PV of Cash Flows 5.0% 4.9 (11.1) 38.9 43.2 85.3 83.6 43.8 1.3 (10.7) 279.3

PV of Cash Flows 10.0% 4.8 (10.4) 34.7 36.7 69.2 64.7 32.4 0.9 (7.2) 225.8

Capital Expenditure

Mining - Trucks 3.3 3.3

Mining - Drills 2.9 1.5 4.4

Mining - Shovels 3.0 3.0

Mining Other 3.7 5.8 4.9 4.1 2.6 0.9 0.1 22.1

Processing Plant 26.7 47.1 1.1 2.1 0.1 0.1 0.6 0.0 77.8

Tailings Dam 2.0 6.0 8.0

Total 32.4 61.8 12.3 7.7 2.7 1.0 0.7 0.0 118.5

The cash flow projection shows the mine running to 2016 and the mill running until 2018 under the planned expansion scenario.

Sabodala’s profits are subject to an 8 year tax exemption. This expires in May 2015 after which future profits will be subject to tax based on a 25% income tax rate.


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The mine life is currently projected at six years, project life is eight and total gold production is projected at 1.316 million ounces.

The project is forecast to generate a gross revenue of US$1,390M to 2019 and a total net cash flow of US$350M.The NPV at a discount rate of 5% is US279M.

A sensitivity assessment has been carried out and the results are shown in the chart below.

Figure 1 Sensitivities

Conclusion and Recommendations

Based on the site visits and review of the available data the following are the conclusions by AMC regarding the Project.

The Project has been rapidly brought into production and represents a growing opportunity. In addition to an operation which is being expanded there is a good geological database on the maturing exploration work on the Mining Concession, as well as potential for further deposits in the immediate vicinity. The exploration in the area as proposed is endorsed with the comment that it is aggressive and will need a rigorous focus. It will be important to maintain quality in all the work being done.

The geological work to date including data collection is of good quality and suitable for the estimation of Mineral Resources. Drilling carried out is of sufficient density. There is a succession of targets / deposits in the “pipeline” and it will be important to continually rank and upgrade these.

There are exploration projects in the district being worked on by other parties which may come into play later. Teranga is being proactive on this.


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The July 2010 Proven and Probable Mineral Reserves are quoted as 29.88 M tonnes at 1.52 g/t Au for a total of 1.46 Moz Au. There is significant potential to add to this via the current exploration program and considering success achieved to date.

The review indicates that the Sabodala and Niakafiri deposits have the capacity to produce enough ore for the 4.0 Mt/y mill expansion project.

More than one year of mining operations in Sabodala has provided valuable ground for training and developing operating parameters and functions. It is reasonable to anticipate that operational processes will gradually improve as the operation matures and that these will have a positive impact on costs and equipment efficiency.

Unit costs to date have been higher than scoping study estimates, but relative to the ‘maturity’ improvements described above, and those associated with economies of scale resulting from the expansion project and also from targeted improvement areas, AMC believes that cost estimates are not unreasonable. Particular focus is advised on power generation and control of power costs.

To reach the targeted higher rate of production and processing, the project needs additional investment in both equipment and personnel. Over $32M for mining-related issues and over $85M for processing-related issues has been estimated as capital expenditure. AMC believes that these estimates are reasonable. AMC has also indicated that the higher production years of 2013 and 2014 may be years of increased risk and that appropriately focused monitoring of equipment and process performance, particularly in years 2011 and 2012, should be done to assess any likely cost and timeline requirements for additional capital funding. AMC has assessed the potential additional capital to be around $US5 M

The Niakafiri deposit does not yet have geotechnical data. While AMC has assumed that the geotechnical conditions in the two deposits are similar, assessment work should be undertaken to determine specific Niakafiri geotechnical characteristics.

The Sabodala village must be moved prior to mining at Niakafiri. As MDL has undertaken such relocation previously for the Sabodala pit it believes that it has a very clear path to do so again for Niakafiri. The related cost items are included in the project cost estimates and AMC has no reason to believe that this will prove to be a material issue.

Ground and surface water issues should be studied appropriately relative to any potential impact on slope design.

Controlled drilling and blasting of final walls should be an area of focus in light of the significant benefits that can be obtained.

The Sabodala and Niakafiri ores are medium to hard but with relatively simple metallurgy allowing 90% recovery to be readily obtained. Test work has indicated that some potential exists for treating low grade oxide ores by heap leaching and this may merit further investigation.

The Sabodala processing plant, designed around a simple 2 Mtpa crush, SABC, CIL circuit, has met recovery predictions and has exceeded design throughput.


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The planned expansion appears sound, being based on current operating plant performance and modelling, and designed to ultimately deliver milling capacity of 4 mtpa in two phases.

A summary of recommendations is given below:

Drilling of a total of twelve target areas in the mining concession for a total of 41,000m at an estimated cost of US$5.5M.

Hydrological investigation related to operations improvement and pit wall stability at an estimated cost of US$75,000.

Pre-feasibility study for Sabodala to determine the viability of underground mining portions of the Sabodala resource outside of the open pit mine. The estimated cost is US$248,000.

Investigate possibilities for a reduction in the capital cost of Phase 2 work, with particular reference to the crushing process and choice of associated equipment. A study cost of US$50,000 is estimated.

Investigate power saving opportunities and the possibility of the use of Light Fuel Oil for power generation. As study cost of US$50,000 is estimated.

Undertake exploration programs on four project areas surrounding the mine lease with a total of nine targets ready for drilling. Also continue to evaluate the numerous gold anomalies and structures identified. The total budget estimated to end of June 2011 is US$14.0M.


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CONTENTS

1 Introduction............................................................................................................................ 1 2 Reliance On Other Experts.................................................................................................... 3 3 Property Description And Location ........................................................................................ 4

3.1 Property Location ......................................................................................................... 4 3.2 Land Tenure ................................................................................................................. 5

3.2.1 Sabodala Mining Concessions ....................................................................... 5 3.3 Existing Environmental Liabilities ................................................................................. 7 3.4 Sabodala Regional Exploration Projects ...................................................................... 7

4 Accessibility, Climate, Local Resources, Infrastructure And Physiography......................... 12 4.1 Accessibility................................................................................................................ 12 4.2 Climate ....................................................................................................................... 12 4.3 Local Resources And Infrastructure ........................................................................... 12

4.3.1 Water Storage .............................................................................................. 12 4.3.2 Camp And Plant Site .................................................................................... 12 4.3.3 Tailings Storage Facility ............................................................................... 15 4.3.4 Dakar Facilities ............................................................................................. 15 4.3.5 Communications........................................................................................... 15

4.4 Physiography.............................................................................................................. 15 5 History.................................................................................................................................. 16 6 Geological Setting................................................................................................................ 18

6.1 Regional Geology....................................................................................................... 18 6.1.1 Overview....................................................................................................... 18 6.1.2 Structural Setting .......................................................................................... 18 6.1.3 Surficial Geology .......................................................................................... 20

6.2 Local Geology Of The Sabodala Property.................................................................. 21 6.2.1 Lithology ....................................................................................................... 21 6.2.2 Structure ....................................................................................................... 23 6.2.3 Sabodala Deposit ......................................................................................... 24

6.3 Geology Of Exploration Project Areas........................................................................ 25 6.3.1 Western Exploration Projects In The Mako Belt ........................................... 25 6.3.2 Eastern Exploration Projects In The Sounkounkoun Consessions .............. 25

7 Deposit Types...................................................................................................................... 27 8 Mineralization....................................................................................................................... 29

8.1 Sabodala Deposit ....................................................................................................... 29 8.1.1 Overview....................................................................................................... 29 8.1.2 Controlling Structures On A Deposit Scale................................................... 30 8.1.3 Veining And Alteration Associated With Mineralization ................................ 33 8.1.4 Gold Occurrence Within Mineralized Zones ................................................. 38 8.1.5 Structural History And Paragenesis.............................................................. 38

8.2 Niakafiri, Niakafiri West And Dinkokhono Deposits .................................................... 41 8.2.1 Niakafiri Deposit ........................................................................................... 41 8.2.2 Niakafiri West Deposit .................................................................................. 45

8.3 Other Mineralized Areas On The Sabodala Property ................................................. 46 8.3.1 Soukhoto And Faloumbo Areas.................................................................... 47 8.3.2 Gora.............................................................................................................. 47


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9 Exploration........................................................................................................................... 51 9.1 Exploration Approach ................................................................................................. 51 9.2 Geophysical Surveys And Investigations ................................................................... 51 9.3 Soil, Termite Mound And Rock Chip Geochemistry ................................................... 53 9.4 Geological Mapping.................................................................................................... 54

10 Drilling.................................................................................................................................. 56 10.1 Mining Concession ..................................................................................................... 57 10.2 Exploration Leases..................................................................................................... 58

11 Sample Method And Approach............................................................................................ 61 11.1 Reverse Circulation (Rc) Drilling ................................................................................ 61 11.2 Diamond Drilling ......................................................................................................... 61 11.3 Rotary Air Blast (Rab) Drilling..................................................................................... 62 11.4 Data Management...................................................................................................... 63 11.5 Discussion .................................................................................................................. 63

12 Sample Preparation, Analyses And Security ....................................................................... 64 12.1 2005 – 2008 Gold Sample Preparation And Analyses ............................................... 64 12.2 2009 – 2010 Gold Sample Preparation And Analyses ............................................... 64 12.3 Quality Control Measures........................................................................................... 65

12.3.1 Blanks........................................................................................................... 66 12.3.2 Duplicates..................................................................................................... 66 12.3.3 Standard Reference Materials...................................................................... 69 12.3.4 Summary ...................................................................................................... 70

13 Data Verification .................................................................................................................. 71 14 Adjacent Properties ............................................................................................................. 73

14.1 Oromin Joint Venture ................................................................................................. 73 14.2 Massawa .................................................................................................................... 76

15 Mineral Processing And Metallurgical Testing..................................................................... 78 15.1 Introduction................................................................................................................. 78 15.2 Ore Sources ............................................................................................................... 78

15.2.1 Mineralogy .................................................................................................... 78 15.3 Metallurgical Test Work.............................................................................................. 79

15.3.1 Previous Test Work ...................................................................................... 79 15.3.2 Ore Samples................................................................................................. 79 15.3.3 Comminution Test Work ............................................................................... 80 15.3.4 Extraction Test Work .................................................................................... 80 15.3.5 Test Work On Niakafiri Ore .......................................................................... 82

15.4 Recovery Models........................................................................................................ 83 15.4.1 Original Recovery Models ............................................................................ 83 15.4.2 Updated Recovery Models ........................................................................... 84

15.5 Heap Leach Test Program ......................................................................................... 85 15.5.1 Introduction................................................................................................... 85 15.5.2 Test Work Program ...................................................................................... 86 15.5.3 Results.......................................................................................................... 86

16 Mineral Resource And Mineral Reserve Estimates ............................................................. 88 16.1 Project Mineral Resources ......................................................................................... 88 16.2 Sabodala Deposit Mineral Resource Estimate ........................................................... 90

16.2.1 Raw Data...................................................................................................... 90 16.2.2 Domains ....................................................................................................... 91 16.2.3 Statistics And Compositing........................................................................... 92


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16.2.4 Block Model .................................................................................................. 94 16.2.5 Results.......................................................................................................... 95

16.3 Niakafiri Resource Estimate ....................................................................................... 96 16.3.1 Raw Data...................................................................................................... 97 16.3.2 Domains ....................................................................................................... 97 16.3.3 Statistics And Compositing........................................................................... 97 16.3.4 Block Model .................................................................................................. 98 16.3.5 Results.......................................................................................................... 99

16.4 Niakafiri West And Soukhoto Resource Estimates................................................... 100 16.4.1 Overview..................................................................................................... 100 16.4.2 Results........................................................................................................ 101

16.5 Gora Resource Estimate .......................................................................................... 103 16.5.1 Overview..................................................................................................... 103 16.5.2 Results........................................................................................................ 103

16.6 Sabodala Project Mineral Reserves ......................................................................... 104 16.6.1 Summary .................................................................................................... 104 16.6.2 Pit Optimization Parameters....................................................................... 105 16.6.3 Mining Cost................................................................................................. 106 16.6.4 Geotechnical Considerations...................................................................... 107 16.6.5 Sabodala Mineral Reserves ....................................................................... 108 16.6.6 Stockpiles ................................................................................................... 110 16.6.7 Niakafiri Mineral Reserves.......................................................................... 110

17 Other Relevant Data And Information................................................................................ 112 17.1 Reconciliation ........................................................................................................... 112 17.2 Mine Call Factors ..................................................................................................... 113 17.3 Underground Potential ............................................................................................. 113

18 Interpretation And Conclusions.......................................................................................... 115 19 Recommendations............................................................................................................. 117

19.1 Mining Concession ................................................................................................... 117 19.1.1 Exploration Drilling...................................................................................... 117 19.1.2 Improvements For Mining Operations ........................................................ 119 19.1.3 Underground Pre-Feasibility....................................................................... 119 19.1.4 Processing Plant Expansion Phase 2......................................................... 120 19.1.5 Power Generation....................................................................................... 120

19.2 Exploration Leases................................................................................................... 120 19.2.1 Budget To 30 June 2011 ............................................................................ 121

20 References ........................................................................................................................ 122 21 Date And Signature Page.................................................................................................. 123 22 Additional Requirements For Technical Reports On Development Properites.................. 124

22.1 Mining Operations .................................................................................................... 124 22.2 Mining Schedule....................................................................................................... 126 22.3 Processing Operations ............................................................................................. 128

22.3.1 Overview Of Current Plant.......................................................................... 128 22.3.2 Actual Vs Projected Plant Performance ..................................................... 131 22.3.3 Processing Plant Expansion....................................................................... 133 22.3.4 Scoping Study Key Findings....................................................................... 134 22.3.5 Phase 1 Expansion..................................................................................... 134 22.3.6 Phase 2 Expansion..................................................................................... 135 Flow Sheet Description ............................................................................................ 135


xviii

22.4 Markets..................................................................................................................... 136 22.5 Contracts .................................................................................................................. 136 22.6 Environmental .......................................................................................................... 137 22.7 Taxes........................................................................................................................ 137 22.8 Capital And Operating Costs.................................................................................... 137

22.8.1 Capital Expenditure .................................................................................... 137 22.8.2 Mill Expansion Capital Cost Estimates ....................................................... 138 22.8.3 Phase 1 Expansion..................................................................................... 138 22.8.4 Phase 2 Expansion..................................................................................... 139 22.8.5 Expansion Operating Cost Estimates......................................................... 139

22.9 Economic Analysis And Mine Life ............................................................................ 141 23 Qualified Persons’ Certificates........................................................................................... 144

TABLES

Table 1.1 Persons who Prepared or Contributed to this Technical Report.............................. 1 Table 3.1 Granted Gold Exploration Permits and Applications................................................ 7 Table 3.2 Equity and Funding Arrangements for Permits ........................................................ 9 Table 5.1 Ownership Periods and Work Completed.............................................................. 16 Table 10.1 Summary of Drilling by Year .................................................................................. 56 Table 10.2 Drilling and Trenching Completed per Project ....................................................... 58 Table 10.3 Drilling Results, Exploration Leases ...................................................................... 59 Table 14.1 Oromin Mineral Resource and Mineral Resource Estimates................................. 76 Table 14.2 Massawa Mineral Resource and Mineral Reserve Estimates ............................... 77 Table 15.1 Overview of Heap Leach samples ......................................................................... 86 Table 15.2 Summary of initial leaching test results ................................................................. 86 Table 15.3 Summary of 30 day results .................................................................................... 87 Table 16.1 Measured and Indicated Mineral Resources for the Total Project ......................... 88 Table 16.2 Inferred Mineral Resources for the Total Project ................................................... 88 Table 16.3 Cut Offs Applied to Resources .............................................................................. 88 Table 16.4 Bulk Density by Lithology....................................................................................... 91 Table 16.5 Statistics of Raw Assays........................................................................................ 92 Table 16.6 Preliminary and Final Capping Levels ................................................................... 93 Table 16.7 Statistics of One Meter Composite Assays............................................................ 93 Table 16.8 Sabodala Measured and Indicated Resource Breakdown..................................... 95 Table 16.9 Sabodala Inferred Mineral Resources ................................................................... 95 Table 16.10 Sabodala Mineral Resources by Selected Cut Offs............................................... 96 Table 16.11 Niakafiri Ordinary Kriging Estimation Parameters ................................................. 98 Table 16.12 Niakafiri Measured and Indicated Resource breakdown ....................................... 99 Table 16.13 Niakafiri Inferred Mineral Resources ..................................................................... 99 Table 16.14 Niakafiri Mineral Resources by selected Cut Offs ............................................... 100 Table 16.15 Estimation search and data parameters .............................................................. 101 Table 16.16 Niakafiri West and Soukhoto Inferred Mineral Resources ................................... 101 Table 16.17 Gora Inferred Mineral Resources ........................................................................ 104 Table 16.18 Mineral Reserves Summary ................................................................................ 104 Table 16.19 Inferred Mineral Resources within Pit Designs .................................................... 105 Table 16.20 General Parameters for Open Pit Designs .......................................................... 105 Table 16.21 Costs and Cut offs ............................................................................................... 106


xix

Table 16.22 Life of Mine Average Mining Cost........................................................................ 106 Table 16.23 Average Slopes Used by Region......................................................................... 107 Table 16.24 Mineral Reserves for Sabodala ........................................................................... 109 Table 16.25 Inferred Mineral Resources within Sabodala Pit Design...................................... 109 Table 16.26 Mineral Reserves for Niakafiri.............................................................................. 111 Table 17.1 Comparison of Mineral Resource to Mine and Mill Production............................ 112 Table 17.2 Comparison of Mineral Resource by Bench ........................................................ 113 Table 17.3 Mine Call Factors Applied to Sabodala................................................................ 113 Table 17.4 Sabodala Underground Breakdown as per SWRPA Report................................ 114 Table 19.1 Mining Lease Targets 2010-2011 ........................................................................ 117 Table 19.2 Pre-Feasibility Study Costs by Activity ................................................................ 120 Table 22.1 Mining Fleet and Personnel Required ................................................................. 126 Table 22.2 Mine Production Schedule................................................................................... 126 Table 22.3 Closing Stocks ..................................................................................................... 127 Table 22.4 Actual and Projected Metallurgical and Cost Performance.................................. 132 Table 22.5 Hedge Schedule .................................................................................................. 137 Table 22.6 Capital Expenditure in US$ M.............................................................................. 138 Table 22.7 Phase 1 Expansion Capital Costs Summary ....................................................... 138 Table 22.8 Phase 2 Expansion Capital Costs Summary ....................................................... 139 Table 22.9 Projected Expansion Scenario Production Data.................................................. 140 Table 22.10 Cash Flow Model for Sabodala............................................................................ 142 Table 22.11 Possible ‘Best’ and ‘Worst’ Case Scenarios ........................................................ 143

FIGURES

Figure 3.1 Location of Sabodala Property. ............................................................................... 4 Figure 3.2 Mining Concession Limits ....................................................................................... 5 Figure 3.3 Corporate structure.................................................................................................. 6 Figure 3.4 Exploration Permits and Applications ..................................................................... 8 Figure 4.1 View of Camp Site ................................................................................................. 13 Figure 4.2 Sabodala Mine Truck Shop and Fuel Farm ........................................................... 13 Figure 4.3 Site Infrastructure .................................................................................................. 14 Figure 6.1 Geology and ‘Endowment’ of the Kedougou-Kenieba Inlier .................................. 19 Figure 6.2 Map of the Sabodala Project ................................................................................. 21 Figure 6.3 Geology of the Original Sabodala Mining Concession ......................................... 22 Figure 7.1 Regional Geology West Africa............................................................................... 27 Figure 8.1 Geological Plan from Bench Mapping ................................................................... 31 Figure 8.2 Typical Geological Cross Section .......................................................................... 32 Figure 8.3 Styles of Mineralization in the Northwest Shear .................................................... 33 Figure 8.4 Northwest Shear on the Northern 640 Bench, ....................................................... 34 Figure 8.5 Style of Veining in the Main Flat ........................................................................... 35 Figure 8.6 Main Stage Extension Vein Arrays above the Main Flat........................................ 36 Figure 8.7 Sigmoidal Extension Vein Array in Sheeted Quartz Extension Vein System......... 36 Figure 8.8 Alteration and Breccia Textures in the Sabodala deposit ...................................... 37 Figure 8.9 Paragenetic Chart.................................................................................................. 39 Figure 8.10 Possible Structural Patterns and Mineralization Controls ...................................... 40 Figure 8.11 Cross Section Through the Niakafiri Shear Zone, Looking North.......................... 42 Figure 8.12 Mineralization Styles at the Niakafiri Deposit......................................................... 44


xx

Figure 8.13 IP Surveys for the Central and South Sabodala property...................................... 46 Figure 8.14 Surface Geology of the Gora Quartz Vein Prospect.............................................. 48 Figure 8.15 Cross Section through North of Gora Prospect ..................................................... 49 Figure 8.16 Resistive Ridge of Quartz Veining and Detail of Vein Mineralization..................... 50 Figure 9.1 Geological Interpretation based on Aeromagnetics............................................... 52 Figure 9.2 Regolith Map from Radiometrics, DTM and Satellite Imagery............................... 53 Figure 9.3 Surface Geochemical Anomalies and Prospects Identified To Date ..................... 54 Figure 10.1 Cross Section 20330N Showing Drilling Orientations............................................ 58 Figure 11.1 Sabodala Drill Core................................................................................................ 62 Figure 12.1 SGS Crusher at Sabodala ..................................................................................... 65 Figure 12.2 Control chart for blanks.......................................................................................... 66 Figure 12.3 RC and DD Field Duplicates – Scatterplot (Fire Assay) ........................................ 67 Figure 12.4 RC and DD Field Duplicates – Scatterplot (Aqua Regia) ...................................... 67 Figure 12.5 RC and DD Duplicates – Relative Difference Plot (Fire Assay)............................. 68 Figure 12.6 RC and DD Duplicates – Relative Difference Plot (Aqua Regia) ........................... 68 Figure 12.7 Control Charts........................................................................................................ 69 Figure 14.1 Plan showing Adjacent Properties ......................................................................... 73 Figure 15.1 Plant Recovery as a Function of Head Grade ....................................................... 84 Figure 15.2 Plant Recovery as a Function of Head Grade ....................................................... 85 Figure 16.1 Orthophoto with Location of deposits on the Mining Concession .......................... 89 Figure 16.2 Cross Section through Niakafiri West Deposit, (17540N).................................... 102 Figure 16.3 Cross Section through Soukhoto Deposit, (18420N)........................................... 102 Figure 16.4 Long Section with Vein Grade x Thickness contours .......................................... 103 Figure 16.5 Sabodala Ultimate Pit Design with Rock Unit Overlay......................................... 107 Figure 16.6 Niakafiri Ultimate Pit Design with Rock Unit Overlay........................................... 108 Figure 16.7 Sabodala Ultimate Pit Design .............................................................................. 108 Figure 16.8 Cross Section through Sabodala at 20450N ....................................................... 109 Figure 16.9 Long section Through Sabodala Looking East .................................................... 110 Figure 16.10 Niakafiri ultimate pit design.................................................................................. 110 Figure 16.11 Cross Section through Niakafiri at 17750N.......................................................... 111 Figure 19.1 Mining Lease Targets 2010 – 2011 ..................................................................... 118 Figure 19.2 Possible Area to be Mined................................................................................... 119 Figure 19.3 Budget Summary to end June 2011 .................................................................... 121 Figure 22.1 General View of the Sabodala Pit ........................................................................ 124 Figure 22.2 Loading in the Sabodala Pit. ................................................................................ 125 Figure 22.3 Drilling Blastholes on Night Shift at the Sabodala pit........................................... 125 Figure 22.4 Mining Sequence by Phase ................................................................................. 127 Figure 22.5 Sabodala Mill and Power Station May 2009 ........................................................ 133 Figure 22.6 Operating Costs versus Feed Blend.................................................................... 141 Figure 22.7 Sensitivities.......................................................................................................... 143

APPENDICES

APPENDIX A Sabodala Processing Plant Phase 1 Expansion Conceptual Flow Sheets

APPENDIX B Sabodala Processing Plant Projected Operating Cost Estimates as a Function of Feed Blend


1

1 INTRODUCTION

This Technical Report on the Sabodala Gold Project (“the Project”) in Senegal, West Africa has been prepared by AMC Mining Consultants (Canada) Ltd (“AMC”) of Vancouver, Canada on behalf of Teranga Gold Corporation of Toronto, Canada, as part of its initial public offering on the TSX. It has been prepared in accordance with the requirements of National Instrument 43-101 (NI 43-101), “Standards of Disclosure for Mineral Projects”, of the Canadian Securities Administrators “(CSA”) for lodgment on CSA’s “System for Electronic Document Analysis and Retrieval” (“SEDAR”). It is proposed that Mineral Deposits Limited (“MDL”) will transfer its wholly owned Mauritian subsidiaries SGML (Capital) Limited and Sabodala Gold (Mauritius) Limited which, at the time of the transfer, owns 100% of Sabodala Mining Company SARL (“SMC”) and 90% of Sabodala Gold Operations SA (“SGO”), and its 15% holding in Oromin Explorations Ltd., to a Canadian company, Teranga Gold Corporation (“Teranga Gold”) subject to approval by MDL shareholders.

The names and details of persons who prepared, or on whom the Qualified Persons have relied in the preparation of, this Technical Reported are listed in Table 1.1. The Qualified Persons meet the requirements of independence as defined in NI 43-101.

Table 1.1 Persons who Prepared or Contributed to this Technical Report

Qualified Persons responsible for the preparation of this Technical Report Qualified Person

Position Employer Independent

of MDL Date of Last Site

Visit Professional Designation

Sections of Report

Mr P R Stephenson,

Director, Regional Manager, Principal Geologist

AMC Mining Consultants (Canada) Ltd

Yes No visit

PGeo, BSc (Hons) MCIM, FAIG FAusIMM (CP)

1-3, 14.

Mr J M Shannon,

Group Manager Principal Geologist


Yes No visit PGeo, BA Mod, MA MCIM,

4,-10,16 Mineral Resource,17-19

Mr B O’Connor Principal Geologist


Yes 8-14 July 2010 PGeo, BSc, MCIM,

10-13

Mr A Riles Principal Metallurgical Consultant

Riles Integrated Resource Management Ltd

Yes No visit

BSc (Hons), Grad Dipl Business Managmt. MAusIMM (CP)

15 and part 22, contributed to 18-19

Dr A Ebrahimi Principal Mining Engineer

AnoMine Tech Ltd

Yes 20-25 August 2010 PEng, PhD, MASc, BASc

16 Mineral Reserve, and 22 contributed to 18-19

Other Experts upon whose contributions the Qualified Person has relied

Expert Position Employer Independent of MDL

Visited Site Sections of Report

Ms D Nussipakynova PGeo

Senior Geologist


Yes No visit Section16 Review of Resource.

Stuart Smith Director and Principal Metallurgist

Aurifex Pty Ltd

Independent Consultant, engaged by MDL

Yes Part 22


2

The scope of the personal inspections of the property undertaken by Qualified Persons B O’Connor and A Ebrahimi covered the geology and mining aspects of the project, including inspections of the mining operation, exploration properties, drill core, sampling and assaying procedures and discussions with MDL staff.

The Technical Report is based on information provided by MDL, a list of which is contained in Section 21, on site visits undertaken by two of the Qualified Persons, and on discussions with MDL personnel in both Vancouver and Senegal.

Most of the factual text for the Technical Report was written by MDL and provided to AMC for review.

The exchange rates used for conversion of costs to $US are:

1 Euro equals 1.25 US$

1 CFA equals 0.0020 US$

1 Rand equals 0.13 US$

Note these are taken from the current budget exercise.

All dollars in the text are US$’s.

MDL was provided with a draft of this report to review for factual content and conformity with the brief.

This effective date of this report is 27 September 2010, as amended 7 October 2010 and 1 November 2010.


3

2 RELIANCE ON OTHER EXPERTS

With respect to title to the Mining Concession (Section 3 of this report), AMC has relied on Mining Agreement documents provided by MDL that confirm the granting of the Concession and setting out the terms of five Supplementary Deeds that amend certain provisions of the Mining Agreement.

With respect to title to exploration licenses (Section 3 of this report), AMC has relied on a document provided by MDL and signed by Mr Maname Fall, Managing Partner of the Dakar-based legal and tax firm Sojufisc.


4

3 PROPERTY DESCRIPTION AND LOCATION

3.1 Property Location

The Project is located in southeast Senegal, approximately 650 km east-southeast of the capital city of Dakar and 96 km north of the town of Kédougou. The property location is illustrated in Figure 3.1.

Figure 3.1 Location of Sabodala Property.


5

3.2 Land Tenure

3.2.1 Sabodala Mining Concessions

The property is located at 13°11’5”N latitude, 12°6’45”W longitude and comprises one mining concession, granted on May 2, 2007, by Ministerial Letter No. 00197MMIE/CT BG/mtd. The dimensions of the original mining concession are approximately 7 km north-south by 3 km east-west, for a total area of 20.3 km². The current mining concession has been expanded to approximately 33 km2 to accommodate the infrastructure. The vertices of the perimeter were marked by contracted surveyors and later, slightly revised by more modern survey technology. The outline and infrastructure as well as the UTM co-ordinates are shown in Figure 3.2.

Figure 3.2 Mining Concession Limits


6

MDL executed its Mining Convention with the Government of Senegal on March 23, 2005, and was granted an Exploitation Permit for mining operations. The Mining Convention granted all necessary surface rights to mine. A subsequent Supplementary Deed to the Mining Convention signed on January 22, 2007, granted a ten year (renewable) Mining Concession to MDL, effective from the date of the Presidential Decree (30 April 2007). A Restructure and Demerger Deed relating to shares in Sabodala Gold (Mauritius) Limited and SGML (Capital) Limited and the common shares in Oromin Explorations Ltd. will transfer ownership of the shares in the two subsidiaries to Teranga Gold Corporation. Sabodala Mining Company (SMC), a company incorporated in Senegal, being a 100% subsidiary of Sabodala Gold (Mauritius) Limited (SGML), acts as operator for the exploration of the Project on behalf of MDL under the Mining Convention. SGML is a wholly owned subsidiary of Nimbus Gold Pty. Ltd., which in turn is 100% owned by MDL. SGML established an operating company, Sabodala Gold Operations S.A. (SGO), to mine the Sabodala deposit. The Senegalese Government has a 10% free carried interest in SGO. In Figure 3.3 the corporate structure is explained in schematic form.

Figure 3.3 Corporate structure

The Presidential Decree granting the Mining Concession was signed on April 30, 2007, and the Ministerial Notification letter, authorizing commencement of the investment and mining phases of the project development, was issued on May 2, 2007. It required that mining begin no later than 18 months from the date of the Presidential Decree, i.e., by November 2008.

Commencing May 2, 2007, MDL is exempt from all property, company and value added taxes for a period of eight years, which expires in 2 May 2015 There will also be exemption from import and export duties for a period of four years or, if sooner, when production starts. A royalty (termed a ‘mining tax’) equivalent to 3% of the gold sales will be payable to the Senegalese government. Subsequently a Supplementary Deed has transferred this Concession and its inherent rights to SGO the operating company. The Senegalese government will have a 10% interest in SGO, which activates after repayment of initial capital plus interest, and prior to that, it is eligible to receive


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dividends. Eight years after the concession is signed a tax rate of 25% is applied to mining profits in the ninth year and in each subsequent year.

The Mining Convention includes a commitment to pay a total of US$425,000 per annum to fund social development of local authorities of the region and US$30,000 per annum to the logistical support for the regional administration; these items are included in operating costs.

3.3 Existing Environmental Liabilities

There was an abandoned processing facility near the current pit which operated in 1998. MDL reports that the historical tailings have been moved to the current tailings storage facility. In addition the historically mined and untreated ore has now been treated in the current plant.

There is virtually no artisanal mining on the Sabodala Mining Concession apart from sporadic hard rock working at Faloumbo and minor alluvials at Sutuba. According to SMC, the area has not been contaminated by these workings such that it could stand out as a liability or obligation for remediation.

3.4 Sabodala Regional Exploration Projects

The regional exploration projects comprise seven granted research permits which cover a total surface area of 1,364 km2. Three new requests for exploration permits covering a total of 91 km2 have been lodged.

The permit locations are grouped into four different project areas:

Near Mine Project – contains the three permits of Bransan, Sabodala NW and Makana

Faleme – contains the two permits of Heremakono and Sounkounkou

Dembala – contains the two permits of Dembala Berola and Saiansoutou

Massakounda – contains only one permit of the same name

The permits locations are shown in Figure 3.4 and the details of the permits are tabulated in Table 3.1.

Table 3.1 Granted Gold Exploration Permits and Applications

Project Permit Status

Area

(Km2)

Next Renewal

Due

Maximum

Validity Comments

Bransan 2nd Validity Period 261 Oct‐12 Oct‐15

Sabodala North West 2nd Validity Period 120 May‐12 May‐15

Makana 2nd Validity Period 125 Nov‐10 Nov‐13 Renewal Process to commence in September

Bransan Sud Application 7 N/A N/A Application Lodged June 2010

Sabodala Ouest Application 3 N/A N/A Application Lodged June 2010

Sounkounkou 2nd Validity Period 213 Sep‐12 Sep‐15

Heremakono 2nd Validity Period 215 Oct‐11 Oct‐14

Dembala Berola 2nd Validity Period 244 Jan‐12 Jan‐15

Saiansoutou ‐ Application Application 81 N/A N/A Application in Progress

Massakounda Massakounda Permit 2nd Validity Period 186 Jan‐12 Jan‐15

Grand Total 1455

Total Granted 1364

Total Applications 91

Faleme

Dembala

Near Mine


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Figure 3.4 Exploration Permits and Applications

All permits are granted by ministerial decree and are subject to a Mining Convention signed between SMC and the state of Senegal.

The gold exploration permits are held in a combination of full SMC ownership and earn-in joint ventures where SMC is the funding and managing party as explained in Table 3.3 below.


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Table 3.2 Equity and Funding Arrangements for Permits

Project Permit SMC

Equity Holder Comments

Bransan 70% SMC Partnership with local syndicate

Sabodala North West 51% Axmin Eam in JV

Makana 80% NA FP

EC Renewal Process to commence

in September

Bransan Sud N/A SMC Application Lodged June 2010

Near Mine

Sabodala Ouest N/A SMC Application Lodged June 2010

Sounkounkou 51% Axmin Eam in JV Faleme

Heremakono 51% Axmin Eam in JV

Dembala Berola 100% SMC Permit recently transferred into

100% SMC ownership Dembala

Saiansoutou-Application 100% SMC Application in Progress

Massakounda Massakounda Permit 100% SMC Permit recently transferred into

100% SMC ownership

All valid permits are linked to an executed Mining Convention with the Government of Senegal. The conventions typically contain the following key terms:

Exclusive right to apply for an exploitation permit provided a feasibility study is completed.

The Senegalese Government will be entitled to a 10% free carried interest in the mining operation.

3% royalty on production

25% company tax with an eight year tax free period

Senegalese import duty exemption on mining equipment, fuel, explosives, chemicals.

Summary of Agreements in Force over SMC’s exploration permits:

With the recent transfer of the formerly ROKAMCO held permits of Massakounda and Dembala Berola only three agreements remain effective:

Axmin Joint Venture – over the permits of Sabodala NW, Heremakono and Sounkounkoun

Bransan Agreement - although this permit is fully held by SMC, there is a 30% ownership right assigned to a Senegalese company, Senegal Nominees Limited.

NAFPEC Joint Venture – this agreement is an earn-in Joint Venture which covers the Makana exploration permit.

Axmin Joint Venture

A joint-venture between Axmin (AXM) and SMC was signed 30 September 2008. The agreement covers the following exploration permits held by Axmin: Sabodala North West, Sounkounkou and Heremakono.


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The agreement is a traditional earn-in type agreement which is funded and operated by SMC. The key earn-in terms are as follows:

SMC can earn 51% in the three permits by spending US$2,500,000 within the first three years of the joint venture. This level of expenditure has been reached as of the end of July 2010.

At the 51% earn-in stage AXM has the right to elect to contribute proportionally to remain at the 49% ownership level.

Should AXM elect to dilute, then SMC will be required to sole fund the next USD3.5 million of exploration expenditure within a further three year period. This will result in SMC earning an 80% equity position.

Once the 80% SMC equity position is reached AXM has the right again to elect to contribute in proportion to retain its 20% equity position or alternatively to dilute to a 1.5% production royalty.

In the case where both SMC and AXM are involved in the construction of a mine, the 10% free carried interest of the Republic of Senegal (ROS) will be absorbed by both parties proportionally.

Presently, SMC can exit the join-venture at any time with 30 days notice.

Bransan Agreement

This agreement was signed on 4 July 2007 subsequent to SMC acquiring the Bransan permit it October 2006. The agreement stipulates that the initial ownerships are 70% SMC, 30% Senegal Nominees (SN). SMC will however be responsible for 100% funding to the exploration work and will be the manager.

Once a discovery is made and a development decision is made, SN has the right after 120 days to either:

Convert to a contributing interest, in which case SN will have to fund its share of the development costs, or

Not to convert to a contributing interest, in which case SN will dilute to a 10% equity holding in the mine development with SMC’s shareholding increasing to 90%.

SN will only be entitled to receive benefits from production after SMC has recovered all its Joint Venture and development costs.

The start of the mining process will require the formation of a special purposes company, which will allow the ROS to take its 10% equity stake. The equity ratios will be diluted proportionally to accommodate the ROS equity as follows:

In the case where SN has become a contributing party and maintained its original holding: ROS 10%, SMC 63%, SN 27%.

In the case where SN has diluted: ROS 10%, SMC 81%; SN 9%.

NAFPEC Joint Venture Agreement

New African Petroleum Company SARL (NAFPEC), a Senegalese Company, initially acquired the Makana exploration permit in August 2004. From September 2005 to February 2007 the permit was subject to a Joint Venture between NAFPEC and Randgold Resources. On 9 January 2008 SMC


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signed a new joint venture with NAFPEC concerning the Makana permit. The key terms are as follows:

SMC equity from beginning is 80% and NAFPEC has a 20% equity stake in the permit.

SMC is obliged to sole fund and manage the exploration program.

On grant of exploitation permit both parties are required to fund the development costs pro-rata based on their equity positions.

At the development decision, the formation of a special purposes mining company is required and in this the ROS will have a 10% free carried interest. In terms of the original 80%/20% shareholdings this will mean the following positions: ROS 10%, SMC72% and NAFPEC18%. In case of dilution of either SMC or NAFPEC the carrying of the ROS equity will be proportional between the two parties.

In the case of default of financial contributions of development, either SMC or NAFPEC, a 1% dilution will apply for each US$100,000 of funding shortfall, until the 10% equity position for the defaulting party is reached.

At this 10% position the minority party has again the right to elect to contribute or dilute. In the case of default on cash call, the default triggers a sales clause where the remaining 10% can be purchased at an agreed value or if no agreement is reached by valuation of an independent expert.

During the exploration period SMC can withdraw at any time with 30 days notice.


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4 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY

4.1 Accessibility

The Project is located in southeast Senegal, approximately 650 km east-southeast of the capital city of Dakar. Access to the Project from Dakar is by sealed road, Highway N1, to the regional centre of Tambacounda and then via a good all-weather sealed road, Highway N7, 230 km southeast to Kédougou, then 96 km of sealed and laterite-surfaced roads which access the villages of Faloumbo and Sabodala. A 1,250m, sealed, public airstrip, capable of handling light to medium sized aircraft, lies at the north end of the property.

There are three villages on the Sabodala Mining Concession. Sabodala village is approximately two kilometres south of the Sabodala pit and is very close to the Niakifiri deposit. Faloumbo village is to the north-northeast of Sabodala pit and is close to the Faloumbo workings. The Dambankoto village holds just a few families formerly from Faloumbo. Dambankoto utilizes water from a bore completed in 1982 by Bureau de Recherches Géologiques et Minières (“BRGM”) hydrological test work.

4.2 Climate

In Kédougou the highest monthly average temperatures are between March and May, 31ºC to 40ºC. The lowest monthly average temperatures are between December and January, 17ºC to 26ºC. The annual Harmattan is a dry wind that blows from the north, usually from December to February, resulting in dusty and hazy skies.

There is a distinct tropical wet season from May to October, with most rain falling from storms between August and September, and a dry season from December to April. Mean annual rainfall at Sabodala is approximately 1,130 mm. It is possible to operate all year but the schedule allows for a reduced mining rate and for predominantly fresh ore to be processed in the wet season.

4.3 Local Resources and Infrastructure

4.3.1 Water Storage

Primary water supply to service the processing plant and mine is comprised of two surface water storage dams from local catchment areas. These dams are designed to store adequate water from seasonal rainfall events to provide for mine production needs on a year-round basis.

MDL has also constructed a water pipeline to the Faleme River for supplemental water if necessary.

4.3.2 Camp and Plant Site

The main camp is located approximately 3 km from the mine and 2 km from the mill. Kwickspace was contracted by MDL and is the supplier of the pre-fabricated camp buildings. Total camp construction cost was US$15M. The camp is designed to house up to 600 employees and will require expansion to accommodate the proposed increased capacity mining and milling operations. Figure 4.1 shows the “Quads” in the foreground with the recreational areas in the middle of the photograph and the rest of the camp in the background.


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Figure 4.1 View of Camp Site

The plant site is discussed in detail in later sections.

The truck shop and fuel farm were constructed in 2008. Sufficient capacity exists in the fuel farm to accommodate the expanded mining fleet.

The Administration complex is made up pre-fabricated buildings which were supplied by Kwickspace.

Figure 4.2 Sabodala Mine Truck Shop and Fuel Farm

A 30 MW, 5+1-engine Wärtsilä heavy fuel oil (HFO) power plant was constructed at a cost of US$30M. The power station was commissioned in November of 2008.


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Figure 4.3 Site Infrastructure


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4.3.3 Tailings Storage Facility

The first cell of the tailings storage facility was constructed in 2008. This cell will be at capacity in 2013.

4.3.4 Dakar Facilities

Existing port facilities at Dakar are utilized for unloading of all project construction freight and for long term operational freight. No new infrastructure is required for the port to accommodate the Project.

Since 2005, MDL has operated an office in Dakar to assist with logistics, government liaison and personnel transport.

4.3.5 Communications

The site has the following communication and radio facilities:

Satellite internet

VOIP satellite phone

Cell phone coverage

Vehicle and hand-held radios

4.4 Physiography

Topography in the area is generally undulating with a gentle gradient to the north and west towards the major river courses in the area. The elevation varies from approximately 150m to 350m. In the east of the area and abutting on to the eastern side of the concession is a north-south aligned ridge rising at least 100m above the surroundings.

Vegetation ranges from savannah to thick bushes and large trees on hillsides. Watercourses are marked by palms. After each wet season villagers burn off a majority of the tall grass.


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5 HISTORY

The Sabodala deposit was discovered by BRGM in 1961. A summary of subsequent ownership and general account of work performed is listed in Table 5.1.

Table 5.1 Ownership Periods and Work Completed

Year Company Work Done

1961 BRGM Regional geology, soil sampling, pitting, trenching in area of artisanal mining

1971-1973 Soviet-Senegal JV 513m diamond drilling in 19 holes in quartz vein style mineralization

1973-1983 BRGM 5,856m diamond drilling in 53 holes, 263m percussion in 30 holes

1984-1994 Société Minière de Sabodala-Paget Mining Ltd. JV

4,705 m reverse circulation drilling in 61 holes, 192 m diamond drilling in 4 holes Constructed airstrip and exploration camp Resource estimate by Continental Resource Management Pty Ltd Metallurgical studies by AMMTEC Rock Mechanics studies by Barrett Fuller and Partners Feasibility study by Lycopodium

1997-1998 Eeximcor-Afrique SA Granted exploitation permit, constructed 200,000 processing plant

The findings of the work over the period can be summarized as follows, with the results becoming progressively more encouraging over time, but due to the gold price and other factors, the project did not progress to production.

The soil sampling in 1961 by BRGM identified Sabodala, which had not previously been recognized by artisanal miners as the gold was fine-grained.

The drilling by the Soviet-Senegal JV gave results of 12.2m at 5.8 g/t Au, 69m at 1.9 g/t Au/ and 25m at 3.6 g/t Au.

The drilling by BRGM gave highlights of 8m at 7.9 g/t Au, 35 m at 5.6 g/t Au and 18.6m at 27.6 g/t Au, though it was not specified whether these were from percussion or from core holes.

The drill highlights for the next period of work by Société Minière de Sabodala-Paget Mining Ltd. JV were 28m at 6.8 g/t Au, 13m at 29.8 g/t Au, 18.0m at 12.1 g/t Au and 25.0m at 9.2 g/t Au.

In addition, Eeximcor-Afrique SA mined and stockpiled 80,000 tonnes of which 38,000 tonnes at a grade 4.4 g/t Au were processed, producing approx 4,400 ounces Au.

Following Parliamentary approval of the new Senegal Mining Code on November 24, 2003, the Government of the Republic of Senegal decided to accelerate development of the country’s mineral resources. As part of this plan, an MDL consortium and other international companies were invited to tender for the exploration and exploitation of the Sabodala deposit.


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MDL lodged a full complying bid for the Sabodala Gold Project on June 7, 2004, and was advised by the Government of its selection on October 25, 2004. The bid was a joint venture between SMC (70%) and private Senegalese interests (30%). Exploration drilling began in June 2005. The company subsequently exercised its option to acquire the remaining 30% minority interest for a mixture of cash and shares.

On 3 May 2007 MDL received Mining Concession status for Sabodala by decree of the President of Senegal. The decree includes the following provisions:

Ten year mine lease

Eight year exoneration from taxation

No import duties

The ROS retains a 10% free carried interest after project capital is recovered with interest

SMC has continued to explore the Project as described in Section 9, Exploration and Section 10, Drilling.


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6 GEOLOGICAL SETTING

6.1 Regional Geology

6.1.1 Overview

The Sabodala property and the surrounding MDL exploration permits are located in the 2213 to 2198 Ma age Kedougou-Kenieba Inlier, which lies within the Paleoproterozoic age Birimian Terrane of the West African Craton. The company’s concessions straddle two major divisions of the Inlier: the volcanic dominated Mako Supergroup to the west, and the sediment-dominated Diale-Dalema Supergroup to the east. The Mako Supergroup forms a 20 to 40 km wide north-northeast trending volcanic-dominant belt of dominantly mafic volcanic rocks with subsidiary ultramafic intrusions, felsic volcanic rocks, and intervolcanic sedimentary horizons; the Sabodala deposit and western portions of the company’s concessions in the Bransan and Makana properties are hosted in the Mako belt. To the east underlying the company’s Sounkounkoun concessions, the Diale-Dalema metasedimentary sequence is composed dominantly of a folded, sandy turbidite succession that is intruded by small stocks and dykes of various composition. The relative ages of the Mako and Diale-Dalema supergroups have not been convincingly determined. While some parties interpret the Diale-Dalema sequence to have been deposited onto the Mako volcanic sequences, bedding facing indicators within the Diale-Dalema sequence on the company’s concessions are dominantly to the west, suggesting the opposite relationship. However the boundary between the belts may be tectonic so that an original stratigraphic relationship is not preserved.

The Mako and Diale-Dalema supracrustal sequences are intruded by a series of variably deformed granitoid intrusions that range in age from 2160 to 2000 Ma. These include the Karkadian Batholith which bounds the Mako Belt to the west, and several major large stocks in the central Mako Belt in the project areas. Lithologies in the region are affected mainly by lower greenschist grade metamorphism although metamorphic grade rises to at or above the biotite isograd locally adjacent to some of the granitoid and small granodiorite stocks that intrude the sequence. Northeast trending intermediate to felsic and later, post-tectonic mafic dykes are present throughout the region, the latter forming prominent linear magnetic features. Felsic and intermediate composition dykes are often spatially associated with shear zones hosting gold mineralization, and locally are host to significant gold mineralization themselves.

6.1.2 Structural Setting

Major crustal shear zones regionally bound, and influence the overall north-northeast lithologic grain in the region. These include a north-northeast trending shear zone which is interpreted to form a boundary between the Mako and Diale-Dalema groups which lies east of the Sabodala property area, and which is termed the Senegal-Tombo Shear Zone or Main Transcurrent Shear Zone (MTZ) by different authors. This structure has been previously interpreted to pass through the western portions of the Diale-Dalema sequence based on magnetic patterns, but fieldwork suggests that the linear magnetic features are instead related to sets of late mafic dykes. Intense zones of high strain however, are present in eastern portions of the Mako Supergroup on the Sabodala project and the adjacent properties of Oromin Joint Venture Group (Oromin), suggesting the main strands of the structure may lie further west than previously interpreted. The Main Transcurrent shear zone converges with, and may join to the north in Mali with the major northerly trending Senegal-Mali Shear Zone, which is spatially associated with several major gold deposits, including Sadiola and


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Loulo in Mali. The corridor of the Main Transcurrent Shear zone may be long lived, and if representing a suture between the Mako and Diale-Dalema supergoups, the older structure may now be overprinted and obscured by later ductile features.

Figure 6.1 Geology and ‘Endowment’ of the Kedougou-Kenieba Inlier

Note: The ‘Endowment’ figures are taken from various companies’ websites and are not specifically figures for any one year. They have been back calculated to 100% of the deposit in each case, and are simply to give a size for each deposit and the area. The green to the west of the MTZ are volcanic rocks and the pink are sediments.

High strain zones and apparent truncations of lithologic features apparent in poorly exposed areas on magnetic and geological maps on the Sabodala and Sounkounkoun projects suggest the presence of second and third order shear zones to the Main Transcurrent Shear Zone at the property scale, which may control the localization of gold mineralization. The more intense shear zones on the Sabodala, Makana and Bransan concessions, and on parts of Oromin’s adjacent property occur in variably altered ultramafic units, but laterally extend into adjacent mafic volcanic rocks. The structures wrap around major intrusions, and northwest trending linking structures between major shear zones are also present, all of which form potentially prospective sites and low strain domains for fluid focus and gold deposit formation. Although potentially localized on older structures that they now overprint, the timing of regional shear zone formation is late in the geological history, probably after the emplacement of most intrusions. Many granitoids and stocks in the region are affected by strain, and are wrapped by lithologies and fabrics due to strain molding. Field relationships suggest that gold mineralization at Sabodala and other deposits in the region is probably coeval with latter


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stages of shear zone development, and given its late relative timing with respect to the lithologic sequence, most rheologically favorable lithologies, including granites, form prospective hosts for development of mineralization at permissive structural sites.

Two dominant foliation-forming events are evident in the Mako Supergroup, and most intensely developed in and adjacent to the major shear zones described above. Where best documented on the Sabodala property, an early, pervasive foliation which trends east-west to northeast (S1) is most intense, and has defined the dominant fabric in shear zones in the Mako Supergroup. The S1 foliation is locally axial planar to folds with northeast-trending axial traces, for example in a folded chert marker unit which lies several hundred meters to the west of the Goumbougamba prospect on the Bransan property. S1 is overprinted by a second, north-northeast trending and steep northwest dipping spaced foliation (S2) that is associated with crenulations and folds of S1. These two foliations likely record two increments of a progressive deformation event (D1 to D2) which based on orientations and regional considerations may have been associated initially with left lateral regional strike slip displacement along stratabound shear zones in the region, followed by potentially northwest-southeast directed shortening on S2 during later phases. These two increments of strain may correspond with the development of different vein generations in the gold deposits in the region. Foliation development in the region is inhomogeneous and large areas, particularly in mafic volcanic rocks, gabbro and felsic intrusions, are only weakly foliated or lack measurable S1 or S2 foliation.

In eastern portions of the project within the Diale-Dalema Supergroup, the dominant foliation trends northeast and has steep northwesterly dips. Since only one fabric is often present it is unclear whether this is correlative with either S1 or S2 to the west in the Mako sequence. While the foliation is axial planar to some folds of the turbidite sequence, an earlier phase of folding is also apparent from bedding facing changes, upon which the dominant foliation is superimposed. These older folds could influence the morphology, and aid in the localization, of younger vein systems developed in gold prospects in the region, especially where crossed by zones of high strain.

Late crenulation folds with shallow westerly dipping axial planes occur in southwestern portions of the Sabodala pit along the ultramafic unit, overprint both S1 and S2 foliations, and record a later phase of low strain deformation that is likely post-mineralization in timing. A steep north plunging intersection and stretching lineation (L2) is developed at the intersection of S1 and S2 and is present on the Sabodala project. Dominant lineations have shallow north-northeasterly trends and plunges, and are defined by stretched variolites and pillows. Late brittle faults with east-west to west-northwest trends and minor sinistral displacements locally offset lithologies on the Sabodala property.

6.1.3 Surficial Geology

Lateritic weathering combined with duricrust formation is still active in the region. Apart from local hills and resistant lithologies, much of the terrain is covered by laterite and ferricrete, so outcrop is sparse. Hills which occur in east and southeastern portions of the Sabodala property, around the Goumbagamba prospect on the central Bransan property and surrounding the Gora prospect to the east, form some of the best exposed outcrop areas on the projects. Oxidation depth in the region is highly variable, but is generally several tens of meters.


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6.2 Local Geology of the Sabodala Property

6.2.1 Lithology

The Sabodala property is underlain mainly by mafic volcanic rocks with associated subvolcanic mafic intrusions of the Mako Supergroup. These are interlayered with variably altered ultramafic units, and local interflow sedimentary horizons. A large granitic intrusion occupies the north-western portions of the property, and several phases of mafic to felsic dykes intrude the sequence (Figure 6.2). Lithologies generally trend north-northeast to northeast with steep dips, although local variations are apparent, as is discussed below. These variations in trend may be locally important trap sites for mineralization, especially where units are obliquely intersected, and cut by, mineralized shear zones. Lithologies are affected by lower greenschist grade metamorphic assemblages. Figure 6.2 shows the geology of the Sabodala project including the outline of the adjacent exploration permits, and Figure 6.3 shows the geology of the original mining concession.

Figure 6.2 Map of the Sabodala Project


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Figure 6.3 Geology of the Original Sabodala Mining Concession


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Mafic volcanic rocks dominate in the sequence and range from pillowed to massive. Pillowed varieties include both variolitic (probable Fe-tholeiitic) and non-variolitic (vesicular, probably Mg-tholeiitic) varieties. These pillowed areas alternate with more massive, fine to medium-grained gabbroic portions of the mafic sequence, the latter which likely represent a combination of flow centers which are coring flows that have pillowed margins, and subvolcanic intrusions, including sills and dykes which may represent coeval feeders to the flows. Interflow sediment horizons occur locally in the mafic volcanic sequence, with the most prominent being a siliceous, highly strained cherty metasedimentary horizon referred to “mylonite” by Painter (2006). It passes through the Sabodala deposit and is traceable from the northeast through the central portions of the Sabodala property in a series of resistant weathering outcrops. Other interflow units comprise narrow carbonaceous (graphitic) mudstone-siltstone horizons, which locally are often exploited by shear zones. Facing directions implied by pillows and by graded bedding in interflow sedimentary horizons suggest that the sequence, at least in the vicinity of the Sabodala deposit, is east-facing and overturned, although local open to tight folding is apparent which may be associated with facing inversions.

Ultramafic rocks are present throughout the stratigraphy, and are variably and often intensely affected by alteration and high strain zone development. Fresher varieties which retain primary textures are mottled with relict igneous texture suggesting that they mainly comprise intrusive sills and dykes. The ultramafic units, where preserving primary textures, are often altered to talc-chlorite-calcite +/- serpentine assemblages. Areas of pervasively carbonate altered ultramafic rocks occur most extensively along the Niakafiri and Masato trends/shear zones, where they are often host to gold mineralization. Due to the widespread magnetite-destructive carbonate alteration of ultramafic units in these areas, they do not always have positive, magnetic responses, so are locally difficult to define on airborne magnetic surveys. However, they are traceable between known locations in outcrop and drill core as I.P. resistivity anomalies where they are intensely carbonate altered.

Dykes of several varieties intrude both the volcanic sequence and the probably synvolcanic aged ultramafic sills. These include at least two phases of porphyritic, pink to tan matrix dykes of probable intermediate to felsic composition that preferentially intrude along shear zones in altered ultramafic units and mineralized shear zones. These are typically 1 to 10 m thick, plagioclase-quartz porphyritic and include both pre- and late mineralization varieties. Later, post-mineralization, fresh mafic (dolerite/diabase) dykes that are up to several tens of meters in thickness trend north-northeast generally subparallel to the lithologic sequence. The largest and most continuous of these forms a prominent magnetic linear which extends from southwestern to northeastern parts of the property, passing east of the Sabodala deposit and west of Niakafiri. The late mafic dykes are not associated with, and cut across, mineralization and its hosting structures.

6.2.2 Structure

Principal structures on the Sabodala property form a steeply west-northwest dipping, north-northeast trending shear zone network which has previously been referred to as the “Sabodala Shear Zone”. The largest, and most continuous structures within this overall corridor on the property include the north-northeast trending Niakafiri, and Masato shear zones, which are high strain zones developed in altered ultramafic units. To the west of these, several shear zones are linked to them by subsidiary north to northwest trending splays. These include the “Ayoub’s Thrust zone”, which is focused along the ultramafic sill that lies on the west side (hangingwall) of the Sabodala deposit, shear zones which extend southward from this in the Sutuba and Soukhoto and Niakafiri West prospect areas, and the


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areas of high strain localized along the interflow chert-mudstone sedimentary horizon that has been locally termed the “mylonite”. The north-northeast trending shear zones on the Sabodala property likely represent first and second order structures of regional scale to first order features such as the Main Transcurrent Shear zone, while the northwest trending shear zones may be third order features that accommodate strain between these higher order features. The latter locally intersect to form linking networks of locally developed shear zones that form important deposit scale controls on mineralization at other deposits in the region.

Oblique fabric relationships, foliation trajectories of S1, and local kinematic indicators are locally present in high strain zones/shear zones on the Sabodala property and suggest that a significant component of sinistral (left lateral) shear strain was accommodated along them. The patterns are consistent with the simultaneous development of S1 foliation during northwest-southeast shortening perpendicular to S1, with slip and shear zone development along north-northeast shear zones that are localized along rheologically weak lithologies such as ultramafic units and sedimentary horizons. S2 foliation is approximately parallel to the slip surfaces along the shear zones and may reflect a second increment of fabric development in response to west-northwest/east-southeast directed shortening and steep stretching parallel to L2 lineation with associated west-side up sinistral displacement. This potential sequence and change from dominantly sinistral to sinistral-reverse during S2 and lineation development may be reflected in the sequence of veining in the deposit areas. Shear zone development was likely continuous between S1 and S2 (D1 and D2) during a protracted period of sinistral regional transpression and regional greenschist grade metamorphism, the latter is suggested by the definition of foliations and fabrics by metamorphic mineral assemblages.

6.2.3 Sabodala Deposit

At the Sabodala deposit, drilling and open pit development have allowed the most detailed view of volcanic stratigraphy on the property. The local stratigraphy has an important influence on the localization of mineralization in the deposit. The sequence comprises, from east to west:

1. A footwall sequence of pillowed to massive, often variolitic mafic volcanic rocks and fine-grained gabbro.

2. A siliceous, probable chert unit referred to as a mylonite in Painter, 2006.

3. A fragmental mafic unit termed “volcaniclastic” in previous work which comprises mafic volcanic and jasperoidal cherty rounded fragments set in a chloritic, mafic matrix.

4. A 70 to 200 m thick gabbro sill.

5. Talc-chlorite-serpentine to carbonate altered ultramafic sill that is 30 to 70 m wide, along which the “Ayoub’s Thrust” is localized.

6. Massive fine-grained mafic volcanic rocks, which occur in the deposit hangingwall beyond the limits of mineralization.

While all of the units in the deposit area mentioned above may host gold mineralization, most extensive mineralized areas in central portions of the deposit adjacent to the ore controlling Main Flat and Northwest shear zones are localized in the “volcaniclastic” and adjacent mylonitic chert units where they are affected by extensive albite-carbonate-pyrite alteration and quartz-carbonate-albite vein development associated with shear zone networks. The Sabodala deposit stratigraphy is


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traceable both to the north and south of the deposit on the property, where it is host to several additional gold prospects, including Sutuba, Soukhoto and Faloumbo.

The structures, veining, alteration and gold mineralization of the Sabodala deposit are covered in Section 8 Mineralization, along with the other deposits.

6.3 Geology of Exploration Project Areas

6.3.1 Western Exploration Projects in the Mako Belt

The Makana and Bransan concessions lie within the Mako Supergoup, in continuation of the same general geology as is host to the Sabodala property. Mafic volcanic rocks predominate at both properties, and host bands of ultramafic rocks which are locally highly strained and carbonate altered, such as in eastern portions of the Makana property, which hosts the southern continuation of the Niakafiri Shear zone. Felsic volcanic rocks also occur in the west-central portions of the Makana permit west of the southern continuations of the Sabodala mine stratigraphy, where they are spatially associated with quartz-feldspar porphyritic intrusions, defining a bimodal component to the volcanic sequence. On the Bransan permit, one of the best exposed prospects is Goumbagamba, which is hosted by a north trending granitic sill that is localized in alternating mafic volcanic rocks and highly strained talc-chlorite altered ultramafic rocks. Here areas of high strain locally wrap around granite intrusions to the east, forming bends and steps, and locally penetrating into and offsetting margins of these intrusions. Continuations of potentially the same chert-mudstone horizon that is present in the Sabodala pit are present on the Bransan permit, west of the Goumbagamba prospect, and in eastern parts of the Makana permit.

6.3.2 Eastern Exploration Projects in the Sounkounkoun Consessions

The company’s eastern exploration projects, comprising the Sounkounkoun concessions, are underlain mainly by the turbiditic sedimentary rocks of the Diale-Delama Supergroup. Principal lithologies in this area comprise a thick sequence of bedded turbiditic sandstone, siltstone, and mudstone. Bedding in most areas dips west-northwest moderately to steeply, although variations to shallow and moderate east-southeast dips occur locally. Bedding in trenches within prospects and isolated outcrop exposures observed throughout the area is generally upright and faces west toward the Mako belt, based on facing indicators such as common graded bedding and local load casts and scours.

The Diale-Delama sequence is intruded by several phases of intrusions having differing ages and a range of compositions. Most are small stocks and dykes, the former which generally are less than 2 km in length and a few hundred meters wide. There are often preferential hosts to gold-bearing quartz veins, generally as sets of extension veins and associated with minor shear zones which cross them. Common varieties include gabbro, quartz-feldspar porphyritic felsic intrusions, and medium to fine-grained probable granodiorite. Thermal aureoles around some form hornfels zones, or are spatially associated with areas of higher, upper greenschist, metamorphic grade. The intrusions become more abundant westward toward the transition to the Mako Supergroup where some tectonic interleaving of the intrusions and sediments may occur, and in the transition area larger granitoids intrusions are also present. Dykes of the different intrusive types typically trend northeast shallowly oblique to the strike of bedding, with steep dips. As with the Mako Supergroup,


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the turbidite sequences in the Diale-Dalema Supergroup are intruded by late, fresh mafic dykes that form prominent aeromagnetic lineaments.

Bedding facing changes in the Diale-Dalema turbidite sequence records an early phase of probably tight folding which has no associated foliation. The significance of this event is unclear due to limited exposure, but it is sufficiently widespread that regional associated fold patterns are likely developed. A dominant, northwest trending and northwest dipping foliation is superimposed on the early folds and obliquely crosses fold limbs. The foliation is penetrative and defined by alignment of phyllosilicate minerals in fine grained silty and muddy beds, and by a spaced cleavage in sandstone. Minor folds to which the foliation is axial planar are locally present, and may reflect the presence of larger folds which could form interference patterns with the older folds.

Narrow north to northeast trending shear zones associated with intense development of the dominant foliation occur locally in the Diale-Dalema sequence where they vary from bedding concordant to discordant. Some are localized along felsic dykes. Gold mineralization is spatially associated with some of these. The Massawa deposit, operated by Randgold Resources, lies approximately 10 km east of the Makana concession in the Diale-Dalema sequence adjacent to a north-northeast trending shear zone and associated dykes; if of sufficient size and extent, this structure or associated shear zones could project into the Sounkounkoun concessions.


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7 DEPOSIT TYPES

Sabodala occurs in the prolific West African (Birimian) paleoproterozoic metallogenic district which extends from Senegal and Mali through northeastern Guinea, Ivory Coast, Ghana and Burkina Faso.

Figure 7.1 Regional Geology West Africa

The region includes several world class gold deposits such as Luolo and Sadiola in Mali, and Ashanti (Obuassi) in Ghana. The metallogenic district is associated with paleoproterozoic aged epigenetic gold deposits which occur in 2.25–1.90 Ga granite-greenstone belts of the Birimian and Tarkwaiian cycles, which were deformed and metamorphosed during the paleoproterozoic Eburnean orogeny adjacent to the Archaean Sao Luis Craton to the east. Despite the abundance of known deposits, much of the region is lightly explored.

Gold deposits in the West African metallogenic district, including those on the Sabodala project and the company’s adjacent exploration concessions, show many characteristics consistent with their classification as orogenic (mesothermal) gold deposits and prospects. In addition to the deposits in western Africa, these include some of the largest gold deposits globally of variable age, such as the Archean aged Hollinger and Red Lake deposits in Canada and Kalgoorlie in Australia. Orogenic gold systems are structurally controlled deposits formed during regional deformation (orogenic) events. The term orogenic refers to deposits sharing common origin in metamorphic belts which have undergone regional compressional to transpressional deformation (orogenesis), often in response to terrane accretion or continent-continent collisional events.

Orogenic gold deposits exhibit a range of styles dependant on metamorphic grade, setting, fluid type and fluid/confining pressure. They include often spatially associated quartz shear veins, extension vein arrays, shear zone and disseminated sulphide styles. At greenschist grade, vein dominated


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styles such as those developed in the Sabodala district contain quartz-carbonate +/- albite +/- K-feldspar veins with up to 10% (pyrite +/- arsenopyrite +/- base metals) sulphides and associated Fe-carbonate albite, chlorite, scheelite, fuchsite and tourmaline as associated vein and hydrothermal alteration assemblages. Vein systems and shear zones are often semi-brittle in style, including both brittle veining styles (extension veins and fault hosted brecciated shear veins) which alternate with periods of ductile deformation, producing sequences of early folded and younger less strained vein systems during latter periods of regional deformation at peak to immediate post-peak metamorphic timing. Sigmoidal extension vein arrays are often present and are typical of the deposit style. This deposit type often also has great vertical extent providing potential for discovery of significant down dip and down plunge continuations of mineralized zones.

Like the Sabodala district, orogenic deposits are typically localized adjacent to major faults (shear zones) in second and third order shear zones within volcano-sedimentary (greenstone and sedimentary) belts between granitic domains (commonly for Precambrian deposits such as the west African Birimian, Abitibi Greenstone Belt of Canada and Yilgarn region of Western Australia) or in “slate belt” turbidite sequences (many Phanerozoic age deposits). Fluid source for these systems is controversial: they generally involve a dominant metamorphic fluid component, consistent with their setting and relative timing, but in many districts there is also evidence for a contributing magmatic fluid inducing early oxide-rich alteration assemblages, as is seen at Sabodala.


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8 MINERALIZATION

Gold deposits and prospects on the Sabodala project and the adjacent company exploration tenements occur in several styles of orogenic gold mineralization that vary with hosting lithology, proximity to shear zones, and relative timing of mineralization in the structural history. The styles include:

1. The Sabodala deposit itself, which comprises a network of extension vein arrays, breccia mineralization and a network of controlling shallow to moderate dipping shear veins which are developed adjacent to a northeast trending shear zone

2. Gold mineralization within shear zones in carbonate altered ultramafic and mafic units that is associated with networks of quartz shear veins, slip surfaces and extension veins, which include the Niakafiri deposit, Niakafiri West and Dinkokhono prospects

3. Mineralization in northwest or northeast trending, generally steeply dipping banded quartz veins which occur in areas of elevated strain and hosting mineralized shear zones such as the Gora deposit and the Faloumbo and Soukhoto prospects, and

4. Quartz vein arrays developed in competent units within the sedimentary sequence of the Diale-Dalema sequence, particularly sandstone horizons and in small intrusions.

Mineralization is typically spatially related to ductile shear zones and areas of high D1-D2 strain. The deposits also commonly show a spatial association with small intrusions of felsic to intermediate composition which is localized along hosting shear zones.

Principal deposits and prospects are described below. The largest and best understood deposit in the company’s properties is Sabodala due to its production status and size, so this deposit is described in most detail below. Gold deposits on the adjacent properties of Oromin are of similar style, and include primarily shear vein systems and bulk tonnage, lower grade mineralization in carbonate altered ultramafic rocks along shear zones.

8.1 Sabodala Deposit

8.1.1 Overview

The Sabodala deposit comprises a network of mineralized shear zones and associated surrounding sets of quartz breccia veins and vein arrays which are discordant to, and cut across the hosting volcanic stratigraphy. Mineralization is most intensely focused in and west of where the shear zone network intersects, and crosscuts the mylonitic chert unit, which is described in Section 6. Best developed mineralization extends from the chert unit westward to the ultramafic-hosted Ayoub’s Thrust, in the steeply west-northwest dipping host sequence comprising the volcaniclastic unit, mafic volcanic units and gabbro which lie between the chert and the shear zone. The deposit is developed over a strike length of at least 600 m from the Sutuba prospect southwest of the current open pit, northward to several hundred meters north of the open pit, where it is open at depth. Within and northward from the current open pit, the deposit plunges moderately to the north, while at the south end of the deposit the plunge is shallow to the south. The mineralization plunges vary with the orientation of, and intersections between the principal mineralized structures which host, and are surrounded by, gold mineralization.


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8.1.2 Controlling Structures on a Deposit Scale

Several shear zone orientations control the position and morphology of gold mineralization in the Sabodala deposit. The largest and most continuous is the Ayoub’s Thrust, which, although containing only a small proportion of mineralization itself, has likely a major structural control on the position of adjacent mineralization and subsidiary mineralized shear zones. This structure is a 50 to 100 m wide, largely ultramafic sill hosted, north-northeast trending and steeply dipping high strain zone which lies immediately west of the orebody, see Figure 8.1. Within it, areas of intense oxide alteration with relict fuchsite and locally abundant quartz veining define oxidized upper parts of carbonate alteration zones, which, below depths of oxidation, comprise inner dolomitic, fuchsite-bearing carbonate and outer talc-chlorite-serpentine alteration. While this alteration and veining does not usually carry gold mineralization, it defines a significant fluid channelway and controlling shear zone along the ultramafic unit adjacent to which gold mineralization is developed. A second, stratabound shear zone to the east occurs along the deformed chert-siltstone unit in eastern parts of the orebody, representing an area of high strain which has been termed the Mylonite Shear zone.

Within the Sabodala orebody, principal ore hosting and controlling structures extend between the stratabound Ayoub’s Thrust, and Mylonite shear zones, forming a network of shear zones that host and are surrounded by gold mineralization, and from which subsidiary mineralized structures splay off. The most significant of these are the Main Flat and Northwest Shear. These host and are surrounded by the most continuous and through-going areas of mineralization in the deposit along central quartz-carbonate-albite-pyrite shear vein systems developed along them, and in broad surrounding zones of alteration and veining which are best developed where the two structures intersect.

The Main Flat is the more laterally extensive of these two principal ore hosting structures, and is traceable over a strike length of more than 600 m from north-northeast to south-southwest across the deposit. It dips shallowly to the west in southern parts of the deposit, rolling to flat and ultimately shallow to moderate north dips in northern part of the deposit, creating an overall domal geometry. The structure accommodates more than 100 m of reverse displacement (top to the east) of marker units in southern parts of the deposit.

The displacement on the Main Flat diminishes northward as the vein/shear zone system becomes more complex, and splits into subsidiary shear vein structures at depth, some of which may define new downward en echelon steps of the shear vein system to the north that host continuing gold mineralization.

The Northwest Shear trends west-northwest and dips moderately to the northeast, running through central parts of the deposit. It is best developed immediately above the Main Flat and veining and mineralization within it thicken downward as they approach that structure. Although it is a significant and laterally traceable ore-producing structure, apparent displacement of lithologies across the Northwest Shear is only minor. Oblique foliations within it suggest a right-lateral/reverse (northeast side up) shear sense during D1. The structure is also traceable to the southeast to the margins of the open pit where it thins, but it may be traceable to the southeast as an exploration target, especially where it intersects other structures or refracts across lithologies to form dilational sites.


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Figure 8.1 Geological Plan from Bench Mapping


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Figure 8.2 Typical Geological Cross Section

The Main Flat – Northwest Shear intersection and the abundant veining and alteration surrounding and extending between the junction of these structures together form the highest grade, north-northwest plunging core to the Sabodala orebody. The similarities in style, alteration and veining history along the Main Flat and Northwest Shear suggest that they are probably coeval and potentially conjugate shear zones.

In addition to the Main Flat and Northwest Shear, several subsidiary shear zones splay off, or link between these mineralized structures. These locally control significant areas of gold mineralization in the deposit, and include (i) the “New Fault”, a potential hangingwall splay off the Main Flat which occurs in southern portions of the deposit, and (ii) a structure defined by blasthole assay patterns along the western parts of the central orebody, which is defined on its margins by a steeply dipping shear zone that is several meters wide. The “New Fault” accommodates significant top to the southeast displacement of lithologic units based on map patterns, and south of its junction with the Main Flat may accommodate as much as half of the displacement that is taken up on the Main Flat to the north.

Collectively, the Main Flat, Northwest Shear, “New Fault”, structure associated with the blast hole assay trend, and networks of dominantly shallow southerly dipping extension veins form a complex intersecting set of structures that plunges shallowly to the north-northwest. This plunging zone of high vein density and mineralization defines the currently exposed portions of the Sabodala orebody


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in the pit. The mineralized structures join, but do not cut across, Ayoub’s Thrust along the north-northeast trending ultramafic unit.

A close spatial association of felsic to intermediate composition quartz-feldspar porphyritic dykes with mineralized structures is apparent in the Sabodala deposit as seen in Figure 8.3 photo A. An explanation of the photographs is given below the figure.

Figure 8.3 Styles of Mineralization in the Northwest Shear

A: View southeast of wall; view approx. 0.5 m B: View = 15 cm

A: Dyke occurring along the Northwest Shear along the southeast pit wall on 650 bench. The dyke occurs at right, and is on the hangingwall of the Northwest Shear. It is pink albite-carbonate-pyrite altered, and syn or pre- mineralization in timing. Note the sharp dyke contact, with quartz veinlets extending from the chloritic mafic volcanic rocks (left) into the altered dyke. The dyke is quartz porphyritic. B: Detail of the central grey quartz breccia vein of the Northwest Shear, from the southeastern part of 650 bench. Note the breccia texture defined by orange albite altered-carbonate fragments in the grey quartz matrix. Pyrite occurs disseminated and as slip surfaces in the quartz vein.

At least two generations of these dykes occur along or adjacent to the Northwest Shear and Main Flat; they also exploit the New Fault. The first phase is pre or early syn-mineralization in timing and locally mineralized, and the second set is late - to post-mineralization in timing based on crosscutting relationships to mineralization and overprinting alteration. The implied close timing of the dykes to mineralization suggests a temporal and potentially genetic association, which could be reflected in the local presence of early, potentially magmatic, hematite-bearing oxidized alteration in many parts of the system. These dykes are coeval with pre/syn- and post-mineralization dykes that are also developed in the Niakafiri Shear Zone, including at the Niakafiri deposit, and which also occur in association with mineralized shear zones on the Oromin property. The early dykes can contain significant gold mineralization where they are overprinted by pyritic carbonate-albite-pyrite alteration and quartz breccia veining.

8.1.3 Veining and Alteration associated with Mineralization

Gold mineralization at the Sabodala deposit occurs in a combination of continuous grey quartz shear veins along shear zone surfaces in the Main Flat and Northwest shear zones, in sets of quartz-carbonate-albite-pyrite extension veins, in coalescing extension and shear vein domains which form zones of quartz-carbonate matrix breccia, and in areas of pervasive tan to pink coloured carbonate-albite-sericite-pyrite alteration which surrounds and links between veins, shear zones and breccias.


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Multiple generations of veins are evident, but the most voluminous veining and alteration forms the youngest generations. The veining is structurally late, and both veins and alteration exhibit low post-mineralization strain, crossing and largely overprinting S1 and S2 fabrics. Veins are deformed however in shear zones associated with the Main Flat and Northwest Shear, but this strain probably reflects late, continuing syn-mineralization displacement along mineralized structures.

The most continuous mineralization occurs along and surrounding the Main Flat and Northwest Shear. In the central parts of the deposit, these two structures are cored by quartz shear vein systems comprising mottled grey, variably brecciated, and banded quartz veining which is locally host to high gold grades. These central shear veins are typically surrounded by intense, often brecciated alteration with auriferous white quartz-carbonate-albite veinlets. These structures vary from narrow ductile sericite-carbonate-chlorite altered shear zones locally containing a central shear vein in distal parts of the Sabodala deposit, to shear zones with a central shear vein locally >5m thick or a series of closely spaced veins over intervals of 3 to 10m in some parts of the core of the deposit where mineralization is best developed. Immediately beneath or along strike from the quartz shear veins in the main structures, the proximal alteration often comprises a muscovite-carbonate altered shear zone that may be several meters thick, also forming part of the shear zone slip surfaces. The shear zone is often strongly foliated, and may contain oblique internal shear fabrics. This foliated zone and the slip surfaces in the vein probably accommodate much of the syn-mineralization displacement along the Main Flat, probably late in its structural history. Quartz-carbonate veins are often transposed into foliation surfaces.

Figure 8.4 Northwest Shear on the Northern 640 Bench,

Explanation: Detail of the Northwest Shear on the northern 640 bench, view approximately 5 m. At left is a grey quartz vein which dips steeply to the east and which at its top (right) has a well developed grey cataclastic breccia band along its hangingwall. Note the greenish dyke to the right of the quartz vein, and further quartz veining in altered wallrock to the right of the dyke. Host rock is carbonate-albite-sericite-pyrite altered gabbro here.

The Main Flat and Northwest Shear central vein systems are surrounded by intense, often brecciated tan carbonate-albite-pyrite-sericite alteration within which extensional quartz-albite-


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carbonate-pyrite veins of several generations are developed. Most pervasive areas of alteration may be massive and lack veinlet development, but these often grade into areas of abundant white quartz+/-albite+/-carbonate-pyrite veinlets. The alteration and veining surrounding these structures extends, as envelopes around the main mineralized structures, significantly widening where shear zones join or intersect, and / or where they approach and intersect the mylonitic chert unit to the east.

Within mineralized areas of alteration, earliest veins are often discontinuous narrow banded quartz-carbonate veins that are boudinaged in the plane of S1/S2, and which dip steeply west parallel to the volcanic stratigraphy. They are common in sets adjacent to the mylonitic chert unit, and consequently could be coeval with early pre-mineralization displacement along the Mylonite Shear Zone. These veins are locally preceded by early magnetite veinlets and by patchy hematite alteration which affects the chert and which is preserved in later quartz-albite-carbonate breccia mineralization, although these styles of oxide alteration may precede gold mineralization.

Figure 8.5 Style of Veining in the Main Flat

Explanation: Style of veining in the Main Flat, drill hole SBRC-240D, 151.6 to 156.06 m. Note the typically mottled grey quartz vein forming the core to the Main Flat in the upper three drill core rows, which is similar to the style of veining along the Northwest Shear. Grey bands are zones of cataclastic breccia and slip surfaces in the vein and areas of fine-grained pyrite in the quartz. Foliated orange-tan carbonate-albite-pyrite altered wallrock in the two lower rows contains auriferous shallow dipping quartz veinlets that surround the main shear vein.

The early veins are overprinted by sets of main stage shallow southerly-dipping, sheeted or branching quartz-albite-carbonate-pyrite extension veins which form often sheeted arrays in which may occur in densities of several veins per vertical meter. These are the most abundant sets of veins that are developed in the deposit, often affecting large volumes of the wallrock adjacent to the mineralized shear zones and are shown in Figure 8.6 and 8.7. While having overall shallow southerly dips, vein orientations can locally be variable, probably due to fluid overpressuring during vein formation which lead to brecciation and linking between vein arrays and sets.


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Figure 8.6 Main Stage Extension Vein Arrays above the Main Flat

Note: view is approximately 5m across

Figure 8.7 Sigmoidal Extension Vein Array in Sheeted Quartz Extension Vein System


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The main stage veins have often pyritic envelopes of pink to orange-tan carbonate-albite-sericite alteration. The pink colour is probably caused by fine-grained hematite in the albite. Vein abundance is generally highest near shear zones, diminishing in abundance distally. Carbonate-albite-pyrite alteration associated with the extension veins is pervasive in areas of most intense veining generally near the shear zones, but for much of the area of extension vein development, alteration forms 1-5 cm envelopes to veins, with intervening wallrock affected by chlorite-calcite alteration. Outside gold bearing areas and distal in the alteration, the veins grade outward into quartz-calcite veinlets in chlorite-calcite alteration that lack any significant gold grades.

At least two phases of main stage extension veining are locally apparent, but which are of similar orientation. Earlier veins have blocky quartz-carbonate-albite fill and pyritic pink to tan albite-carbonate alteration envelopes. These are locally overprinted by a set of younger, also shallow dipping more glassy quartz veins with lower carbonate-albite content and yellow to greenish coloured sericite-carbonate envelopes. Comparison of assays to intervals in core suggest both sets of veins are auriferous. The extension veins frequently form in en echelon vein arrays, or join more continuous breccia and shear veins around which vein arrays are developed. Vein en echelon arrays, and fringing extensional veins on the brecciated shear veins, often have sigmoidal forms, suggesting syn-veining reverse displacement (Figure 8.7). Both moderate to shallow west and conjugate sets of east dipping arrays and shear veins occur. The shear veins may be banded and/or have breccia fill.

Within the Sabodala deposit, the extension veins commonly coalesce in, or join areas of vein-like to diffuse quartz-calcite-carbonate-pyrite matrix supported breccia, especially in or adjacent to the Northwest Shear and Main Flat where breccias can occur over intervals of several meters, and are often very high grade. Breccia matrix is often fine-grained, and pale grey to tan in colour. This is shown in Figure 8.8 below.

Figure 8.8 Alteration and Breccia Textures in the Sabodala deposit

A: SBRC-224D, 89-93 m B: SBRC-215D, 80-83 m

Explanation of Figure 8.8: A: Typical area of intense alteration grading into breccia below. Intense tan albite-carbonate-pyrite alteration affects wallrocks, and contains common quartz veinlets and breccia veins. B: Fine-grained pale grey quartz matrix breccia with tan albite-carbonate altered wallrock fragments within or adjacent to the Northwest Shear. Breccia may be in part cataclastic. Albite is abundant in the matrix at lower right. Dark fragments are hematite-rich.


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Wallrock fragments in the breccias are typically <5 cm in diameter and intensely altered to tan carbonate-albite-pyrite assemblages. Specular hematite-rich fragments, some of which are cherty, are often present. Occurrence of these hematitic fragments in areas of volcaniclastic protolith suggests that they may represent incorporation of jasper-hematite fragments from the volcanoclastic unit, or could also represent brecciation of the phase of early hematization. The breccias coincide with the position of the intersection of the Main Flat and Northwest Shear zones, and may extend as lenses along the margins of these structures. Breccias of similar texture but with greater fragment abundance also affect the mylonitic chert unit where intersected by the principal shear zones.

8.1.4 Gold Occurrence within Mineralized Zones

Gold mineralization of all styles is associated with pyrite in association with extension and shear veins as clots, grains and along slip surfaces within veins, as pervasively disseminated envelopes around veins, and is also disseminated in broad zones of carbonate-albite alteration surrounding shear veins. Locally pyrite forms veinlets, which both cut across, and in other areas are cut by, quartz-carbonate albite veins, suggesting multiple pyrite generations, occurring within both pyrite veinlets and quartz-carbonate veinlets. Pyrite is variable in grain size and ranges from cubic to anhedral. Pyrite of all grain sizes from mineralized zones is spatially associated with grains of native gold along crystal margins, in fractures within pyrite, or encapsulated in pyrite grains. Trace, often very fine-grained chalcopyrite and locally galena occur as minute grains in or adjacent to pyrite often spatially associated with gold. Shear veins also may contain fine-grained gold encapsulated in or peripheral to pyrite in pyritic bands along slip surfaces. Coarse gold is absent.

8.1.5 Structural History and Paragenesis

Overall interpreted paragenesis and the structural setting of the Sabodala deposit are illustrated in Figures 8.9 and 8.10. The controlling structures to mineralization may have initially formed during D1 on the S1 foliation in response to north-south to north-northwest, south-southeast directed shortening. This phase of deformation is associated with regional apparent left-lateral (sinistral) displacement on shear zones, including Ayoub’s Thrust, which was associated with early, pre-mineralization carbonate alteration. East-west trending and steeply dipping oblique foliation in the Northwest Shear, which is overprinted by later S2 fabric, suggests that that structure was active during D1 and accommodated right lateral/reverse displacement, probably coeval with and conjugate to significant top to the southeast displacement on the Main Flat and “New Fault”. Early veins which include boudinaged, more highly strained foliation parallel sets, steeply dipping northeast trending extension veins, and potentially early shear veins along the main structures, likely formed progressively during D1.


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Figure 8.9 Paragenetic Chart

This paragenetic chart illustrates the sequence of veining, deformation and dyke intrusion in relation to gold mineralization. Gold events are in red. Most mineralization is associated with mid to late D2 veining Associated with sets of shallow dipping quartz-albite-carbonate pyrite extension veins, shear veins developed along main shear veins, and albite-carbonate-pyrite breccia formation.

Succeeding sets of more voluminous structurally late shallow to moderate south dipping extension veins and shear veins developed along the main mineralized structures overprint the early veins and form the dominant vein sets in the deposit. These later veins likely reflect a new increment of strain during D2 associated with northeast-southeast directed shortening, S2 foliation development, conjugate top to the east and top to the west displacement on the Main Flat and Northwest Shear, and steep to moderate north plunging elongation lineation development, the latter to which the extension veins are orthogonal to. This second increment of mineralization is more voluminous than the deformed early veins. The two increments of veining and strain were likely continuous, and are often spatially coincident along the same structures.

Felsic dykes may have intruded periodically along the mineralized structures during these events, with early dykes potentially associated with an early, probably pre-mineralization phase of hematite alteration which occurs in fragments of breccia material, and which may have been coeval with early carbonate alteration along the Ayoub’s Thrust shear zone. During the different phases of mineralization, brittle and ductile deformation styles were likely cyclic and influenced by multiple pulses of hydrothermal fluid which induced veining and brecciation during periods of fluid overpressuring, alternating with periods of more ductile shear zone development and deformation of earlier formed veins.


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Figure 8.10 Possible Structural Patterns and Mineralization Controls

Note: Top left: Plan map with mineralization in the deposit coinciding with the position of the Main Flat surface projection, in shaded red, showing the interpreted structural setting and principal mineralized or controlling structures. The surface projection of the Main Flat marks the outline of the Sabodala deposit. The Main Flat is the dominant structure in a set of intersecting mineralized shear zones that include the Northwest Shear and “New Fault”. These structures may emanate off a significant shear zone to the southeast (“SE shear zone”) that occurs near the Dinkokhono deposit. Mineralization in the Main Flat occurs where this north-northwest trending shear zone corridor approaches and joins Ayoub’s Thrust. Offsets of marker units. Note the carbonate alteration along Ayoub’s Thrust where it is proximal to mineralized structures. Center right: Hypothetical section looking northwest illustrating potential downward en echelon stepping of Main Flat through area of stacked shear zones. This could occur where an oblique shear zone intersects the Main Flat. Below: Cross section illustrating known mineralized structures (upper left), and potential extensions and targets to the east and at depth. The Main Flat could link in en echelon steps to the Niakafiri Shear Zone. Potential for stacked shallow dipping shear zones occurs adjacent to the ultramafic-hosted shear zones to the east and west.


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8.2 Niakafiri, Niakafiri West and Dinkokhono Deposits

Outside of the Sabodala deposit on other parts of the Sabodala property, significant areas of mineralization are hosted by north-northeast trending, steep west-northwest dipping carbonate altered shear zones along the Niakafiri Shear Zone, shear zones which splay off this structure to the west, and along the Masato shear zone which lies 400 to 500 m east of and parallel to the Niakafiri Shear zone. Similar styles of mineralization are also present on continuations of these shear zones on the adjacent Oromin properties, including the Masato deposit, which lies along the Masato Shear Zone to the northeast of the Sabodala property, and in the Maki Medina deposit, which forms an additional zone of mineralization along the Niakafiri Shear Zone to the south.

On the Sabodala property, the Niakafiri Shear Zone is traceable from the Niakafiri deposit northward through the Dinkokhono prospect and Sambaya Hill before passing out off the property to the northeast. The shear zone comprises a dominantly ultramafic-hosted zone of high strain that is localized in, and in part defined by pervasive, strongly foliated tan, grey or green carbonate +/- chlorite +/- fuchsite +/- muscovite +/- pyrite +/- talc +/- chlorite alteration. Alteration associated with mineralization in the Niakafiri, Masato and other shear zones on the Sabodala property is associated with coincident positive IP resistivity and chargeability responses with form outlines of known areas of carbonate-muscovite-pyrite alteration that are developed along them. These responses may reflect the combined resistive nature of the carbonate +/- albite alteration, in association with chargeable pyrite development and graphite presence along many mineralized slip surfaces.

8.2.1 Niakafiri Deposit

The most extensive areas of mineralization along carbonate altered shear zones occurs at the Niakafiri deposit in southern parts of the Sabodala property, extending from the southern parts of the property boundary to the Dinkokhono prospect. Here, the Niakafiri deposit occurs along an approximately 750m strike length of the Niakafiri shear zone. The deposit has been drilled to a depth of 150m and parts are still open. The mineralization style in the Niakafiri deposit, and spatially associated shear zones developed in the Niakafiri West area, comprises sets of quartz veins, shear veins and disseminated pyrite developed in the ultramafic-hosted carbonate altered shear zones along, and splaying off the main Niakafiri Shear Zone.


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Figure 8.11 Cross Section Through the Niakafiri Shear Zone, Looking North

The above cross section is located at the north end of the Niakafiri deposit, just south of the Dinkokhono prospect. The shear zone corresponds with the area of altered rocks, and is most intense in areas of pervasive carbonate-dominant alteration. Highest gold grades correspond with areas of most intense veining, especially along shear veins shown in black.

In outcrop, the Niakafiri shear zone is comprised of continuous, north-northeast trending zones of high strain in rusty, Fe-oxide rich, and often erosionally resistant outcrop exposures which contain elevated concentrations of quartz veins. The Fe-oxide bearing exposures lie above, or locally contain, fresher areas of pyritic carbonate-sericite-albite-pyrite-quartz alteration in altered ultramafic to mafic host rocks which have been intersected in underlying drill holes in fresh rock below. An ultramafic protolith is suggested by the gradation from talc-chlorite altered ultramafic outside or on the margins of the altered shear zones, to intense carbonate-sericite alteration in their cores, often over only a few meters. Drilling suggests that the shear zones and their hosting ultramafic units dip steeply to the west and may be locally discordant to the volcanic stratigraphy. The dominant alteration mineral in the Niakafiri Shear Zone in the deposit area is dolomite with variable muscovite (sericite) content, and quartz, albite and pyrite as other common alteration minerals. Muscovite is often pale to bright green and fuchsitic (Cr-bearing), giving a green tint commonly to the carbonate alteration zones (Figure 8.12B). Albite while present, especially in altered dykes and sills in the carbonate alteration zones, is far less abundant than is seen in the alteration associated with veining at the Sabodala deposit. Areas of carbonate alteration in the Niakafiri deposit are often intensely strained, with foliation defined by fine-grained carbonate-quartz-muscovite, or muscovite-chlorite bands (Figure 8.12C to 8.12E).

Pink felsic dykes of various ages occur along the Niakafiri shear zone in the Niakafiri deposit within areas of carbonate alteration and gold mineralization, as they do at the Sabodala deposit. Here


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these also form at least two generations of pink altered quartz-feldspar porphyritic styles. Earlier dykes are affected by strain on their margins with development of foliation and cataclastic brecciation (Figure 8.12D), and variable alteration, including presence of pyrite in peripheral portions of the dykes.

Gold mineralization in the Niakafiri deposit is generally concentrated in areas of both most intense strain, and most pervasive dolomite-sericite alteration within the Niakafiri Shear zone where networks of quartz extension and shear veins are developed, often spatially associated with felsic dykes. Veining is most abundant where conjugate dextral east-northeast and sinistral north-northwest trending shear veins (Figure 8.12A). These occur in outcrop as resistant chains of brecciated quartz-Fe-oxide shear veins that are locally traceable for 20 m or more. Shear sense on the shear veins is indicated by sigmoidal vein geometries of extension veins, and by internal oblique fabrics in the shear veins, the latter which contain oblique foliation development along brecciated slip surfaces in quartz. The intersection of north-northeast and north-northwest trending shear vein sets and associated fringing sets of steeply dipping, east-west trending extension veins around them defines steep northerly plunging oreshoots, which are approximately parallel to the regional L2 lineation. Several sets of mineralized extension veins may be developed which are variably deformed, the youngest of which is shallow dipping and may cut across shear veins.

Where fresh in drill core, mineralized shear veins comprise highly strained banded white quartz veins which have common muscovite (fuchsite), carbonate and pyrite stylolites and discontinuous bands/lenses, defining anastomosing foliation in the veins (Figure 8.12C, E). These generally host the highest and most continuous gold grades. Like the Sabodala veins, chalcopyrite occurs as a fine-grained accessory mineral. The shear veins locally exceed 50 cm in thickness and may have gradational contacts with highly strained carbonate alteration, with the gradational nature of their margins probably due to strain. Shear veins below depths of oxidation frequently contain abundant pyrite along slip surfaces, and pyrite is common in surrounding carbonate alteration in mineralized areas, locally forming disseminated envelopes to associated extension veins. Stylolites and slip surfaces along shear veins locally contain black tourmaline and black, pyritic graphitic carbonaceous material, the latter which locally forms a matrix to brecciated vein and wallrock fragments. The origin of the carbonaceous material may reflect the localization of shear veins along thin sedimentary horizons within the sequence, or the hydrothermal precipitation of carbon along shear veins under reduced conditions. The photographs and accompanying text in Figure 8.12 show and describe these features.


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Figure 8.12 Mineralization Styles at the Niakafiri Deposit

A: NKRC-177D, 238 to 251m B: NKRC-171D, 135 to 139.54m

C: NKRC-177D, samples from 223 to 224m D: NKRC-177D, samples from 230 to 235m

E: NKRC-170D, 201m (below) and 169m (top) F: MARC-003, samples from 446 to 458m Explanation of Figure 8.12: Mineralization style at the Niakafiri deposit and along associated shear zones, from Rhys (2009). A: Oxidized steeply dipping and north-northeast trending quartz breccia vein in central parts of the Niakafiri deposit outcrop exposures. B: Green fuchsitic carbonate altered containing deformed quartz veins that are parallel to foliation and stylolitic (upper rows) which are cut by younger, quartz veins that also cut across foliation at high angles. C: Highly strained carbonate-muscovite shear zone with fine grained


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pyrite trails along foliation surfaces, and deformed, stylolitic quartz shear veins. D: Samples across the contact of a felsic dyke (pink/orange, upper two rows) showing increasing strain downward in the dyke manifested as a spaced foliation marked by pyrite-muscovite surfaces. Typical fuchsitic highly strained carbonate altered shear zone which is host to the dyke occurs in the lower row. E: Mineralized shear veins and breccia zones in the Niakafiri Shear Zone. The upper row shows irregular black stylolites, bands and matrix fill of graphite-pyrite which forms a matrix and slip surfaces to a mineralized cataclastic breccia. The lower core shows a shear vein with pyritic stylolites. F: Core from southern extensions of the Masato Shear Zone onto the Sabodala property showing its similar nature to the Niakafiri deposit. Upper two core rows show mineralized quartz shear veins with pyritic to graphitic stylolites and breccia textures. Lower core shows at left a dyke margin in tan/pink colour, with to the right pyritic fuchsite-carbonate altered shear zone having deformed early carbonate veinlets. Dark area at center is pyritic.

Evidence for syn-alteration deformation along the shear zones includes the presence of carbonate and quartz-carbonate+/-pyrite veins which span deformation. These include early boudinaged or tightly folded carbonate-dominant veinlets that may be transposed into the dominant foliation, and which are crosscut by more quartz-rich veins showing lower degrees of strain, and finally late unstrained quartz extension veins. In outcrop, foliation in the shear zones is often defined by a combination of S1 and S2, with S1 foliation being typically intense. The intensity and presence of both of these fabrics in the shear zones also suggests that the structures were active during both events. The sequence of veining from oldest most deformed to least deformed, young extension veins suggests that veining associated with gold mineralization in the shear zone was coeval with deformation.

The mainly steeply dipping extension and shear veins at Niakafiri that are associated with areas of gold mineralization are generally more highly strained than those at the Sabodala deposit, and may form an older set of veins than the main stage shallow dipping Sabodala vein arrays. Like the older, steeply dipping veins in the Sabodala deposit, late shallow dipping extension veins that may be coeval with main stage veining at the Sabodala deposit cut the Niakafiri vein systems, suggesting the Niakafiri mineralization may have been mainly coeval with early phases of mineralization there.

8.2.2 Niakafiri West Deposit

Diamond drilling and IP patterns west of the Niakafiri deposit indicates that a network of carbonate altered shear zones extends west and northwestward from the Niakafiri deposit beneath and west of the Sabodala town site (Figure 8.13). These shear zones extend north-northeastward beneath overburden and ferricrete through the western Sutuba and Soukhoto areas and may link up with the Ayoub’s Thrust at the Sabodala deposit. Drilling and geophysical patterns suggest that these structures include north-northwest tending shear zone strands which link northwestward in the area of the Niakafiri West deposit into a north-northeast trending shear zone corridor. In drill core, the style of mineralization at Niakafiri West is closely comparable to the Niakafiri deposit, comprising sets of variably deformed quartz extension veins and quartz-carbonate-sericite-tourmaline-pyrite shear veins developed in tan to pale green carbonate alteration in areas of high strain.


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Figure 8.13 IP Surveys for the Central and South Sabodala property

Note: This survey shows the distribution of carbonate altered shear zones that are host to the Niakafiri and Niakafiri West deposits. Warm colours illustrate higher values. Modified from Isles (2008) and Rhys (2009). Note the coincident positive response of carbonate altered shear zones in both chargeability (A), and resistivity (B). In the chargeability plot, anomalies link between the Niakafiri deposit and Soukhoto area. Note also the widening of, and internal trends in the anomalies along the Niakafiri Shear zone under Sambaya Hill, which forms a highly prospective target area where internal complexities and splays to the structure may form favourable sites for dilation and gold mineralization.

8.3 Other Mineralized Areas on the Sabodala Property

Gold mineralization continues on prospects along the Niakafiri Shear Zone and other parallel shear zones to the east and west in central and northern portions of the Sabodala property. Along the Niakafiri Shear Zone corridor, similar styles of mineralization to the Niakafiri deposit, comprising networks of shear and extension veins in carbonate altered portions of the shear zone, occur at the Dinkokono prospect and Sambaya Hill. These target areas remain highly prospective and not fully tested, especially in the vicinity of Sambaya Hill where the surface alteration and coincident chargeability and resistivity anomalies suggest significant widening of the shear zone, and potential


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splitting of the main structure, forming a favourable target area for vein formation (Figure 8.13). In eastern and far southeastern portions of the property, additional exposures occur of the Masato shear zone and another rusty, highly strained area with elevated quartz vein densities. Drilling along the Masato shear zones suggests the presence of mineralization of similar style to Niakafiri (Figure 8.12F); the second target is untested by drilling.

8.3.1 Soukhoto and Faloumbo Areas

The Soukhoto and Faloumbo areas contain widely spaced east-northeast trending and steeply dipping quartz veins which vary from 5 to 50 cm thick, and which have strike lengths of at least several tens of meters. The veins comprise white quartz with local prismatic fill, and have thin foliated envelopes suggesting that they are developed in minor shear zones. They are hosted in foliated mafic volcanic rocks. Their relationship to other vein sets, including those in the Niakafiri Shear Zone was not determined, but they are of similar orientation to some common shear vein orientations in the Niakafiri Shear Zone, suggesting that they may represent equivalents to the shear veins developed there. These veins occur in areas of high strain between the more intense shear zones such as the nearby Niakafiri shear zone and associated subsidiary structures, potentially linking between the larger shear zones or occurring in areas of strain accommodation at bends and terminations of individual shear zone strands. Potential occurs in these areas for defining individual higher grade shear veins, or for areas of lower grade, bulk tonnage mineralization where the shear veins are closely spaced or are associated with sets of quartz extension veins.

8.3.2 Gora

The Gora Deposit (formerly termed Zone D) lies approximately 25 km northeast of the Sabodala processing plant along the transition between the Mako and Diale-Dalema belts. Gora occurs within the Sonkounkou exploration permit held by Axmin and in which SMC is earning a majority interest in an earn-in JV. The area is accessed via a good all-weather laterite road to Sounkounkoun and then a bush track.

Gora is hosted by a moderate to steep southeast dipping, northeast trending sequence of turbiditic sandstone, siltstone and mudstone which is at least locally overturned and southeast-facing. The sedimentary package hosting the veins is of undetermined thickness, and is intruded or bounded by various sill-like intrusions to the east and west, including granodiorite. The hosting sediments have been affected by upper greenschist grade metamorphic conditions, defined by aluminosilicate porphyroblasts and biotite, probably in the thermal aureole of the surrounding intrusions. Hosting lithologies contain a slaty foliation which strikes parallel but which dips variably with respect to bedding.

Gold mineralization at Gora occurs in quartz shear veins which trend north-northeast with moderate to steep east-southeast dips, see the plan and section in Figures 8.14 and 8.15. Two principal and additional veins are locally 50 to 100 m apart, defining a veining corridor at least 100 m wide in plan view. Veining extends for at least 700 m along strike, where in outcrop the veins form ridges resistant to weathering as shown in Figure 8.16, photo A.


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Figure 8.14 Surface Geology of the Gora Quartz Vein Prospect


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Figure 8.15 Cross Section through North of Gora Prospect

Vein dips are often 5 to 15 degrees steeper to the southeast in surface trenches than bedding in the hosting sediments. Veins locally vary to several meters thick and are typically banded with grey and white quartz as shown in Figure 8.16 photo B. Dark grey bands and stylolites in the veins may contain carbonaceous material, probable tourmaline, and reddish Fe-oxides probably after pyrite. The veins occur in narrow shear zones, which are locally manifested as narrow zones of more intense foliation on vein margins. Left steps in the outcrops of veins in plan may suggest either en echelon stepping of the veins and/or left lateral offsets on late sinistral faults know to be developed regionally.


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Figure 8.16 Resistive Ridge of Quartz Veining and Detail of Vein Mineralization

Longitudinal sections of grade x thickness plots of the principal veins at Gora display a steep south plunging oreshoot control, see Figure 16.4, in the Mineral Resource section. This is at a high angle to shallow northeast plunging lineations that are developed on vein surfaces that reflect slip direction along the vein structures, suggesting that the oreshoots may occur in dilational jogs and steps in the shear veins.

The Gora veins are typical orogenic banded shear veins. With a strike length of the vein system of at least 700m, multiple parallel veins, and the localization along a laterally continuous sedimentary horizon, the veins may have significant both strike and down dip continuity.


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9 EXPLORATION

9.1 Exploration Approach

SMC uses a phased approach to the exploration of concessions.

Phase 1: Target Generation

The following data types are collected and compiled.

Airborne geophysics integrated with field geology (regolith and outcrop mapping) to identify major prospective structures, lithologies and alteration zones.

Surface geochemistry to delineate gold bearing corridors and targets.

Rotary Air Blast (RAB) drilling of prospective structures where extensive transported materials render surface sampling of low effectiveness.

This work also includes geological mapping which is discussed below.

Phase 2: Prioritization and Ranking

Based on the compiled data from Phase 1 and the knowledge base of the SMC exploration team, targets are ordered by best chance of hosting economic mineralization.

Phase 3: Target Testing

Trenching is carried out in areas of shallow soil cover to map the gold bearing zones and provide a first pass evaluation of their potential.

Reverse Circulation (RC) and diamond drilling are used to systematically test the defined targets.

Where significant mineralization has been identified, systematic RC and diamond drilling is employed to ascertain dimension and quality of the target area.

9.2 Geophysical Surveys and Investigations

Various sets of Landsat, Aster and Quickbird images are available for most of the permit areas. These have been used in remote sensing interpretations by J Kaisin to produce project wide, consistent regolith maps.

In October 2005, Worley Parsons GPX conducted an airborne survey on 100 m line spacing, acquiring magnetic, radiometric and digital terrain data. This survey covered 100% of the Near Mine, Faleme and Massakounda Projects and 50% of the Dembala Project.

From May to November 2007 Fugro Airborne Surveys (Pty) Limited flew a 133,817 line km aeromagnetic and radiometric survey over eastern Senegal on behalf of the Ministry of Finance and Economy. The survey was flown on 250m spaced lines on a 135 azimuth, at a survey height of 80m. This survey provided coverage over the remaining parts of the exploration permits and allowed SMC to improve its understanding of the regional structures and geology.


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A digital terrain model is available from the 2005 airborne geophysical datasets. In addition to that there are 1:200,000 scale government topographic maps available. For some areas 100,000 and 50,000 scale maps are available.

No ground geophysical surveys have been carried out by SMC on any of the regional exploration permits. A dipole-dipole IP survey was completed over the mine lease during 2008.

Several phases of interpretation of the above geophysical data set have been completed:

In 2006 a regional interpretation of the Mako Belt by Dave Isles, at 100,000 scale.

In 2007 a regional interpretation of the 2005 SMC survey by Rankin at 100,000 scale.

In 2007 Nick Lockett and Associates completed a Quickbird, remote sensing interpretation of outcrop and regolith geology of the Dembala Berola project the interpretation was integrated with the available aeromagnetics. This is shown in Figure 9.1

In 2009 and 2010 consultant Jean Kaisin was engaged for several project scale interpretations of SMC and government flown geophysical datasets. The interpretation was produced at 1:25000 scale. The interpretation integrated the aeromagnetics, existing geological knowledge, DTM, radiometric and satellite imagery. The resultant fully attributed GIS map contains interpreted basement geology, regolith and structure. The exception is the Massakounda permit, which remains to be integrated into this map. This is shown in Figure 9.2.

Figure 9.1 Geological Interpretation based on Aeromagnetics


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Figure 9.2 Regolith Map from Radiometrics, DTM and Satellite Imagery

9.3 Soil, Termite Mound and Rock Chip Geochemistry

Surface geochemical sampling is an integral part of SMC’s early exploration strategy. Prior to 2008, the general approach was to obtain a first pass coverage of 400 x 100m spaced soil samples for gold analysis. In areas of positive responses infill sampling to 200 x 50m may be carried out. Large surveys have been completed on virtually all projects.

Since 2008 SMC has adopted cathedral termite mount sampling as the preferred regional geochemical sampling medium. These termites are known to bring material to surface from as deep as the water table potentially exposing buried mineralization in areas of shallow surface cover. There is also a great advantage in terms of the speed that the surveys can be completed.

Large termite mound surveys have been completed on the Faleme, Near Mine and Dembala Projects. Regional termite mount sampling campaigns have been conducted on a nominal 200 x 50m spacing.

SMC’s geochemical data base contains gold analysis from over 77,000 soil and termite samples and over 8,000 rock chip samples from the exploration programs. Large surface geochemical


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datasets have also been received from Axmin for the joint venture permits of Sounkounkoun, Heremakono and Sabodala NW.

Figure 9.3 Surface Geochemical Anomalies and Prospects Identified To Date

9.4 Geological Mapping

Geological mapping has been conducted largely by SMC staff geologists on selected prospects in all project areas.

Extensive and detailed mapping has been completed over the Eastern and Central Parts of Makana Permit; the northern part of the Sabodala North West permit, covering the Toumoumba Prospect as well as the greenstone portion in the central parts of the permit referred to as the Bane area; and the prospects of Goumbou Gamba, Goumbou Gamba South, Diadiako, the Sabodala Structural Corridor (SSC) and Dindifa prospect areas at Bransan.

Prospect scale geological mapping has been completed on the Gora and Diabougou prospects and partial mapping has been completed on zone ABC Diegoun.


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Prospect scale mapping has been completed on Gounamehko and its north extension, Dembala Hill, Seven Hills, Saiansoutou, Saiansoutou Extension, Berola Hill, Some, Bondala and Gora by SMC geologists. The Tourokhoto prospect mapping was conducted by J Kaisin.

Regional scale mapping was completed by Geoter, as part of 400 x 100m soil geochemical grid covering 90% of the property.

Based on the above, SMC currently has over 27 targets to consider for follow up work and the key targets that are recommended for follow up in Section 19 are; Gora Tourokhoto, Dembala Hill, Goundamekho, Diegoun North, Diegoun South, Diadiako, Toumoumba, Majiva.


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10 DRILLING

MDL has drilled a total of 200,601 m of diamond core and RC drill holes in the Sabodala Mining Concession from 2005 to 2010 inclusive, as summarized in Table 10.1. Management of the drilling programs, including logging, sampling, and data verification, was contracted to RSG Global through to 2007, since when drilling supervision has been undertaken by SGO. In addition drilling is carried out on the Exploration Leases which are discussed separately.

Table 10.1 Summary of Drilling by Year

Deposit/Prospect Year No. of Holes RC (m) DD (m) Total (m)

Sabodala 2005 165 11,760 5,725 17,485

2006 228 20,251 20,567 40,818

2007 289 24,457 29,601 54,058

2008 82 6,258 8,562 14,820

Flat Extension (Sabodala) 2010 13 2,542 4,039 6,581

Niakafiri 2005 45 3,646 1,149 4,795

2006 69 6,268 3,912 10,180

2007 46 3,420 2,786 6,206

Niakafiri West 2007 22 1,385 0 1,385

2008 40 5,380 740 6,120

Dinkokhono 2007 43 3,540 0 3,540

2008 26 2,847 2,142 4,989

Masato 2007 5 495 711 1,206

2009 2 0 363 363

2010 1 0 188 188

Sutuba 2006 39 2,959 1,013 3,972

2007 33 2,580 18 2,598

2008 50 3,976 1,101 5,077

2009 1 0 100 100

2010 48 3,001 392 3,393

Falombou 2009 4 638 0 638

Dambakhoto Sterilization 2009 2 270 0 270

2010 2 300 0 300

Soukhoto 2007 32 2,859 327 3,186

2010 8 0 951 951

Ayoub’s Extension 2010 11 1,098 0 1,098

Sambaya Hill 2007 42 5,885 0 5,885

2010 1 399 0 399

116,214 84,387 200,601


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10.1 Mining Concession

Typically, RC drilling was used to approximately 100 m deep. Below this depth, water inflow makes RC inefficient and diamond drilling is used. Drilling is done with three multipurpose (diamond drilling and RC), track-mounted machines, including two UDR650 rigs and one larger KL900. An LF230 Boart-Longyear diamond drill, capable of 1,200 m holes, was brought to site in May 2007. Diamond drilling incorporates both NQ (47.6 mm dia.) and HQ (63.5 mm dia.) core. In March 2010, SGO contracted the services of an ATLAS COPCO 220 drill rig, which has the capability to drill RC to depths of 400m (120mm diameter).

Drillhole collars are surveyed using a theodolite or Topcon differential GPS based on established survey trig points. All holes are downhole surveyed using a Reflex Easy-Shot single shot tool. Frequency of measurement is dictated by the target of the hole. Holes drilled on a pre-determined grid are surveyed at 30 m intervals after the hole is completed. Holes targeted specifically at a certain geologic feature are downhole surveyed as the hole progresses. Ezy-Mark or ACE Tool TM is used for oriented core. when used. To provide an adequate database, orientation marks are carried out every three metres down the hole while drilling (i.e., three metre runs), as marks are often ineffective when the core is broken and/or rendered unusable as evidenced by core grinding.

Diamond drill core and RC chips are logged wet by a geologist using a simple and consistent code system, noting lithology, alteration, mineralization and base of oxidation. In addition, diamond drill core logging records structural geology, geotechnical features including core recovery, rock quality designation (RQD), fracture frequency and infill, and hardness. Diamond drill core recovery averages 98% while RC recovery averages around 85%.

The logging data is recorded by a geologist on handwritten logging forms and entered into Excel spreadsheets then stored in a SQL Access database. Access to the database is restricted as much as possible to maintain accuracy. MapInfo or Vulcan is available and used for on-site data validation by the responsible geologist and geological for geological interpretation.

In order to provide a permanent visual record, all drill core is photographed before it is sampled or disturbed during logging. For geotechnical purposes, core photographs are taken dry, as soon as possible after recovery to minimize the effects of breakage during handling or decomposition upon exposure to air and water. The core is re-photographed wet to best record colours, geological features and textures. Each tray of core is photographed with a name board showing project location, drill hole number, the tray number, the depths at the start/end of the tray, date, colour bar and whether photographed wet or dry.

Initial drilling was designed with a declination of 45° to 60° to the east to intersect mineralized structures dipping 20° to 30° to the west. Holes intersecting the shallow mineralization essentially measure true width. However, the drilling also intersects the Northwest Shear domain at a low angle, and in some cases the drill holes appear to be running down the dip of the Northwest Shear structure. Figure 10.1 demonstrates a typical section through the mineralization (Section 20330N), showing the relationship between the Northwest Shear and flat mineralized structures and the drilling orientation. MDL recognized this feature of the drilling and undertook a series of scissor holes drilled in the opposite direction.


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Figure 10.1 Cross Section 20330N Showing Drilling Orientations

Eleven holes were drilled specifically for geotechnical purposes. Ten water holes were also completed for camp and drilling water requirements, hydrological test work, and village requirements.

10.2 Exploration Leases

SMC has utilized RAB drilling, trenching, reverse circulation and diamond drilling on its regional exploration programs. Table 10.2 summarizes the sum total of trenches and drilling carried out to date. Included in this table is the drilling carried out by Axmin on the SMC-Axmin Joint Venture properties.

Table 10.2 Drilling and Trenching Completed per Project

Project Trenching (m) RAB (m) RC (m) Diamond (m)

Near Mine 400 86,562 4,134 3,289

Faleme 23,049 19,792 6,246 2,285

Dembala 19,897 2,398 1,950 0

Massakounda 0 0 0 0

Total: 43,346 108,752 12,330 5,579


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Trenching and RAB drilling are primarily used to evaluate surface geochemical anomalies and more accurately locate the bedrock gold bearing structures that give rise to the surface gold anomalism in an area. Both methods are quick and cost effective in achieving this. Trenching is largely deployed in areas where the surface cover is generally <2m thick. It has the added advantage of exposing great widths of bedrock geology that is generally only available in rare and scattered outcrops. For safety reason trenches are restricted to a maximum of 2.5m

RAB drilling is deployed were the surface cover exceeds 2m of overburden. RAB holes are drilled to blade refusal with the aim of sampling the top of the un-oxidized bedrock as well as the profile of saprolite.

RC and diamond drilling are used to test and evaluate areas with well-defined gold-bearing structures defined in outcrop, trenches or RAB holes. In many cases RC pre-collars are used to evaluate or drill the top 100 to 150 m of a hole and a diamond tail is used where greater depth is required or where geological information is thought from diamond core.

A summary of the drilling results to date is presented in Table 10.3 below.

Table 10.3 Drilling Results, Exploration Leases

Exploration Permit Prospect

Drill Type Result Note

Brascan Diadiako DD 14m @ 0.78g/t Au, from 80m

13m @1.43g/t, from 189m

including 7.6m @2.24g/t Au, from 193

RC 10m @ 1.33g/t Au

Drilling limited to two lines 600m

apart

Dembala Berola Goundamekho RC 6m @ 4.2g/t Au

26m @ 0.9g/t Au

Reconnaissance drilling

Makana Makana RAB 10m @ 0.2g/t Au

13m @ 0.1g/t Au

Note: For all intersections, the true width of mineralisation has not been determined

The results of the drilling and other exploration work have enabled SMC to identify multiple high potential targets, including:

Tourokhoto – A sediment-hosted, bulk tonnage target. Has the potential for shear zone hosted mineralization with peripheral extension veining in adjacent competent host units. The style of shear zone with the clear evidence for syntectonic veining and presence of tourmaline make this target highly prospective.

Diegoun North – Host rocks include sediments, quartz-feldspar porphyry and gabbro. Referred to as “the Doughnut” because of its shape, the large geochemical surface expression covers an area of approximately 20 Km2 with the anomalies apparently peripheral to a central complex of felsic intrusive consisting of quartz-feldspar porphyries and granodiorite.

Diegoun South – An intrusive hosted target over 1900m in length. Gold occurs in a quartz vein network within a granitic dyke.


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Goundamekho – A sediment-hosted, bulk tonnage target. Presence of both extension and shear veins is positive, including incipient local development of shear veins in areas of concentrated extension veining. Allows the potential for greater intensity and continuity of veining, and continuity of grades along shear veins.

Dembala Hill – Mineralization hosted in volcanic and sedimentary units, a bulk tonnage target.

The trenching and drilling on these targets is preliminary in nature but confirms the anomalies defined by surface geochemistry.


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11 SAMPLE METHOD AND APPROACH

From 2005 through 2007, management of the drilling programs including logging, sampling and data verification was contracted to RSG Global (RSG). Since 2008 MDL has managed the drilling programs and continued sampling with the same procedures used by RSG. A description of MDL’s sampling method and approach for the Sabodala project was previously provided in the November 2007 NI 43-101 Report by Scott Wilson Roscoe Postle Associates Inc. (SWRPA). For completeness of the current report the sample method and approach has been excerpted, edited and expanded from the November 2007 report and applies to the Sabodala project and the exploration leases. Reconnaissance sampling of soil, outcrop and termite mounds is discussed in Section 9, Exploration. The drills were under repair at the time of the AMC site visit, so were not seen while operating, and the protocols were only discussed.

11.1 Reverse Circulation (RC) Drilling

RC drilling is used for shallow drill holes and pre-collars of deeper diamond tailed drill holes. RC cuttings are collected through a cyclone into a collector bag. The cuttings are sampled on one metre intervals adjacent to and in mineralization. The one metre interval is weighed then the cuttings are passed through a three-tier, one-eighth splitter resulting in an approximately 2.0 kg to 2.5 kg subsample.

Subsample preparation is only carried out during the day shift; the night shift samples are collected and subsampled during the succeeding day shift. Damp or wet samples are dried prior to being split; clods are not force-fed through the riffles. Plastic sample bags and calico collection bags are labelled with a permanent ink marker prior to starting each drill hole.

The cyclone is cleaned at each rod change. The cyclone and all hoses are dismantled for thorough cleaning between holes. The drill log and sample book are regularly checked against the hole depth as drilling proceeds to ensure compatibility. The drill log has a column for sample return quality which is noted “good” or “poor”.

A sample of the chips for the interval is stored in a plastic chip tray and received by the logging geologist.

RC drilling is carried out in wet ground and below the water table. To mitigate poor sample quality, the chip return is checked frequently. If the return appears blocked the hole advance is stopped and corrective procedures are initiated. The RC drills have an operating dust suppression system.

A reflex single shot camera is used for downhole surveys with the initial reading taken at 9 metres downhole, and subsequent readings taken every 30 metres thereafter as the hole progresses. The driller reads the instrument and the attendant geologist confirms it. A geologist or geological technician is at the rig at all times it is in operation. A +7 degree correction is added to the reading to correct for magnetic north. This brings the reading in line with UTM coordinate system WGS-84.

11.2 Diamond Drilling

Drill holes are typically drilled to approximate perpendicular to the intended target mineralization from the hangingwall to or into the footwall; see Figure 10.1 which is a section view that shows drillhole orientations. Drillholes are HQ or NQ size in diameter. A geologist is at attendance at the rig when it is in operation during day shift. The driller will take the downhole survey as the hole advances.


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Core measurement blocks are inserted by the driller and the block position marked in the box in case of core movement during transport to the core logging facility. Core orientation marks are rotated to the bottom of the core. The core is then matched up in the core trays and the orientation line propagated along the length of the core. The core is marked for sampling by a geologist respecting lithological and mineralization contacts. The maximum sample length is 1.5m. Magnetic susceptibility is recorded for all drill core at 1.0 m intervals

The core is split for sampling with a diamond saw, The split core samples are bagged and tagged.

Bulk density is carried out for both mineralized and barren host rocks plus samples of the various weathering profiles. A 20cm to 30cm sample is taken from each 5.0 m interval of the split core. The methodology used is the weight in air/weight in water method and commercial paraffin wax is used for porous oxide samples. The current database contains approximately 45,000 bulk density measurements.

Remaining drill core after cutting is shown in Figure 11.1. Metallurgical samples are collected by cutting the remaining half core.

Figure 11.1 Sabodala Drill Core

11.3 Rotary Air Blast (RAB) Drilling

The RAB drill is used for reconnaissance exploration drilling, typically the maximum drill depth is 40m and angled 60-70 degrees to surface. Collar surveys are picked up in a similar fashion to the RC holes. No downhole surveys are performed.

Cuttings are recovered via a cyclone which is attached by a drill pipe to the top of the sealed hole collar. Unlike RC cuttings, the cuttings from a RAB hole are exposed to the wall rock as they ascend to the collar of the hole for collection.


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Samples submitted for analysis are a composite of two individual one metre samples. The one metre sample is taken via a pipe inserted into the cuttings pile in two passes; forming a cross pattern. The composite weighs approximately 2.5 kg. The RAB reject is retained in a blue plastic bag, secured with a wire or rope closure designed for that purpose and an aluminum tag is attached with the sample number written. The subsample composite is collected in a smaller clear plastic bag, the top folded twice and stapled over the fold with a paper sample tag.

The collection system is cleaned after every 3m drill run. The recovery of the cuttings is logged as “insufficient sample” if the blue bag is not between half and three quarters full. This is judged from experience.

The core storage compound at Sabodala Mine which include separate buildings for logging, sampling, office and analysis facilities is protected by high level security fences and is under 24 hour surveillance by security personnel.

11.4 Data Management

The SMC geological database is centralized, and held in an Access format and monitored by a dedicated Data Manager. The database has built in validation features. The geologist completes hand written entries either at the rig or in the core yard on a standard drill core logging form. The same geologist then enters this data into a spreadsheet in digital format. This digital data is then loaded into the database and subsequently matched with the assays received from the assay laboratory. The assays are delivered in a format specific for the Sabodala database. The drill hole surveys are emailed to the Data Manager in a specified format and added to the database also.

Mapinfo software is used by the geologist to visually view the data (Vulcan is also available) and confirmation is given to the Data Manager.

The hand written logs, downhole surveys, driller sheets and safety forms are in an organized fashion within the same data room. Electronic files are kept under the control of the Data Manager.

11.5 Discussion

The chip and core sampling procedures respect the mineralization and geology with the length of the sample as much as possible. The maximum sample lengths vary among the three drill methods. The RC samples have the smallest maximum size to minimize the impact of crossing a geological or mineralogical boundary over a one metre interval.

The RAB drill which has the largest maximum sample length and the increased potential of sample contamination as the cuttings ascend the drillhole and interact with the wall rock. The RAB is appropriately used for reconnaissance exploration work to test the subsurface oxide layer. The resultant anomalies that may be outlined by the RAB drilling are followed up with either RC or Core drilling.

RC drilling in wet conditions can lead to cuttings build up within the hole itself and the collection system. Although mitigating procedures are in place and followed, there is the potential for grade smearing over several samples.


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12 SAMPLE PREPARATION, ANALYSES AND SECURITY

During the resource definition phase of the Sabodala project all samples were sent to the SGS laboratory in Kayes, Mali. Since commencing production at the Sabodala Mine samples generated from the mill, mine and all exploration drilling are processed at the on-site laboratory operated by SGS using an aqua regia digestion followed by AAS. Exploration intervals that are mineralized above 0.5g/t gold are sent to the Kayes laboratory for fire assay. No part of sample preparation other than bagging of samples for delivery to the sample preparation laboratory was conducted by an employee, officer, director or associate of the issuer.

12.1 2005 – 2008 Gold Sample Preparation and Analyses

Sample preparation and analysis was executed at the SGS-Kayes laboratory in Kayes, Mali. The Kayes laboratory is not certified by the ISO/IEC 17025 standard. SGS-Toronto reports that the SGS-Kayes laboratory QA/QC and data quality systems are identical to those in the ISO/IEC accredited laboratories in Toronto, Johannesburg, and Perth.

Sample preparation comprises drying and jaw crushing to minus 2.0 mm. The jaw crusher is cleaned using an air gun and visually inspected between samples. Barren quartz is used between samples when there is a possibility of high levels of gold or other metals in the samples. Crushed samples are split using a Jones riffle to 200g. The 200g sample is pulverized with a ring and puck pulverizer to 85% minus 75 μm (200 mesh).

Analysis for Au is by fire assay and atomic absorption finish using a 50g sample (SGS Protocol FAA515). The detection limit is 0.005 g/t Au (5 ppb).

12.2 2009 – 2010 Gold Sample Preparation and Analyses

Samples received are transferred into stainless steel trays. All samples are identified in the trays by a sample system number. Samples are sorted and placed onto shelves in the drying rack. Sample trays are not stacked upon each other. The drying racks are wheeled into a Marc DO2-E drying oven and dried at 105o C for 8 hours or until visually inspected and found to be dry.

Samples that are larger than 2mm in fragment size are then crushed in the Terminator jaw crusher. The sample volume is reduced in size upon exit of the crusher via a subsample tray located in a revolving reject collector. The reject is discarded. If the original sample is considered to be under 2mm, the sample goes directly to a splitter for sample volume reduction, and then on to pulverizing.

Compressed air is used to clean the crusher and splitters between samples. A visual inspection for residual material is completed after each sample. A quartz wash is performed upon a failed visual inspection.


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Figure 12.1 SGS Crusher at Sabodala

Samples are then pulverized with a LM2-P mill to 75 µm. QC sizing analyses are completed and recorded on every 40th sample processed for Grade Control and Exploration. Sizing analyses are done per job for all plant samples. QC results are normally >95% passing 75 µm.

Compressed air is used to clean the bowls between samples milled. A quartz wash is done on the bowls after every 10th samples that was milled or when a visual inspection indicated the requirement. Dedicated bowls are used for 1) Grade Control, 2) Exploration and 3) Plant.

Dedicated balances are used for 1) Grade Control/Exploration/Plant and 2) Carbon samples. Balances are calibrated at the beginning of each shift. SGS internal QC material insertions are one standard, two blanks and one duplicate per 40 samples of grade control and exploration samples.

SGS method utilized on site is code ARE155 and exploration samples over 0.5 g/t are sent off site for fire assay for gold. The GBC SensAA spectrometer used at the assay laboratory onsite is inspected annually.

12.3 Quality Control Measures

SGS has internal quality control measures mentioned in Section 12.2. Management of the drilling programs, including logging, sampling and data verification was contracted to RSG Global up to 2008. In 2008, Project staff became responsible for QA/QC management. The QA/QC program comprise submitting standard reference samples, blank samples and duplicate samples into the sample stream. These results and discussion is taken from the SWRPA report as the database used for the resource work has not changed and was reviewed by them. Their comment was that in


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general the QA/QC program was satisfactorily carried out. From a review of their work and observations on site AMC can say that the database was appropriate for the resource work.

12.3.1 Blanks

Blanks, were originally prepared by RSG Global and are presently prepared by SMC/SGO. They are submitted at a rate of 1 sample per batch of 20 samples.

The results of 9,169 control blanks submitted are illustrated in Figure 13.2. The samples which returned values greater the 0.035 g/t Au are omitted from the graph for convenience.

SMC follows the recommendation from SWRPA during a 2007 review of the dataset of a pass/failure determination for blanks as 3x detection limit of the assay process i.e. 3x 0.005 = 0.15 g/t Au. Within that guidance SWRPA have stated in their report that the following results were seen:

97.13 % of the control blanks returned values within the maximum acceptance level 1.57 % of the control blanks returned values between three and four times the detection limit

1.13 % of the control blanks returned values greater than four times the detection limit

Figure 12.2 Control chart for blanks

12.3.2 Duplicates

Duplicate samples were submitted at a rate of one duplicate per batch of 20 samples throughout the project. SMC uses the following procedures for duplicate samples.

RC duplicate samples are generated by taking a second split; 2 kg to 3 kg, of the bulk reject (20 kg to 30 kg) through the three-tier riffle splitter in the field. Diamond drill duplicate samples are a riffle split of the core after passing through the initial minus 6.0 mm crushing stage at the assay laboratory, i.e., commonly known as rejects.

Most drill holes are a combination of RC drilling and diamond drilling. SMC treats the duplicate result data for RC and diamond drilling collectively.


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Figures 12.3 through 12.6 are scatter plots and relative difference plots that illustrate the degree of variability and homogeneity of samples in the sample preparation stage. Mean values of sample pairs less than 0.01 g/t Au are omitted from the graphs.

Figure 12.3 RC and DD Field Duplicates – Scatterplot (Fire Assay)

Figure 12.4 RC and DD Field Duplicates – Scatterplot (Aqua Regia)


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Figure 12.5 is a relative difference plot comparing the difference and the means of the original and duplicate samples from the RC and Diamond drilling program.

Figure 12.5 RC and DD Duplicates – Relative Difference Plot (Fire Assay)

Figure 12.6 RC and DD Duplicates – Relative Difference Plot (Aqua Regia)


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12.3.3 Standard Reference Materials

SMC has used a total of 35 standard reference materials supplied by two distributors; Geostats Pty. Ltd and Rocklabs Ltd. Both oxide and sulphide matrix standards have been utilized. The majority of the Rocklabs standards that have historically been used for quality control have since been sold out.

SMC uses the following convention to assess standard reference material performance. The approach is to use the mean assay (+/-) 2 standard deviations with a maximum for gold of (+/-) 10%. Only 3% of the assays would be expected to fall outside the limits and values would be expected to be randomly distributed about the standard’s mean value.

Figures 13.7 through 13.9 are a summary of the standard’s performance which approximates the economic cut-off grade, average grade and 85th percentile of grades above the economic cut-off grade of the Sabodala mineralization.

As noted in previous reports, results of the standard reference sample program indicate a slight problem with the standard sample insertion procedure and monitoring protocols. Although a portion of the results that exceed expected values could be caused by mislabelling of the standards, a portion cannot be explained on that basis.

AMC would recommend the following protocol to simplify the monitoring of standard performance.

Reduce the number of standards used to 3 or 4 each for oxide and sulphide samples. Utilize a standard that approximates the economic cut-off value, the average grade and the 85th percentile of those values in the mineralization that are above the economic cut-off. An additional standard approximating 10 g/t Au could be utilized for samples containing visible gold.

Monitor the standard reference samples on a per batch basis as received; as well generate a monthly report including charts similar to figures 13.7 through 13.9. The charts should represent the results in chronological order.

Corrective action would take place on batches of assays where the standard exceeded TEHR standard deviations of the mean grade for the standard or where successive results exceed two standard deviations on the same side of the mean.

Figure 12.7 Control Charts


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12.3.4 Summary

SMC follows an industry standard level program of quality control. There are improvements that should be made to the monitoring of the QC data. There are sufficient failures with the standard reference material results that AMC would recommend SMC request monthly reports on the QC data from the data manager and what corrective actions that have been implemented for QC failures of the previous months report. The duplicate data for the aqua regia method of assaying suggests that there is an issue with the precision of the sample data. AMC would suggest SMC review in detail the outliers in the duplicate data to determine the cause.

Notwithstanding the comments above, AMC is satisfied that sample preparation, analysis and security processes have been conducted to reasonable industry standards and have produced acceptable results, and that none of the issues discussed in this section are likely to materially impact on mineral resource / reserve estimates.


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13 DATA VERIFICATION

A site visit was conducted by Brian O’Connor of AMC from July 11 through 13, 2010. During the visit the following validation tasks were completed; a review of the geological knowledge and practices on the mining lease and regional exploration properties was carried out, a review of the on-site laboratory facility, sample analysis, security as well as the QA/QC procedures.

Geological Knowledge

SMC conducts exploration on projects in various stages of development. Geological knowledge is acquired through lithologic and structural mapping. SMC uses contract geological specialists where appropriate.

Review of Exploration Practices

AMC did not view the drills in operation during the site visit. The rigs were either under repair or mobilizing. AMC did tour many of the exploration sites, spoke with the exploration personnel and reviewed the available exploration interpretations.

SMC exploration follows standard industry practice for drilling. Drill hole (core and RC) collars are surveyed for coordinate and elevation. A Reflex single shot camera is used to record the downhole surveys determine inclination and azimuth.

The exploration data uses industry standard protocols for the quality assurance and quality control. Standard forms are used for logging, recording of geological data, survey data and assay data. The exploration data is stored in an organized form with a dedicated data manager. The responsible geologist plots and reviews the resultant data compilation of geology, survey and assay to check for any data errors that may have occurred during the compilation process. The geologist informs the data manager of any errors for correction or confirms the data is correct.

On Site Laboratory Inspection

AMC carried out an inspection of the laboratory facilities during the site visit. The facility is owned by SMC and operated by SGS. The assay lab performs aqua regia gold analysis for the exploration samples. Samples returning over 0.5 g/t are sent for fire assay at the SGS lab in Mali. The samples are kept in a secure location.

QA/QC

SMC uses various controls on sampling including the insertion of blanks, standards and duplicates. Although SMC follows industry standard practice, AMC would recommend that SMC more closely monitor the resultant QA/QC data and take corrective actions at least on a monthly basis.

Review of the Database

The database is monitored by a dedicated Data Manager at the Sabodala Mine. For security and integrity reasons access to the data is limited to only a few personnel. The data manager was not available during the site visit by AMC, thus AMC was not able to perform an audit of the data. Sabodala is an operating mine producing gold derived from the data set and geological interpretation. AMC does not believe there are serious flaws with the dataset that would inhibit the


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use of the data for Mineral Resource and Mineral Reserve estimation.


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14 ADJACENT PROPERTIES

Two substantial properties are adjacent to the Project; the Oromin’s Sabodala Project and Rangold Resources’ Massawa Project.

Figure 14.1 Plan showing Adjacent Properties

14.1 Oromin Joint Venture

The Oromin Joint Venture Group (Oromin 43.5%) is actively exploring a concession adjacent to the Project. MDL has acquired approximately 15.01% of the issued and outstanding shares of Oromin, thus giving it an interest in the adjoining ground. A Restructure and Demerger Deed relating to common shares in Oromin Explorations Ltd. will transfer ownership in approximately 15% of Oromin’s issued and outstanding shares to Teranga Gold Corporation.

The text that follows comprises extracts taken verbatim from a Technical Report prepared by SRK Consulting (Canada) Inc, dated June 2010, and supplied to AMC by MDL. This is available on SEDAR. AMC has been unable to verify the information and the information is not necessarily indicative of mineralization on the Project.

“The Oromin Joint Venture Group (“OJVG”) holds a 15-year renewable mining license in respect of the Sabodala concession, approximately 212.6 km2 of land in the Tambakounda region of south-eastern Senegal. Gold exploration on the property has been conducted by Oromin Explorations Ltd. (“Oromin”) since 2005. Oromin’s exploration work has progressed from property-wide soil geochemical sampling and geophysical surveys to more focussed trenching, reverse-circulation (“RC”) drilling and diamond drilling (“DD”). Oromin has been successful in identifying numerous exploration targets and nine gold deposits thus far; Masato, Golouma West, Golouma South,


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Kerekounda, Kourouloulou, Niakafiri, Maki Medina Kobokoto and Koulouqwinde. Seven of these have been drilled to a level that supports classification as mineral resources”.

“This Technical Report provides information to support the project’s Feasibility Study (“FS”) compiled by SRK Consulting (Canada) Inc. (“SRK”) and Ausenco Ltd. and includes indicated resources from Masato, Golouma West, Golouma South, Kerekounda and Kourouloulou. Niakafiri and Maki Medina resources are classified as Inferred resources at this time”.

“The mineral deposits within OJVG’s Sabodala exploration property fall within the broad classification of orogenic gold. The principal mineralized zones within the deposits are hosted by high strain areas within the prevailing shear zones. Gold mineralization is associated with zones of metavolcanics affected by intense Fe-carbonate-sericite±quartz±feldspar ±pyrite alteration, the intensity of which broadly correlates to the intensity of the deformation fabric and the presence of thicker quartz-carbonate veins. At Masato, fuchsite (Cr-mica) is also present, owing to the presence of ultramafic rocks. Multiple parallel zones comprise each deposit, with individual zones of anomalous gold values typically ranging 2 to15 m in true thickness”.

“Golouma West deposit consists of two broadly E-W trending zones, which together have a total strike length of approximately 800 m and a drilled-off to a depth of about 320 m, and one N-NE trending zone with a strike of over 250 m. A total of six steeply south-dipping shear zone-hosted sheet-like bodies of mineralization have been defined in the E-W zones”.

“Golouma South occupies a NNE-oriented, moderately to steeply west-dipping ductile shear zone. Mineralization has been defined for a strike length of approximately 640 m and down to about 280 m below surface currently. It has been modelled within five shear zone-hosted sheet-like bodies of mineralization”.

“The Masato deposit has been defined over a 2,100 m strike length of a NNE-trending, moderately west-dipping shear zone. The zone consists of between two and six separate mineralized zones over a distance of up to 90 m, which have been drilled to a depth of about 220 m below surface”.

“Mineralization at Kerekounda occupies three relatively minor N-NW-trending shear zones, dipping 50-70° towards W-SW. Mineralization has been defined over a strike length of about 350 m and down-dip for approximately 430 m”.

“Kourouloulou has four E-SE striking shear zone-hosted sheet-like bodies of mineralization that dip at intermediate angles to the south. Although the strike length of this deposit is currently defined to approximately 200 m, the grades are higher than the other deposits”.

“Drilling at Maki Medina has defined the mineralization over a strike length of approximately 1,600 m. Currently, the mineralized shear zones have been drilled to depths shallower than 200 m below the surface”.

“The mineralization at Niakafiri Southeast has been defined within steeply west-dipping, N-NE striking shear zones over a strike length of approximately 900 m. Step-out drilling


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indicates that the zone extends a further 350 m to the north, giving a total strike length of 1,200 m and remains open to the south. Although mineralization is known to occur at depths of greater than 300 m, the majority of the deposit is defined at depths less than 200 m”.

“At present, the main potential for defining more mineralization is through continued drilling of many new gold-in-soil geochemical and geophysical anomalies, such as the promising Kobokoto, Kotouniokollo, Niakafiri Southwest and Koulouqwinde zones of mineralization. Current resources may be further expanded at depth at Kerekounda, Golouma West, Golouma South and Kourouloulou deposits, by infill drilling at Masato deposit, and by drilling along strike and within the shallow oxide zones at Maki Medina and Niakafiri Southeast deposits”.

“The mineral resource models represent an update to the 2009 resource evaluation described in the SRK Preliminary Feasibility Study (August, 2009). This resource update incorporates drilling completed by OJVG as recently as April 2010 for the Kourouloulou deposit, but predominantly to January 2010 for the majority of the deposits. In the opinion of SRK, the block model resource estimates reported herein are a reasonable representation of the gold mineral resources located on the Sabodala property at the current level of sampling”.

“The design of gold mineralization wireframes and the resource estimates were completed both in Datamine (Version 2) and GEMS 6.2.3. Statistical analysis and resource validation was carried out in GEMS, Datamine, Sage2001, and in non-commercial software”.

“In addition to the five deposits re-estimated during this study, the resources for Niakafiri and Maki Medina deposits are also provided in this report. These two inferred deposits were not re-estimated and are not included in the reserves. Insufficient drilling at the Kobokoto and Koulouqwinde deposits, at the data cut-off date for this study, did not allow for resources to be calculated for inclusion in this report”.

“SRK considers the mineral resources estimates presented here have “reasonable prospects for economic extraction”, implying that the quantity and grade estimates meet certain economic thresholds and that the mineral resources are reported at an appropriate cut-off grade taking into account extraction scenarios and processing recoveries. SRK considers that large portions of the Sabodala deposits are amenable for open pit extraction. SRK designed Whittle shells to report open pit resources for Golouma West, Golouma South, Masato, Kerekounda and Kourouloulou deposits”.

“Some portions of the deposits below the Whittle shells are considered suited for underground mining. The mineral resources estimates presented for Maki Medina and Niakafiri are both relatively shallow in depth and are reported as global resources”.


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Table 14.1 Oromin Mineral Resource and Mineral Resource Estimates

Mineral Resource Estimates – All Deposits

Category Tonnes (M) Grade (g/t Au)

Ounces (M)

Indicated 45.60 1.73 2.54 Inferred 10.99 1.28 0.45

Mineral Reserve Estimates – All Deposits Probable 17.52 2.52 1.42

Notes by AMC: 1. The mineral resource estimates include mineralization considered by SRK to be amenable to both open pit and underground mining 2. Resource cut-off grades: Open pit: 0.4 g/t Au. Underground: 1.0 g/t Au

3. Reserve cut-off grades: Open pit: 0.66-0.90 g/t Au. Underground: 2.0 g/t Au”

14.2 Massawa

The Massawa gold deposit is owned by Randgold Resources and is located approximately 700 km south east of Dakar and approximately 90 km due west of the Loulo Gold Mine in Mali.

The text that follows comprises extracts taken verbatim from a Technical Report prepared by Rangold, dated 31 May 2010. and supplied to AMC by MDL. This is available on SEDAR. AMC has been unable to verify the information and the information is not necessarily indicative of mineralization on the Sabodala Gold Project.

“The Massawa gold deposit is a grassroots exploration discovery in Eastern Senegal. Soil sampling effectively identified the initial 3.2 km gold in soil anomaly in 2005 with subsequent Rotary Air Blast (“RAB”) drilling and diamond drilling successfully confirming bedrock gold mineralization over the 8.5km-long Massawa target. Only 4.0 kilometres of the 8.5 kilometre target has been drilled to 50m line spacing and included in the present mineral resource estimation. Following the positive results from a Scoping Study completed in March 2009 a decision was taken to advance the project to Prefeasibility”.

“Mineralisation at Massawa locates in various lithologies but is structurally controlled within anastomosing shears which converge to the north. The deposit has been differentiated into four zones over a 4.0 km strike, namely Central 1, Central 2, North1 and North 2, based on differing mineralisation characteristics. In addition, there is a 3.4 km long gold in soil anomaly which extends to the south which has had reconnaissance (400 to 600m) spaced drilling which has confirmed continuation of mineralization”.

“The pre feasibility study has been completed on Massawa during the 9 months from March 2009 to December 2009. This has consisted of a 35,000m diamond and RC drill program, geotechnical drilling and testwork, metallurgical testwork, preliminary water dam and TSF site selection and design, social, economic and environmental baseline and impact studies. These have resulted in revised geological model, updated and upgraded mineral resources, pit slope designs, revised metallurgical recoveries and process route options allowing for revised pit optimisations followed by full pit and waste dump designs and the generation of a feed and capital expenditure schedules which have been incorporated into a revised financial model”.


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Table 14.2 Massawa Mineral Resource and Mineral Reserve Estimates

Mineral Resource Estimates

Category Tonnes (M)

Grade (g/t Au)

Ounces (M)

Open Pit Indicated 17.43 4.16 2.33

Underground Inferred 6.24 3.39 0.68

Mineral Reserve Estimates

Open Pit Probable 10.51 4.62 1.56 Notes by AMC: 1.Resource cut off criteria: Open pit: 0.0 g/t Au within US$1,000 pit shell. Underground: 2.0 g/t Au beneath US$1,000 pit shell 2 Reserve cut-off criteria: Within US$700 optimized pit.


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15 MINERAL PROCESSING AND METALLURGICAL TESTING

15.1 Introduction

In 2009 MDL successfully commissioned the Sabodala metallurgical processing facility. The Sabodala processing plant is nominally designed to process 2.0 million tonnes per annum, (mtpa) or approximately 6,000 tonnes per day (tpd), of gold ore. The management of the design, engineering, procurement and construction stages of the Sabodala Plant was overseen by Ausenco Ltd, Australia, (“Ausenco”) on behalf of MDL.

The Sabodala processing plant consists of:

Single stage jaw crushing

Semi-autogenous (“SAG”) mill – ball mill grinding circuit with pebble crusher

Two stage leach circuit and 7 stage carbon-in-leach (“CIL”) circuit

Anglo American Research Laboratories (“AARL”) elution and electro-winning circuit

Tails thickening and disposal

The Sabodala processing plant includes the design contingency for a gravity circuit, which was deferred from initial construction.

Gold is recovered in the elution circuit and is followed by electro winning of gold onto stainless steel wire wool cathodes. The loaded wire wool is cleaned with the resultant sludge smelted to produce a final bullion product. The bullion is transported from site under secure conditions for further refining and subsequent sale.

15.2 Ore Sources

The ore treated by the Sabodala processing plant has been sourced from the Sabodala open pit which has been designed in phases. As of August 2010, the pit operation was nearing the end of the first phase. This has resulted in the processing plant treating ore from a vertical cross section of the open cut mine plan, including oxide and transitional ore blends through to competent fresh material.

15.2.1 Mineralogy

A one kilogram sample from the Composite Sample #2 was examined by Roger Townsend and Associates Ltd. A full description of the origin of Composite Sample #2 is presented in Section 15.3.2.

The following observations were made of the Sabodala ore sample:

Presence of hematite and pyrite as the major opaque mineral constituents

Gold occurred typically as fine grains, largely associated as inclusions in pyrite

Several examples of fine liberated gold were observed

Other oxide and sulphide minerals were noted as accessory and trace occurrences


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15.3 Metallurgical Test Work

Ausenco managed the Feasibility Study test program undertaken by AMMTEC Ltd. (“AMMTEC”) of Perth, Australia. The test work was performed during late 2005 and 2006, and defined the process design criteria for the Sabodala processing plant. The test work program included mineralogy, grinding, leach extraction, rheology, gravity separation, flotation, and cyanide detoxification.

The test work was completed in several phases and included programs to investigate different flow sheet treatment options, including whole ore cyanidation and gravity recoverable gold with intensive cyanidation of the gravity concentrate and cyanidation of the gravity tailings.

15.3.1 Previous Test Work

In 1988 a joint venture between BRGM and a Russian partner, NEYRTEC, investigated whole ore cyanidation and reportedly achieved a gold recovery of 90%. In 1993, a pre-feasibility study was undertaken by Lycopodium, Australia, based on test work completed by Metcon, Australia. The test work indicated a recovery of 87.5% at a grind P80 of 66 µm was achievable with whole ore cyanidation. An alternative flow sheet with flotation, concentrate regrinding, and leaching was also investigated however achieved similar overall recoveries.

Lycopodium completed a feasibility study in 1994 with a predicted gold recovery of 91.2% including a gravity circuit and direct cyanidation. The gravity circuit was found to be most effective with the hard ore type. The Bond rod mill work index (RWI) and ball mill index (“BWI”) of 26.1 kWh/t and 17.6 kWh/t respectively were found for this ore type.

15.3.2 Ore Samples

MDL and RSG Global (Australia) identified two main ore types for the Sabodala deposit:

Brecciated - complex mineralized breccia characterized by quartz matrix infill with albite, sericite, disseminated pyrite and occasional red brown hematite. This ore type represents 75% of the ore at Sabodala

Siliceous - A siliceous breccia distinguished by intense silicification and a high silica matrix. This ore type represents some 25% of the ore at Sabodala

However observations from the first year of operation indicate that perhaps the distinction between these two ore types in not as significant as originally thought from drill core alone.

A total of 65 kg of quarter core samples from the Sabodala 2005 drilling program were selected by MDL and sent to AMMTEC. The samples were combined into a single composite. This composite sample was used for comminution, grind optimization and preg-robbing tests.

Ausenco requested additional metallurgical testing samples. These included:

One main comminution sample (170 kg), taken near the centre of the Main Zone and intended to represent fresh, competent Sabodala material

Six Comminution variability samples (40 kg each) taken from the brecciated, siliceous and oxide zones

One main extraction composite sample (120 kg) per main ore type


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Twenty-seven (27) extraction variability samples (7 kg each) representing the expected variation in gold grade

The average grade of the main extraction sample, Composite Sample #1, was 5.69 g/t Au. This was higher than the expected mine grade of 3.40 g/t Au. Therefore 75 kg of the sample was diluted with low grade material to make Composite Sample #2, grading 3.35 g/t Au.

15.3.3 Comminution Test Work

Tests were carried out on the main comminution composite sample and six variability samples, including:

JK Drop Weight Tests

SAG Mill Comminution Determinations

Bond Index Determinations (Abrasion, Rod Mill, Ball Mill)

The fresh ores tested ranked as medium to hard materials in the JK database, with an Ab value of 27.8, and a ta value of 0.33.

The Bond work index determinations for fresh ore indicated a RWI range of 18.3 kWh/t to 22.8 kWh/t, and a BWI range of 15.0 kWh/t to 18.9 kWh/t. This indicates a medium to hard ore.

The Bond work index determinations for the Oxide ore indicated an average RWI and BWI of 10.2 kWh/t and 9.3 kWh/t respectively, indicating a soft ore.

The abrasion index values for the fresh ore range from 0.223 to 0.524 and are considered moderately abrasive.

In summary the results indicate that Sabodala Fresh ore is a reasonably hard and competent ore, and that the Oxide material, which constitutes a small portion of the pit, is considerably softer and less competent. These results are in line with values reported for historical test work.

15.3.4 Extraction Test Work

Preliminary tests focused on direct leaching of the whole ore at a 75 µm grind size. Initial tests on Composite Sample #2 yielded a gold leach extraction of 84%. Subsequent leaching tests were in the range of 84% to 88%. Diagnostic investigation of the residues indicated losses were primarily due to fine gold associated with sulphide minerals.

Test work indicated that there appeared to be no preg-robbing tendencies with the Sabodala ore.

Determination of Optimum Grind

Leach tests at 53 µm, 75 µm, 90 µm, and 106 µm were carried out on composite samples. Gold and silver extraction rates increased with fineness of grind. The optimal grind was determined to be 75 µm and all further tests were conducted at a P80 of 75 µm.

Size by Size Diagnostic Gold Analysis


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A composite sample was ground at 75 µm and screened at 150 µm, 106 µm, 75 µm, and 38 µm. The majority of the Au (87%) and Ag (91%) were found in the -75 µm fractions. These results are in agreement with the observations in the cyanidation leach tests which indicated an absence of coarser gold, and are in line with the mineralogical observations in Section 16.2.1. The deportment of gold in various minerals was determined by a series of selective leaches. The results indicated free and cyanide leachable gold content increases with fineness of grind.

The unrecovered gold was associated with pyrite, the proportion increasing with coarseness of grind.

Gravity Separation Test Work

Composite Sample #2 was ground to 350 µm and tested in a 3” laboratory Knelson concentrator. A total of 22.9% of the gold reported to the gravity concentrate. It was considered likely that the gold present was fine grained and hence not liberated at 350 microns.

The Knelson gravity was subjected to intense cyanidation (IC) leach with 30 kg/t cyanide. The Knelson gravity tailings were ground to a P80 of 75 µm and were subjected to standard cyanidation under several sets of conditions. The results indicated that leach extraction was independent of different agitation modes. The gold extraction was 84%; no improvement over direct whole ore leaching. Diagnostic tests of the tailings indicated that the unrecovered gold occurred almost entirely as sulphide occluded fine grained gold.

After reviewing the results it was decided to evaluate ultrafine grinding (UFG) and subsequent IC of a high mass-pull gravity concentrate. The high gravity mass-pull increased the gravity gold recovery to 53.8%. The gravity concentrates were ground to P80‘s of 10 µm, 20 µm, and 30 µm. Subsequent IC leach of the gravity concentrate resulted in leach extractions in excess of 95%. The gravity tailings were treated by direct cyanidation and reported extractions of approximately 85%. This resulted in an overall increase in gold extraction to levels of 89% to 91%.

Subsequently a comprehensive set of tests for each of the 27 variability samples was performed, applying the conditions established for the Composite Sample #2. The conditions included a primary grind of 350 µm, gravity concentration, UFG of the concentrate to 20 µm followed by IC, and secondary grind of the tails to 75 µm followed by CIL leaching. The average leach extraction of the gravity concentrate was 97.5%, with overall leach extractions (combined concentrate and tails leaching) ranging from 85.2% to 96.8%. The average variability test gold extraction was 91.4%.

Pre-Leach Conditioning Tests

Two samples were used to test the effects of pre-conditioning on gold extraction. One sample was leached with hydrogen peroxide, and the second sample leached with lead nitrate. The pre-conditioning of the slurry resulted in increased leaching kinetics; however overall gold extraction levels were unchanged. It is believed that the unrecovered gold is occluded within sulphides, and hence leach accelerants such as hydrogen peroxide or lead nitrate are not expected to improve extraction rates.

Oxygen Uptake Tests

A 2 kg sub-sample of Composite Sample #2 was ground to a P80 of 75 µm and subsequently used to determine the oxygen uptake characteristics of the ore. The ore showed low oxygen demand having negligible amounts of oxygen consuming minerals such as pyrrhotite.


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The outcomes of the oxygen uptake tests were in accord with the mineralogical assessment presented in Section 16.2.1.

15.3.5 Other Test Work

Viscosity Test Work

The Sabodala ore was found to exhibit relatively low viscosity and it is believed that there will be no slurry handling problems encountered in the milling, leaching or thickening circuits.

Flash Flotation Test Work

A single flash flotation test on Composite Sample #2 showed that 82.6% of the gold could be recovered into 2.4% of the feed mass using a flash flotation cell on the cyclone underflow. The recovery of sulphur to the concentrate was practically equivalent to the recovery of gold, believed to confirm the reported mineralogy of gold predominantly associated with pyrite.

This test was considered to be non-representative of the orebody as a whole and the flotation concentrate was not subjected to leach extraction tests.

Key Reagents

The main reagents used in the plant are grinding media, cyanide (in the form of NaCN) and lime (in the form of quicklime, CaO).

The design consumption of grinding media was 1.68 kg/t. The cyanide consumption rate was 1.23 kg/t, however this figure incorporates the intensive cyanidation of a gravity concentrate. The design lime consumption rate was 0.90 kg/t.

15.3.5 Test Work on Niakafiri Ore

In 2007 AMMTEC performed test work on four samples of ore from the Niakafiri gold deposit. The test work included grinding, followed by either whole ore leaching or gravity concentration, IC of the gravity concentrate and CIL leaching of gravity tailings. This test work was completed at a scoping level in comparison to the detailed test work previously undertaken on the Sabodala ore.

The samples were taken from two drill holes identified as NKDD001 and NKDD002. Specific intercepts from each drill hole were used and two samples from each hole were generated. Two of the samples were used for grinding test work and two for leach extraction test work. The main sample used for extraction testing (Sample #2 from NKDD002) had a grade of 1.51 g/t Au. This sample is not intended to be, and cannot be considered as representative of the entire deposit.

The grinding test work was performed on the two samples from drill hole NKDD001 and indicated that the main ore (fresh ore, Sample #3) has a RWI of 21.8 kWh/t and a BWI of 15.8 kWh/t. These results are within the range of results obtained for the Sabodala ore. It is expected the grinding energy requirements for Niakafiri ore will be similar to the Sabodala ore.

Sample #4 representing the oxide component of the ore body reported low work index results. The RWI was 6.7 kWh/t and the BWI of 2.1 kWh/t.


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The results of extraction test work performed on the Niakafiri ore indicated that gravity concentration followed by regrinding and IC is a superior process route to whole ore cyanidation. This is in keeping with the results reported for the Sabodala ore. The overall gold extraction ranged from 89.7% to 93.7%, with varying grinds from a P80 of 150 µm to 75 µm.

The test work results for the Niakafiri ore are preliminary. The initial indicate that the Niakafiri ore will likely behave in a similar fashion to the Sabodala ore. MDL have utilised recovery figures of 90% and 92% for Niakafiri fresh ore and oxide ore respectively in the financial model.

15.4 Recovery Models

The recovery model for the Sabodala ore was originally developed from the feasibility test work undertaken by AMMTEC and managed by Ausenco. The recovery models have been redeveloped based on actual feed blends and operating data from the Sabodala processing plant.

15.4.1 Original Recovery Models

The Feasibility Study test work indicated that a typical gold leach extraction between 84% and 88.5% would be achieved via whole ore cyanidation. This range of extraction results is in line with the historical test work reported in Section 15.3.1.

The test work program subsequently developed the process flow sheet which included gravity concentration, ultrafine grinding, intensive cyanidation and gravity tailings cyanidation. The 27 variability samples were subjected to extraction tests according to this flow sheet. The following extraction algorithms were determined for the main ore types:

Brecciated ore only: Extraction % = 94.78 – 3.055 ln (head grade g/t) Siliceous ore only: Extraction % = 97.69 – 4.908 ln (head grade g/t) All results: Extraction % = 93.87 – 2.217 ln (head grade g/t)

The extraction model:

Predicts overall gold extraction (not recovery) based on head grade

Is based on the 27 variability samples, including the brecciated and siliceous ore types, and excludes the oxide ore

Is based on the gravity concentration, ultrafine grinding and intensive cyanidation flow sheet

Fitted the general test trends but did not show a high correlation with the test results.

Ausenco noted the models represented the test work results reasonably well, although the test results were variable. Ausenco also noted that, in its experience, leach extractions results from laboratory test work were generally slightly higher than those in an operating plant. Therefore, Ausenco recommended downgrading the laboratory extraction results by 1%.

MDL reached the conclusion that, in the absence of a strong grade-recovery correlation, particularly relating to oxide and transition ore, the averaged data from the variability test work was the best indication of expected plant performance. MDL utilised a recovery figure of 91.4% for financial modelling purposes. MDL personnel had significant experience in operating a similar Ausenco designed plant at North Mara in Tanzania, and had observed that design recoveries were exceeded within the first year.


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15.4.2 Updated Recovery Models

New recovery models have been developed based on the performance of the Sabodala processing plant while treating either oxide ore or fresh ore. The data utilized for the recovery models:

Represents the actual gold recovery performance of the Sabodala processing plant

Is determined from daily results

Excludes process interruptions

Has been reviewed for data consistency and data integrity

In the four month period from March 2009 to July 2009 (inclusive) the feed material to the processing plant was predominantly oxide and transitional ore. The ore was sourced from different areas of the Sabodala open cut mine, both in terms of horizontal location and depth.

The plot of head grade against plant recovery for the oxide blends for the time period March to July 2009 is presented in Figure 15.1.

Figure 15.1 Plant Recovery as a Function of Head Grade

The plot demonstrates virtually no trend between head grade and recovery for the oxide ore, during the period March 2009 – July 2009. The plot covers a head grade range of 1.5 g/t to 5.9 g/t, and shows recovery values ranging from 88% to 97.5%.

A single figure has been adopted for the recovery of Sabodala oxide ore sources. This figure is 92.8%, based on the projected y-intercept of the trend line shown in Figure 15.1. This is believed to represent a fair, realistic recovery value which may be applied to oxide ore sourced from the Sabodala open cut mine. This figure has been utilised in the relevant financial calculations.


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In the three-month period April 2010 to July 2010 (inclusive) the Sabodala Processing Plant treated in excess of 90% fresh ore. This has provided the opportunity to assess the recovery of the fresh ore as a function of head grade. The recovery plot for the fresh ore is presented in Figure 15.2.

Figure 15.2 Plant Recovery as a Function of Head Grade

The plot demonstrates a noticeable positive correlation between head grade and recovery for the Sabodala open cut mine Fresh ore processed during the period April 2010 – July 2010. The trend line R2 value of 0.44 is considered fair in light of the use of actual plant data. The maximum variation is approximately ± 4% from the trend line to the observed results.

The recovery plot covers a grade range from approximately 1.1 g/t to 5.4 g/t. The recovery values range from a low of 86% to a high of 96.5%.

A Recovery Model has been adopted to calculate the expected recovery of the Sabodala fresh ore based on the expected head grade. The recovery algorithm adopted is:

Gold Recovery % = 86.74 + (1.55 x Head Grade)

The maximum recovery value has been capped at 94.5%, in line with the modelled recovery for a 5.0 g/t feed grade. This seeks to avoid an overestimation of recovery from high grade ore sources, an inherent problem with a linear recovery algorithm. This recovery algorithm and maximum recovery cap has been utilised for financial modelling purposes.

15.5 Heap Leach Test Program

15.5.1 Introduction

In view of the greater oxide component at Niakafiri and other orebodies in the district, heap leach potential was considered to merit some initial investigation. Accordingly in January 2010 two bulk


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crushed ore samples were submitted to SGS Laboratories (South Africa) for heap leach amenability test work. An overview of the sample nature and head grades is presented in Table 15.1.

Table 15.1 Overview of Heap Leach samples

Sample Composition Grade (g/t)

1 100% Oxide ore 1.29

2 67% Oxide ore

33% Fresh ore 1.32

The specific origin of the ore is uncertain given the nature of ROM pad stockpiling and blending. The samples were intended to provide a scoping level overview of heap leach amenability of the Sabodala oxide ore, and the potential application to alternative ore sources.

15.5.2 Test Work Program

The test work program commenced in April 2010 and included:

Determination of optimal crush size (6mm, 8mm, 10mm, 12mm) by crushing and subsequent intensive bottle roll leaching

Testing of material permeability at optimal crush size (to determine need for agglomerate)

Agglomeration (with cement) of the samples at the optimal crush size

Column heap leach tests at the selected crush size, for a duration of 60 – 90 days

15.5.3 Results

The optimal crush size was determined to be 8 mm, common to both samples. A summary of the initial extraction results are presented in Table 15.2.

Table 15.2 Summary of initial leaching test results

Sample Crush size (mm)

Au Extraction

(%) Sample

Crush size (mm)

Au Extraction

(%) 1 6 93.1 2 6 58.7 1 8 89.8 2 8 73.4 1 10 78.5 2 10 58.4

1 12 80.1 2 12 61.7

The samples were leached via bottle rolls for a period of 7 days with excess cyanide. Sample 1 did not appear to be fully leached, with extraction increasing up to day 7. Sample 2 appeared to be fully leached by day 5, with no additional extraction noted.

The oxide sample (#1) delivered high gold extraction values, ranging from 78.5% at the 10 mm crush size, to 93.1% at a crush size of 6 mm. The mixed oxide – fresh ore sample returned gold extraction values of 58.4% up to 73.4%.


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The permeability tests indicated that agglomeration of the samples would be required, due to the high percentage of fine material. Agglomeration was undertaken with a cement addition rate of 1 kg/t.

The agglomerated samples were stacked into 150 mm diameter, 2m high test columns, and leaching commenced in mid June 2010. The leaching tests were stopped after 50 days. The extraction results for Sample 1 and Sample 2 at day 30 are presented in Table 15.3.

Table 15.3 Summary of 30 day results

Sample Au

Extraction (%)

Cyanide Consumption

(kg/t)

Lime Consumption

(kg/t)

1 90.8 4.53 3.75

2 60.2 4.39 3.72

The leach columns are arranged as an open system, with a constant supply of fresh leach solution. The gold extraction and cyanide consumption are calculated by daily analysis of the discharge leach solution. This arrangement provides an accurate measurement of achievable gold extractions, but probably over-estimates both leach kinetics and reagent consumption.

Although these tests were of a preliminary nature only they showed clearly that the oxide material is potentially amenable to heap leaching. Additional testwork is required in order to develop design criteria and cost parameters.


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16 MINERAL RESOURCE AND MINERAL RESERVE ESTIMATES

16.1 Project Mineral Resources

The Mineral Resources for the project cover five deposits and have been estimated at different times. Note the Mineral Resources include Mineral Reserves which are shown later in this section, and all are quoted to July 1 2010.

Table 16.1 Measured and Indicated Mineral Resources for the Total Project


M

tonnes

Grade

g/t Au

M oz

Au

M t

onnes

Grade

g/t Au

M oz

Au

M

tonnes

Grade

g/t Au

M oz

Au

Sabodala 28.517 1.41 1.294 13.375 1.34 0.575 41.892 1.39 1.869

Niakifiri 0.278 1.74 0.016 10.463 1.10 0.370 10.741 1.12 0.386

Total 28.795 1.41 1.310 23.838 1.23 0.945 52.633 1.33 2.254

Notes: 1. CIM definitions were used for Mineral Resources 2. The cut offs applied are 0.35 g/t or 0.30 g/t for oxide and 0.50 g/t for fresh material

3. Measured Resources include stockpiles which total 2.613 M tonnes @ 1.26 g/tAu for 106,000 ounces

Measured and Indicated Mineral Resources have been estimated for Sabodala and Niakifiri and total 52,633, 000 tonnes at a grade of 1.33 g/t Au for 2.254 M ounces of gold. In addition there are Inferred Mineral Resources for five deposits including the two main ones above, which are shown in Table 16.2 below.

Table 16.2 Inferred Mineral Resources for the Total Project

Inferred

M tonnes

Grade g/t Au

M Oz Au

Sabodala 7.310 1.22 0.287

Niakifiri 7.248 0.88 0.205

Niakifiri West 7.144 0.82 0.188

Soukhoto 0.566 1.32 0.024

Gora 0.387 5.60 0.070

Total 22.655 1.06 0.774

These Mineral Resources have been estimated by a number of different practitioners using a number of different methods and with different support. This will be discussed in the following sections.

Table 16.3 Cut Offs Applied to Resources

Oxide Fresh All

Sabodala 0.35 0.50

Niakifiri 0.30 0.50

Niakifiri West & Sukhoto 0.30

Gora 0.50

Mr JM Shannon, P.Geo, of AMC, who is independent of Teranga and MDL, and who is a Qualified Person (within the meaning of NI 43-101), has reviewed and accepts responsibility for the resource estimates. Mr Shannon is not aware of any environmental, permitting, legal, title,


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taxation, socio-economic, marketing or political issues that would materially affect the resource estimates.

It is noted that some early-stage projects are included, all of which have a good geological understanding and appear to demonstrate continuity. These have been classified as Inferred Resources but lack constraints in the form of an optimised pit shell. However ‘reasonable prospects for economic extraction’, as per CIM guidelines, have been determined by way of cut-offs that are in-line with current Sabodala practice. In Section 16.2.5 below, AMC makes further observation about the Mineral Resources relative to their classification. AMC considers that neither of these issues is material to the project economics as outlined in this report.

Figure 16.1 shows the revised mining concession boundary in blue, the location of the main deposits and the plant site.

Figure 16.1 Orthophoto with Location of deposits on the Mining Concession


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16.2 Sabodala Deposit Mineral Resource Estimate

SWRPA was retained by MDL in 2009 to complete a Resource Block Model on the Sabodala deposit. This block model was a follow up to an earlier model which was the subject of a Technical Report by SWRPA in November 2007. It was intended for the 2009 model to be used to assess the viability of underground mining at Sabodala and the economic transition point between open pit and underground; the model was therefore constructed using a small block size. This model was re-blocked and forms the basis for the resource figures above.

16.2.1 Raw Data

Drillhole Database

SWRPA previously reviewed the database, sampling method and approach, sample preparation, analyses, security and data verification used for preparation of the mineral resource estimate for the Sabodala deposit in 2007 and the updated mineral resource estimate in July 2008. No additional drilling has been undertaken since July 2008. Details of the 2007 database review are documented in the SWRPA report of 2007.

A drill hole relogging program was undertaken on site from June 2009 to September 2009 to identify additional data to assist in the re-interpretation of mineralization trends extending outside of the present models. A total of 674 drill holes were chosen for reclogging that are located across the main pit area including one to two sections to the north and south beyond the current mineralized domain extents (sections 19810N to 20970N).

Bulk Density

There were a total of 38,761 bulk density determinations as of September 1, 2008. The immersion in water method was conducted by in-house Sabodala personnel to determine the bulk density values in core samples. Samples were approximately 10 cm long and correspond to most of the rock types in the Sabodala deposit although some barren or areas with very low mineralization were not sampled.

Previous block model bulk densities were estimated using an inverse distance squared method and assigned to the parent blocks. For the updated model, specific gravity determinations were flagged with new lithology and oxide models then averaged by lithology type and assigned to the block model variable called ‘sg’. Although local variances are not preserved, calculated averages are within reasonable limits for each lithology type and were used in the final block model.

There were no bulk density determinations located in the oxide portion of the updated porphyry therefore the average specific gravity was determined from the original lithology flagging. Table 16.4 lists the average bulk densities assigned to the block model.


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Table 16.4 Bulk Density by Lithology

Fresh Oxide

Lithology No of samples

Average (t/m3)

No of samples

Average (t/m3)

Volcaniclastics West 1,626 2.84 17 2.76

Ultramafics 2,166 2.85 40 2.52

Gabbro 7,878 2.85 90 2.17

Volcaniclastics West 9,960 2.82 261 2.34

Mylonite 1,884 2.73 7 2.14

Basalt 12,976 2.87 82 2.38

Felsic Porphyry 459 2.75 assigned 2.68

16.2.2 Domains

Lithologic Models

The surface outcrop lithology map from Painter (2006) was imported and registered in Vulcan local mine grid coordinates to aid in interpretation.

Limited mapping of lithology contacts and structures on the east, northeast and south pit walls has been completed by site exploration geologists on the 690 and 680 benches and registered in Vulcan to aid in geological interpretation.

A total of thirteen new lithology models were generated in Vulcan based on relogged data. The existing topographic surface (Pit_Upper_Surface.00t) was used to generate an “air” model. The block model boundary was used to limit the extents of the lithology models.

An oxidation surface was constructed by modeling individual points representing the base of the weathered rock profile in each drill hole. Oxide and “fresh” (unoxidized) rock solids were generated.

Mineralization Models

Zones with similar mineralization characteristics were modeled based on lithological, alteration and structural trends using relogged data and an updated structural interpretation. There were six of these mineralization domain trends with a global domain encompassing all, making seven altogether. Some of these were split such that for estimation a total of eighteen mineralized domains were used.

The recent structural study undertaken by Rhys (2009) indicates that the Main Flat Zone (MFZ) is the dominant ore controlling structure based on field and core observations and is associated with quartz veining, intense brecciation, shearing and carbonate-albite-pyrite-sericite alteration. The original MFZ included various mineralization trends and has now been segregated into updated models with individual trends.

The Northwest Shear (NWS) hosts and controls significant mineralization but is secondary to the MFZ in structural significance and splays off the hangingwall of the MFZ. The location of the NWS is not as obvious in the logs as the flatter zones probably due to the majority of holes trending parallel to the zone. Although a number of holes were drilled vertically and perpendicular to the NWS, the extents are better defined in local areas in the exposed pit and core photographs.


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Ten Upper Flat Zones (UF) splay off steeper trending structures (NWS and the original East Thrust zone) and are broader zones primarily located in the volcaniclastics where mineralization is not as continuous from hole to hole as in the MFZ. These exhibit a general shallow trend similar to the MFZ and the Lower Flat Zones (LF) and associated with variable carbonate-albite-siliceous alteration.

Two LF Zones are located below the MFZ and trend parallel to the MFZ and UF Zones and are associated with quartz veining and variable carbonate-albite alteration.

The Footwall Flat Zone (FW Flat) was originally a part of the MFZ but has been modeled as a splay off the eastern footwall of the MFZ. This zone has similar alteration and structural characteristics to the MFZ but follows a different trend.

Two steep zones have been modeled and generally follow the trends of the previously modeled steep zones. The steep Sfg Zone corresponds to the steep dipping portion of the mylonite at depth and includes high grades associated with variable shearing at the contacts. The steep Ayoub Thrust Zone generally aligns parallel to the gabbro/mafic volcanic contact and includes quartz veining with weak carbonate-albite alteration.

In addition a global mineralization envelope that includes all mineralization domains as well as isolated and discontinuous mineralization located in widely spaced holes that have not been domained was created, and termed the EDA domain (EDA). Mineralization inside the EDA but located outside of other modeled domains has been treated as a separate domain with a unique composite and domain flag.

16.2.3 Statistics and Compositing

Statistics

A static Vulcan Isis database was created from the Access drill hole database containing the relogged holes. A total of 674 drill holes are included in the Vulcan database saoct1909.new.isis containing collar, downhole survey, lithological, alteration, structure, mineralization and analytical data.

The classical statistics for the raw gold assays in the Sabodala drilling are presented in Table 16.5.

Table 16.5 Statistics of Raw Assays

Parameter MFS NWS Steep Zones

FW Flat LF Zones UF Zones EDA

Min g/t Au 0.0025 0.0025 0.0025 0.0025 0.0025 0.0025 0.0025

25th percentile 0.07 0.32 0.07 0.09 0.03 0.07 0.0025

Median g/t Au 0.58 1.06 0.500 0.74 0.37 0.54 0.01

75th percentile 2.53 2.98 1.63 2.72 1.48 1.90 0.05

Maximum g/t Au 117.00 49.90 184.00 56.50 42.30 85.36 152.00

Mean g/t Au 2.50 2.42 2.25 2.16 1.42 1.78 0.17

SD g/t Au 5.74 3.80 9.40 3.86 3.08 3.71 1.18

Co-efficient of Var 2.30 1.57 4.17 1.78 2.16 2.08 7.16

No of samples 9,436 1,305 1,081 2,050 529 5,549 61,845


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Capping Levels

Gold grades were not capped in the previous Jul08_resource block model but the spatial influence of high grades was restricted to the block size used (10m x 10m x 5m). Outlier values in the EDA zone were dealt with through the MIK estimation method.

The updated resource model uses capping levels determined by raw assays for each domain prior to compositing. Preliminary capping levels were established using histograms, probability plots, decile plots and cutting curves. Final capping levels were determined from reconciliation of the block grades with grade control data, and are shown in Table 16.6.

Table 16.6 Preliminary and Final Capping Levels

Preliminary Capping levels Final Capping Levels

Domain Total Assays

Capping level g/t

No. Capped Capping levelg/t

No. Capped

MFS 9,436 30 66 15 294

NWS 1,305 30 4 15 16

Steep Zones 1,081 25 13 15 27

FW Flat 2,050 20 9 15 27

LF Zones 529 15 4 15 4

UF Zones 5,549 25 22 15 74

EDA 61,845 10 74 10 74

Compositing

Run-length composites were generated at one meter lengths and stored in the sadec09_r2_f.cmf.isis Vulcan Isis composite file. Composites are flagged by mineralization domain in the “ore” numeric field. Non-logged and unsampled intervals were replaced with a grade of 0.0 g/t.

Composites less than 0.5m in length were removed from the final database. This accounted for a small percentage of data (1%) with no demonstrated grade bias.

The statistics for the one meter composite gold assays from the Sabodala drilling are presented in Table 16.7

Table 16.7 Statistics of One Meter Composite Assays

Parameter MFS NWS Steep Zones

FW Flat LF Zones UF Zones EDA

Min g/t Au 0.00 0.0025 0.00 0.00 0.00 0.00 0.00

25th percentile 0.11 0.37 0.09 0.14 0.05 0.11 0.0025

Median g/t Au 0.73 1.13 0.53 0.86 0.48 0.62 0.01

75th percentile 2.62 3.04 1.61 2.71 1.63 1.92 0.05

Maximum g/t Au 15.00 15.00 15.00 15.00 14.96 15.00 10.00

Mean g/t Au 2.11 2.31 1.44 1.97 1.30 1.64 0.14

SD g/t Au 3.21 2.98 2.39 2.68 2.11 2.60 0.56

Co-efficient of Var 1.52 1.29 1.66 1.36 1.62 1.58 4.06

No of samples 9,152 1,292 1,063 1,971 518 5,526 61,134


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16.2.4 Block Model

Block Model Parameters

The sanov09_resource.bmf block model was constructed along an east-west orientation with 10m x 10m x 5m parent block sizes and 1.25m x 1.25m x 1.25m subblocks along mineralization domain boundaries extending from 9600E to 10600E, 19750N to 21000N and 250 meter elevation to 800 meter elevation. The maximum block size inside mineralization domains and EDA is 2.5m x 2.5m x 2.5m. Block model parameters are stored in the Vulcan block definition file nov09_resource.bdf. For the purposes of the current reporting this model was then reblocked to 10m x 10m x 5m, and this model with the larger block size is the current working model for Sabodala.

RQD Model

A preliminary RQD model was constructed using existing data stored in the original database. A total of 14,169 measurements in 351 drill holes ranging from 0. m to 21m were composited into 3m lengths. Composites were flagged by oxide type then estimated into the block model honouring the oxide boundary and using the nearest neighbor method. A large search was used that enabled population of all blocks in the model with an RQD value.

Variography and Grade Estimation

Vulcan estimation parameters are based on variography, reconciliation with grade control data and visual checks in Vulcan. Downhole and directional correlograms were constructed in Sage to determine variography for each mineralization domain.

Grades were estimated by domain using the ordinary kriging method and a spherical model with hard boundaries.

Gold grade estimates are based on the au_ok variable with final estimates stored in the au_final block model variable. Estimation flags (est_ok = 1 to 3) for domains were stored for each estimation run based on increasing search distances.

The first estimation pass (est_ok = 1) uses small limited searches to estimate blocks located close to composites but in unestimated gaps generated from using a two hole minimum restriction. These gaps produce a striped effect whereby blocks between two holes are estimated yet blocks closer to individual holes do not get estimated.

The second estimation pass (est_ok = 2) uses larger search radii based on the 2nd variogram structure with composites from a minimum of two drill holes that connect the majority of the blocks estimated during the first pass.

The third estimation pass (est_ok = 3) uses 1.5 times the second variogram structure with no minimum drill hole restriction.

The EDA was estimated with one estimation pass (stored as est_ok = 3) that corresponds to the 2nd variogram structure in the major and semi-major directions and a modified range in the minor direction. Estimation ranges in the EDA were restricted to prevent extrapolation of grades outside reasonable limits as domain boundaries were not generated.

Octant restrictions would allow distant composites to be used in grade estimation and were therefore not enforced. Alternatively, the closest composites to block centroids (adhering to defined variogram models) were used in order to preserve local gold grades.


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Classification of Estimates

Classifications consistent with the 2008 resource estimate were assigned to the 10mx10mx10m model that was re-blocked from the SWRPA 2009 estimate. Nominally those blocks interpolated in areas that have 20m x 20m drill spacing are considered Measured and blocks in areas where drilling is only 40m x 40m spacing are Indicated. Blocks outside of these regions but within the EDA are flagged as Inferred.

Block Model Validation

Visual validation comparing assay and composite grades to block grade estimates showed reasonable correlation with no significant overestimation or overextended influence of high grades.

Final block grades were compared to the average grades of composites for each block. Only blocks estimated with both methods were compared. The average composite grade in 45,560 blocks is 0.57 g/t Au compared to the average au_final block grade of 0.52 g/t Au with less than a 10% difference. Scatterplots show reasonable correlation of composite grades to the model and a quartile-quartile plot shows average composite grades similar to block grades below 2 g/t Au and higher above 2 g/t Au, showing a slight underestimation in the model above 2g/t Au.

16.2.5 Results

The output was initially tabulated to a range of cut offs from 0.3 to 1.5. A selection of these increments are shown in Table 16.10. However it is worth noting that different cut-offs are applied to the fresh and oxide portions of the deposit due to hardness, and hence throughput considerations. The breakdown of the Mineral Resources for the Sabadola deposit at cut-off grades of 0.35 g/t Au for Oxide and 0.5 g/t Au for Fresh are shown in Table 16.8 and 16.6.

Table 16.8 Sabodala Measured and Indicated Resource Breakdown

Measured Indicated Measured and

Indicated

M

tonnes Grade g/t Au

M oz Au

M tonnes

Gradeg/t Au

M oz Au

M tonnes

Grade g/t Au

M oz Au

Oxide 0.908 0.78 0.023 0.040 0.63 0.001 0.949 0.77 0.024

Fresh 24.995 1.45 1.165 13.335 1.34 0.574 38.330 1.41 1.739

Stockpile 2.613 1.26 0.106 - - - 2.613 1.26 0.106

Total 28.516 1.41 1.294 13.375 1.34 0.575 41.892 1.39 1.869

Table 16.9 Sabodala Inferred Mineral Resources

Inferred


M Oz Au

Oxide 0.045 0.55 0.001

Fresh 7.265 1.22 0.286

Total 7.310 1.22 0.286

These resources include Mineral Reserves which are quoted later.

The resources have a cut-off applied which is in-line with those used for the expansion project and are thus considered to have ‘reasonable prospects for economic extraction’ as per CIM guidelines. Of note is that an optimized pit shell has not been constructed for the resources as


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would be normal AMC practice. However the impact is predominantly on the Inferred Resources, and hence does not affect the economics of the project.

The reader is referred to Figure 16.8 and 16.9 for sections of the model which has the Mineral Reserves and open pit outline shown.

Table 16.10 Sabodala Mineral Resources by Selected Cut Offs

Cut-off Grade Tonnes Grade Ounces Tonnes Grade Ounces Tonnes Grade Ounces

0.30 1,111,876 0.70 24,941 37,605,529 1.09 1,322,378 38,717,405 1.08 1,347,319

0.35 908,859 0.78 22,820 33,518,294 1.19 1,279,802 34,427,153 1.18 1,302,622

0.40 764,814 0.86 21,083 30,039,176 1.28 1,237,856 30,803,990 1.27 1,258,939

0.50 558,289 1.01 18,096 24,995,072 1.45 1,165,468 25,553,361 1.44 1,183,564

0.60 437,314 1.14 15,977 21,399,107 1.60 1,102,156 21,836,421 1.59 1,118,133

0.80 289,834 1.36 12,663 16,275,109 1.89 987,974 16,564,943 1.88 1,000,637

1.00 220,051 1.51 10,674 12,900,306 2.15 891,074 13,120,357 2.14 901,748

1.50 90,535 1.98 5,749 8,070,110 2.70 700,542 8,160,645 2.69 706,290


0.30 59,037 0.53 1,015 19,496,965 1.04 650,395 19,556,002 1.04 651,410

0.35 40,230 0.63 818 17,511,374 1.12 629,711 17,551,604 1.12 630,529

0.40 32,478 0.69 726 15,743,400 1.20 608,452 15,775,878 1.20 609,178

0.50 21,437 0.82 565 13,334,970 1.34 573,730 13,356,407 1.34 574,295

0.60 12,100 1.03 400 11,494,441 1.46 541,137 11,506,540 1.46 541,537

0.80 6,580 1.29 273 8,841,030 1.70 482,009 8,847,610 1.70 482,282

1.00 6,580 1.29 273 6,723,609 1.95 421,191 6,730,189 1.95 421,463

1.50 0 0.00 0 3,902,421 2.47 309,900 3,902,421 2.47 309,900


0.30 1,170,913 0.69 25,956 57,102,494 1.07 1,972,773 58,273,407 1.07 1,998,729

0.35 949,090 0.77 23,638 51,029,668 1.16 1,909,514 51,978,757 1.16 1,933,152

0.40 797,292 0.85 21,809 45,782,576 1.25 1,846,309 46,579,868 1.25 1,868,117

0.50 579,726 1.00 18,661 38,330,043 1.41 1,739,198 38,909,769 1.41 1,757,859

0.60 449,414 1.13 16,378 32,893,547 1.55 1,643,293 33,342,962 1.55 1,659,670

0.80 296,414 1.36 12,935 25,116,139 1.82 1,469,983 25,412,553 1.82 1,482,918

1.00 226,631 1.50 10,947 19,623,915 2.08 1,312,265 19,850,547 2.07 1,323,212

1.50 90,535 1.98 5,749 11,972,531 2.63 1,010,442 12,063,066 2.62 1,016,191


0.30 51,589 0.52 867 11,328,790 0.92 336,309 11,380,379 0.92 337,176

0.35 44,643 0.55 793 9,979,788 1.00 322,257 10,024,430 1.00 323,050

0.40 35,218 0.60 680 8,866,200 1.08 308,867 8,901,418 1.08 309,547

0.50 21,378 0.69 476 7,265,229 1.22 285,883 7,286,607 1.22 286,358

0.60 14,502 0.77 357 6,098,877 1.35 265,403 6,113,379 1.35 265,761

0.80 5,040 0.94 153 4,518,744 1.58 229,889 4,523,784 1.58 230,042

1.00 2,520 1.01 82 3,328,788 1.83 195,903 3,331,308 1.83 195,986

1.50 0 0.00 0 1,804,081 2.35 136,306 1,804,081 2.35 136,306

Oxide Fresh Total

Measured Resources

Oxide Fresh

Measured + Indicated Resources

Total

Inferred Resources

FreshOxide

Oxide Fresh

Total

Total

Indicated Resources

AMC has reviewed the block model and the reporting and classification for the Sabodala resource. A review of the classification on some of the sections in the middle of the deposit (e.g. 20090N to 20330N), showed Measured Resources forming a pattern around individual holes. AMC practice would be to assess this situation and to create smooth surfaces so as to remove such a striped effect. As the effect is within the Measured and Indicated Resource envelope it is not considered to be a material issue.

16.3 Niakafiri Resource Estimate

The estimate for the Niakafiri deposit was carried out in house by Bruce van Brunt of MDL in June 2007. A brief description of the estimate follows.


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16.3.1 Raw Data

Drill Hole Database

The Niakafiri drillhole data is maintained in an Access database with embedded macros for systematic retrieval and formula calculations. The most important tables residing in the database include the gold assays, geologic variables such as lithology, alteration, structural information, collar coordinates, down-the-hole survey information, and bulk density data. The drill hole spacing in approximately one third of the deposit was 20 m by 20 m, while the remainder was 40 m x 20 m.

All assay results received from the laboratories are digitally merged into the database. Regular backups are also maintained. Checks are performed occasionally to ensure that the assay certificates are correctly input and maintained in the digital database.

The Niakafiri Access database contains a total of 24,389 m of RC and diamond drilling in 203 surface drill holes.

Topography was based on surveyed drill hole collars.

16.3.2 Domains

Mineralized Domain

Correlation of mineralized domains was based on a 0.5 g/t Au cut-off grade supported by geological interpretation, especially the north-trending shears. The 0.5 g/t Au cut-off is not a hard boundary as approximately 25% of the assays included in the mineralized domains are less than 0.5 g/t Au.

16.3.3 Statistics and Compositing

Statistics

The statistics of raw assays within the mineralized domains in the Niakafiri deposit are summarized in Table 16.11.

Table 16.11 Statistics of Raw Assay Data

Parameter Mineralized Domain

Min g/t Au 0.00

25th percentile 0.45

Median g/t Au 0.97

75th percentile 1.94

Maximum g/t Au 18.90

Mean g/t Au 1.52

SD g/t Au 1.78

Co-efficient of Var 1.17

No of samples 3,636


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Composites

Drill hole grades were composited into nominal 2.5m bench composites prior to estimating the variograms and interpolating gold grades.

Capping

Based on the low coefficient of variation, management of high grade assays was not considered necessary.

Bulk Density

Testing was carried out in the same manner as discussed in Section 16.2.1. The fresh ore figure was based on 6,000 measurements, which gave an average of 2.78; this was rounded and the figure of 2.80 applied. The figure adopted for the Sabodala oxide is 2.00.

16.3.4 Block Model

Block Model Construction

The block model is a variable block size model with parent blocks at 5x5x5m and sub blocks of 2.5 m x 2.5 m x 1 m blocks.

Grade Estimation

Pairwise relative variograms were calculated using 2.5 m composited gold values separately for data inside and outside the mineralized domain. The variogram for inside the mineralized domain has the greatest continuity of 47 m, oriented towards 351° azimuth, plunging -20°. Secondary directions were modelled with very short ranges.

Grade interpolation was carried using Ordinary Kriging based on the parameters summarized in Table 16.12.

Table 16.11 Niakafiri Ordinary Kriging Estimation Parameters

Primary Pass Inside Mineralized Domain

Secondary Pass Inside Mineralized Domain (Inferred)

Primary Pass Outside Mineralized Domain

Discrete Approximate Matrix

3 m x 3 m x 1 m 3 m x 3 m x 1 m 3 m x 3 m x 1 m

Nominal Composite

2.5 m bench 2.5 m bench 2.5 m bench

Search Rotation (X, Y, Z)

351.0, -19.7, 79.0

351.0, -19.7, 79.0

330.0,0.0,80.0

Search Ellipsoid Distance (X m, Y m, Z m)

50.0, 50.0, 10.0 100.0, 100.0, 20.0

50.0, 54.0, 20.0

Minimum Samples 1 1 1

Maximum Samples 10 10 10

Maximum Samples/Drillhole

2 2 2

For outside the mineralized domain a High Yield Threshold of 1.8 g/t Au was given a reduced search limit of X =10.0m, Y =10.0m, Z =5.0m.


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Classification

Classification of mineral resources was based on the following:

Number of drill holes in the search ellipsoid, i.e., 1=Inf; 2=Ind; 3=Meas

Ratio of the average distance to the composites used to krige the grade to the principal variogram range for the domain, i.e., <=50%=Meas; 50%-100%=Ind; >100%= Inf

16.3.5 Results

The output was initially tabulated in cut offs from 0.3 to 1.5. A selection of these is shown in Table 16.14. However it is worth noting that different cut offs are applied to the fresh and oxide portions of the deposit due to hardness, hence throughput considerations, for reporting purposes. The breakdown of the Niakafiri Mineral Resources at cut-off grades of 0.30 g/t Au for Oxide and 0.5 g/t Au for Fresh are shown in Table 16.13 and 16.14.

Table 16.12 Niakafiri Measured and Indicated Resource breakdown


M tonnes

Grade g/t Au

M oz Au

M tonnes

Gradeg/t Au

M oz Au

M tonnes

Grade g/t Au

M oz Au

Oxide 0.120 1.84 0.007 5.372 0.93 0.160 5.492 0.95 0.167

Fresh 0.158 1.67 0.008 5.091 1.28 0.210 5.248 1.29 0.219

Total 0.278 1.74 0.016 10.463 1.10 0.370 10.741 1.12 0.386

Table 16.13 Niakafiri Inferred Mineral Resources

Inferred

M tonnes g/t Au M Oz Au

Oxide 2.782 0.75 0.067

Fresh 4.466 0.96 0.138

Total 7.248 0.88 0.205

AMC again notes that these resources in that they are not constrained by an optimized pit shape, although a fair cut off grade is applied.

The reader is referred to Figure 16.11 for a section of the model which has the Mineral Reserves and open pit outline shown.


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Table 16.14 Niakafiri Mineral Resources by selected Cut Offs

Cut-off Grade Tonnes Grade Ounces Tonnes Grade Ounces Tonnes Grade Ounces0.30 120,100 1.84 7,088 166,203 1.60 8,567 286,303 1.70 15,6550.35 119,350 1.85 7,080 163,945 1.62 8,544 283,295 1.72 15,6240.40 118,313 1.86 7,068 160,550 1.65 8,503 278,863 1.74 15,5700.50 115,088 1.90 7,020 157,558 1.67 8,461 272,645 1.77 15,4820.60 113,875 1.91 6,999 152,850 1.70 8,375 266,725 1.79 15,3740.80 109,338 1.96 6,894 142,243 1.78 8,133 251,580 1.86 15,0271.0 102,100 2.03 6,675 128,493 1.87 7,727 230,593 1.94 14,4021.5 65,950 2.47 5,246 87,493 2.16 6,070 153,443 2.29 11,316

Cut-off Grade Tonnes Grade Ounces Tonnes Grade Ounces Tonnes Grade Ounces0.30 5,372,125 0.93 160,319 8,388,218 0.93 250,506 13,760,343 0.93 410,8250.35 4,414,150 1.06 150,370 7,168,083 1.03 237,835 11,582,233 1.04 388,2060.40 3,736,475 1.18 142,244 6,316,180 1.12 227,592 10,052,655 1.14 369,8350.50 2,858,363 1.41 129,687 5,090,933 1.28 210,022 7,949,295 1.33 339,7090.60 2,410,775 1.57 121,854 4,465,393 1.39 199,132 6,876,168 1.45 320,9850.80 2,024,338 1.74 113,214 3,807,440 1.51 184,440 5,831,778 1.59 297,6531.0 1,757,775 1.87 105,499 3,115,548 1.64 164,462 4,873,323 1.72 269,9611.5 1,000,375 2.35 75,422 1,558,713 2.05 102,783 2,559,088 2.17 178,205

Cut-off Grade Tonnes Grade Ounces Tonnes Grade Ounces Tonnes Grade Ounces0.30 5,492,225 0.95 167,407 8,554,420 0.94 259,072 14,046,645 0.94 426,4800.35 4,533,500 1.08 157,451 7,332,028 1.05 246,379 11,865,528 1.06 403,8300.40 3,854,788 1.20 149,311 6,476,730 1.13 236,094 10,331,518 1.16 385,4050.50 2,973,450 1.43 136,708 5,248,490 1.29 218,483 8,221,940 1.34 355,1900.60 2,524,650 1.59 128,853 4,618,243 1.40 207,507 7,142,893 1.46 336,3590.80 2,133,675 1.75 120,108 3,949,683 1.52 192,573 6,083,358 1.60 312,6811.0 1,859,875 1.88 112,174 3,244,040 1.65 172,189 5,103,915 1.73 284,3631.5 1,066,325 2.35 80,667 1,646,205 2.06 108,854 2,712,530 2.17 189,521

Cut-off Grade Tonnes Grade Ounces Tonnes Grade Ounces Tonnes Grade Ounces0.30 2,782,675 0.75 67,045 7,504,420 0.73 175,353 10,287,095 0.73 242,3970.35 2,344,263 0.83 62,478 6,453,828 0.79 164,443 8,798,090 0.80 226,9200.40 2,094,613 0.88 59,476 5,335,320 0.88 151,029 7,429,933 0.88 210,5050.50 1,693,850 0.99 53,698 4,465,570 0.96 138,437 6,159,420 0.97 192,1350.60 1,311,888 1.11 47,010 3,512,760 1.08 121,963 4,824,648 1.09 168,9730.80 915,950 1.30 38,225 2,145,650 1.32 91,288 3,061,600 1.32 129,5121.0 507,438 1.62 26,451 1,133,600 1.71 62,169 1,641,038 1.68 88,6201.5 231,388 2.11 15,712 542,658 2.23 38,889 774,045 2.19 54,601

Oxide Fresh Total

Measured ResourcesOxide Fresh Total

Indicated ResourcesOxide Fresh Total

Measured + Indicated ResourcesOxide Fresh Total

Inferred Resources

16.4 Niakafiri West and Soukhoto Resource Estimates

Resource estimates have been carried out for the Niakafiri West prospect and the Soukhoto prospect, both situated near Sabodala village on the Sabodala mining lease. Both were estimated by Bill Yeo, Chief Mine Geologist on site in June 2010, and both resources are classified as Inferred Resources.

16.4.1 Overview

Estimates were produced for these two deposits to provide a preliminary view of their potential.

Wireframes were constructed as follows; a constrained or mineralised domain (domain 1) and an un-constrained waste domain (domain 9). The mineralised domain at Niakafiri West was further


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split into four sub-domains. These domains were used to code both the composite data and the block model so that the estimation process could be constrained. Domains are based on gold grade information only. The mineralised domains were digitised in section and 3D wireframes created from these.

The existing drillhole data was composited into 2m equal length composites

Statistical analysis was presented as summary statistics and cumulative histograms for each domain. The Coefficient of Variation value (CV) is less than 2 for Niakafiri West domain 1 but exceeds 2 for all other domains.

A top-cut of 10 g/t was applied to the composite data for the Soukhoto mineralised domain, which resulted in reducing the CV values to 1.3. The high CV values for the waste domains are not unexpected but no top cuts were applied.

Estimation was completed using Inverse Distance Squared (ID2) for the mineralised domain and nearest neighbour for the waste domain. As this was a preliminary estimate, these techniques are deemed by AMC to be sufficient for the purpose.

Table 16.15 Estimation search and data parameters

Prospect

Domain

Sub‐domain d1 d2 d3 d4

Bearing 90 90 270 270 90 90 90

Plunge 40 70 5 25 40 35 35

Dip 0 0 0 0 0 0 0

Major 60 60 60 60 60 60 60

Semi‐major 30 30 30 30 40 30 40

Minor 10 10 10 10 20 10 20

Min data 1 1 1 1 1 1 1

Max data 4 4 4 4 1 4 1

d1

Niakafiri West Souhkoto

d9 d1 d9

16.4.2 Results

Given the early stage of the geological information and considering the type of estimation technique applied the resources are classified as Inferred Resources.

Table 16.16 Niakafiri West and Soukhoto Inferred Mineral Resources

Niakafiri West Soukhoto

Cut off grade

M tonnes

Grade g/t Au

M Oz Au

M tonnes

Grade g/t Au

M Oz Au

0.30 7.144 0.82 0.188 0.566 1.32 0.024

0.50 3.902 1.18 0.148 0.496 1.45 0.023

0.65 2.759 1.43 0.127 0.474 1.50 0.023

1.00 1.284 2.19 0.091 0.246 2.17 0.017

Note that the 0.30 g/t Au cut off was chosen to report the resources and this figure is highlighted in Table 16.17.


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Representative cross-sections showing estimated block grade for Domain 1 from each prospect are shown in Figure 16.2 and 16.3.

Figure 16.2 Cross Section through Niakafiri West Deposit, (17540N)

Figure 16.3 Cross Section through Soukhoto Deposit, (18420N)

The resources have a cut-off applied which is in-line with the expansion cut-offs, and hence are considered to have ‘reasonable prospects for economic extraction.’ Again it is noted that an optimized pit shell has not been constructed for the resources as would be normal AMC practice, but that, as they are Inferred Resources, there is no effect on the economics of the Project.


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16.5 Gora Resource Estimate

The estimate for the Gora deposit was carried out in house by the SMC Exploration Manager, Martin Pawlitschek, in June 2010. A brief description of the estimate follows.

16.5.1 Overview

At Gora up to four separate, sub-parallel and partially overlapping mineralized lodes have been identified. The two that are of significant size are referred to as Vein1 and Vein 2, with Vein 1 being the larger of the two and corresponding to a line of quartz ridges at surface.

Interpretation of the geology was carried out on sections, and then digitized. Mineralised domains were created at both 0.1 g/t Au and 0.5 g/t Au cut-off grades. Solids of the grade boundaries were then constructed guided by the interpretations on the geology sections.

As part of the interpretation, longitudinal sections of grade x thickness values were prepared. These show a steep south plunge-control on the ore shoots. This will guide exploration drilling to greater depth.

Figure 16.4 Long Section with Vein Grade x Thickness contours

The quoted Inferred Resource has been estimated by calculating the volume for Vein 1 and 2 separately, applying an estimated bulk density of 2.58 t/m3 to derive a tonnage, and calculating an average grade for each vein by a polygonal method in the plane of the vein. Capping was employed with Vein 1 being capped at 20 g/t Au and Vein 2 at 10 g/t Au.

16.5.2 Results

This simple estimation which is based on a sound geological interpretation has resulted in the following figures shown in Table 16.18 for the veins modeled on a 0.5 g/t Au threshold. No cut off has been applied within the vein, and as the grades are based on a global average, this is a preliminary figure, and hence classified as an Inferred Resource.


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Table 16.17 Gora Inferred Mineral Resources

Inferred

Cut off grade

0.5g/t Au

M tonnes

Grade g/t Au

M Oz Au

Vein 1 0.173 8.80 0.049

Vein 2 0.214 3.00 0.021

Total 0.387 5.60 0.070

These resouce numbers have not been split as oxide and fresh material.

This Mineral Resource has been estimated in a thorough but simple fashion and has been classified as an Inferred Resource. There is a good geological understanding as written up in Section 8 ‘Mineralisation’ and there appears to be good continuity of the veins.

The Gora grades indicate potential for an underground operation. AMC supports the tabled figures as an Inferred Resource.

16.6 Sabodala Project Mineral Reserves

Two of the four block models discussed above have Measured and Indicated Resources and therefore have had Mineral Reserves estimated. This work has been carried out by mine personnel using information obtained from the existing operation. However the operating costs used in the reserve work were those calculated for the expansion production rate. Both resource models were re-blocked from the original models. For the Sabodala deposit the latest available topography dated end of June 2010 was used. The Niakafiri deposit is approximately 5 km from the Sabodala pit. There is no geotechnical information available for Niakafiri but considering the similar geological setting of this deposit to Sabodala, the same slope angles were assumed for Niakafiri pit slopes. The Niakafiri deposit is adjacent to the Sabodala village. There is no known community and social issue with the relocation of the village and costs associated with this movement have been included in the reserve estimate.

16.6.1 Summary

The Proven and Probable Mineral Reserves for the Sabodala and Niakafiri deposits, were based on the Measured and Indicated Resources that fall within the designed pits. The total Proven and Probable Mineral Reserves for the project at 1 July 2010 are 29.882 M tonnes at 1.52 g/t Au for a total of 1.460 M ounces of gold. This figure is broken out by deposit in Table 16.19, with the Sabodala figures including stockpiles at this stage. In Table 16.25 later in this section there is a full breakdown of the Mineral Reserves for the Sabodala deposit.

Table 16.18 Mineral Reserves Summary


M tonnes

Grade g/t Au

M oz Au

M tonnes

Grade g/t Au

M oz Au

M tonnes

Grade g/t Au

M oz Au

Sabodala 18.657 1.60 0.959 4.014 1.75 0.225 22.671 1.62 1.184

Niakafiri 0.231 1.76 0.013 6.980 1.17 0.262 7.212 1.19 0.275

Total 18.888 1.60 0.972 10.994 1.38 0.488 29.882 1.52 1.460 Notes: 1. CIM definitions were used for Mineral Reserves 2. Mineral Reserves are reported at the marginal cut-off grade for each pit. 3. Mineral Reserves are estimated using an average long term price of US$900 per ounce Au.


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The Inferred Resources contained within the two pits are shown in Table 16.19 below. These tonnages do not form part of the Mineral Reserves, but will be evaluated as mining progress and may contribute to the Mineral Reserves in the future.

Dr A Ebrahimi, P.Eng, of AnoMine Tech and a sub-consultant to AMC, who is independent of Teranga and MDL, and who is a Qualified Person (within the meaning of NI 43-101), has reviewed and accepts responsibility for the reserve estimates. Dr Ebrahimi is not aware of any environmental, permitting, legal, title, taxation, socio-economic, marketing or political issues that would materially affect the reserve estimates.

Table 16.19 Inferred Mineral Resources within Pit Designs

Inferred

M tonnes

Grade g/t Au

Oz Au

Sabodala 0.058 0.83 1,536

Niakafiri 0.016 0.70 359

Total 0.074 0.80 1,895

16.6.2 Pit Optimization Parameters

Pit optimization runs were completed using Gemcom’s Whittle program and Lerchs-Grossmann algorithm on the re-blocked December 2009 resource model for Sabodala and the re-blocked August 2007 model for Niakafiri, using only blocks classified as Measured and Indicated Resources. The cost data used in the pit design algorithm is summarized in Table 16.21. The cost structures applied assume mill expansion as presented in Section 22 and marginal improvements in mining cost through efficiency and overhead costs due to project maturity.

Table 16.20 General Parameters for Open Pit Designs

Item Parameter

Gold Price US$900 per ounce

Milling rate – 100% Fresh 3,500,000 tonnes per year

Mining Cost US$2.00 per tonne

Metallurgical Recovery (grade dependent) Variable

Incremental mining cost below 700RL US$0.015 per tonne

Royalty 3%

Bench Height Sabodala 10m

Niakafiri 5m

Average Pit Slope in Oxide material 35 degrees

Average Pit slopes in waste rock 45 degrees

The cut-off grades used in the pit design are shown in Table 16.18. Different cut-off grades were used in the Sabodala and Niakafiri pits and for oxide and fresh reserves. The different cut-off grades reflect the different costs and recoveries associated with the mining and treatment of the various mined materials. For example the pit design for the Sabodala pit uses a 0.67 g/t cut-off grade, but any material in the pit that can pay the mill treatment cost of $14.15 per tonne will be stockpiled, with an incremental cut-off grade of 0.54 g/t.


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The mine plan discussed in Section 22 uses two cut-off grades for production assumptions. The higher cut-off grade is used to define material that can be treated economically in the plant at the time of production, whereas the material above the incremental cut-off grade will be mined and stockpiled and, depending on the economics of production at the time, will be treated at the end of the mine life.

Table 16.21 Costs and Cut offs

Item Unit Oxide Fresh

Milling rate Tonnes per annum 5,991,840 3,503,562

Processing cost $/tonne $9.61 $14.15

G&A $/tonne $1.67 $2.85

Ore rehandle $/tonne $0.35 $0.35

COSTP $/tonne $11.63 $17.35

Average Recovery % 93% 90%

Cut-off g/t Au 0.43 0.67

Incremental cut-off g/t Au 0.36 0.54

G&A $ / annum $10,000,000

Ramps, benches, and berms were designed and the resulting pits were smoothed. Haulage roads are designed 34m in width with 10 percent overall gradient. Sabodala final pit design has 800 width and 1000m length. The highest wall of this pit is 290m taking place in south east of the pit. Niakafiri final pit utilizes smaller haulage roads about 25m width and overall 10 percent gradient. Niakafiri final pit has 720m length (N-S) and 400m width. The highest wall in this pit takes place in south east and south west walls with about 140m depth.

SGO has designed the Sabodala open pit in three phases to facilitate scheduling of mine production. Sabodala pit will producing ore continuously up to 2016. Niakafiri open pit will commence production in 2014 and be completed in 2017. The outlines of the designed pits for both Sabodala and Niakafiri are shown in Figure 16.5 and 16.6 and also 16.7 and 16.10, embedded in an orthophoto.

16.6.3 Mining Cost

Mining costs are developed from first principles for each Budget and reserves exercise. Niakafiri oxide mining costs were factored down to reflect the softness of the rock and limited requirement to blast.

Table 16.22 Life of Mine Average Mining Cost

Element $ / tonne mined

Drilling 0.35

Blasting 0.60

Loading 0.23

Hauling* 0.33

Supervision 0.04

Pit Ancillary 0.12

Geology 0.01

Overheads 0.32

Total 2.00 Note * $0.25 incremental cost is added to Niakafiri for longer ore haulage


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16.6.4 Geotechnical Considerations

Mining One Consulting (Mining One) has been retained since 2006 to provide geotechnical advice for the Sabodala and Niakafiri pit designs. Slope angles in pit optimization are controlled by the rock type of individual model blocks. Recommended batter slopes from Mining One are universally reduced by 5 degrees to account for ramp access and then applied in the Whittle pit optimizations through use of a Zone Code. The following Table 16.24 shows the average slopes used in the pit optimizations by region and Figures 16.5 and 16.6 show the relative position of rock units in both pits.

Table 16.23 Average Slopes Used by Region

Lithology Profile Bearing Slope

Basalt 1 35 35.8 80 42.2 133 56.0 175 63.3 300 55.0 340 47.9 Volcanoclastic 2 94 60.6 175 52.2 320 56.5 345 55.8 Gabbro 3 94 63.1 193 56.1 230 57.2 280 55.0 320 59.5 Ultramafic 4 255 68.9 320 51.4 347 54.3 Porphyry 5 55 63.1 130 55.2 180 63.1 Oxide 6 0 35

Figure 16.5 Sabodala Ultimate Pit Design with Rock Unit Overlay


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Figure 16.6 Niakafiri Ultimate Pit Design with Rock Unit Overlay

Pit walls through oxide rock at Niakafiri have been designed at an average slope of less than 45 degrees. Pit slopes in the underlying fresh Basalt are similar to the slopes applied at Sabodala.

16.6.5 Sabodala Mineral Reserves

All Mineral Reserves at the Sabodala Project are to be mined by open pit at present.

Open Pit

The Mineral Reserves for the Sabodala Open Pit are quoted using the latest ultimate pit cut by the end of June 2010 mining surface. Total material comprises 132.428 M tonnes, including 112.371 M tonnes waste and 20.058 M tonnes of Proven and Probable Mineral Reserves resulting in a remaining 5.5:1 waste to ore strip ratio. The Pit was designed using slopes recommended by Mining One consultants.

Figure 16.7 Sabodala Ultimate Pit Design


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Table 16.24 Mineral Reserves for Sabodala


Open pit M

tonnes Grade

g/t Au

Moz Au M tonnes

Grade

g/t Au

M oz Au

M tonnes

Grade

g/t Au

M oz Au

Oxide 0.670 0.86 0.018 0.018 0.69 - 0.687 0.85 0.019

Fresh 15.374 1.69 0.834 3.996 1.75 0.225 19.370 1.70 1.059

Sub Total 16.044 1.65 0.853 4.014 1.75 0.225 20.058 1.67 1.078

Stockpile

Oxide 0.718 1.18 0.027 - - - 0.718 1.18 0.027

Fresh 1.895 1.29 0.079 - - - 1.895 1.29 0.079

Sub Total 2.613 1.26 0.106 - - - 2.613 1.26 0.106

Grand Total 18.657 1.60 0.959 4.014 1.75 0.225 22.671 1.62 1.184 Notes: 1. CIM definitions were used for Mineral Reserves 2. Mineral Reserves are reported at the marginal cut-off grade for each pit.

3. Fresh Mineral Reserves stated at a cut off of 0.54 g/t Au 4. Oxide Mineral Reserves stated at a cut off of 0.36 g/t Au 5. Numbers may not add up due to rounding.

The Inferred Resources contained within the designed pit are shown in Table 16.26 below. These tonnages do not form part of the Mineral Reserves, but will be evaluated as mined and may contribute to the Mineral Reserves in the future. They would more normally form part of the remaining Mineral Resources, if that was tabulated separately.

Table 16.25 Inferred Mineral Resources within Sabodala Pit Design

Inferred

M tonnes g/t Au Oz Au

Oxide 0.040 0.58 738

Fresh 0.018 1.38 798

Total 0.058 0.83 1,536

Note: the ounce column is in units of ounces due to the magnitude of the figures

Figure 16.8 Cross Section through Sabodala at 20450N


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Figure 16.9 Long section Through Sabodala Looking East

The Sabodala ultimate pit design is planned to be developed using 3 mining phases. Mining in Phase 1 will be completed in 2010 while waste stripping in Phase 2 continues. In Figure 16.9 the ultimate depth of phase two and three are shown.

16.6.6 Stockpiles

The mining rate at Sabodala since start-up has released ore at a faster rate than milling, resulting in the build-up of several stockpiles ranging in grade from marginally economic (0.6 g/t) to low grade (1.4 g/t). Stockpiled ore is reported as Proven Mineral Reserves, and is shown in Table 16.25.

16.6.7 Niakafiri Mineral Reserves

The Niakafiri pit will be mined as a single phase. The ultimate pit contains 29.300 M tonnes including 22.088 M tonnes waste and 7.211 M tonnes of Proven and Probable Mineral Reserves resulting in a 3.1:1 waste to ore strip ratio.

Figure 16.10 Niakafiri ultimate pit design


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Table 16.26 Mineral Reserves for Niakafiri


Open pit M

tonnes Grade g/t Au

Moz Au

M tonnes

Grade g/t Au

M oz Au

M tonnes

Grade g/t Au

M oz Au

Oxide 0.123 1.78 0.007 4.009 1.07 0.138 4.131 1.09 0.145

Fresh 0.108 1.74 0.006 2.972 1.31 0.125 3.080 1.31 0.131

Total 0.231 1.76 0.013 6.980 1.17 0.262 7.212 1.19 0.276 Notes: 1. CIM definitions were used for Mineral Reserves 2. Mineral Reserves are reported at the marginal cut-off grade for each pit.

3. Fresh Mineral Reserves stated at a cut off of 0.55 g/t Au 4. Oxide Mineral Reserves stated at a cut off of 0.37 g/t Au 5. Mineral Reserve in Nikafiri estimated on basis of the following fundamental assumptions: a) the geotechnical parameters

are the same as Sabodala and b) there is no social and environmental issue with developing this deposit, which are not already costed.

6. Numbers may not add up due to rounding.

The Inferred Resources contained within the designed pit are not material, and total 16,000 tonnes.

Figure 16.11 Cross Section through Niakafiri at 17750N


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17 OTHER RELEVANT DATA AND INFORMATION

17.1 Reconciliation

Monthly reconciliation of block model estimates to production is used to evaluate the predictive nature of the block model for future production. Three sets of data are available to compare: the block model estimates, the ore control estimates and production based on the reconciled milled production data. Stockpile practices at Sabodala, along with any changes in break-even cut-off and mill feed cut-off have been seen to cause some difficulty in tracking and reconciling.

Monthly comparisons have been carried out to date between the Resource Block Model (RBM) and the Blasthole Block Model (BHM). However, these are done at a 1.0 g/t Au cut-off and then compared to the mill figures. Further uncertainty results from the use of truck counts rather than what would be a preferred accounting by way of a weightometer at the mill. Comparison figures are shown in Table 17.1.

Table 17.1 Comparison of Mineral Resource to Mine and Mill Production

RBM BHM Mill Production

Tonnage Grade Metal Tonnage Grade Metal Tonnage Grade Metal

Month K tonnes g/t Au Oz K tonnes g/t Au Oz K tonnes g/t Au Oz

Jul-09 370 3.02 35,925 206 2.90 19,207 204 3.80 24,923

Aug-09 272 3.25 28,421 257 3.06 25,284 173 3.15 17,521

Sep-09 151 3.22 15,632 194 2.45 15,281 182 4.02 23,523

Oct-09 185 2.69 16,000 147 2.31 10,917 174 2.09 11,692

Nov-09 253 3.73 30,340 272 2.67 23,349 264 3.68 31,235

Dec-09 204 2.23 14,626 228 1.76 12,901 210 2.02 13,638

Jan-10 141 2.38 10,789 144 2.47 11,435 252 2.06 16,690

Feb-10 153 3.09 15,200 221 2.33 16,555 178 2.35 13,449

Mar-10 137 2.02 8,897 131 1.63 6,865 218 1.78 12,476

Apr-10 232 2.25 16,783 199 2.31 14,779 173 1.93 10,735

May-10 164 3.34 17,611 154 2.59 12,824 200 2.22 14,275

Jun-10 177 2.60 14,796 216 2.24 15,556 175 3.33 18,736

Total 2,439 2.87 225,021 2,369 2.43 184,955 2,403 2.71 208,892

Bench by bench comparison of the resource model to actual-mined since mining started is also carried out and shows that, at a 1gpt cut-off, the resource model under-predicts tonnes by 19% compared to what is calculated as actually mined and over-predicts grade by 11%; the net result is that 6% more ounces have been mined than was reported from the model.


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Table 17.2 Comparison of Mineral Resource by Bench

>1.00 g/t Sabodala Pit Actual Mined Resource Model (sabnov09) Variance

Bench Tonnes Grade Ozs Tonnes Grade Ozs Tonnes Grade Ozs

720 46,403 2.76 4,118 6,393 1.68 346 626% 64% 1090%

710 393,663 3.15 39,847 257,514 2.73 22,611 53% 15% 76%

700 651,971 2.26 47,284 415,128 2.62 34,995 57% -14% 35%

690 645,743 2.16 44,757 582,556 2.24 41,936 11% -4% 7%

680 610,656 2.41 47,229 592,830 2.37 45,134 3% 2% 5%

670 666,237 2.33 49,822 623,953 3.02 60,643 7% -23% -18%

660 606,128 2.32 45,302 524,150 3.17 53,403 16% -27% -15%

650 490,453 2.19 34,558 436,067 2.37 33,199 12% -7% 4%

640 367,173 2.41 28,459 338,276 2.62 28,462 9% -8% 0%

630 260,469 2.39 20,003 215,013 3.15 21,775 21% -24% -8%

Total 4,738,894 2.37 361,378 3,991,880 2.67 342,504 19% -11% 6%

Notwithstanding the above, there is a realization that there is some over-prediction in the model. A revised model has been constructed and is seen to adjust for the over-prediction to some degree, with capping of 20 g/t Au being applied. As part of the reconciliation, call factors are also applied, as discussed in the next section.

AMC believes that the effort to maintain reconciliation data is very important. Some refinement is required though with changing models, cut offs, use of stockpiles it is realized that it is a difficult task. The efforts thus far are commendable.

17.2 Mine Call Factors

After comparing mine and mill production to the resource model through the monthly reconciliations discussed above, above mine call factors have been developed to apply to the resource model figures prior to scheduling and budgeting. The call factors have the effect of shifting ounces from above the high grade 2 g/t Au cut-off to the medium grade material in the range between 1-2 g/t Au.

Table 17.3 Mine Call Factors Applied to Sabodala

Mining Phase Grade range Tonnage factor Grade factor

1 +2 g/t Au 0.95 0.90 1-2 g/t Au 1.20 1.00 <1g/t Au 1.00 1.00

2 & 3 +2 g/t Au 0.97 0.95 1-2 g/t Au 1.20 1.00

<1g/t Au 1.00 1.00

17.3 Underground Potential

In 2009, SWRPA was contracted to construct a block model with sufficient detail to assess the potential of underground mining parts of the Sabodala deposit. As part of this exercise SGO completed a relogging program combined with updating the geologic interpretation with significantly more structural control.

The output from the SWRPA model at a 2.0 g/t Au cut-off is shown below as Table 17.2 and directly as per the SWRPA report. The figures have been classified by SWRPA as ‘Measured’,


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‘Indicated’ and ‘Inferred but AMC stresses that they do not form part of the Mineral Resource statement for the current report. The mineralization associated with the SWRPA assessment has been addressed as part of the open pit mining consideration of this report.

Table 17.4 Sabodala Underground Breakdown as per SWRPA Report



M oz Au

M tonnes

Grade g/t Au

M oz Au M tonnes

Grade g/t Au

M oz Au

1.905 4.71 0.288 2.926 3.51 0.331 4.831 3.98 619

Inferred

2.926 3.09 0.291 - - - - - -

AMC again notes that the SWRPA figures reflect a study exercise only and are not to be considered as Mineral Resources.


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18 INTERPRETATION AND CONCLUSIONS

Based on the site visits and review of the available data the following are the conclusions by AMC regarding the Project.

The Project has been rapidly brought into production and represents a growing opportunity. In addition to an operation which is being expanded there is a good geological database on the maturing exploration work on the Mining Concession, as well as potential for further deposits in the immediate vicinity. The exploration in the area as proposed is endorsed with the comment that it is aggressive and will need a rigorous focus. It will be important to maintain quality in all the work being done.

The geological work to date including data collection is of good quality and suitable for the estimation of Mineral Resource. Drilling carried out is of sufficient density. There is a succession of targets / deposits in the “pipeline” and it will be important to continually rank and upgrade these.

There are exploration projects in the district being worked on by other parties which may come into play later. Teranga Gold Corp. will be proactive to secure additional leases.

The July 2010 Proven and Probable Mineral Reserves are quoted as 29.88 M tonnes at 1.52 g/t Au for a total of 1.46 Moz Au. There is significant potential to add to this via the current exploration program and considering success achieved to date.

The review indicates that the Sabodala and Niakafiri deposits have the capacity to produce enough ore for the 4.0 Mt/y mill expansion project.

More than one year of mining operations in Sabodala has provided valuable ground for training and developing operating parameters and functions. It is reasonable to anticipate that operational processes will gradually improve as the operation matures and that these will have a positive impact on costs and equipment efficiency.

Unit costs to date have been higher than scoping study estimates, but relative to the ‘maturity’ improvements described above, and those associated with economies of scale resulting from the expansion project and also from targeted improvement areas, AMC believes that cost estimates are not unreasonable. Particular focus is advised on power generation and control of power costs.

To reach the targeted higher rate of production and processing, the project needs additional investment in both equipment and personnel. Over $32M for mining-related issues and over $85M for processing-related issues has been estimated as capital expenditure. AMC believes that these estimates are reasonable. AMC has also indicated that the higher production years of 2013 and 2014 may be years of increased risk and that appropriately focused monitoring of equipment and process performance, particularly in years 2001 and 2012, should be done to assess any likely cost and timeline requirements for additional capital funding. AMC has assessed the potential additional capital to be around $US5 M

The Niakafiri deposit does not yet have geotechnical data. While AMC has assumed that the geotechnical conditions in the two deposits are similar, assessment work should be undertaken to determine specific Niakafiri geotechnical characteristics.

The Sabodala village must be moved prior to mining at Niakafiri. As MDL has undertaken such relocation previously for the Sabodala pit it believes that it has a very clear path to do so again for


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Niakafiri. The related cost items are included in the project cost estimates and AMC has no reason to believe that this will prove to be a material issue.

Ground and surface water issues should be studied appropriately relative to any potential impact on slope design.

Controlled drilling and blasting of final walls should be an area of focus in light of the significant benefits that can be obtained.

The Sabodala and Niakafiri ores are medium to hard but with relatively simple metallurgy allowing 90% recovery to be readily obtained. Test work has indicated that some potential exists for treating low grade oxide ores by heap leaching and this may merit further investigation.

The Sabodala processing plant, designed around a simple 2 Mtpa crush, SABC, CIL circuit, has met recovery predictions and has exceeded design throughput.

The planned expansion appears sound, being based on current operating plant performance and modelling, and designed to ultimately deliver milling capacity of 4 mtpa in two phases.


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19 RECOMMENDATIONS

AMC makes the following recommendations with respect to exploration, mining and processing activities:

The recommendations are presented separately relative to the Mining Concession and to the Exploration Leases.

The exploration properties are in different stages of work from early to quite advanced. They are to be tackled in a systematic fashion and have been broken out into their components. AMC has reviewed the planned exploration program for the 12 month period, July 2010 to June 2011, when there are some large expenditures planned. From what has been reviewed the work program is justified with the caveat that it is staged and continued work is subject to continual ranking and contingent on results in certain projects.

19.1 Mining Concession

19.1.1 Exploration Drilling

A total of twelve target areas have been selected for drill testing and are shown in Figure 19.1. These need to be systematically drilled to sufficient depth and density to evaluate the extent of mineralization available to open pit mining or exploitation by underground methods. An expenditure of $5.5M is proposed including 41,000m of a mix of RC and diamond drilling to evaluate the known targets on the Sabodala Mining Concession over the next nine months. This is shown in Table 19.1. as proposed by MDL.

Table 19.1 Mining Lease Targets 2010-2011

Exploration Overheads October November December January February March April May June TotalsSalaries 6,333 6,333 6,333 6,333 6,333 6,333 6,333 6,333 6,333 $56,997

Contract Labour 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 $36,000Travel & Accom. In Country 300 300 300 300 300 $1,500

Travel & Accom. International 2,000 2,000 2,000 2,000 2,000 $10,000Charter Flights 600 600 600 600 600 600 600 600 600 $5,400

Accomodations Backcharge 7,200 7,200 7,200 7,200 7,200 7,200 7,200 7,200 7,200 $64,800Consultants - Other 15,000 $15,000

Computer Support & Consumables 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 $9,000Technical Assistance Fee 45,556 45,556 25,309 25,309 37,120 45,556 43,869 45,556 43,869 $357,697

Consumables & Other 10,003 10,004 10,005 10,006 10,007 10,008 10,009 10,010 10,011 $90,063Assays 63,180 63,180 35,100 35,100 51,480 63,180 60,840 63,180 60,840 $496,080

Access (Roads & Pads) 13,003 13,004 13,005 13,006 13,007 13,008 13,009 13,010 13,011 $117,063Drilling - RC 227,779 227,779 126,544 126,544 185,598 227,779 219,343 227,779 219,343 $1,788,485

Drilling - Diamond 289,529 289,529 160,850 160,850 235,913 289,529 278,806 289,529 278,806 $2,273,340Drilling - RAB $0

Light Vehicles $0

Total $'s $670,483 $668,185 $392,245 $389,947 $554,557 $668,193 $662,308 $668,197 $647,312 $5,321,425

Cumulative $'s $670,483 1,338,667$ 1,730,912$ 2,120,859$ 2,675,416$ 3,343,608$ 4,005,916$ 4,674,113$ 5,321,425$ Drill Meters

DDH 1,890 1,890 1,050 1,050 1,540 1,890 1,820 1,890 1,820 14,840

RC 3,375 3,375 1,875 1,875 2,750 3,375 3,250 3,375 3,250 26,500

Totals Meters 5,265 5,265 2,925 2,925 4,290 5,265 5,070 5,265 5,070 41,340

Cumulative $'s 5,265 10,530 13,455 16,380 20,670 25,935 31,005 36,270 41,340

2011


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Figure 19.1 Mining Lease Targets 2010 – 2011


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19.1.2 Improvements for Mining Operations

Groundwater and Surface Water Control

More than one year of mining operations in the Sabodala pit has shown that there is a significant amount of ground water that must be contained. There are measures in the mine to control the water and keep it out of the pit. As the mine gets deeper water may create stability and operational issues and it is strongly recommended to perform a hydrological study to better understand the ground and surface water regime and potential impact on slope stability. Based on the study either horizontal drain or dewatering wells may be of benefit. Such a study would cost of the order of US$75,000.

Drilling and Blasting

Controlled drilling and blasting assists in building smoother and more stable slopes on the final pit walls. It is recommended to undertake testing of drill and blast patterns as part of regular mining operations and at no additional cost.

19.1.3 Underground Pre-Feasibility

A pre-feasibility level study is recommended to determine the viability of underground mining portions of the Sabodala resource outside of the open pit mine. This potential is shown as the green and brown area shapes below the grey pit shell in Figure 19.2, with a high-level estimate of costs for a pre feasibility study shown in Table 19.2.

Figure 19.2 Possible Area to be Mined


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Table 19.2 Pre-Feasibility Study Costs by Activity

Activity Cost in US$

Model reception & review $5,000

Geotechnical assessment $25,000

Mining Options $35,000

Mine design, development & production schedule, manpower & equipment

$60,000

Ventilation $25,000

Backfill $20,000

Underground infrastructure & services $40,000

Capex, opex & economics $30,000

Peer review $8,000

Total Estimate $248,000

19.1.4 Processing Plant Expansion Phase 2

It is recommended to investigate possibilities for a reduction in the capital cost of Phase 2 work, with particular reference to the crushing process and choice of associated equipment. A study cost of US$50,000 is estimated.

19.1.5 Power Generation

Investigate power saving opportunities and the possibility of the use of Light Fuel Oil for power generation. As study cost of US$50,000 is estimated.

19.2 Exploration Leases

Separate programs and budgets are presented by SMC for the four project areas surrounding the mine lease. Within this area, a total of nine targets listed below are ready for immediate drilling.

Gora – Faleme River Project

Tourokhoto – Dembala Project

Dembala Hill – Dembala Project

Goundamekho – Dembala Project

Diegoun North (Doughnut geochem complex) – Faleme River Project

Digeoun South – Faleme River Project

Diadiako – Near Mine Project

Toumoumba – Near Mine Project

Majiva – Near Mine Project

In addition to drilling the above targets, SMC will continue to evaluate the numerous gold anomalies and structures identified on its permit holding with mapping, RAB drilling and trenching to decide if any of these have potential that justifies RC and diamond drill testing. There are also still greenfield programs underway to obtain first pass geochemical and geological information from prospective areas, which have not previously seen any modern exploration.

At the time of budgeting, drilling capacity has been secured for these programs. Very large geochemical sampling programs are outsourced to KMS as standalone, deliverables based


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Project USD % USD % Area

Near Mine 4,700,000 34.8% 38%

Faleme River 4,300,000 31.9% 36%

Dembala 3,700,000 27.4% 15%

Massakounda 800,000 5.9% 11%

Sub Total Ops 13,500,000 100%

CAPEX 500,000

Grand Total: 14,000,000

contracts. Consultants are utilised to provide specialist input when required, such as structural geology, geophysics, geochemistry, environmental matters and database management. All drilling and earth moving machinery needs are supplied by specialist contractors.

The proposed program and budgets provide for the aggressive use of both RAB drilling and trenching

19.2.1 Budget to 30 June 2011

The total budget estimated for the period to end June 2011 is US$14.0M is shown in Table 19.3 and the split by activity shown in the adjoining pie chart.

The proposed operations budget amounts to US$13.5M and contains an aggressive provision for RC and diamond drill testing, or 57,000m and 10,000m respectively. The budget also includes a further 130,000m of RAB drilling, 18,000m of trenching and sufficient funding to allow developing additional targets by mapping and geochemistry.

Figure 19.3 Budget Summary to end June 2011

Seventy-eight percent of the budget is allocated to drilling, trenching or surface geochemistry costs, with the remaining 22% containing fixed costs. AMC supports the exploration program as designed as it is important to explore aggressively to understand the area’s potential as soon as possible so as to make the best and most efficient plan for exploitation of the region.

The discussion on the most efficient exploitation of the Sabodala deposit underground potential will be greatly enhanced by completing a pre-feasibility study such as that proposed. This will allow an economic assessment of the entire deposit.


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20 REFERENCES

Feybesse, J-L, Billa, M., Guerrot, C., Duguey, E., Lescuyer, J-L., Milesi, J-P., and Bouchot, V., 2006: The Paleoproterozoic Ghanian provice: Geodynamic model and ore controls, including regional stress modeling. Precambrian Research, v. 149, p. 149-196.

Gueye, M., Ngom, P.M., Diene, M., Thiam, Y., Siegesmund, S., Wemmer, K., and Pawlig, S., (2007) Intrusive rocks and tectono-metamorphic evolution of the Mako Paleoproterozoic belt (Eastern Senegal, West Africa). Journal of African Earth Sciences, v. 50, p. 88-110.

Hirdes, W., and Davis, D.W., (2002) U-Pb geochronology of Paleoproterozoic rocks in the southern part of the Kedougou-Kenieba Inlier, Senegal, West Africa: Evidence for diachronous accretionary development of the Eburnean Province. Precambrian Research, v. 118, p. 83-89.

Rhys, D. (2009): Brief Summary of Sabodala Field Observations, May 2009, Independent report prepared by Panterra Geoservices Inc. for Mineral Deposits Limited. May 19, 2009. Ross, K.V., and Rhys, D.A., (2009) Petrographic study of a sample suite from the Sabodala Gold Deposit and surrounding areas, Senegal. Panterra Geoservices Inc., unpublished report to Mineral Deposits Limited. Mining One Pty. Ltd. (2007): Geotechnical Analysis of the Sabodala Geotechnical Drilling Project, March 2007. Nakai-Lajoie, P. (2009): SABODALA Site Visit: Summary of Work – July 24 to August 7, 2009, Independent report prepared by Scott Wilson RPA for Mineral Deposits Limited. August 7, 2009. Painter M. (2005): Structural Constraints on Gold Mineralisation at Sabodala, Prepared by RSG Global on behalf of Mineral Deposits Limited, November 2005. Scott Wilson Roscoe Postle Associates Inc., Technical Report on the Sabadola Gold Project, Senegal, Africa, unpublished report prepared for Mineral Deposits Limited, November 1, 2007

Sow, Moussa Felix (2007): Certificate from Mr. Moussa Felix Sow, lawyer, regarding property title dated September 24, 2007.


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21 DATE AND SIGNATURE PAGE

This report titled Technical Report for Sabodala Gold Project, Senegal, West Africa for Mineral Deposits Limited, has been prepared by and signed for by the following authors:

1 November 2010

Dated at Vancouver, BC

Original signed and sealed by

Patrick Roger Stephenson, P. Geo. Principal Geologist

1 November 2010



John Morton Shannon, P.Geo. Principal Geologist

1 November 2010



Brian O’Connor, P.Geo. Principal Geologist

1 November 2010



Alan Riles, MAusIMM Consulting Metallurgist

1 November 2010



Anoush Ebrahimi, PEng Consulting Mining Engineer


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22 ADDITIONAL REQUIREMENTS FOR TECHNICAL REPORTS ON DEVELOPMENT PROPERITES

22.1 Mining Operations

The Sabodala Project poured its first gold bar in March 2009 after milling ore from Sabodala pit. Pre-production stripping and mining commenced in January 2008.

Long term and expansion-based project mining operations will consist of two open pits, a three-phase design at Sabodala and a single-phase design at Niakafiri. Presently the first mining phase at Sabodala is being completed as Phase 2 is in the waste stripping stage. The pit at Niakafiri is scheduled for development in 2014. Figure 22.1 is a general view of Sabodala pit development looking to the west with the ROM pad and waste dump in the near background, and tailings pond in the distance.

Figure 22.1 General View of the Sabodala Pit

The mining method utilized is conventional truck and shovel open pit mining. The mining operation is selective in terms of separating ore from waste. A selective mining unit (SMU) of 10m x 10m x 10m is utilized. The SMU size is commensurate with the ore body model as described in the geological section of this report. Mining dilution is included in the 10m cubic blocks. Considering the size of the blocks and dilution the mining recovery is assumed to be 100 percent.

The loading fleet on site is made up of two PC3000 shovels, one PC2000 shovel and two WA900 wheel loaders. The PC3000’s utilize 15m3 buckets, the PC2000 a 10m3 bucket and the WA900’s 10.5m3 buckets to load 15 HD785-7 haul trucks. One of the PC3000’s and 5 of the HD785’s are part of the 2010 mine expansion to increase mining capacity ahead of the proposed mill expansion. All of the new equipment is scheduled to be in production before the end of 2010. A PC3000 and PC2000 are shown loading Komatsu HD785 Haul Trucks in the Sabodala Pit in Figure 22.2.


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Figure 22.2 Loading in the Sabodala Pit.

Drilling of blastholes is done by three Sandvik DP1500’s and three Terex Reedrill SKF-12’s. Two of the Terex Reedrill SKF-12’s are part of the mine fleet expansion and will be in production before the end of 2010.

Figure 22.3 Drilling Blastholes on Night Shift at the Sabodala pit

An equipment list and manpower requirement is shown in Table 22.1, which also indicates the current and post-expansion fleet. Three crews are assumed, with one person per machine.


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Table 22.1 Mining Fleet and Personnel Required

Mining Fleet Operators

Current

10 x Dumpers 30

2 x Face Shovels (Back up loader operated by shovel operators when down)

6

2 x Loader (ROM Pad) 6

2 x Water Truck 6

2 x Grader 6

3 x Dozers 9

2 x Wheeled Dozer 6

1 x Rock Breaker 3

1 x Leading Hand 3

1 x Translator 3

2 x Flagmen 6

4 x Drillers 12

SUB TOTAL: 96

Expansion Additions

1 x Face Shovel 3

1 x Excavator 3

5 x Dumpers 15

2 x Dozer 6

2 x Drillers 6

SUB TOTAL 33

TOTAL 129

There will be fifteen additional personnel to cover holidays etc. for a total of one hundred and forty four.

22.2 Mining Schedule

Open pit mining at Sabodala is owner operated. The mining schedule is driven by balancing the truck hours required to deliver ore to the ROM pad and waste to the dumps annually vs. the loading capacity. Ore in excess of process plant requirements is selectively stockpiled throughout the life of the operation.

Table 22.2 Mine Production Schedule Yearly Summary Unit FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 Total

Waste Tonnes Mined t 21,163,112 18,841,232 27,845,531 26,869,464 20,654,821 18,936,785 134,310,944

Hi‐grade (+2 g/t) Ore Mined t 403,822 1,010,879 1,656,885 954,025 1,277,269 1,323,687 6,626,566

Hi‐grade (+2 g/t) Ore Grade g/t 3.47 3.26 2.96 2.82 3.00 2.78 2.99

Med‐grade (1.5‐2g/t) Ore Mined t 222,433 525,925 838,525 635,388 678,640 1,019,948 3,920,858

Med‐grade (1.5‐2g/t) Ore Grade g/t 1.73 1.72 1.75 1.71 1.76 1.73 1.73

Lo‐grade (1‐1.5g/t) Ore Mined t 444,351 1,088,650 1,151,747 929,439 1,111,587 1,562,270 6,288,044

Lo‐grade (1‐1.5g/t) Ore Grade g/t 1.21 1.22 1.23 1.23 1.23 1.23 1.23

Marginal (0.5‐1g/t) Ore Mined t 1,310,239 2,112,642 1,486,025 1,650,604 1,902,159 1,972,106

Marginal (0.5‐1g/t) Ore Grade g/t 0.70 0.71 0.73 0.70 0.71 0.90

Mined Total t 23,543,956 23,579,327 32,978,712 31,038,920 25,624,475 24,962,950 161,728,341

Mined Waste t 21,163,112 18,841,232 27,845,531 26,869,464 20,654,821 19,084,939 134,459,098

Mined Ore (+0.5g/t) t 2,380,845 4,738,095 5,133,181 4,169,456 4,969,655 5,878,011 27,269,242

Ore Grade g/t 1.36 1.49 1.73 1.46 1.56 1.55 1.54

Strip ratio t:t 8.89 3.98 5.42 6.44 4.16 3.25 5.38

SG t/m³ 2.74 2.74 2.77 2.73 2.56 2.31 2.65

Ore Oxide Percentage % 56% 14% 5% 24% 21% 39% 25%

Mined Ounces oz 104,197 226,345 285,101 195,443 249,269 293,644 1,353,999


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Sufficient closing stocks (available broken inventory), are maintained throughout the life of the operation to insure that the mill will continually operate at maximum production levels. There are a number of stockpiles and a summary of the build-up and run-down of these is shown in Table 22.3.

Table 22.3 Closing Stocks Closing Stocks Unit FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019

A t 0 0 0 0 0 0 0 0 0

g/t 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

ox_% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

B t 0 0 188,525 0 0 0 0 0 0

g/t 0.00 0.00 1.75 0.00 0.00 0.00 0.00 0.00 0.00

ox_% 0.0% 0.0% 3.7% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

C t 1,023,227 26,320 1,439,547 164,215 0 0 0 0 0

g/t 1.37 1.21 1.23 1.23 0.00 0.00 0.00 0.00 0.00

ox_% 16.5% 10.0% 4.3% 12.2% 0.0% 0.0% 0.0% 0.0% 0.0%

D t 977,173 1,912,389 2,850,351 3,777,841 4,021,934 4,980,203 1,692,476 0 0

g/t 0.83 0.81 0.82 0.81 0.81 0.81 0.81 0.00 0.00

ox_% 38.3% 37.4% 25.0% 25.6% 25.7% 31.8% 31.4% 0.0% 0.0%

E t 539,695 1,360,412 1,404,428 2,127,542 2,899,417 3,941,830 4,089,378 1,332,572 0

g/t 0.61 0.59 0.58 0.58 0.58 0.57 0.57 0.57 0.00

ox_% 46.4% 41.0% 30.7% 31.5% 31.1% 35.4% 35.0% 35.0% 0.0%

Total t 2,540,095 3,299,121 5,882,851 6,069,598 6,921,352 8,922,033 5,781,855 1,332,572 0

g/t 1.00 0.72 0.89 0.74 0.71 0.71 0.64 0.57 0.00

ox_% 31.2% 38.7% 20.6% 27.3% 28.0% 33.4% 34.0% 35.0% 0.0%

Based on the mining schedule the average cost of mining is projected to be US$2.00 per tonne. This mining cost is based on a diesel cost of $0.84 per liter, a 500 FCFA per USD exchange rate and a US$1.25 per Euro exchange rate. AMC notes that the reported mining cost/tonne for the financial year up to May 2010 (pre-expansion) is $2.40 against a budgeted figure of $2.50. Improvements in cost may reasonably be anticipated through a more mature mining process and the economies of scale related to the expansion plan.

Mining phases or Pit stages are sequenced to maximize gold production annually, and these are shown graphically in Figure 22.4.

Figure 22.4 Mining Sequence by Phase

0

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

30,000,000

35,000,000

FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017

Tonnes Mined

Mining Sequence By Phase

Sabodala Phase 1 Sabodala Phase 2 Sabodala Phase 3 Niakafiri

AMC has reviewed that Sabodala mining schedule and, relative to all key mining and trucking factors, the current fleet capability and the additional equipment that will be brought on-stream in 2010, there does not appear to be a high degree of risk in years 2011 and 2012, or 2015 and


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2016. The years 2013 and 2014 are projected to be significantly more demanding when, respectively, 40% and 32% more production is required compared to 2012. Further fleet additions are planned for 2012 and 2013 but, in preparation for the likely increased risk in 2013 and 2014, AMC advises that:

a) Fleet performance should be rigorously monitored and full capability assessed in 2011 and 2012.

b) Relative to that assessment and the projected additional capability that will be added in 2012 and 2013, a judgment should be made early in 2012 as to whether yet further equipment should be made available for 2013 and 2014.

c) If such additional equipment were deemed to be necessary, then the potential cost could be of the order of $US5M.

22.3 Processing Operations

22.3.1 Overview of Current Plant

The Sabodala Processing Plant is nominally designed to process 2.0 mtpa of ore at a gold grade of 3.4 g/t and a plant availability of 95%. The instantaneous design feed rate is 245 t/h of ore.

The gold plant comprises facilities for crushing, grinding, carbon-in-leach (CIL) cyanidation and tailings disposal. Gold recovery facilities include acid washing, carbon stripping and electro winning, followed by bullion smelting and carbon regeneration. The major equipment includes:

Primary crusher Nordberg C140S single toggle jaw crusher

SAG mill Outotec 7.3 m diameter x 4.3 m EGL, 4,000 kW

Ball mill Outotec 5.5 m diameter x 7.85 m EGL, 4,000 kW

Recycle crusher Metso HP200SX Cone Crusher

CIL circuit 9 x 1,240 m3, with compressed air injection

Elution circuit 5 t batch capacity, split AARL Elution

Tailings thickener Outotec 23 m diameter High Rate Thickener

The Sabodala processing plant design included an allowance for a gravity circuit. The proposed gravity circuit included ultrafine grinding and intensive cyanidation of the gravity concentrate. The circuit was deferred from original plant construction.

Crushing, Stockpiling and Reclaim

The primary crushing circuit incorporates a jaw crusher to produce the required feed for the semi-autogenous grinding (SAG) mill. Run-of-mine ore is delivered to the primary crushing facility by rear-dump haul trucks and front-end loaders. Ore delivery from the mine is on a 24 hour per day schedule.

A belt conveying system delivers crushed ore to the crushed ore stockpile. The reclaim system includes a single apron feeder and two vibrating feeders, located under the stockpile. Reclaimed ore is discharged onto the reclaim conveyor.


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Primary crusher operation is controlled from a remote OIS (Operator Interface Station) console in the crusher control room, with the feed rate controlled through a variable speed drive on the apron feeder.

Grinding and classification

Ore is ground in two stages to produce a product suitable for cyanide leaching. The first stage includes a SAG mill driven by a 4 MW variable speed motor. Oversize pebbles extracted from the SAG mill are removed by a screen, crushed by the 132 kW pebble crusher and returned to the SAG Mill feed. Undersize from the SAG mill discharge screen gravitates to the cyclone feed hopper, where it is combined with the ball mill discharge and process water.

The second grinding stage consists of a ball mill driven by a 4 MW fixed speed motor. The ball mill operates in closed circuit with a cyclone cluster consisting of sixteen (16) 250 mm diameter cyclones (12 operating, 4 standby). The cyclone cluster is fed a combination of the SAG mill discharge, the ball mill discharge and process water. The cyclone underflow reports back to the ball mill for further grinding, while the cyclone overflow, at 48 - 50 wt% solids and a P80 of 75 µm gravitates to the CIL feed pumps via a vibrating screen for removal of trash or tramp material.

Gravity Circuit (Deferred Installation)

Leaching of gravity gold has been shown to improve overall gold extraction. The Sabodala flow sheet previously included three (3) Falcon Concentrators treating cyclone overflow in a rougher duty, followed by a single Falcon Concentrator as a cleaner producing a gravity concentrate. The gravity concentrate was to be ground to a P80 of 20 µm in the IsaMill, and fed to the Intensive Cyanidation (IC) leach tank. The IC tank was sized for a residence time of four hours, with overflow slurry being directed to the CIL circuit.

MDL took the decision to defer the construction of the gravity circuit at the time of equipment procurement. The decision was based on the nature of mill feed ore, specifically the oxide content. The decision took into account actual plant phenomena, such as the preferential grinding of sulfide minerals, which is not observed in laboratory scale test work.

Leaching and Adsorption Circuit

The leach circuit consists of two leach tanks and seven leach-adsorption stages. The circuit residence time varies from approximately 24 hours to 30 hours, dependent on the ore blend and hence, throughput rate achieved by the grinding circuit.

Lime is added to the grinding circuit to increase the slurry pH to 10, which is the alkalinity required for subsequent cyanidation. Sodium cyanide is added to the first leach tank to effect gold leaching. All tanks are sparged with low pressure air to ensure sufficient oxygen is available for the gold dissolution reaction.

Granular 6 x 12 mesh activated carbon is present in the slurry to absorb the gold-cyanide complex ion, and is maintained at a concentration of 10 to 15 kg/m3 per tank

Each stage of the adsorption circuit consists of a mechanically agitated tank equipped with a mechanically swept vertical carbon retaining screen. Slurry flows from tank to tank, and carbon is advanced counter current by pumping slurry from tank to tank up stream.


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Carbon Recovery and Acid Wash

Loaded carbon is recovered from the adsorption circuit using the loaded carbon transfer pump. The carbon is screened and washed with process water on the loaded carbon screen and reports to the acid wash column.

A set volume of concentrated hydrochloric acid is added to a controlled flow of raw water feeding the acid wash column, to achieve a concentration of 3% HCl (w/v). The carbon is allowed to soak, with acid-soluble metals being dissolved from the loaded carbon.

After soaking the carbon is rinsed with 4 bed volumes (bv) of raw water. The acid wash column discharge reports to the carbon safety screen. The rinsed carbon is transferred to the elution column using raw water.

Carbon Elution and Electrowinning

The Sabodala elution circuit utilizes a split Anglo American Research Laboratories (AARL) design to treat carbon in five tonne batches.

To recover gold from the carbon, batches of carbon are subject to a high pressure and temperature process termed elution. A hot cyanide-caustic solution is used to remove the gold from the carbon and into solution. The gold is recovered from this pregnant solution by electrowinning onto stainless steel wire wool cathodes in a single electrowinning cell.

The loaded cathodes are removed and pressure washed, with the gold in the form of sludge being recovered and dried. The dried gold sludge is mixed with fluxing chemicals and smelted on site to produce bullion bars of 88% Au purity, with silver forming the balance. After gold recovery the “barren” carbon is thermally reactivated and returned to the circuit.

The gold bullion is shipped under secured conditions to the contracted refinery for further processing and subsequent sale.

Tails Thickening

The CIL circuit tailings are thickened prior to storage in the Tailings Storage Facilities. The use of the tailings thickener recovers process water (containing valuable reagents) and reduces the overall tailings storage requirements. The achieved thickened underflow density range is 62 - 65 wt% solids.

The thickener underflow is pumped via a two-stage pumping arrangement to the Tailings Storage Facility.

Tailings Storage

The Tailings Storage Facility (TSF) was designed by Coffey Geosciences, Australia. The TSF site is located approximately 500m north-west of the Processing Plant. The TSF utilises a natural valley storage design, with three separate embankments required to contain the tailings over time. The final total volume is 7.7 million cubic metres, or 10 million tonnes of tailings.

The TSF is serviced by two tailings discharge lines, and water is reclaimed from a centrally located decant tower and pumping arrangement. In this initial stage of the operation, tailings are deposited on the western side of the TSF with the aim of gradually filling the natural valley. The water pools around the decant tower and is reclaimed for reuse in the Sabodala processing plant.


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The design parameters of the TSF are as follows:

Total production of 10 million tonnes of tailings

Annual production of 2 million tonnes

Tailings beach slope of approximately 1%

Consolidated in-situ dry tailings density of 1.3 t/m3

Tailings are generally non-acid-forming, and should pose limited geochemical concern as indicated by geological test work.

22.3.2 Actual vs Projected Plant Performance

The design, actual and forecasted performance metrics for the Sabodala processing plant are presented for comparison purposes. The actual performance metrics relate to the 2009 – 2010 financial year, while the projected metrics relate to the 2010 – 2011 financial year. The comparison is presented in Table 22.3.

Note is made of the following:

Crushed tonnes are reported as wet tonnes

Milled tonnes are reported as dry tonnes

All costs are reported in US dollars, and relate to the metallurgical processing facility only

Power consumed includes the entire Sabodala mine site

Forecast head grade for FY 2010-11 differs from the schedule due to the forecast being an earlier projection. (1.91g g/t Au versus 1.85 g/t Au).


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Table 22.4 Actual and Projected Metallurgical and Cost Performance

Unit Design

Basis

Actual

FY 2009 - 2010

Forecast

FY 2010 - 2011

Tonnes Crushed Wet tonnes 2,090,000 2,336,691 2,475,530

Throughput TPOH 412 391 377

Availability % 58 68.3 75

Tonnes Milled Dry tonnes 2,000,000 2,235,253 2,441,351

Throughput TPOH 240 286 293

Availability % 95.0 89.2 95.0

Head Grade (assayed) g/t 3.4 2.60 1.91

Head Grade (reconciled)

g/t 3.4 2.63 1.91

Au Recovery % 87.6 91.0 90.0

Au Recovered oz 191,500 172,056 134,991

Au Poured oz - 172,076 134,991

Unit cost per tonne $/t 13.68 15.55 15.22

Unit cost per ounce $/oz - 202 275

Grinding Media

Consumption kg/t 1.68 1.30 1.19

Cyanide


Lime


Heavy Fuel Oil

Consumption l/kWhr - 0.221 0.225

Power

Consumption MWhr - 85,346 92,292

The major points relating to the financial year 2010 – 2011 include:

Fresh ore projected as approximately 75% of the feed blend, with oxide ore contributing the remaining 25% (assumption used in plant study)

Approximately 65% of feed ore is new ore mined from the Sabodala open cut mine, with the remainder sourced from existing ROM pad stockpiles

AMC notes that the projected feed blend ratios will almost certainly differ from those actually mined on a yearly basis. Over a longer period, assuming the resource is mined as planned, the feed ratio should generally be in-line with the above projections.

AMC also notes that although the actual costs exceed the design by 13.5%, this overrun appears to be factored in to the forecast for 2010/2011.

Improvements to the financial performance of the Sabodala Processing Plant can be reasonably anticipated via the following:


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Implementation of SAG mill advanced control system, leading to an incremental increase in mill throughput

Improvements in management of power generation equipment, leading to a decrease in fuel consumption

Sourcing of alternate fuels for power generation, such as light fuel oil (LFO)

Reduction in site wide power usage, leading to a reduction in fuel consumption

Clearly a key factor in the overall cost structure is power generation, hence the focus on that issue in the improvement opportunities listed above.

22.3.3 Processing Plant Expansion

In late 2009 Sabodala Gold Operations (SGO) requested Aurifex Pty Ltd (Aurifex) to undertake a Scoping Study to achieve the equivalent of 200,000 ounces gold production per annum from the Sabodala processing plant.

The SGO nominated head grade of 2.1 g/t resulted in a required plant throughput of approximately 3.5 million tonnes per annum but, with falling head grades, a second scenario of 4.0 million tonnes per annum was also studied. SGO also directed that a gravity circuit not be included in the upgrade project.

Figure 22.5 Sabodala Mill and Power Station May 2009

The Scoping Study evaluated the expansion requirements to reach the minimum throughput of 3.5 million tonnes per annum. The services of Orway Mineral Consultants (OMC) were utilized in the areas of comminution circuit design.

A preferred flow sheet was selected, an equipment list and circuit description developed, and capital and operating costs estimated. The selected flow sheet allowed for 4.0 mtpa throughput with a P80 of 90 µm.

Sabodala Gold Operations has largely adopted the Scoping Study recommendations (see below) and elected to stage the upgrade in two phases. These stages constitute:

Phase 1: A partial secondary crushing facility and 4.0 mtpa Wet Plant

Phase 2: Primary crushing facility

The benefits in staging the expansion include:

Deferment of capital


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Minimal downtime incurred to tie in new equipment

Flexibility depending on future ore blends

22.3.4 Scoping Study Key Findings

The key findings of the Scoping Study included:

The existing crushing and reclaim circuit were limited to approximately 3.5 mtpa

Analysis by OMC concluded the SAG mill would act as a bottleneck, with insufficient breakage rates to achieve more than about 3 mtpa on fresh, competent ore

OMC concluded that, to overcome the SAG mill breakage rate limitation, partial secondary crushing was a viable option, with two variants, i) a 30% bypass so that up to 70% of the feed underwent secondary crushing, ii) replacing the bypass with a double deck screen with only the critical – size SAG material being fed to the secondary crusher. Variant ii) is the preferred option.

The addition of an identical ball mill to the grinding circuit would allow 3.5 mtpa at a final grind P80 of 75 µm to be processed on the basis of available power

The addition of an identical ball mill to the grinding circuit would allow 4.0 mtpa at a final grind P80 of 90 µm to be processed on the basis of available power, at favorable economics to the 3.5 mtpa option

22.3.5 Phase 1 Expansion

Flow Sheet Description

The primary crusher product is screened on a double deck screen, with fines and the coarse oversize passing to the existing stockpile while the intermediate critical – size SAG material is fed to a HP400 secondary crusher and then to a new secondary crusher stockpile and reclaim system. In addition, installation of a fixed rock breaker at the primary crusher and modifications to the existing ROM bin grizzly are required.

Crushed ore from the two stockpiles will be fed to the existing 4 MW SAG mill following quicklime dosing. SAG mill discharge will be scalped by the existing vibrating screen and oversize (pebbles) recirculated via the HP 200 pebble crusher, if required, to the SAG mill feed conveyor as per the existing circuit.

SAG mill screen undersize will be pumped to a cluster of new 15 inch cyclones using the existing cyclone feed pumps. Cyclone underflow will gravitate to a splitter box which will distribute the underflow to the two 4 MW ball mills. Ball mill discharge from the existing mill will be combined with the SAG discharge in the existing common hopper for further classification by the cyclones.

Discharge from the second ball mill will be collected in a new hopper and pumped by new pumps to the new secondary cyclone cluster. The cluster will consist of 15 inch cyclones, in common with the primary cluster. The underflow from these secondary cyclones will be combined with the primary cyclone underflow and be split to the two ball mills.

The primary and secondary cyclone overflow slurry will be combined and split between duplicated trash screens. The trash screen undersize will gravitate to modified CIL feed pumps. The CIL feed pumps will direct the slurry to the first of three new 2,600 m3 leach tanks. Cyanide and air will be added to the leach tanks to facilitate the dissolution of gold.


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The original leach tanks will be converted to adsorption tanks to provide a total of nine adsorption tanks. The circuit residence is approximately 30 hours in the 3.5 mtpa configuration and 26 hours in the 4.0 mtpa configuration. The original circuit design allowed for a residence time of 24 hours.

Carbon will be transferred and recovered from the first adsorption tank (previously leach tank). Elution of the carbon will be conducted in the existing 5 tonne capacity AARL facility. The eluate will be electrowon via two electrowinning cells. An additional eluate tank and a new eluate pump will be installed.

The tailings from the last carbon adsorption tank will gravitate over duplicated vibrating carbon safety screens and pass to a distributor. The slurry will be split between the two tailings thickeners.

Tailings thickener underflow will be pumped to the TSF using the existing tailings pumps. The tailings pumps will be relocated and the motors upgraded as required.

The thickener overflow solution will report to the process water circuit and will be recycled along with makeup raw water and decant water from the TSF.

The Sabodala Power Station will also require the commissioning of an additional 6.0 MW engine. The requirements include cooling and exhaust pipe work, fuel delivery pipe work and a step-down transformer.

Major Equipment

The major equipment listing includes:

Fixed rock breaker (primary jaw crusher)

Secondary crushing facility

Secondary reclaim stockpile

Ball mill (4 MW)

Primary cyclone cluster

Secondary cyclone cluster

Leach tanks (3 x 2,600 m3)

Tailings thickener

Power station engine and ancillaries

A selection of preliminary flow sheets is presented in Appendix A.


Flow Sheet Description

Phase 1 expansion will have increased grinding and downstream capacity to at least 4mtpa, at which point the limiting factor will be the primary crusher. The installation of the secondary crushing facility and reclaim also yields a total reclaim capacity of 5.5 mtpa. Phase 2 therefore involves increasing the capacity of the primary crushing facility.

The identified options include:


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Replacement of existing C140S Jaw crusher with C160S Jaw crusher, the cheapest and simplest option

Construction of gyratory crushing facility, which would better allow for future expansions and enhance large rock-handling capability

The existing jaw crusher may be replaced with the larger C160S unit. There is sufficient space in the existing structure to allow for such a change. This option would operate in the same fashion as the current primary crushing circuit.

A gyratory crushing facility would require the construction of a ROM pad dump pocket, installation of the new gyratory crusher (including supporting structure and discharge system) and tie-in to the existing reclaim and planned secondary crushing system.

SGO have allowed for the greater cost of the gyratory crushing facility in capital estimates and financial models for the purposes of this report.

Major Equipment

The major equipment listing for the jaw crusher option includes:

C160S Jaw Crusher

The major equipment listing for the gyratory crusher option includes:

ROM pad dump pocket

Gyratory crusher support structure

42’ x 65’ Gyratory crusher

Crusher discharge apron feeder

Conveyor tie-ins

22.4 Markets

The principal commodity of Sabodala Gold Operations is gold. Gold is widely and freely traded on the international market, with known and instantly accessible pricing information.

22.5 Contracts

As part of financing the Sabodala project, SGO entered into a gold hedge contract with MacQuarie Bank for 399,000 ounces. The price and delivery schedule for the remaining 246,500 ounce hedge book is shown in Table 22.5.

In August 2010 agreement was reached with MacQuarie Bank to roll up to 125,000 ounces forward, thus allowing SGO to sell into the spot market through November 2011. To date, 53,000 ounces have been deferred to 2013. The financial model assumes an additional 67,000 ounces are rolled forward.


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Table 22.5 Hedge Schedule

Hedge Qty Hedge Price Delivery Date Hedge

Outstanding

18,000 846.00 17-Feb-11 228,500

17,000 846.00 18-May-11 211,500

18,500 846.00 17-Aug-11 193,000

18,500 846.00 17-Nov-11 174,500

28,000 846.00 17-Feb-12 146,500

28,000 846.00 17-May-12 118,500

27,500 846.00 15-Aug-12 91,000

25,000 832.92 21-Nov-12 66,000

25,000 832.92 20-Feb-13 41,000

25,000 790.66 17-May-13 16,000

16,000 791.50 21-Aug-13 0

246,500

22.6 Environmental

An Environmental and Social Impact Statement (ESIS) for the Sabodala Gold Project was completed in July 2006 by Tropica Environmental Consultants, and an Environmental and Social Management and Monitoring Plan (ESMMP) was developed by Earth Systems in September 2007.

The ESMMP committed SMC to preparation of a stand-alone Rehabilitation and Mine Closure Plan in the first year of operations. This plan provides a comprehensive discussion of the implementation, management and monitoring of rehabilitation activities that are to be undertaken during both the operational and closure phases of the Project. This plan satisfies the requirements of the Government of the Republic of Senegal as well as relevant international standards (specifically Australian, Canadian and other relevant standards, e.g. IFC), and provide SMC with a clear indication of anticipated rehabilitation and closure costs throughout the life of the Sabodala Gold Project.

As of the date of this report, no bonds, guarantees or other financial sureties for future reclamation and rehabilitation obligations had been posted.

Estimated closure costs for the Sabodala Project are US$16.22M.

22.7 Taxes

In 2010, Sabodala’s profits have been exonerated for eight years from income taxes under a Mining Convention signed in 2007 with the government of Senegal. Sabodala’s future profits once the exoneration period expires will be subject to tax based on a 25% income tax rate. The eight year period expires May 2, 2015.

22.8 Capital and Operating Costs

22.8.1 Capital Expenditure

The projected capital expenditure profile is shown below as Table 22.6, with the largest single item being the mill expansion. The estimated cost of expanding the mill initially (Phase 1) from the current


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capacity to +3.5Mtpa (80:20 fresh:oxide ore ratio) is US$48M. Additional capital to take the mill to +4Mtpa (80:20 fresh:oxide ore ratio) as part of a Phase 2 expansion is included in the financial analysis, although lower-cost options may also be viable and should be investigated.

Teranga technical and site operating personnel and Aurifex consultants are of the opinion that the existing primary crusher will be capable of delivering approximately 4.0 mtpa (based on a 75% fresh:25% oxide feed), on the basis that the crusher gap is opened, the secondary crusher and associated stockpile reclaim is installed and the feed blend contains sufficient fines (these bypass the crusher and allow higher throughputs). The crusher gap increase, together with the addition of the secondary crusher and secondary reclaim, should allow for feed rates approaching 6Mtpa based on 100% oxide feed. These assumptions have yet to be verified in practice and will require further plant surveys and subsequent modelling as per AMC recommendations.

The mill expansion is further discussed in Section 22.7.2.

Table 22.6 Capital Expenditure in US$ M

Department Total 2011 2012 2013 2014 2015 2016 2017 2018

Mining 32.71 3.69 8.74 11.11 5.60 2.59 0.90 0.10

Processing 85.83 28.77 53.10 1.06 2.08 0.14 0.06 0.58 0.04

Total 118.54 32.46 61.84 12.17 7.68 2.73 0.96 0.68 0.04

Also included in the projected expenditures shown In Table 22.6 are allowances for additional haul trucks, replacement blasthole drills, the construction of a second tailings impoundment, community relations and sustaining capital. Those figures are also included in Table 22.8.

22.8.2 Mill Expansion Capital Cost Estimates

Aurifex has estimated the processing capital costs and operating costs. Capital costs include Phase 1 and Phase 2 of the expansion, while the operating costs include the 3.5 mtpa (Phase 1) and 4.0 mtpa (Phase 2) throughput scenarios.

Aurifex developed capital cost estimates to a level of accuracy of ±30% as part of the Scoping Study. The methodology applied involved obtaining capital cost estimates for the appropriate various equipment items and plate work (mechanical discipline) and applying appropriate factors to arrive at a direct cost including the disciplines of earthworks, civil, structural, electrical & instrumentation, and piping. The applied factors were derived from the original Sabodala project.

Additional factors were applied to the total direct cost to cater for freight, engineering procurement and construction management (EPCM) and contingency. Costs and derivation of the various factors are listed in the Aurifex Scoping Study and appendices. The equipment lists function as a price schedule and presents the costed mechanical items and allowances for installation where appropriate.


The Phase 1 capital cost estimates are presented in Table 22.7 for the secondary crushing facility and the 4.0 mtpa wet plant. An additional cost estimate developed by SGO is included for the required upgrade to the Sabodala power station engine.


139

Table 22.7 Phase 1 Expansion Capital Costs Summary


Cost (US$ M)

4.0 mtpa wet plant 40.4

Secondary crushing facility 7.6

Power Station engine 7.9

Total 55.9

It should be noted that the capital estimates were developed to a level of accuracy of ±30%, and are as of the last quarter of 2009.


Aurifex has estimated the capital costs for the Phase 2 Expansion. The capital cost estimates for the primary crushing circuit options are presented in Table 22.8.

Table 22.8 Phase 2 Expansion Capital Costs Summary


Cost (US$, $M)

Jaw crusher option 8.2

Gyratory crusher option 18.3

Again it is noted that the capital estimates were developed to a level of accuracy of ±30%, and are as of the last quarter of 2009.

22.8.5 Expansion Operating Cost Estimates

Aurifex has provided an initial estimate of the operating costs for the Phase 1 (3.5 mtpa) and Phase 2 (4.0 mtpa) expansion scenarios. SGO provided Aurifex with actual cost data for 2009 and the processing plant 2010 operating budget.

The operating cost estimate is based on a mill feed blend of approximately 75% fresh ore and 25% oxide ore, in line with the 2010 and 2010-2011 operating budgets. It is again referenced that the feed blend projected does not necessarily reflect the feed blend anticipated from the actual mining plan in any given year. AMC believes that, for the total mining plan through to 2016, an average split of mill feed blend at 75% fresh ore and 25% oxide ore is not unreasonable.

The total cost for each processing plant cost centre was factored depending on the classification of costs as fixed, variable or a combination of both. The total costs for each area were treated against the processing plant 2010 operation budget to derive operating costs per tonne and operating costs per ounce.

The operating cost estimate for mining assumes a reduction in cost over Financial-Year-to-May 2010 levels of about 20%. In consideration of difficulties that would normally be associated with the first year of mining and economies of scale that should result from the planned production increase, AMC believes that the projected cost levels are reasonable but that all appropriate actions to control and reduce costs should be rigorously pursued

The operating cost per tonne and the operating cost per ounce for each scenario were updated by SGO to reflect the 2010-2011 operating budget, as presented in Section 22.3. This update allows direct comparisons between the upgrade scenarios and the 2010-2011 operating budget.


140

The forecast production data and processing costs for the 3.5 mtpa and 4.0 mtpa scenarios, in line with the forecast head grade and ore blend for the 2010-2011 operational budget, are presented in Table 22.9.

Table 22.9 Projected Expansion Scenario Production Data

Unit

2010 - 2011 Budget

3.5 mtpa Case

4.0 mtpa Case

Tonnes Milled Dry tonnes 2,441,351 3,500,000 4,000,000

Throughput Rate TPOH 293 421 481

Operating Time % 95.0 95.0 95.0

Head Grade g/t 1.91 1.91 1.91

Recovery % 90.0 90.0 89.8

Gold Production Oz 134,991 193,435 220,689

Total cost (000’s) $ 37,161 46,135 51,641

Cost per tonne $ / t 15.22 13.18 12.91

Cost per ounce $ / oz 275 239 234

The Phase 1 expansion is forecast to reduce the processing operating cost by $2.04 per tonne, a decrease of approximately 13%. The cost per ounce is forecast to reduce by $36 per ounce, resulting in a total processing cost of $239 USD per ounce.

The Phase 1 expansion is projected to deliver 193,435 ounces based on the 2010-2011 budget head grade of 1.91 g/t Au.

The Phase 2 expansion offers a minor additional drop in operating costs but also a forecast increase in gold production of approximately 14% based on Phase 1. The total reduction in processing operating costs is estimated at US$2.31 per tonne, or 15%.

At the SGO nominated head grade of 2.1 g/t Au, the forecast gold production in Phase 1 is approximately 212,500 ounces per year. The approximate gold production forecast for Phase 2 is 242,500 ounces.

The operating costs were estimated at a scoping study level but are deemed to have validity based on calendar year 2009 operating costs and the economies of scale and improvement opportunities described above.

In addition, the impact of the oxide:fresh ore blend on the plant operating costs has been assessed by SGO. The projected operating costs and physical production data are presented in Appendix B, from which the following graph is abstracted.


141

Figure 22.6 Operating Costs versus Feed Blend

$16.01

$15.22

$11.86

$14.15

$12.95

$11.88

$10.94

$10.24

$9.61

$9.00

$10.00

$11.00

$12.00

$13.00

$14.00

$15.00

$16.00

$17.00

0% 20% 40% 60% 80% 100%

Operating Cost ($/t)

Oxide Blend Component

Operating Costs ‐ Feed Blend

Base Case With Secondary Crushing

The physical production data and the operating costs were derived from the Aurifex Scoping Study.

22.9 Economic Analysis and Mine Life

The Mineral Reserves presented in Section 16 and the mining schedule with the expanded mill scenario presented in this section form the basis of the financial model, which is shown in Table 22.10. Note that mill throughputs reflect the modelling with respect to the fresh:oxide proportions as shown in Appendix B

In addition, the following financial and market related assumptions have been included in the financial model:

Spot gold price of US$1200 per ounce through FY 2011 and US$1100 per ounce thereafter, as forecast by SGO. AMC notes that this level of pricing is higher than that used for other contemporary studies but also acknowledges that it does not unfairly reflect the current gold market situation. Project sensitivity to variation in gold price, among other factors, is discussed below.

Deferred hedge payments through FY 2011

Royalty payments of 3% to the government of Senegal

Corporate taxes of 25% beginning in 2015

No allowance for closure costs or salvage

In the current Life-of-Mine-Plan the mining ceases in 2016, stockpiled ore is processing through 2018, and rehabilitation is completed in 2019.


142

Table 22.10 Cash Flow Model for Sabodala Sabodala Gold Operation

Fiscal Year 2011 2012 2013 2014 2015 2016 2017 2018 2019 Total

Ore mined '000t 2,381 4,738 5,133 4,169 4,970 5,878 27,269

Waste mined '000t 21,163 18,841 27,846 26,869 20,655 18,937 134,311

Total mined '000t 23,544 23,579 32,979 31,039 25,624 24,815 161,580

Strip ratio 8.9 4.0 5.4 6.4 4.2 3.2 4.9

Ore mined grade g/t 1.36 1.49 1.73 1.46 1.56 1.42

Ounces mined ounces 104,102 226,976 285,511 195,714 249,254 268,356

Ore milled '000t 2,428 2,831 3,674 3,983 4,118 4,498 4,353 3,999 29,882

Grade g/t 1.85 2.04 1.90 1.71 1.78 1.74 0.96 0.50 1.52

Contained gold ounces 144,398 185,655 224,421 218,960 235,661 251,611 134,349 64,283 1,459,340

Recovered gold ounces 130,389 167,728 202,289 197,255 212,090 228,671 119,777 57,510

Recovery % 90.3% 90.3% 90.1% 90.1% 90.0% 90.9% 89.2% 89.5%

Gold production ounces 130,389 167,728 202,289 197,255 212,090 228,671 119,777 57,510 1,315,709

1 troy ounce = 31.103

Revenue

Hedge sales ounces 0 70,000 88,500 88,000 0 0 0 0 246,500

Spot sales ounces 130,389 97,728 113,789 109,255 212,090 228,671 119,777 57,510 1,069,209

Total sales ounces 130,389 167,728 202,289 197,255 212,090 228,671 119,777 57,510 1,315,709

Hedge sales price US$/oz $846 $846 $810 $790

Spot sales price US$/oz $1,200 $1,100 $1,100 $1,100 $1,100 $1,100 $1,100 $1,100

Average sales price US$/oz $1,200 $994 $973 $962 $1,100 $1,100 $1,100 $1,100 $1,056

Hedge sales revenue US$m 0.0 59.2 71.7 69.5 0.0 0.0 0.0 0.0

Spot sales revenue US$m 156.5 107.5 125.2 120.2 233.3 251.5 131.8 63.3

Revenue US$m 156.5 166.7 196.9 189.7 233.3 251.5 131.8 63.3 1,389.6

Costs

Mining (US$/t mined) 2.20 2.10 2.00 2.00 2.00 2.00 2.00 2.00

Processing (US$/t milled) 15.00 14.00 13.00 13.00 13.00 13.00 13.00 13.00

General & Admin (US$pa) 12.0 10.0 10.0 10.00 10.00 10.00 10.00 10.00 16.2

Operating Costs

Mining US$m 51.8 49.5 66.0 62.1 51.2 49.6 0.0 0.0 0.0 330.2

Processing US$m 36.4 39.6 47.8 51.8 53.5 58.5 56.6 52.0 0.0 396.2

General & Admin US$m 12.0 10.0 10.0 10.0 10.0 10.0 10.0 7.0 16.2 95.2

Refining & Freight US$m 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.0 6.4

By-product credits US$m (0.4) (0.4) (0.4) (0.4) (0.4) (0.4) (0.4) (0.4) 0.0 (3.2)

Oil hedge realised

Operating costs US$m 100.6 99.5 124.1 124.3 115.2 118.5 67.0 59.4 16.2 824.8

Royalty 3.0% 4.7 5.5 6.7 6.5 7.0 7.5 4.0 1.9 0.0 43.8

Total Costs US$m 105.3 105.1 130.8 130.8 122.2 126.0 70.9 61.3 16.2 868.6

Cash cost per ounce US$/oz 808 626 647 663 576 551 592 1,066 660

Profit & Loss

Revenue US$m 156.5 166.7 196.9 189.7 233.3 251.5 131.8 63.3 0.0 1,389.6

Costs US$m (105.3) (105.1) (130.8) (130.8) (122.2) (126.0) (70.9) (61.3) (16.2) (868.6)

EBITDA US$m 51.2 61.6 66.1 58.9 111.1 125.5 60.8 2.0 (16.2) 521.0

Cash Flow

Capital expenditure US$m (32.4) (61.8) (12.3) (7.7) (2.7) (1.0) (0.7) (0.0) 0.0 (118.5)

Project f inance etc (13.7) (11.8) (9.8) 0.0 (2.2) (15.2) 0.0 0.0 0.0 (52.7)

Net Cash Flow US$m 5.0 (12.0) 44.0 51.3 106.2 109.3 60.1 1.9 (16.2) 349.7Undiscounted Cash Flows 5.0 (12.0) 44.0 51.3 106.2 109.3 60.1 1.9 (16.2) 349.7

PV of Cash Flows 5.0% 4.9 (11.1) 38.9 43.2 85.3 83.6 43.8 1.3 (10.7) 279.3

PV of Cash Flows 10.0% 4.8 (10.4) 34.7 36.7 69.2 64.7 32.4 0.9 (7.2) 225.8

Capital Expenditure

Mining - Trucks 3.3 3.3

Mining - Drills 2.9 1.5 4.4

Mining - Shovels 3.0 3.0

Mining Other 3.7 5.8 4.9 4.1 2.6 0.9 0.1 22.1

Processing Plant 26.7 47.1 1.1 2.1 0.1 0.1 0.6 0.0 77.8

Tailings Dam 2.0 6.0 8.0

Total 32.4 61.8 12.3 7.7 2.7 1.0 0.7 0.0 118.5

Payback of the expansion related capital is achieved one year after the completion of the expansion project.

Sensitivity analysis indicates that the project cash flow is least sensitive to capital and operating cost and most sensitive to gold price and ore grade. This is shown in chart form in Figure 22.4.


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Figure 22.7 Sensitivities

As an indication of the project sensitivity to a combination of factors AMC has also estimated possible ‘best’ case and ‘worst’ case scenarios, as shown in Table 22.11 below.

Table 22.11 Possible ‘Best’ and ‘Worst’ Case Scenarios

Scenario Discounted (5%) Cash

Flow US$M

Possible ‘Best’ Case (Gold Price +10%, Ore Grade +10%, Capital Cost -10%, Operating Cost -10%)

568.4

Possible ‘Worst’ Case (Gold Price -20%, Ore Grade -10%, Capital Cost +30%, Operating Cost +10%)

-100.2

This illustrates the upside to higher long term gold prices whilst demonstrating that, in a falling gold price environment, attention to maintenance and control of ore grade would be critical.


144

23 QUALIFIED PERSONS’ CERTIFICATES

P R Stephenson PGeo AMC Mining Consultants (Canada) Limited Suite 1330, 200 Granville Street Vancouver, British Columbia V6C 1S4 Canada

Telephone: +1 604 669 0044 Fax: +1 604 669 1120 Email: [email protected]

1. I, Patrick Roger Stephenson, PGeo, BSc (Hons) FAusIMM (CP), MCIM, FAIG, do hereby certify that I am Principal Geologist and Regional Manager of AMC Mining Consultants (Canada) Limited, Suite 1330, 200 Granville Street, Vancouver, British Columbia V6C 1S4.

2. I graduated with a BSc (Hons) in Geology from the University of Aberdeen, Scotland in 1971.

3. I am a registered member of the Association of Professional Engineers and Geoscientists of BC, a Fellow of The Australasian Institute of Mining and Metallurgy (Chartered Professional), a Member of the Canadian Institute of Mining, Metallurgy and Petroleum and a Fellow of the Australian Institute of Geoscientists.

4. I have worked as a geologist for a total of 39 years since my graduation from university.

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 Sections 1-3, and 14, of the technical report titled “Sabodala Gold Project, Senegal, West Africa. Technical Report for Teranga Gold Corporation”, dated 27 September 2010, amended 7 October 2010 and 1 November 2010 (the “Technical Report”). I have not visited the Sabodala Project.

7. I have not had prior involvement with the property that is the subject of the Technical Report.

8. I am independent of the issuer applying all of the tests in section 1.4 of National Instrument 43-101.

9. I have read National Instrument 43-101 and Form 43-101F1, and the Technical Report has been prepared in compliance with that instrument and form.

10. As of the date of this certificate, to the best of my information, knowledge and belief, the Technical Report contains all scientific and technical information that is required to be disclosed to make the Technical Report not misleading.

Dated 1 November 2010 Original signed and sealed by Patrick Roger Stephenson, PGeo

145

J Morton Shannon PGeo AMC Mining Consultants (Canada) Limited Suite 1330, 200 Granville Street Vancouver, British Columbia V6C 1S4 Canada

Telephone: +1 604 669 0044 Fax: +1 604 669 1120 [email protected]

1. I, John Morton Shannon, PGeo, do hereby certify that I am Principal Geologist and Group Manager Geology for AMC Mining Consultants (Canada) Limited, Suite 1330, 200 Granville Street, Vancouver, British Columbia V6C 1S4.

2. I graduated with a BA Mod Nat. Sci. in Geology from Trinity College Dublin, Ireland in 1971.

3. I am a registered member of the Association of Professional Engineers and Geoscientists of British Columbia, and the Association of Professional Geoscientists of Ontario, and a member of the Canadian Institute of Mining, Metallurgy and Petroleum

4. I have practiced my profession continuously since 1991, and have been involved in mineral exploration and mine geology for a total of 39 years since my graduation from university. This has involved working in Ireland, Zambia, Canada, and Papua New Guinea. My experience is principally in base metals and gold.


6. I am responsible for the preparation of Sections 4-8, 16 Mineral Resources and 17-19, of the technical report titled “Sabodala Gold Project, Senegal, West Africa. Technical Report for Teranga Gold Corporation”, dated 27 September 2010, amended 7 October 2010 and 1 November 2010 (the “Technical Report”). I have not visited the Sabodala Project.

7. I have not had any prior involvement with the property that is the subject of the Technical Report.




Dated this 1 November 2010

Original signed and sealed by John Morton Shannon, PGeo

146

B O’Connor PGeo AMC Mining Consultants (Canada) Limited Suite 1330, 200 Granville Street Vancouver, British Columbia V6C 1S4 Canada

Telephone: +1 604 669 0044 Fax: +1 604 669 1120 Email: [email protected]

1. I, Brian F J O’Connor, PGeo, do hereby certify that I am Principal Geologist of AMC Mining Consultants (Canada) Limited, Suite 1330, 200 Granville Street, Vancouver, British Columbia V6C 1S4.

2. I am a graduate of the University of New Brunswick in 1985 with a Bachelor of Science degree in Geology.

3. I am a registered member of the Association of Professional Engineers and Geoscientists of BC.

4. I have continually worked as a geologist for a total of 24 years.


6. I am responsible for the preparation of Sections 9-13 of the technical report titled “Sabodala Gold Project, Senegal, West Africa. Technical Report for Teranga Gold Corporation”, dated 27 September 2010, amended 7 October 2010 and 1 November 2010 (the “Technical Report”). I visited the Sabodala Project on 8-14 July 2010.





Dated 1 November 2010


Brian F J O’Connor, PGeo

147

A Riles AMC Mining Consultants (Canada) Limited 8 Winbourne Street Gorokan NSW 2263, Australia

Telephone: +61 2 4393 9964 Email: [email protected]

1. I, Alan Riles, BMet (Class 1), Grad Dipl Prof Management, do hereby certify that I am Principal Metallurgical Consultant of Riles Integrated Resource Management Ltd, of 8 Winbourne Street, Gorokan, NSW 2263, Australia.

2. I graduated with a BMet (Class 1) in Metallurgy from the Sheffield University, UK in 1974.

3. I am a Member of The Australasian Institute of Mining and Metallurgy (Chartered Professional).

4. I have worked as a metallurgist for a total of 35 years since my graduation from university.


6. I am responsible for the preparation of Section 15, part 22 and contributed to 18 and 19, of the technical report titled “Sabodala Gold Project, Senegal, West Africa. Technical Report for Teranga Gold Corporation”, dated 27 September 2010, amended 7 October 2010 and 1 November 2010 (the “Technical Report”). I have not visited the Sabodala Project.





Dated 1 November 2010 Original signed and sealed by

Alan Riles

148

A Ebrahimi PEng

AnoMine Tech, 3730 Calder Avenue, North Vancouver, British Columbia V7N 3S2.Canada

Telephone: +1 604 202 6166 Email: [email protected]

1. I, Anoush Ebrahimi, PEng, PhD, MASc, BASc, do hereby certify that I am Principal Mining Engineer of AnoMine Tech, 3730 Calder Avenue, North Vancouver, British Columbia V7N 3S2.

2. I am a graduate of Kerman University, Iran (B.A.Sc., 1990); Poly Technique Tehran University, Iran (M.A.Sc., 1993); University of British Columbia (Ph.D., 2004).

3. I am a registered member of the Association of Professional Engineers and Geoscientists of BC.

4. I have worked as a mining engineer for a total of 20 years since my graduation from university.


6. I am responsible for the preparation of Section 16 Mineral Reserves, part 22 and contributed to 18 and 19, of the technical report titled “Sabodala Gold Project, Senegal, West Africa. Technical Report for Teranga Gold Corporation”, dated 27 September 2010, amended 7 October 2010 and 1 November 2010 (the “Technical Report”). I visited the Sabodala Project on 20-25 August 2010.





Dated 1 November 2010 Original signed and sealed by

Anoush Ebrahimi, PEng

APPENDIX A

SABODALA PROCESSING PLANT PHASE 1 EXPANSION

CONCEPTUAL FLOW SHEETS

Appendix A Figure 1: Secondary crushing facility

Appendix A Figure 2: Grinding circuit overview

Appendix A Figure 3: Leaching\CIL circuit overview

Appendix A Figure 4: Tailings handling circuit overview

APPENDIX B

SABODALA PROCESSING PLANT

PROJECTED OPERATING COST ESTIAMTES AS A FUNCTION OF FEED BLEND

Appendix B Table 1: Projected operating costs as a function of feed blend

Production Schedule Base Case Base Case

100% Fresh

Base Case

100% Oxide

100% Fresh -

Pre Crush

80% Fresh -

Pre Crush

60% Fresh -

Pre Crush

40% Fresh -

Pre Crush

20% Fresh -

Pre Crush

100% Oxide -

Pre Crush

Mill Throughput (t) 2,441,351 2,295,930 2,995,920 3,503,562 4,001,218 4,498,873 4,996,529 5,494,184 5,991,840

Operating Time (%) 95.0% 95.0% 95.0% 95.0% 95.0% 95.0% 95.0% 95.0% 95.0%

Site Power Consumed kWhr 92,291,558 92,372,142 75,034,637 119,589,191 119,333,812 115,650,538 108,194,538 100,738,538 127,165,444

Cost KPI's

Total Processing Cost ($) 37,161,355$ 36,765,581$ 35,530,934$ 49,561,348$ 51,809,802$ 53,424,356$ 54,678,219$ 56,243,114$ 57,568,704$

Cost Per Tonne Milled ($/t) 15.22$ 16.01$ 11.86$ 14.15$ 12.95$ 11.88$ 10.94$ 10.24$ 9.61$

Site Power Cost $/kWhr 0.22$ 0.20$ 0.21$ 0.20$ 0.20$ 0.21$ 0.21$ 0.22$ 0.21$

Power Cost $/t 8.25$ 8.15$ 5.31$ 6.90$ 6.11$ 5.36$ 4.66$ 4.09$ 4.37$

Plant Section Costs

Processing Overheads $/t 9.19$ 9.69$ 6.58$ 7.78$ 6.87$ 6.05$ 5.30$ 4.69$ 4.86$

Crushing $/t 0.43$ 0.44$ 0.41$ 0.69$ 0.71$ 0.75$ 0.81$ 0.88$ 0.36$

Milling & Classification $/t 1.17$ 1.18$ 1.16$ 1.33$ 1.38$ 1.46$ 1.61$ 1.76$ 1.12$

CIL $/t 0.07$ 0.07$ 0.07$ 0.08$ 0.08$ 0.09$ 0.10$ 0.10$ 0.07$

Elution & Gold Room $/t 0.13$ 0.13$ 0.12$ 0.14$ 0.15$ 0.16$ 0.17$ 0.19$ 0.12$

Plant Tailings $/t 0.04$ 0.04$ 0.04$ 0.04$ 0.05$ 0.05$ 0.05$ 0.06$ 0.04$

Plant Water System $/t 0.01$ 0.01$ 0.01$ 0.01$ 0.01$ 0.01$ 0.01$ 0.01$ 0.01$

Air & Reagents $/t 3.06$ 3.27$ 2.54$ 3.28$ 3.00$ 2.69$ 2.32$ 2.03$ 2.56$

Laboratory $/t 0.01$ 0.01$ 0.01$ 0.00$ 0.00$ 0.00$ 0.00$ 0.00$ 0.00$

Metallurgy Overheads $/t 0.26$ 0.28$ 0.21$ 0.18$ 0.16$ 0.14$ 0.13$ 0.12$ 0.11$

Workshop $/t 0.82$ 0.87$ 0.67$ 0.58$ 0.51$ 0.46$ 0.41$ 0.38$ 0.34$

Dams & External Services $/t 0.03$ 0.03$ 0.03$ 0.03$ 0.03$ 0.02$ 0.02$ 0.02$ 0.02$

TOTAL $/t 15.22$ 16.01$ 11.86$ 14.15$ 12.95$ 11.88$ 10.94$ 10.24$ 9.61$

Key Consumables

HFO $/t 7.23$ 6.84$ 4.26$ 5.80$ 5.07$ 4.37$ 3.68$ 3.12$ 3.61$

Grinding Media $/t 1.78$ 1.95$ 1.35$ 1.95$ 1.74$ 1.52$ 1.27$ 1.07$ 1.35$

Labour (all) $/t 1.48$ 1.58$ 1.21$ 1.03$ 0.90$ 0.80$ 0.72$ 0.66$ 0.60$

G & A $/t 0.86$ 0.91$ 0.70$ 0.60$ 0.52$ 0.46$ 0.42$ 0.38$ 0.35$

Cyanide $/t 0.59$ 0.67$ 0.41$ 0.67$ 0.59$ 0.50$ 0.41$ 0.34$ 0.41$

Mill Liners $/t 0.65$ 0.65$ 0.65$ 0.76$ 0.79$ 0.84$ 0.93$ 1.02$ 0.65$

Mech Spares $/t 0.33$ 0.33$ 0.33$ 0.38$ 0.40$ 0.42$ 0.47$ 0.51$ 0.32$

Lime $/t 0.43$ 0.39$ 0.52$ 0.39$ 0.40$ 0.39$ 0.37$ 0.36$ 0.52$

Crusher Liners $/t 0.14$ 0.14$ 0.14$ 0.16$ 0.16$ 0.18$ 0.19$ 0.21$ 0.13$

Appendix B Figure 1: Projected operating costs as a function of feed blend

$16.01

$15.22

$11.86

$14.15

$12.95

$11.88

$10.94

$10.24

$9.61

$9.00

$10.00

$11.00

$12.00

$13.00

$14.00

$15.00

$16.00

$17.00

0% 20% 40% 60% 80% 100%

Op

era

tin

g C

ost

($

/t)

Oxide Blend Component

Operating Costs - Feed Blend

Base Case With Secondary Crushing

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