Prepared for EARTHSTONE MINING AND MINERALS...

JORC COMPLIANT MINERAL RESERVE STATEMENT OF

TOURZA IRON ORE PROJECT IN MOROCCO

Prepared for EARTHSTONE MINING AND MINERALS LIMITED

Vanterpool Plaza, 2nd Floor, Wickhams Cay I, Road Town, Tortola, British Virgin Islands

IMC-SRG: 707, Task Order 32 April 2012

Prepared By IMC–SRG CONSULTING (P) LIMITED (An IMC-DMT Group Company) Regd Off: 135 Jodhpur Park Kolkata 700068, India

IMC –SRG CONSULTING (P) LIMITED

Earthstone IMC April 2012

April 2012 Board of Directors Earthstone Mining and Minerals Limited Vanterpool Plaza, 2nd Floor, Wickhams Cay I Road Town, Tortola, British Virgin Islands Dear Sirs,

JORC COMPLIANT MINERAL RESERVE STATEMENT FOR TOURZA IRON ORE PROJECT, MOROCCO

Purpose of the Report

IMC-SRG Consulting (P) Limited, an IMC-DMT Group Company (referred as “IMC”, “IMC-SRG” or “the Consultant”) has been commissioned by Earthstone Mining and Minerals Limited (“Earthstone” or “the Client”) to carry out exploration and prepare a JORC compliant mineral reserve statement of Tourza iron ore prospect in Morocco (“the Project”).

Capability and Independence

IMC operates as an independent technical consultant providing exploration, resource evaluation, mining engineering and mine valuation services to clients. IMC has received and will receive professional fees for the preparation of this report. However, neither IMC nor any of its directors, staff or sub-consultants who contributed to this report has any interest in:

The Company or Client; or

The mining assets reviewed; or

The outcome of any potential financing initiative, including a share offering

Inherent Exploration & Mining Risk

Exploration & mining business relies upon the accuracy of determination as to whether a given deposit has significant resources and reserves. The reliance is important as the reported resources and reserves are only estimates and do not represent with certainty that estimated resources and reserves will be recovered or that they will be recovered at the rates estimated. Resource and Reserve estimates are based on limited sampling, and inherently carry the uncertainty that samples may not be representative. Basically, resource exploration and development is a speculative business, characterized by a number of significant risks. Estimation of resource and reserve is only one such risk.

Whilst an effective management team can identify the known risks and take measures to manage and mitigate these risks, there is still the possibility for unexpected and unpredictable events to occur. It is therefore not

135, Jodhpur Park Kolkata - 700068

West Bengal India

Tel: +91 33 24149826 Fax: +91 33 24148761

Email: [email protected]

www.imcgcl.com

http://www.imcgcl.com/

IMC –SRG CONSULTING (P) LIMITED


possible to remove all risks or state with certainty that an event that may have a material impact on the development or subsequent operation of a mine, will not occur.

This report should be treated as confidential and must not be reproduced, copied, partially or in full, loaned or disposed, directly or indirectly, nor be used for any purpose other than for which it is specifically furnished, without the prior written consent of Earthstone Mining and Minerals Limited or IMC-SRG Consulting (P) Limited.

Consultant Legal Entity: IMC-SRG Consulting (P) Ltd Consultant Address: 135, Jodhpur Park

Kolkata - 700068 West Bengal

India

Tel: +91 33 24149826 Fax: +91 33 24148761

Email: [email protected] www.imcgcl.com

Date: April 2012 Project Number: IMC-SRG 707 TO 32

Project Director: Pankaj Kr Sinha Director, IMC-SRG

Project Manager: Dr MM Mukherjee Principal Resource Geologist, IMC-SRG

Compiled By: Somnath Gain Senior Consultant (Modelling), IMC-SRG

Principal Resource Geologist: Dr E Bernhard Teigler Manager Business Segment Geology, Appraisal and Development, DMT

Principal Mining Engineer: TN Gunaseelan Managing Director, IMC-SRG Director, IMC Group Consulting

Client Legal Entity: Earthstone Mining and Minerals Limited

Client Address: Vanterpool Plaza, 2nd Floor, Wickhams Cay I,

Road Town, Tortola, British Virgin Islands

http://www.imcgcl.com/

JORC Compliant Mineral Reserve Statement Page i Tourza Iron Ore Project, Morocco


CONTENTS 1. EXECUTIVE SUMMARY ......................................................................................................................... 2 1.1. INTRODUCTION ....................................................................................................................................... 2 1.2. LOCATION AND ACCESSIBILITY........................................................................................................ 2 1.3. GEOLOGY AND MINERALISATION .................................................................................................... 2 1.4. LOCAL GEOLOGY OF THE ORE ZONES ............................................................................................ 2 1.5. NATURE OF THE EVIDENCE................................................................................................................. 2 1.6. QA-QC AND STATISTICAL ANALYSIS............................................................................................... 3 1.7. GEOLOGICAL MODELING ..................................................................................................................... 3 1.8. MINERAL RESOURCE ESTIMATE ....................................................................................................... 3 1.9. MINING ....................................................................................................................................................... 4 1.10. IRON ORE PROCESSING ......................................................................................................................... 4 1.11. ENVIRONMENT ISSUES ......................................................................................................................... 5 1.12. MARKETING .............................................................................................................................................. 5 1.13. FINANCIALS .............................................................................................................................................. 5 1.14. PROVED RESERVE................................................................................................................................... 6 1.15. CONCLUSIONS.......................................................................................................................................... 7 2. INTRODUCTION ....................................................................................................................................... 9 2.1. THE ASSIGNMENT ................................................................................................................................... 9 2.2. STAGES OF WORK ................................................................................................................................... 9 2.3. REPORTING STANDARD ........................................................................................................................ 9 2.4. EARTHSTONE GROUP ............................................................................................................................ 9 2.5. PROJECT TEAM ...................................................................................................................................... 10 2.6. ASSET ........................................................................................................................................................ 11 2.7. LOCATION................................................................................................................................................ 13 2.8. ACCESSIBILITY ...................................................................................................................................... 14 2.9. PHYSIOGRAPHY..................................................................................................................................... 15 2.10. CLIMATE .................................................................................................................................................. 15 2.11. HISTORICAL DATA AVAILABLE....................................................................................................... 15 3. GEOLOGY................................................................................................................................................. 17 3.1. STRATIGRAPHY AND TECTONICS ................................................................................................... 17 3.2. REGIONAL GEOLOGY .......................................................................................................................... 20 3.3. ECONOMIC GEOLOGY ......................................................................................................................... 20 3.4. LOCAL GEOLOGY .................................................................................................................................. 21 3.5. LOCAL STRATIGRAPHY AND TECTONICS .................................................................................... 21 3.6. GEOLOGY OF THE AREA ..................................................................................................................... 21 3.7. MINERALISATION ................................................................................................................................. 24 3.8. THE NATURE OF THE DEPOSIT ......................................................................................................... 24 3.9. FLOAT ORE .............................................................................................................................................. 26 3.10. STRUCTURE............................................................................................................................................. 26 3.11. MINERALOGRAPHIC STUDY.............................................................................................................. 26 4. MINERAL RESOURCES ......................................................................................................................... 29 4.1. PRINCIPLES OF RESOURCE CALCULATION.................................................................................. 29 4.2. PRINCIPLES OF THE JORC CODE ...................................................................................................... 29 4.3. NATURE OF THE EVIDENCE............................................................................................................... 30 4.3.1. MAPPING AND SAMPLING.................................................................................................................. 30 4.3.2. CHANNEL SAMPLING........................................................................................................................... 30 4.3.3. DRILLING DATA..................................................................................................................................... 31 4.3.4. SURVEY .................................................................................................................................................... 34 4.4. SAMPLING AND ASSAY PROCEDURE ............................................................................................. 34 4.4.1. CORE LOGGING AND SAMPLING ..................................................................................................... 34 4.4.2. SAMPLE PREPARATION & ASSAY PROCEDURE .......................................................................... 35 4.4.3. EXTERNAL CHECK SAMPLE ANALYSIS......................................................................................... 36 4.4.4. REGRESSION ANALYSIS...................................................................................................................... 40 4.4.5. SPECIFIC GRAVITY ............................................................................................................................... 40 4.4.6. QA/QC PROCEDURE .............................................................................................................................. 41 4.4.7. DRILLHOLE DATABASE INTEGRITY ............................................................................................... 42

JORC Compliant Mineral Reserve Statement Page ii Tourza Iron Ore Project, Morocco


4.4.8. BALANCE AREA ..................................................................................................................................... 42 5. STATISTICAL EVALUATION OF THE OREBODY.......................................................................... 43 5.1. STATISTICAL EVALUATION OF VARIOUS ELEMENTS.............................................................. 43 5.2. REGRESSION ANALYSIS BETWEEN DIFFERENT ELEMENTS .................................................. 48 6. GEOLOGICAL MODELLING ................................................................................................................ 53 6.1. GEOLOGICAL DATABASE ................................................................................................................... 53 6.2. BOREHOLE DATA ENTRY AND VALIDATION .............................................................................. 53 6.3. LITHOLOGY SECTIONAL ANALYSIS ............................................................................................... 53 6.4. TOPOGRAPHIC MODEL ........................................................................................................................ 56 6.5. GRADE SECTIONAL ANALYSIS......................................................................................................... 57 6.6. SOLID MODEL ......................................................................................................................................... 57 6.7. OREBODY VOLUME .............................................................................................................................. 57 6.8. COMPOSITING OF BOREHOLE DATA .............................................................................................. 58 6.9. BLOCK MODEL AND GRADE ESTIMATION ................................................................................... 58 6.9.1. BLOCK MODEL SUMMARY ................................................................................................................ 58 6.9.2. BLOCK MODEL CONSTRAINTS ......................................................................................................... 59 6.9.3. BLOCK MODEL ATTRIBUTES ............................................................................................................ 59 6.9.4. SPECIFIC GRAVITY ............................................................................................................................... 60 6.10. RESOURCE ESTIMATION BY MODELING....................................................................................... 60 6.10.1. BLOCK MODEL VOLUME COMPARISONS ..................................................................................... 61 6.10.2. BLOCK MODEL VALIDATION ............................................................................................................ 61 6.11. RESOURCE ASSESSMENT BY CONVENTIONAL METHOD ........................................................ 63 7. STATEMENT OF JORC MINERAL RESOURCES ............................................................................. 65 7.1. TOTAL RESOURCE CONFIDENCE LIMIT ........................................................................................ 66 7.2. ORE QUALITY ......................................................................................................................................... 67 8. MINING ..................................................................................................................................................... 69 8.1. MINING METHOD................................................................................................................................... 69 8.2. OPEN PIT OPTIMIZATION .................................................................................................................... 69 8.3. OPEN PIT DESIGN .................................................................................................................................. 70 8.4. GEOTECHNICAL AND HYDRO-GEOLOGICAL ISSUES................................................................ 70 8.5. PROVED RESERVES .............................................................................................................................. 70 8.6. LIFE OF MINE PRODUCTION SCHEDULE ....................................................................................... 71 8.7. HAUL ROAD AND SITE LAYOUT ...................................................................................................... 71 8.8. EQUIPMENT ............................................................................................................................................. 71 9. IRON ORE PROCESSING PLANT ........................................................................................................ 73 10. INFRASTRUCTURE ................................................................................................................................ 75 11. ENVIRONMENT ASPECTS ................................................................................................................... 76 12. MARKETING ............................................................................................................................................ 77 13. FINANCIALS ............................................................................................................................................ 79 13.1. PRODUCTION SCHEDULE ................................................................................................................... 79 13.2. CAPEX ....................................................................................................................................................... 79 13.3. OPERATING COST.................................................................................................................................. 79 13.4. ECONOMIC VIABILITY......................................................................................................................... 80 14. JORC COMPLIANT RESERVE STATEMENT .................................................................................... 81 15. CONCLUSIONS........................................................................................................................................ 82

LIST OF TABLES

Table 2.7-1 Concession Coordinates for Tourza Iron Ore Project ............................................................ 14 Table 4.3.2-1 Channel samples details ........................................................................................................... 31 Table 4.4.2-1 Summary of analysis result...................................................................................................... 35 Table 4.4.3-1 Samples sent to external laboratory ........................................................................................ 36 Table 4.4.5-1 Physical property of iron ore ................................................................................................... 41 Table 6.1-1 Geological database structure .................................................................................................. 53 Table 6.3-1 Details of the section lines ....................................................................................................... 55 Table 6.7-1 Volumes of solid model ........................................................................................................... 58 Table 6.9.3-1 Block model attributes ............................................................................................................. 60 Table 6.10.1-1 Solid and block model volume comparison............................................................................ 61

JORC Compliant Mineral Reserve Statement Page iii Tourza Iron Ore Project, Morocco


Table 6.11-1 Fe distribution pattern in boreholes......................................................................................... 63 Table 7-1 Mineral Resource using Surpac at 25% Fe Cut-off ............................................................... 65 Table 7-2 Mineral Resource using Conventional Method ...................................................................... 66 Table 7.1-1 Confidence Limit of Estimated Tonnage (“Measured” Category)........................................ 66 Table 8.3-1 Final Pit Slope Criteria............................................................................................................. 70 Table 8.5-1 Tourza Mineable Reserve Estimate ........................................................................................ 70 Table 8.6-1 Tourza Open Pit LOM Production Schedule.......................................................................... 71 Table 8.8-1 Major Mining Equipment ........................................................................................................ 72 Table 13.1-1 Production Schedule................................................................................................................. 79 Table 13.2-1 Capex ........................................................................................................................................ 79 Table 13.3-1 Opex .......................................................................................................................................... 79 Table 14-1 JORC Compliant Proved Reserve Statement ......................................................................... 81

LIST OF FIGURES

Figure 2.4-1 Tourza Project Administration Structure ................................................................................ 10 Figure 2.6-1 Concession boundary plotted using Morocco Lambert Zone 2 system ................................ 12 Figure 2.6-2 Concession boundary plotted on satellite imagery................................................................. 13 Figure 2.7-1 Location of the deposit............................................................................................................. 14 Figure 2.11-1 Historical wells dug by the French.......................................................................................... 15 Figure 2.11-2 Graphical litho logs of historical wells dug by the French .................................................... 16 Figure 3.1-1 Regional geological map of Morocco ..................................................................................... 18 Figure 3.2-1 Geological map of Morocco .................................................................................................... 20 Figure 3.6-1 Generalized stratigraphic model for oolitic iron stones ......................................................... 22 Figure 3.6-2 Local geological map ............................................................................................................... 23 Figure 3.6-3 Structural map of the region .................................................................................................... 24 Figure 3.7-1 Representative cross-section of the area ................................................................................. 24 Figure 3.8-1 Descaling of massive quartzitic beds ...................................................................................... 25 Figure 3.9-1 Float Ore ................................................................................................................................... 26 Figure 4.2-1 Principles behind the JORC Code ........................................................................................... 30 Figure 4.3.3-1 Drilling is progress ................................................................................................................... 32 Figure 4.3.3-2 Borehole logging by IMC ........................................................................................................ 32 Figure 4.3.3-3 Borehole location within Tourza concession.......................................................................... 33 Figure 4.4.1-1 Borehole core logs stored at site.............................................................................................. 34 Figure 4.4.4-1 Regression between check sample and internal wet chemical analysis................................ 40 Figure 4.4.6-1 Dr Teigler verifying the core logs at site laboratory .............................................................. 41 Figure 5.1-1 Probability plot of Fe% (95% CI) ........................................................................................... 43 Figure 5.1-2 Histogram of Fe% .................................................................................................................... 44 Figure 5.1-3 Histogram of SiO2%................................................................................................................. 45 Figure 5.1-4 Histogram of Al2O3%............................................................................................................... 45 Figure 5.1-5 Histogram of TiO2% ................................................................................................................ 46 Figure 5.1-6 Histogram of P% ...................................................................................................................... 46 Figure 5.1-7 Histogram of S% ...................................................................................................................... 47 Figure 5.1-8 Histogram of V%...................................................................................................................... 47 Figure 5.2-1 Scatter plot of SiO2% vs Fe% ................................................................................................. 48 Figure 5.2-2 Scatter plot of Al2O3% vs Fe% .............................................................................................. 49 Figure 5.2-3 Scatter plot of TiO2% vs Fe%.................................................................................................. 49 Figure 5.2-4 Scatter plot of P% vs Fe% ....................................................................................................... 50 Figure 5.2-5 Scatter plot of S% vs Fe% ....................................................................................................... 50 Figure 5.2-6 Scatter plot of V% vs Fe%....................................................................................................... 51 Figure 5.2-7 Contour Plot of Thickness vs North, West ............................................................................ 51 Figure 5.2-8 Contour Plot of Fe vs North, West ......................................................................................... 52 Figure 5.2-9 Contour Plot of P% vs North, West ....................................................................................... 52 Figure 6.3-1 Cross section lines .................................................................................................................... 54 Figure 6.3-2 Section lines in Surpac ............................................................................................................. 55 Figure 6.3-3 Section along section line 5 ..................................................................................................... 56 Figure 6.4-1 Topographic surface (DTM) & contours ................................................................................ 56 Figure 6.6-1 Orebody outer line digitised in Surpac ................................................................................... 57

JORC Compliant Mineral Reserve Statement Page iv Tourza Iron Ore Project, Morocco


Figure 6.6-2 Orebody wireframe model ....................................................................................................... 57 Figure 6.9.1-1 Block model.............................................................................................................................. 59 Figure 6.9.2-1 Block model constrained by topography and orebody wireframes....................................... 59 Figure 6.10-1 Block model with Fe% grades................................................................................................. 60 Figure 6.10-2 Block model with Fe% > 50 .................................................................................................... 60 Figure 6.10-3 Block model with Fe% > 56 .................................................................................................... 61 Figure 6.10.2-1 Block model validation ............................................................................................................ 62 Figure 6.11-1 Frequency histogram of weighted average grade in 75 boreholes ........................................ 63 Figure 6.11-2 Frequency histogram of width of iron ore .............................................................................. 64 Figure 6.11-3 Width of iron ore zones in meters (x-axis) against corresponding Fe grade (%)................. 64 Figure 7-1 Grade vs tonnage curve............................................................................................................ 65 Figure 8.2-1 Optimised Pit Shell .................................................................................................................. 70 Figure 8.7-1 Backhoe operating at site ......................................................................................................... 71 Figure 9-1 Process recommended by NML .............................................................................................. 74

LIST OF ANNEXURE Annexure A Prospecting License of Tourza Concession Annexure B Summary of Previous Studies Annexure C Company Profile and Consent Letter from Drilling Agency Annexure D Borehole Litho Logs Annexure E Operating Procedure of Internal and External laboratory Annexure F Chemical Analysis Certificates from Laboratory Annexure G CV of the JORC Competent Person Annexure H CV of the technical team from IMC Annexure I The JORC Code

JORC Compliant Mineral Reserve Statement Page 1 Tourza Iron Ore Project, Morocco


EXECUTIVE SUMMARY



1. EXECUTIVE SUMMARY

1.1. Introduction • IMC-SRG Consulting (P) Ltd (“IMC-SRG” or “IMC” or the “Consultant”) has been commissioned by

Earthstone Mining and Minerals Limited (“Earthstone” or “Company” or the “Client”) to plan and supervise the exploration campaign leading to preparation of a JORC Compliant Mineral Resource and Reserve Estimates on the Mineral Asset of the Company comprising the Tourza Iron Ore Prospect (“Tourza”), located in Morocco.

1.2. Location and Accessibility • The Tourza concession is having an area of 16sqkm and is located ~16km north of Alnif, Meknès-

Tafilalet region of Morocco. Alnif village is approximately 530km west of Agadir on the N12 highway in Morocco.

1.3. Geology and Mineralisation • The area under investigation lies in the southern most Anti-Atlas structural domain of Morocco that

comprises major Precambrian granitic domes overlain by younger weakly deformed sediments ranging in age from Neoproterozoic to Lower Paleozoic.

• The Neoproterozoic Quartzite Series consists of siltstones, pelitic sandstones, conglomerates, thick quartzite layers and intercalated stromatolitic limestone.

• Mafic intrusive in the form of dolerites and gabbro’s intruded the quartzite almost concordantly. • Cambrian, Ordovician and Silurian sediments that are weakly deformed and metamorphosed overlie

the older rocks and host Oolitic iron formation.

1.4. Local Geology of the Ore Zones • The underlying geology of the concession area consists of ferruginised sandstones and mafic

metavolcanics to the immediate north as well as to the South East of the deposit, with phyllitic material underlying the actual iron ore deposit towards the north-western part of the deposit. A lateritic cap of ~1 m thickness is observed above the phyllite towards the North West of the deposit. Subsurface data indicate presence of slaty rock below the iron ore. The iron ore deposit occupy large hill measuring 1,000m x 500m with maximum height of about 80m above the river plain. The ore body is gently tilted at 5 to 10° towards the North East, thus forming an edge/cliff face along its southern boundary. The dip shows minor rolls and monoclinal flexures.

• Ironstone ores are iron-rich sedimentary deposits composed of oolitic to granular magnetite, hematite and/or goethite with varying amounts of silica, clay and carbonate that are intercalated with sandstone, shale and siltstone. The thickness of iron ore varies from 3m to 31.7m.

1.5. Nature of the Evidence • Initial reconnaissance was carried out in the concession during May 2011. • Subsequently, geological mapping was conducted during May to July 2011. Around 200 location

points were observed, ~10 channels were constructed and 28 samples were collected. Samples were analyzed using XRF analysis.

• Out of the 16sqkm concession area, nearly 1.5sqkm area of mineralization has been identified. • An exploration plan was prepared by IMC and drilling was initiated in August 2011. The exploration

drilling in Tourza concession was carried out on a grid of approximately 100m x 100m. A total of 88 boreholes were drilled in the concession.



• This report is based on results of 88 boreholes drilled as on 3rd February 2012. • Downhole orientation survey was not done considering the shallow depth of holes (average depth

~33m). • 1,555 samples were generated from 88 boreholes and were analyzed in Earthstone’s Mali laboratory

using wet chemical analysis process. • Out of the total samples, around 10% (144 samples, including 1 CRM) were sent to ALS Group’s Mali

laboratory for external checking. • The interhole variation in Fe from wet chemical analysis at internal lab and external lab is around

±2.5%, which is within the acceptable range. • About 100kg of various grades of iron ore was collected and handed over to external lab for Specific

Gravity analysis. Specific Gravity thus determined is 3.71 and has been used for resource calculation.

1.6. QA-QC and Statistical Analysis • Check samples, CRM, blank samples and duplicate samples were also prepared and sent to laboratory

to check the quality of performance of an assay laboratory as a part of QA-QC procedure. • Statistical analysis was performed for all data to check data consistency and continuity. • Inverse Distance Weighting (IDW) method of interpolation was applied for estimating the resources.

1.7. Geological Modeling • The geological model was developed using Surpac geological and mine planning software. • Based on Fe value and litho units, cross sectional profile of iron was created and subsequently solid

orebody model was constructed. A block model of 20m x 20m x 1m was created with sub-blocking at 5m x 5m x 0.5m.

1.8. Mineral Resource Estimate • The resource estimated has been classified as Measured category based on the data quality, drill hole

spacing and data continuity. • Based on solid and block modeling using Surpac, the mineral resource at Fe 25% cut-off is estimated

as below:

• Mineral Resource estimate was also validated by 2 different conventional methods of resource estimation (standard cross-section method & area-thickness method) with following results:

Type of Ore Measured Resource (Mt) Grade % FeMain Orebody 47.02 50.09Hangingwall Orebody 0.15 36.96 Total 47.17 50.05Float ore 3.69 >51Grand total 50.86 • There is a very good agreement in estimation of tonnage in conventional as well as block model

developed in Surpac. The difference is only 2.3%. • The error limit estimated by classical is worked out to +/- 6% on tonnage estimate. • Phosphorous is the only deleterious impurity with overall average of 0.7%.

Category Resource (Mt) Fe % SiO2 % Al2O3 % TiO2 % P % S % V %

Measured Resource 52.05 50.1 11.7 6.6 0.3 0.70 0.02 0.07



1.9. Mining • Although the market price is quite high as compared to mining cost, open pit optimization was carried

out using the resource block model and Whittle open pit optimization software. Total cost of mining and processing was considered at $22.6 /t of finished product. The price ex-mines was considered for optimization at $58/t.

• Based on the above, final pit was designed. Dilution was applied to the resources within the pit by adding 3% of low grade ore at 25% Fe and losses were applied at 2%.

• Since mining will be limited within the iron orebody and pit slopes of working benches is likely to be maintained at 15o to 20o in the initial years, slope stability is not likely to be an issue. However, during the mining operation geo-technical studies are proposed to arrive at appropriate pit slope angles.

• The boreholes did not intercept any water body. Also, the area has scanty rains and the mineralized body being mostly above valley level, no significant hydrological issues are anticipated.

• The final pit contains a total of 72.76 Mt of rock. There is a total of 22.66 Mt of waste rock and 50.10 Mt of economic iron ore.

• A production schedule was prepared based on discussion with Earthstone. The production schedule was designed to deliver 1.5 Mt/y of Direct Shippable Ore (DSO with >56% Fe) for initial 5 years followed by 4 Mt/y of Beneficiable Ore (BO) feed to the process plant. Year ROM (Mt/y) Fe (%) Waste (t) Strip Ratio Ore Type 1st to 5th year 1.5 56.71% - - DSO 6th to end of life 4.0 49.31% 1.90 0.47 BO

1.10. Iron Ore Processing MN Dastur Limited, India have been engaged for carrying out the processing studies. While further work is going on, as of now based on preliminary test works carried out at National Metallurgical Laboratory (NML), Jamshedpur, India and Institute of Minerals and Materials Technology (IMMT), Bhubaneshwar, India, IMC have summarized the observations below:

• The samples collected for test work indicate that the ore consists of mainly magnetite with sizeable hematite, small quantity of goethite and silicate minerals.

• The magnetite is easily separable at about 150 µm. However, hematite is difficult to liberate because of its close association with silicates even at small micron size. It may require grinding to -44 µm for any significant recovery of iron value.

• The grade of the samples tested ranged between 53-56% Fe. • The test works established the possibility of producing a composite concentrate analyzing +64% Fe

with about 55% yield. • Both the testing agencies found gravity separation not effective and adopted LIMS first for recovery of

magnetite concentrate. • LIMS test was carried out in two-stages, roughing and cleaning. IMMT fed the material at 106 µm for

all the stages of LIMS, whereas NML used 150 µm feed for roughing, concentrate obtained from which was reground to 74 µm for further liberation before subjecting the same to cleaning.

• Following basic process steps are envisaged at this stage: o Reducing the ROM ore to -150 µm through appropriate combination of crushers and grinding mill. o Treating the -150 µm ground material in Stage-I LIMS, further grinding of concentrate thus

produced to -74 µm size and final cleaning of the same in Stage-II LIMS to produce magnetic concentrate.

o Grinding of non-magnetics obtained from both the LIMS to 44 µm and subjecting the same to high intensity magnetic separation in WHIMS.

o Composite concentrate produced from LIMS and WHIMS are treated in a thickener to partially dewater the same.



o Final dewatering of thickener underflow in filter press to produce concentrate-cake with about 10% moisture.

o Treating WHIMS tails in high rate tailings thickener before disposing off the thickener underflow at about 55% solids to a pre-selected tailings pond.

o The water recovered from both thickeners at about 150 µm suspended solids is recycled to plant. • Detailed feasibility study needs to be undertaken.

1.11. Environment issues • No significant environment impact issues are reported by Earthstone. The area is devoid of any forest.

• It is recommended that studies particularly related to beneficiation plant, its impact and mitigation measures are carried out. Budget of $2 million is provided for the mine closure.

1.12. Marketing • Earthstone is one of the leading producers and exporter of Iron Ore in Indonesia since 2009 and has

contract with various buyers to meet the annual sales target and is well placed to serve the growing demand of Asian countries.

• The company is targeting to export iron ore as Lumps as DSO initially for first 5 years. Thereafter, the ores would be beneficiated and sold as concentrates.

• Currently, the company has an export order for selling DSO basis 60% Fe at $80/t FOB Agadir. Company initiated mining through contract and currently exporting first shipment of 45,000t+/-10% from Agadir.

1.13. Financials • Production schedule

Given below is the production schedule (in Mt) from the mine for DSO and BO:

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020-1 1 2 3 4 5 6 7 8 9

Reserve 50.10 50.10 48.60 47.10 45.60 44.10 38.60 34.60 30.60 26.60 ROM-DSO - 1.50 1.50 1.50 1.50 1.50 - - - - ROM-BO - 4.00 4.00 4.00 4.00

Year

2021 2022 2023 2024 2025 2026 202710 11 12 13 14 15 16

Reserve 22.60 18.60 14.60 10.60 6.60 2.60 - ROM-DSO - - - - - - - ROM-BO 4.00 4.00 4.00 4.00 4.00 4.00 2.60

Year

• Capital cost

Area US$ million For DSO mining For BO Mine Closure Total

Pre-operative expenditure including exploration, beneficiation studies etc.*

2.34 - - 2.34

Mining** - - - - Process plant and facilities - 120.00 - 120.00 Transport # - - - - Agadir port facilities ## - - - - Mine closure - - 2.00 2.00 Total 2.34 120.00 2.00 124.34

* The pre-operative expenditure has already been spent so far. **No capex has been provided for mining as contractor is engaged.



#Transport is done by contractor. ## All port facilities are in place and these need to be hired. No land cost has been considered as it is understood that the land belongs to the government and is available free of cost as part of mining lease.

• Operating cost

The operating cost of DSO and beneficiated ore (BO), FOB ex-Agadir is given below:

Cost head DSO ($/t) BO ($/t) Ore Mining 5.26 10.52 Waste Mining 1.47 Processing 9.61 General & Administration 1.00 1.00 Total Cost ex-mines 6.26 22.60 Transportation Mine to Port 24.00 24.00 Port Charges 5.82 5.82 Rent of storage space 1.90 1.90 Total Cost FOB ex-Agadir 37.98 54.32

The above cost does not include royalty. It is understood that there is no royalty applicable on ores that is exported. The cost also does not include cost of capital, working capital and mining cost is based on contractors quote.

• Economic viability

Currently, the company has an export order for selling DSO basis 60% Fe at $80/t FOB Agadir. Company initiated mining through contract and currently exporting first shipment of 45,000t+/-10% from Agadir. The market price of beneficiated ore FOB ex-Agadir is considered at $110/t based on the current CIF China price of $153/t. At this stage, since the realization is much higher than the DSO cost, the production of which is planned for first 5 years, no cost escalations and price forecast has been considered. The cost of beneficiated ore estimated as on date is much lower than the current market price of beneficiated ore. The production of beneficiated ore is planned after 5 years. Thus, considering the current prices and cost of mining, the mine is considered economically viable.

1.14. Proved Reserve • This prospect has been studied in detail and resources have been categorized under measured category

as per JORC 2004 standards. • Method of mining and production schedules have been arrived at. It is proposed to mine in the first 5

years high grade material, crush it and sell as DSO. From the 5th year onwards the ore will be beneficiated and sold as Pellet Feed Fines.

• Mining dilutions and losses have been considered. Open pit optimization was carried out. Detailed year wise pit layouts have to be carried out. Earthstone have planned to engage contractor for mining.

• Preliminary studies on beneficiation have been carried out. Detailed feasibility has to be carried out on beneficiation.

• No significant environment issues are envisaged. However, detailed EIA has to be prepared. • Exploratory mining of DSO has been initiated. • The capex and opex have been estimated. The market price considered for assessing the economic

viability is based on Earthstone having a sale order. • Based on the above, the total mineable iron ore quantity as given below is categorized as JORC

Compliant Proved Reserve.



Type of ore Proved Reserve (Mt) Average Grade (%Fe) DSO 7.60 56.71% BO 42.50 49.31%

1.15. Conclusions • Tourza Oolitic iron ore deposit can be classified as a high tonnage, high grade one amongst similar

class of deposits in the world. • The deposit is bedded, nearly sub-horizontal, shows gradual thickness variation and with least partings

of other rocks. The contact with overlying and underlying rocks is sharp and physically identifiable. So the deposit is geometrically simple.

• Resource/Reserve has been estimated by diamond core drilling on a 100x100m grid with a high degree of accuracy and precision.

• The study has been carried out as per JORC 2004 standards. • The concession holds JORC Compliant Measured Resource of 52.05 Mt @ 50.17% Fe at a cutoff of

25% Fe. • Experimental open-pit mining has been initiated for producing DSO and is transported to Agadir port

for export. This DSO project has been proved to be economic at the present market price. • The concession holds JORC Compliant Proved Reserve of 50.10 Mt @50.43% Fe), which includes

about 7.6 Mt DSO (56.71% Fe) and balance 42.5Mt as BO (49.31% Fe).



GEOLOGY AND MINERAL RESOURCE



2. INTRODUCTION

2.1. The assignment IMC-SRG Consulting (P) Limited (hereinafter also referred to as “IMC-SRG” or “IMC” or “the Consultant”) is a Group Company of the international group holding company, IMC Group Consulting Limited (the “IMC Group”). IMC Group is a division of DMT GmbH & Co. KG, Essen, Germany (together “IMC-DMT Group”) and leads the group’s international mining activities. DMT in turn is wholly owned by TÜV NORD Group, Hanover, Germany and the total group’s turnover is in the region of €1 billion.

IMC has been commissioned by Earthstone Mining and Minerals Limited (hereinafter also referred to as “Earthstone”, “Company” or the “Client”) to plan and supervise the exploration campaign leading to preparation of a JORC Compliant Mineral Reserve Statement on the Mineral Assets of the Company comprising the Tourza Iron Ore Prospect (“Tourza”), located in Morocco.

2.2. Stages of work The work was done in the following stages:

• Reviewing all the historical exploration data and initial reconnaissance survey

• Geological mapping

• Channel sampling

• Topography survey

• Developing exploration plan for drilling

• Supervision of drilling and borehole logging and sampling

• QA/QC compliance

• Orebody modeling

• Mineral resource estimation

• Conceptual mining study

• Mineral reserve estimation

2.3. Reporting Standard In this Report, identified Mineral Resources and Reserves are reported in accordance with recommendations and guidelines of the Joint Ore Reserves Committee (“JORC”) Code (2004).

2.4. Earthstone Group Earthstone Group (“Earthstone”) is a privately held mineral exploration and mining company with reported presence in diversified geographies and diversified asset classes, from Gold and Precious metal assets to Base metals and Iron Ore and is also evaluating Coal assets at various places.

Group has reported a diversified geographical presence spread across 18 countries in two continents. It has a wide reach across Africa and Southeast Asia with operating offices in Indonesia, Morocco, Mauritania, Mali, Sierra Leone, Liberia, Guinea, Burkina Faso, Benin, Burundi, Botswana, Zambia, Mozambique, Namibia and South Africa.

Indonesia: Earthstone reportedly has one iron ore producing asset located in Sumatra Island, Indonesia. It has delivered iron ore from this asset, with profits maintaining low cost of mining operations. Also, it has another



upcoming project, Musi Rawas, in Indonesia. This project is expected to start production from mid-2012. Earthstone is also reportedly developing a Zinc and Lead project at Banten, Java in Indonesia.

West Africa: The group has also reportedly developed significant presence in Iron ore in West Africa with several projects under active exploration.

Earthstone has also informed development of copper, cobalt, lead, zinc, chrome, nickel and rare earth minerals projects in Burundi, DR Congo, Madagascar, Mauritania, Morocco, Mozambique, Guinea, Indonesia and Zambia. These projects are reportedly at various stages of early to late stage exploration.

Most prominent of Earthstone’s concessions is the large Kayes-Selibabi cluster comprising of 13 concessions in Southern Mauritania and few large concessions in Mali. Concessions in Mali have shown large iron ore resources from a three phased exploration program. Advanced exploration program and more than 5,000m of drilling has been completed in the West African iron ore belt. Drilling program of another 10,000m is being planned to expand resource base further. Concurrent with the exploration result, feasibility study is reportedly under preparation.

Earthstone is also exploring a large number of iron ore concessions in Mauritania, which is the 7th largest iron ore exporter globally. Few of Earthstone’s concession in Mauritania are reportedly adjacent to those of Sphere Minerals (now Xstrata), Australia and Bumi Mauritania which have reported resources of 2.7+ billion tons of iron ore.

Gold assets are reportedly under exploration in 5 countries. Most of these concessions fall in the Birimian greenstone belt, which is known for gold production in West Africa and is the fastest growing gold producing region in the world. As informed, Earthstone owns several promising concessions in Burkina Faso, Mali, Mauritania, Sierra Leone and Zambia.

As reported, Earthstone also has developing interests in Thermal and Coking Coal. It looks to cater to rising power needs of developing economies and also from synergies of common buyer for coking coal and iron ore. Earthstone is reportedly evaluating coal targets for acquisition and has begun with acquisition of a coal mining concession in Mali.

Earthstone Resource Morocco, a group company, is holding the exploration license for the Tourza iron ore project. The current organizational structure of Earthstone at Morocco is given below:

Figure 2.4-1 Tourza Project Administration Structure

2.5. Project Team The mineral resource estimation has been carried out by a team from IMC.

Dr Ernst Bernhard Teigler, based out of Germany, is Head of Business Segment Geology, Appraisal and Development and Head of the Department Geology and Borehole Survey division of DMT, the parent company of IMC Group. He is also a Member of South African Council for Natural Scientific Professions (SACNSP,



Registration Number 400174/05) and has sufficient experience which is relevant to the style of mineralization and type of deposit under consideration, and to the activity he is undertaking to qualify as Competent Person in terms of Australian Code for Reporting of Exploration Result, Mineral Resources and Ore Reserves (JORC Code 2004 edition).

Dr MM Mukherjee, based out of India, is Principal Consultant, IMC. He also worked in Geological Survey of India and reached the position of Deputy Director General. He has over 35 years of experience in mineral exploration and has worked in similar deposits. He was also a Member of the ‘Working Group for Introduction of UNFC System in India’ on behalf of Government of India in 2003.

Mr TN Gunaseelan, based out of India, is Director, IMC and Managing Director of IMC India. He is also a Member of The Geological Society of South Africa and has over 24 years of experience which is relevant to the style of mineralization and type of deposit under consideration and carry out mine planning and feasibility studies and to arrive at reserves from resources as per JORC standards.

Field work which included reconnaissance to supervision of drilling, logging and sampling was carried out by IMC field geologists Mr P Seetharam, Mr Keshav S Walvekar and Ms Indrani Basak under the supervision of Dr MM Mukherjee and reviewed by Dr Ernst Bernhard Teigler. Topographic survey was carried out by IMC team comprising Mr RK Sharma and Mr S Sridharan. Mr Somnath Gain from IMC has carried out the geological modeling using Surpac software.

The exploration project is directed by Mr Pankaj Sinha, Director, IMC-SRG. Mr SK Naik, COO of Earthstone is responsible for the integrity of the exploration and various laboratory analysis results.

2.6. Asset Regional office of Agadir, Ministry of Energy and Mines, Kingdom of Morocco has issued the Permission for Exploration (Concession No 2338247, Registration number 230485) in the name of Mr Hicham El Marharani on 8th September 2006.

The asset is described in the prospecting license as followed • Dimension: 4,000m x 4,000m ie 16sqkm • Toposheet: Alnif • Reference point location: Timi N'Tourza, X=514,375.05, Y=471,567.93

(Morocco Lambert Zone 2) • Distance of the center of the East 1,300m, South 400m

concession from reference point:



Figure 2.6-1 Concession boundary plotted using Morocco Lambert Zone 2 system The license was valid for 3 years, till 8th September 2009. The licensed was again renewed for 4 years till 8th September 2013.

On 20th June 2011, Prospecting License was transferred from Mr Hicham El Marharani to Earthstone Resources Morocco. Export license has been granted on 1st February 2012. Copy of the original Prospecting License, Renewal and Transfer of Name, Export license are attached as Annex A.

A B

C D

Reference point from Govt of

Morocco



Figure 2.6-2 Concession boundary plotted on satellite imagery

2.7. Location The Tourza iron ore property is located 16km north of Alnif, Meknès-Tafilalet region of Morocco, a village approximately 530km west of Agadir on the N12 highway in Morocco. According to the 2010 census it has a population of 3,170 (source ‘http://en.wikipedia.org’).

Alnif is nestled on the southeast edge of the Anti-Atlas Mountains and noted for attracting fossil hunters. Alnif and the surrounding basin is the best place in Morocco, and one of the most renowned in the world, for collecting the prehistoric creatures known as Trilobites. Nearest town is Tinerhir 50km north of the concession.

The Tourza concession area is 16sqkm (4km by 4km). The coordinates of the concession are given below:

D C

A B

Iron ore deposit

River bed

Road from Alnif



Table 2.7-1 Concession Coordinates for Tourza Iron Ore Project

Point ID Co-ordinates Morocco Lambert (Zone 2)

Longitude Latitude X Y

A 31°15'44.7902"N 5°15'23,1129"W 513,675.047 473,167.944

B 31°15'44,6054"N 5°12'51,9219"W 517,675.045 473,167.944

C 31°13'34,7185"N 5°12'52,1644"W 517,675.045 469,167.927

D 31°13'34,9032"N 5°15'23,3006"W 513,675.047 469,167.927

Figure 2.7-1 Location of the deposit

2.8. Accessibility Tourza is connected via the N12 (National Route) road to Agadir on the coast which is 530km west of Alnif. Safi is another major port located at a distance of ~540km.

Tourza Iron ore deposit

Alnif

To Algeria and Sahara Desert

To Casablanca

To Agadir



2.9. Physiography Tourza and the concession area are located South of the South-Eastern foothills of the Anti-Atlas mountain range. Further N, the Atlas mountain range is located. The topography around Tourza is rolling river plains separated by metas-edimentary (and meta-volcanic) mountains that show polyphase folding and deformation. The major land-use is agriculture, with farming of livestock (predominantly goats and sheep) as well as date palms and the henna plant.

2.10. Climate The climate in this region is semi-desert to desert, with daytime temperatures reaching a maximum of 50°C in the summer months (June to August). This being a desert-type continental climate, there is a large variation between summer and winter as well as diurnal temperatures. Rainfall is rare and in the form of quick showers during the months of summer/winter.

2.11. Historical data available The iron-rich area was initially discovered by French and was subsequently owned by the Moroccan government before approval for a license was granted to Mr. Hicham El Marhani in 2006. This exploration license (Permis De Recherche De Mines) is understood to be valid for a period of 3 years from 8th Sept 2006. Approval for renewal of the license has been granted and is now valid until 8th Sept 2013.

Figure 2.11-1 Historical wells dug by the French

French, who initially has discovered the deposit, drilled 24 pits/holes, throughout the deposit, which are referred to as the historical wells that have been plotted in the current survey. These holes are ~1 m in diameter and range in depth from 3-27 m. Iron ore was found in majority of the pits/wells excavated.

The deposit was divided into three zones of iron ore. The western and central zones were reported to consist predominantly of the mineral hematite (Fe2O3), which was found in one massive layer, with properties of violet-coloured and being very dense. Phenocrysts of silicate were also observed within the hematite. Both the western and central zones samples were observed to have mineralogical and chemical similarities, with high grades Fe2O3.

The third zone comprised magnetite as well as a mix of magnetite and hematite. An important difference noticed was the colour of the ore (brown), as compared to the central zone (hematite dominant).



Figure 2.11-2 Graphical litho logs of historical wells dug by the French

The hematite coverage of the deposit was estimated at ~70 %, with the substratum iron being up to a maximum of 27 m in pits. The ore deposit out line is given as 1,200m long and 500 - 600m wide.



3. GEOLOGY Morocco’s geology has generally been subdivided into four structural domains or provinces ie from south to north the Anti-Atlas Domain, the Meseta Domain, the Atlas Belt Domain and the Rif Domain. The Rif Domain (or Mediterranean Morocco) is part of the vast Alpine system of Europe and North Africa, whereas the other domains (or African Morocco) are essentially of West African affinities. Apart from these structural units, along the Atlantic coast basins filled with mostly Mesozoic and Cenozoic tabular sediments are recognizable.

3.1. Stratigraphy and tectonics Only the Anti-Atlas Domain is very slightly affected by Alpine movements and was formed by wide spanned up-doming of marginal parts of the West African Craton. Precambrian rocks form the core of major domes in the axial zone of the range. Normally, this basement is covered by poorly deformed sediments of Neoproterozoic to Lower Paleozoic age. In the Tailalt region in southeastern Morocco, the Anti-Atlas Domain dips to the E beneath undeformed Cretaceous sediments of the Sahara platform. However, all the older assemblages of Morocco only crop out within inliers mainly situated in the Anti-Atlas Domain. The oldest rocks may be the augen gneisses of Jbel Ouiharem and the gneisses of Oued Assemlil . The Zenaga Series is a unit of augen gneisses, metadolerites and metamorphic rocks, which are highly affected by sub-horizontal composite foliation. Their metamorphism is attributed to an ancient orogeny because anatectic granitoids were apparently emplaced in Paleoproterozoic times. Similar ages are also recorded from granites at Azguemerzi and Tazenakht in the central Anti-Atlas and farther west in the anticlinal inlier of the Lower Draa. The Quartzite Series north of Kerdous is a detrital unit with siltstones, pelitic sandstones, conglomerates and especially thick quartzitic layers, which yielded Neoproterozoic ages. Limestones, often stromatolitic, are intercalated. Basic intrusions of dolerites and tholeiitic gabbros were emplaced into the quartzites as sills and laccoliths that are more or less concordant with the sedimentary bedding. In the Bou-Azzer inlier, the Quartzite Series is replaced by an ophiolitic complex. Similar conditions occur at Jbel Siroua, whereas at Jbel Saghro sandy-pelitic terrigenous formations correspond to an environment at the base of the continental margin with clastic supply coming from the north. Ranging from late Neoproterozoic to Infracambrian is the Ouarzazate Series, which has been considered as molasse of the Pan-African orogenesis. Above the Ouarzazate Series follows the Adoudounian Series, which represents the base of the Cambrian. It consists at the base of conglomerates, followed by carbonates, marls, sandstones and finally again carbonates. For instance, the Amouslek Formation with shales and limestones, contains a rich fauna of trilobites and archaeocyathids, indicating a Lower Cambrian age of a shallow marine environment. The Middle Cambrian is represented by the Goulimine Quartzitic Series containing various trilobites. The Upper Cambrian is normally not exposed. To the south the Cambrian is overlain by Ordovician strata, which have a widespread outcrop and are mostly made up of sandstones, micaceous clays and occasionally limestones. Typical fossils are graptolites and trilobites. The presence of a Saharan glaciation during the Upper Ordovician is indicated by tillites at Djebel Serraf. Silurian strata are recorded from the Iriqui section in the central Anti-Atlas, represented by platy sandstones, shales and dark mudstones, sometimes containing carbonate nodules. Graptolites, a few lamellibranchs and nautiloids are found. In the eastern Anti-Atlas in the Tailalt predominate black shales. Two types of facies can be subdivided within the Devonian of the Anti-Atlas: In the western Anti-Atlas, sandy mudstones of the Gedinnian-Siegenian, containing limestone beds, overlay conformably the Upper Silurian. The fauna is composed of brachiopods, trilobites, conodonts and tentaculites. In the eastern Anti-Atlas, in the Tailalt, basaltic rocks are erupted at Hammar Laghdad. The Middle Devonian and Frasnian are represented in the western Anti-Atlas mostly by black limestones, whereas to the east the Upper Tailalt Limestones are rich in goniatites and tentaculites . The Famennian of the western Anti-Atlas exhibits a clayey facies at the base, followed by detrital beds and finally a calcareous horizon. In the eastern Anti-Atlas, platforms are uplifted in the western Maader and Tailalt, containing a condensed limestone with cephalopods. In the central and western Anti-Atlas, the Carboniferous is represented in a series of cuestas, which dominate the plains of Draa and constitute the northern side of the Tindouf Basin. The Anti-Atlas can be regarded as a domain that remained largely free of shortening during the Hercynian orogeny. Metamorphism is extremely weak, often non-existent, and there are no Hercynian granites.



Figure 3.1-1 Regional geological map of Morocco

As in Spain, where this term has its origin, the Meseta is a domain where the Paleozoic terrains remained stable after having been affected by the Hercynian orogeny. They were then covered by thin tabular successions of Mesozoic and Cenozoic sediments. Extensive exposure of Precambrian rocks in this terrain is nowhere, but



within the cores of the Mesetan anticlines crop a few Neoproterozoic strata out, for instance at El Jadida, Rehamna and in the eastern part of the Central Massif. Generally, the Meseta Domain is separated into two parts by the NE-SW trending Middle-Atlas fold belt (or Middle Atlasic axis). The Western Meseta has well-developed massifs and a reduced cover, whereas the Eastern Meseta extends on both sides of the Algerian-Moroccan border and is characterized by Paleozoic massifs of small size. From Neoproterozoic to Middle Devonian times the Anti-Atlas and western Morocco belonged to the same depositional setting. This phase is characterized by a post-Panafrican molasse deposition of redbeds and by post-collisional volcanism. Later, southern and middle Morocco constituted one vast epicontinental shelf during the early Paleozoic with terrigenous sediments coming from the Sahara. A carbonate shelf was installed in this region during Early to Middle Devonian. In Late Devonian times the western part of Morocco and the Anti-Atlas platform disintegrated into fault-bounded basins. These basins progressively deformed and closed during the Middle to Late Carboniferous, the main phase of Hercynian movements in northern Africa.

Between the largely allochthonous Rif Domain in the north, the Western Meseta Domain in the northwest and the Anti-Atlas Domain in the south, the Atlas Domain extends from Agadir in the west to eastern Tunisia in the east. The Moroccan part of the Atlas Domain is composed of four main units: From west to east, there are the Western High Atlas, the Paleozoic High Atlas, the Precambrian High Atlas, and the Central and Eastern High Atlas. In its tectonic and stratigraphic evolution the Western High Atlas was more related to the development of the Atlantic margin of northwest Africa than to the rest of the High Atlas. From the Atlantic coast it extends eastwards for about 70 km to the Argana Basin, where the Triassic is up to 5 km thick and comprises essentially a detrital and locally conglomeratic facies with evaporitic sequences appearing in the west. Mesozoic strata in the Western High Atlas thicken to the west and contain Jurassic and Cretaceous calcareous marly and locally evaporitic facies, whereas continental strata are predominant in the east. The Western High Atlas was only affected by differential subsidence. The Paleozoic High Atlas is a horst of Paleozoic terranes intruded by Carboniferous granites and thinly covered by Mesozoic strata, whereas the Precambrian High Atlas is a horst of slightly deformed Infra-Cambrian and Precambrian rocks with very thin Mesozoic cover. The Central and Eastern High Atlas, also known as the Calcareous High Atlas because of thick Mesozoic carbonates, extends as a deep rift trough all the way to the Algerian border. Its stratigraphic and structural evolution can be divided into the following major phases: Continental rifting in the Late Triassic created the Atlas rift, in which broad alluvial fans prograded towards the center of the grabens and deposited fluvial sandstones, conglomerates and mudstones. These mudstones are intercalated with evaporitic horizons of dolomite, gypsum and halite, and with tholeiitic dolerites at the top of the Triassic sequence. The supply of terrigenous clastic materials continued into the Jurassic. From Early to Middle Jurassic epicontinental limestones and reefs were established on fault blocks, which were shoal areas, whereas gravity-generated limestones and olistostromes accumulated in adjacent deeps. Early to Middle Cretaceous subsidence in the Atlas rift and global sea-level rise caused maximum transgression, which extended over adjacent platform areas. During the regression that followed fluvial and deltaic fans prograded into the Atlas gulf from east and west. Subsidence ended after the Turonian and from later Cretaceous the Atlas began to rise. Border faults developed into thrust faults along which slices of Mesozoic strata were thrust onto the adjoining platforms. The trough fill, now uplifted, was eroded into new alluvial fan systems, which filled marginal foredeeps.

The Rif Domain is part of a folded chain extending over the entire length of the Maghreb, known as the Rifo-Tellian Domain (Piqué, 2001), which forms part of the Alpine chain and especially resembles the Betic cordillera of southeastern Spain. Sediments in the Rif Domain initially accumulated from Triassic times on at a more easterly location of present-day Tunisia. This sequence was apparently transported to its present position by progressive WSW movement of this microcontinent, where it collided with the African plate in Oligocene-Miocene times and produced the complicated Rif overthrust. From Essaouira to Tarfaya, the Moroccan Atlantic margin shows a rather constant morphology with tabular strata and a continental shelf, which is very gently sloping. Seismic sections indicate as earliest sedimentary formations Carnian sandstones, mudstones and conglomerates lying discordant on the basement. On land, the Doukkala sub-basin is capped at outcrop by



Quaternary terrains overlying Mio-Pliocene marls and carbonates. In the west, these deposits cover a marine succession beginning with middle Cretaceous sediments that are unconformable onto the folded Paleozoic terrains and the Triassic-Liassic

3.2. Regional Geology This south-eastern region of Morocco is dominated by the Anti-Atlas structural domain. Here, the cores of major Precambrian granitoid domes form the basement for poorly deformed sediments that range in age from Neoproterozoic to Lower Palaeozoic. The Neoproterozoic Quartzite Series consists of siltstones, politic sandstones, conglomerates, thick quartzite layers and intercalated stromatolitic limestone. Mafic intrusive in the form of dolerites and gabbros intruded the quartzite almost concordantly. The younger ouarzazate series is considered to be a molasse-type deposit that is Pan-African in age. Cambrian strata are represented by the Adoudounian Series. A basal conglomerate is followed by carbonates, marls, sandstones and successive carbonates. The Cambrian strata are overlain to the south by Ordovician sandstones, micaceous clays and limestone. These Cambrian and Ordovician sediments are known for their excellent preservation of trilobites. A period of glaciations then occurred during the Upper Ordovician, represented by tillites. Above this, Silurian argillites are found, sometimes containing carbon nodules. Other species found here include graptolites and nautiloids. This Anti-Atlas domain consists of basinal facies sediments that are weakly metamorphosed and deformed

Figure 3.2-1 Geological map of Morocco

3.3. Economic Geology The mineral industry of Morocco is still a major source of revenue despite various economic impacts generated by political uncertainties such as the Middle East conflict and the pending Western Sahara problem. Morocco is the world᾽s leading exporter of phosphate rock, but since the early 1990᾽s the export has declined.

The metal production of Morocco, particularly lead, silver and zinc, has experienced some resurgence since the early 1990᾽s, due in part to the coming online of the Douar Hajar polymetallic mine located approximately 30 km south of Marrakech, which produces lead, zinc, copper, silver and sulfur. El Heimer is located 20 km southeast of Oujda in northeastern Morocco and is the site of the only operating lead smelter in North Africa, with a capacity of about 100,000Mt/a of Pb-Zn and associated metals (copper, antimony and silver).



Phosphate rock is mined in several regions of Morocco. The most actively mined area is Khouribga, which represents the single largest producing phosphate mine in the world. The two open pit mining operations at Khouribga account for approximately 50 % of all phosphate rock mined in Morocco. The reserves of phosphate rock are estimated to be approximately 20 billion tons.

Salt is recovered from a mine approximately 10 km east of Mohammedia. It is the largest salt mine in Morocco and has a production capacity of 1 Mm/a. Probable salt reserves are estimated at 600 Mm/t. The deposit is of Triassic age, probably transgressively deposited in a shallow sea, where blocked seawater could not return to the ocean. Tectonic activity later folded the salt and recrystallized it to a 98.9 %-pure form. The salt deposit reaches a thickness of 80 m in some places in the mine.

3.4. Local Geology Morocco’s geology has generally been subdivided into four structural domains or provinces. These are from south to north the Anti-Atlas Domain, the Meseta Domain, the Atlas Belt Domain and the Rift Domain. Whereas the Rift Domain (or Mediterranean Morocco) is part of the vast Alpine system of Europe and North Africa, the other domains (or African Morocco) are essentially of West African affinities. Apart from these structural units, along the Atlantic coast basins filled with mostly Mesozoic and Cenozoic tabular sediments are recognizable. The study area belongs to Anti-Atlas Domain.

3.5. Local Stratigraphy and tectonics The studied area belongs to south-eastern region of Morocco is dominated by the Anti-Atlas structural domain. Here, the cores of major Precambrian granitoid domes form the basement for poorly deformed sediments that range in age from Neoproterozoic to Lower Palaeozoic. The Neoproterozoic Quartzite Series consists of siltstones, sandstones, conglomerates, thick quartzite layers intercalated with stromatolitic limestone. Mafic intrusive in the form of dolerites and gabbros intruded the quartzite almost concordantly. The younger Ouarzazate series is considered to be a molasse-type deposit that is Pan-African in age. Cambrian strata are represented by the Adoudounian Series. A basal conglomerate is followed by carbonates, marls, sandstones and successive carbonates. The Cambrian strata are overlain to the south by Ordovician sandstones, micaceous clays and limestone. These Cambrian and Ordovician sediments are known for their excellent preservation of trilobites. A period of glaciations then occurred during the Upper Ordovician time represented by tillites. Above this, Silurian argillites are found, sometimes containing carbon nodules. Other species found here include graptolites and nautiloids.

This Anti-Atlas domain consists of basinal facies sediments that are weakly metamorphosed and deformed.

3.6. Geology of the area The lithounits outcrop within the concession area consists predominantly of deformed sedimentaries (quartzite/ argillite) unit of Ordovician age. The underlying rock units of the concession area consists of ferruginised sandstones to the immediate north as well as to the south east of the deposit, with argillite material underlying the magnetite-heamatite ore towards the north-western part.

The Tourza iron ore deposit is described as Oolitic iron stones. This model is also known under synonyms like Clinton type deposit or Minette type deposit. This type is built up by beds rich in iron silicates and oxide minerals with distinctive oolitic texture deposited in shallow-shelf to intertidal, clastic-dominated environments.



Generalized stratigraphic model for oolitic ironstones. Vertical scale is variable; cycles may range from a few meters to as many as 300 m in thickness (modified after Van Houten and Bhattacharyya, 1982; Maynard, 1983).

Figure 3.6-1 Generalized stratigraphic model for oolitic iron stones (Source; USGS)

A B

C D

Reference point from Govt of

Morocco



Figure 3.6-2 Local geological map

The area to the north and east of the concession is bounded by mountain ranges of the Anti-Atlas structural domains. These are composed predominantly of sediments (quartzite, argillite).



Figure 3.6-3 Structural map of the region

3.7. Mineralisation The surrounding geology within the concession area consists predominantly of sedimentary material that has been deformed and metamorphosed. The dominant stratigraphy is Cambrian, Ordovician and Silurian in age. The underlying geology of the concession area consists of ferruginised sandstones to the immediate north as well as to the south east of the deposit, with argillite material underlying the actual iron ore deposit towards the north-western part of the deposit. A lateritic cap of ~1 m thickness is observed above the argillite towards the north west of the deposit.

Figure 3.7-1 Representative cross-section of the area

3.8. The Nature of the Deposit The magnetite-hematite ore body trends NW-SE and is dipping towards NE, terminating in a steep cliff edge to the NW and broadening and flattening out towards the SE end. The dip slope is bisected (up to a depth of ~10 m) by three major channels that flow off the dip slope towards the north. The contact was delineated by marking points of iron ore outcrop and inferred contact (beneath float ore) using a hand-held GPS (WGS84, UTM UPS or decimal degrees). During delineation of the deposit and geological mapping, structural data was collected such as attitude of bedding/foliation as well as fractures. However, due to the magnetic nature of much of the exposed ore body, readings by compass/ clinometer are unreliable for a large part of the area. A true north reading was taken from a point a few km away from the deposit, and fixed by line-of-sight. Thus, whenever the

Legend



compass clinometer pointed to this region, the readings of strike/dip direction and trends were taken as accurate. The iron ore deposit dips uniformly to the NE, with dip angles ranging from 7° to12°. Four major joint sets are found within the exposed ore.

Changes in the physical properties of the ore were also noted during geological mapping from the SE to the NW of the deposit. The ore along the SE scarp edge has a black to dark brown streak, gunmetal-grey to black colouring, is dense, crystalline (fine-to medium grained) and moderately to highly magnetic in nature. This signifies that the dominant phase within this region/portion of the ore body is composed of magnetite. Occasionally intercalated quartzite and iron ore lenses are found to occur within iron ore bands. The top package attains a thickness of 4 m here, while the bottom increases to ~12 m of magnetite ore. The NW terminus point and cliff area is composed almost entirely of reddish-hued hematite. The ore gives a cherry red streak, is non-to-weakly-magnetic and forms spheroids/spherules (≤1 mm diameter) that may be cemented by a gunmetal-grey to red matrix. In the remainder of the ore body, the iron ore is transitional in nature. This is seen as the iron ore taking on a more reddish hue (roughly towards the NW; seen in historic drill well stockpiles) and having decreased magnetic attraction. This mix of the ores is also seen in the texture, which is somewhat crystalline but also contains spheroids/spherules. There is also evidence of goethite disseminated within the magnetite or hematite ore. However, these observations are within hand-specimens or in-situ rock; further geochemical analysis of the samples from this study is needed to elucidate such details as demarcation or zoning of the iron ore.

Contacts between the iron ore and the surrounding sediments are scarce to the NW, while some contacts with sediments (variably ferruginised) such as quartzite and argillite are visible towards the south-eastern extremity of the deposit within in- situ outcrop. Historic drill holes towards the south show an increasing amount of sedimentary quartzite. The reduction in the presence of iron ore within these historic drill holes (shown as fewer iron stockpiles) implies a pinching or thinning-out of the ore body towards the SE. A trench excavated in this area to a depth of ~5m shows only the presence of well-bedded quartzite.

Contact with volcanic basalt is restricted to the middle-northern boundary, as the meta - basalt outcrops immediately to the north of the iron ore deposit. The general trend of the three (3) meta-basalt hills is east-west. The formation of this volcanic material was sub-aerial in nature, as pillow structures (liesegang rings) are preserved, and show onion-peel weathering. The entire hillside is composed of basalts, with low dip. The contact for the basalts and iron ore is inferred to be below the unconsolidated sediments (and road) that lies between. To the immediate east of the meta-basalt, ferruginised sandstone/quartzite is present and also forms the cover against which the iron ore terminates. The top of the ferruginised sedimentary and meta- volcanic package preserves tilted isoclinals folds. Quartz veins are found to be associated with the sedimentary unit.

Figure 3.8-1 Descaling of massive quartzitic beds caused by an interplay of surface weathering and Liesegang textures



Towards the NW edge of the deposit, below the exposed iron ore cliff face, show that the substratum to be ferruginised sediments. These contacts are not linear but irregular in nature, and may also be discordant, as some conglomeratic material is present in the contact zone.

3.9. Float Ore The float ore surrounding the deposit varies in depth within historical pits excavations on the southern and northern slopes of the deposit. The float ore extends for approximately 250-500m from the southern, western and northern sides of the ore deposit. To the SE, the deposit terminates against sediments and a river channel running ~N-S, thus float ore is absent further east of the deposit.

Figure 3.9-1 Float Ore

3.10. Structure The area is deformed and metamorphosed. The general attitude of rock units in the area is NW-SE and dipping 100 towards NE. Two major sets of joints were identified in the field and pervasive in nature. Their attitudes are given below:

• The first set is parallel to the dip direction (N45W-S45E and dipping 10o towards NE).

• The second joint set is perpendicular to the first set and sub vertical in nature.

• Both the above are common to all outcrops/exposures.

• Besides this there is one minor joint set available oblique to the bedding parallel joint. The attitude of the joint is (N30°W-S30°E dipping 70° towards NE).

• Beside these few isoclinal recumbent to reclined folds were observed within the iron ore beds indicating a possible allocthonus nature of deposit.

3.11. Mineralographic Study The ore is Oolitic in character that comprises spherical, oblong to round shaped ring structure. The size of oolites ranges from 1.0mm to around 0.2mm. These are composed of quartz or clayey minerals at core surrounded by intimate mix of goethite-hematite with silica and calcite forming alternate layers. These are metamorphosed. The hematite is transformed to euhedral-subhedral grains of magnetite that occurs on the oolites as disseminations. Magnetite minerals grains are mostly present in the sample along the concentric layers of the oolites. These magnetites are in turn altered to martite variably and these magnetite-rich lumps consist primarily of ‘martite-hematite’ (an altered product of magnetite) containing relics of magnetite.

Thin sections were studied as a part of Mineralographic study and the images of the sections are given below:



The rock belongs to the oolitic iron stone formation. Mostly the oolites are spherical in nature but elongated oolites have also been recorded.

Crude lamination has been observed and the oolites are mostly undisturbed.



The concentric rings are composed of carbonates and iron occurs within the rings.

In some cases the core of the oolites are composed of fine grained silicates.



4. MINERAL RESOURCES

4.1. Principles of Resource Calculation Resource calculation is used as a means of reliably calculating the quantity of a commodity present in a deposit. All data collected including geological, drilling and lab data is used to best estimate the size, shape and nature of the deposit. Based on the level of geological knowledge and confidence, the resource can be quantified at varying levels. Often, as is the case with this study, an internationally recognised reporting system is used in order to maintain clarity on the criteria and methodology used to arrive at a resource figure.

4.2. Principles of the JORC Code The JORC code is used as a reporting system in international exploration campaigns. The Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore reserves was established in 1971 by the Joint Ore Reserves Committee (JORC) and is the fundamental reporting system in Australia, Canada, South Africa, USA, UK and Ireland. It is also accepted in many states in Europe following the agreement to incorporate the CMMI (Council of Mining and Metallurgical Institutions) definitions into the International Framework Classification for Reserves and Resources – Solid Fuels and Mineral Commodities, developed by the United Nations Economic Commission for Europe (UN-ECE).

One of the main factors in the JORC code reporting is that a ‘competent person’ executes the reporting. A competent person must have a minimum of five years’ experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which that person is undertaking. If the Competent Person is estimating or supervising the estimation of mineral resources, the relevant experience must be in the estimation, assessment and evaluation of mineral resources.

The JORC code uses the following terms and definitions which are explained schematically in Figure 4.2-1.

A Mineral Resource is a concentration or occurrence of material of intrinsic economic interest in or on the earth’s crust in such form, quality and quantity that there are reasonable prospects for eventual economic extraction. The location, quantity, grade, geological characteristics and continuity of a Mineral Resource are known, estimated or interpreted from specific geological evidence and knowledge. Mineral Resources are sub-divided, in order of increasing geological confidence, into three categories.

• Inferred Mineral Resource - is part of a Mineral Resource for which tonnage, grade and mineral content can be estimated with a low level of confidence. It is inferred from geological evidence and assumed but not verified geological and/or grade continuity. It is based on information gathered from locations such as outcrops, trenches, pits, workings and drill holes which may be limited or of uncertain quality and reliability.

• Indicated Mineral Resource - is part of a Mineral Resource for which tonnage, densities, shape, physical characteristics, grade and mineral content can be estimated with a reasonable level of confidence. It is based on exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes. The locations are too widely or inappropriately spaced to confirm geological and/or grade continuity but are spaced closely enough for continuity to be assumed.

• Measured Mineral Resource - is part of a Mineral Resource for which tonnage, densities, shape, physical characteristics, grade and mineral content can be estimated with a high level of confidence. It is based on detailed and reliable exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes. The locations are spaced closely enough to confirm geological and grade continuity.



An Ore Reserve is the economically mineable part of a Measured and/or Indicated Mineral Resource. It includes diluting materials and allowance for losses, which may occur when the material is mined. Appropriate assessments and studies have been carried out, and include consideration of and modification by realistically assumed mining, metallurgical, economic, marketing, legal, environmental, social and governmental factors. These assessments demonstrate at the time reporting that extraction could reasonably be justified. Ore reserves are sub-divided in order of increasing confidence into two categories.

• Probable Ore Reserve - is the economically mineable part of an Indicated, and in some circumstances, a Measured Mineral Resource. It includes diluting materials and allowance for losses, which may occur when the material is mined. Appropriate assessments and studies have been carried out, and include consideration of and modification by realistically assumed mining, metallurgical, economic, marketing, legal, environmental, social and governmental factors. These assessments demonstrate at the time reporting that extraction could reasonably be justified.

• Proved Ore Reserve - is the economically mineable part of a Measured Mineral Resource. It includes diluting materials and allowance for losses, which may occur when the material is mined. Appropriate assessments and studies have been carried out, and include consideration of and modification by realistically assumed mining, metallurgical, economic, marketing, legal, environmental, social and governmental factors. These assessments demonstrate at the time reporting that extraction could reasonably be justified.

Figure 4.2-1 Principles behind the JORC Code

4.3. Nature of the Evidence

4.3.1. Mapping and sampling Field geological mapping was conducted by IMC during May to July 2011. Around 200 location points were observed, samples were also collected from some of the locations.

Details of past exploration results are presented in Annexure B.

4.3.2. Channel sampling Around 10 channels were constructed and 28 samples were collected. Channel cutting was carried out on both eastern and western side of the ore body at the cliff part across the dip. Channel lengths are varying from 10m to 27m, width is around 30cm to 40cm and depth is 5cm to 8cm. In each case, two persons chiseled the ore and other two person collected the broken samples on a polythene cloth at the bottom of the channel so that the



broken pieces could fall on the polythene cloth. After that all the broken rocks reduced further into small pieces of about 1 inch and then by coning and quartering process samples were reduced and prepared. Each samples length varies between 4m to 6m. Samples were analysed using hand-held XRF (NITON).

Details of the channel samples are given below:

Table 4.3.2-1 Channel samples details

Channel No Sample No X Y Length

(m) Width (cm)

Depth (cm) Litho Fe%

MAL 19 MAL-19A 287,117 3,456,998 4 30 6 Iron ore-magnetite 48.88

MAL 19 MAL-19B 4 30 6 Iron ore-magnetite 49.18





MAL 26 MAL-26A 286,640 3,457,241 6 30 8 Iron ore- hematite 51.67





MAL 71 MAL-71B 4 40 6 Iron ore- hematite 48.10


MAL 72 MAL-72B 5 30 5 Iron ore- hematite 46.22

MAL 72 MAL-72C 5 30 5 Iron ore- hematite 52.74

MAL 72 MAL-72D 5 30 5 Iron ore- hematite NA

MAL 73 MAL-73 A 286,564 3,457,553 4 40 8 Iron ore- hematite 54.46

MAL 73 MAL-73 B 4 40 8 Iron ore- hematite 52.15

MAL 73 MAL-73 C 5 40 8 Iron ore- hematite 56.19

MAL 73 MAL-73 D 5 40 8 Iron ore- hematite 49.47



MAL 74 MAL-74 C 6 30 5 Iron ore- hematite 53.90



MAL 75 MAL-75 C 6 30 5 Iron ore-magnetite 47.75

MAL 75 MAL-75 D 6 30 5 Iron ore-magnetite 50.99

MAL 75 MAL-75 E 5 30 5 Iron ore-magnetite 48.78

4.3.3. Drilling Data The current drill program in Tourza concession was conducted on a grid of approximately 100m x 100m. A total of 88 boreholes were drilled.



Figure 4.3.3-1 Drilling is progress

Figure 4.3.3-2 Borehole logging by IMC Measurements of core recoveries have been reported and assured to be appropriate. A non-systematic down or upgrading caused by core loss has not been detected. An overall core recovery of ~78% was achieved.



Figure 4.3.3-3 Borehole location within Tourza concession

Concession boundary

Borehole drilled in iron mineralized zone



4.3.4. Survey Topographic survey was carried out using DGPS in September 2011. Downhole orientation survey has not been done as it was considered as not necessary owing to the shallow depth of holes (average depth ~33m) and all holes being vertical.

4.4. Sampling and Assay Procedure

4.4.1. Core Logging and Sampling The logging and sampling in the study area has been done to obtain the maximum amount of relevant geological information from the core which forms the basis of the delineation of mineralised zones (Given as Annexure D). The valuation of these mineralised zones is based on geologically controlled sampling. A combination of the geological logs and sampling results has been used to construct a resource model. The gathering of comprehensive, standardised and accurate information has been attempted. The description of the core and sample positions has been captured on standard field log-sheets. This information has then been entered into the spread sheet database and paper log prints generated for the borehole file. The database has been eventually imported into Surpac modelling software for geological modelling of the mineralised zone to allow grade evaluation and mine planning.

The geological information generated from borehole logging includes the following;

• Thickness of the Fe- mineralisation.

• Major rock types hosting the Fe mineralisation.

• Ascertain the depositional history of the ore body.

Figure 4.4.1-1 Borehole core logs stored at site



4.4.2. Sample Preparation & Assay Procedure Sampling and assaying procedure is presented in Annexure E. About 1,555 samples were prepared form 88 boreholes.

These samples were analysed using wet chemical methods at Easthstone’s Mali laboratory. Analysis by wet chemical method is presented in Annex F.

The summary of assay analysed at Earthstone’s internal lab is presented below:

Table 4.4.2-1 Summary of analysis result

BH ID From To Fe SiO2 Al2O3 TiO2 P S V

Min Max Min Max Min Max Min Max Min Max Min Max Min Max

ADBH 0.0 13.9 36.8 59.5 2.2 19.6 1.3 6.2 0.09 0.42 0.51 1.11 0.00 0.02 0.04 0.08

BH09 0.0 17.9 45.5 59.4 7.5 9.7 5.4 8.6 0.18 0.32 0.50 1.02 0.00 0.02 0.07 0.10

BH10 0.0 20.5 48.2 60.0 4.8 10.7 3.5 7.7 0.20 0.42 0.38 1.05 0.00 0.00 0.06 0.10

BH11 0.0 21.3 49.7 58.7 5.3 9.4 5.2 8.8 0.20 0.32 0.58 1.16 0.00 0.05 0.07 0.09

BH12 0.0 14.6 47.3 57.9 5.5 14.1 4.7 7.4 0.20 0.34 0.54 0.95 0.00 0.00 0.07 0.09

BH13 0.0 6.2 52.5 59.7 4.8 8.7 4.4 6.5 0.20 0.25 0.61 0.87 0.00 0.00 0.07 0.08

BH14 0.0 13.2 51.1 57.3 4.8 11.7 3.5 7.2 0.21 0.29 0.41 0.99 0.00 0.00 0.07 0.09

BH15 0.0 24.4 47.5 59.2 5.7 8.9 4.5 6.5 0.19 0.31 0.37 1.69 0.00 0.02 0.07 0.09

BH16 0.0 16.0 52.4 57.6 4.8 7.4 3.8 5.6 0.18 0.23 0.51 0.99 0.00 0.00 0.07 0.08

BH17 0.0 14.3 52.6 57.4 5.3 8.9 4.9 8.1 0.21 0.25 0.49 1.00 0.00 0.00 0.07 0.09

BH18 0.0 13.9 40.0 57.6 6.5 18.3 6.0 8.9 0.18 0.39 0.48 0.94 0.00 0.61 0.06 0.08

BH19 0.0 17.4 43.8 57.5 5.3 12.7 4.7 8.5 0.16 0.37 0.42 0.99 0.00 0.00 0.07 0.09

BH20 0.0 12.5 41.8 60.0 6.8 20.2 4.4 7.9 0.21 0.41 0.49 1.54 0.00 0.00 0.06 0.08

BH21 0.0 17.2 52.9 59.0 4.2 6.0 3.3 5.1 0.15 0.21 0.57 0.99 0.00 0.00 0.07 0.09

BH22 0.0 28.8 38.7 58.1 6.5 20.4 5.8 9.9 0.21 0.41 0.38 1.23 0.00 0.08 0.07 0.09

BH23 0.0 31.5 47.2 58.1 5.7 11.7 4.3 8.4 0.20 0.38 0.30 1.23 0.00 0.08 0.07 0.10

BH24 0.0 26.6 45.3 58.7 5.9 10.3 4.1 6.8 0.19 0.37 0.38 1.26 0.00 0.00 0.07 0.10

BH25 0.0 24.9 47.3 58.2 5.6 11.1 5.2 7.2 0.19 0.35 0.35 0.87 0.00 0.00 0.07 0.09

BH26 0.0 22.0 42.3 57.3 4.7 16.6 3.2 8.5 0.18 0.33 0.46 1.34 0.00 0.00 0.07 0.10

BH27 0.0 16.5 43.8 57.6 4.6 9.9 3.2 5.9 0.17 0.35 0.54 2.54 0.00 0.10 0.07 0.09

BH28 0.0 31.6 47.7 58.6 5.4 10.6 4.4 9.5 0.20 0.39 0.35 2.39 0.00 0.03 0.07 0.09

BH29 0.0 19.5 49.4 58.7 5.9 8.4 5.0 6.4 0.17 0.29 0.46 1.11 0.00 0.00 0.07 0.09

BH30 0.0 31.7 30.5 58.4 4.1 33.5 2.8 10.0 0.18 0.43 0.40 1.07 0.00 0.00 0.06 0.09

BH31 0.0 24.6 47.8 58.4 5.3 9.2 4.1 6.9 0.18 0.32 0.41 2.00 0.00 0.01 0.05 0.10

BH32 0.0 18.0 53.6 59.5 5.2 8.3 4.5 7.9 0.17 0.28 0.54 1.00 0.00 0.00 0.08 0.09

BH33 0.0 31.6 43.4 58.3 4.8 14.7 3.4 8.6 0.17 0.35 0.51 0.96 0.00 0.00 0.07 0.36

BH34 0.0 26.8 51.4 58.0 5.3 7.3 4.1 5.8 0.21 0.26 0.50 0.88 0.00 0.02 0.08 0.10

BH35 0.0 18.8 51.5 58.7 3.9 8.1 3.5 7.3 0.17 0.29 0.41 0.89 0.00 0.00 0.07 0.09

BH36 0.0 16.6 49.3 59.0 5.6 9.4 5.5 8.8 0.18 0.33 0.46 1.28 0.00 0.11 0.07 0.09

BH37 0.0 10.0 48.3 52.2 10.4 11.2 3.9 6.3 0.21 0.28 0.52 0.89 0.00 0.00 0.06 0.08

BH38 0.0 12.0 49.9 59.7 5.6 7.9 5.4 7.1 0.21 0.37 0.48 0.92 0.00 0.00 0.08 0.09

BH39 0.0 20.3 45.9 58.5 5.6 10.1 4.9 10.0 0.17 0.35 0.45 1.03 0.00 0.05 0.06 0.09

BH40 0.0 5.3 39.9 55.4 7.4 22.5 5.2 9.9 0.21 0.41 0.49 1.16 0.00 0.00 0.06 0.07



BH ID From To Fe SiO2 Al2O3 TiO2 P S V

Min Max Min Max Min Max Min Max Min Max Min Max Min Max

BH41 0.0 6.0 51.5 53.6 5.4 9.8 3.4 6.6 0.19 0.23 0.50 0.90 0.00 0.00 0.07 0.08

BH49 10.4 20.5 39.5 56.9 5.8 15.2 3.7 7.3 0.17 0.40 0.53 1.45 0.00 0.03 0.07 0.08

BH50 0.0 12.9 52.2 58.7 6.4 11.2 5.8 8.8 0.19 0.27 0.54 1.34 0.00 0.00 0.07 0.09

BH51 0.0 11.2 49.6 59.4 5.2 8.0 4.0 6.0 0.17 0.24 0.50 0.89 0.00 0.00 0.06 0.08

BH52 7.9 17.6 45.3 58.2 5.8 9.5 5.6 8.9 0.19 0.26 0.55 1.13 0.00 0.04 0.07 0.08

BH53 5.7 20.9 41.2 58.4 5.5 9.3 5.3 8.5 0.15 0.37 0.54 1.51 0.00 0.11 0.05 0.09

BH54 4.0 21.0 34.0 59.0 7.4 26.0 4.1 8.3 0.16 0.40 0.39 1.48 0.00 0.00 0.06 0.09

BH55 5.1 21.4 38.7 46.5 10.2 14.8 3.9 6.0 0.25 0.41 0.47 0.75 0.00 0.08 0.06 0.08

BH67 8.4 28.3 41.1 59.4 6.0 13.7 4.5 8.1 0.15 0.35 0.50 1.61 0.00 0.04 0.06 0.08

BH76 9.4 32.5 26.3 55.0 5.0 28.6 2.1 7.4 0.13 0.37 0.35 0.94 0.00 0.18 0.05 0.08

BH81 35.2 55.8 25.9 52.8 6.0 40.9 2.6 5.7 0.15 0.37 0.50 0.96 0.00 0.21 0.05 0.08

BH82 7.7 28.9 33.5 55.9 6.3 23.9 2.6 6.2 0.13 0.35 0.38 0.95 0.00 0.24 0.06 0.09

MBH1 0.0 21.9 50.3 60.0 5.2 11.7 5.3 11.2 0.16 0.31 0.49 0.91 0.00 0.17 0.07 0.08

MBH2 0.0 26.9 45.1 58.8 5.7 10.7 4.4 8.9 0.15 0.31 0.52 0.98 0.00 0.02 0.06 0.09

N1 0.0 22.0 48.8 56.6 6.2 9.4 4.3 8.2 0.19 0.36 0.49 0.97 0.00 0.00 0.08 0.11

N2 0.0 21.4 51.3 58.5 5.1 9.6 3.9 6.7 0.18 0.26 0.52 1.01 0.00 0.00 0.07 0.10

OTB1 0.0 24.6 49.7 58.1 5.7 8.7 4.7 7.5 0.19 0.29 0.48 1.11 0.00 0.00 0.07 0.09

OTB2 0.0 26.2 46.9 57.7 4.0 8.4 2.6 6.1 0.21 0.38 0.44 1.34 0.00 0.00 0.07 0.10

OTB3 0.0 30.6 47.4 59.0 5.2 11.2 3.8 8.8 0.19 0.35 0.49 1.12 0.00 0.00 0.07 0.10

OTB4 0.0 20.2 45.6 58.4 5.8 8.4 5.1 7.0 0.17 0.26 0.41 1.19 0.00 0.07 0.07 0.09

OTB6 0.0 28.9 46.0 58.1 5.7 13.1 5.1 8.8 0.21 0.33 0.43 1.14 0.00 0.04 0.06 0.09

OTB7 0.6 19.0 47.8 56.0 6.4 17.8 5.1 9.1 0.23 0.37 0.41 0.91 0.00 0.00 0.07 0.09

OTB8 0.0 11.0 53.4 58.1 5.1 9.8 3.7 6.2 0.18 0.26 0.51 0.89 0.00 0.00 0.07 0.11

4.4.3. External Check Sample analysis Out of the total 1,555 samples, around 10% (143 samples) were sent to ALS Group’s Mali laboratory for external checking. The result of external checking is presented in Annexure F. The borehole wise variation in total Fe from wet chemical analysis at internal lab and external lab is around ±2.5%, which is within the acceptable range.

The list of check samples is shown below:

Table 4.4.3-1 Samples sent to external laboratory

Sr. No Borehole No Sample No Sample Depth Decoded

Sample No From To 1 BH-11 116 14.00 15.00 1138 2 BH-11 119 17.00 18.00 1147 3 BH-12 837 1.00 2.00 1183 4 BH-12 847 11.00 12.00 1182 5 BH-13 867 4.00 5.00 1186 6 BH-13 865 2.00 3.00 1184 7 BH-14 860 9.00 10.00 1179




Sample No From To 8 BH-15 50 10.00 6.00 1154 9 BH-15 62 6.00 17.40 1146

10 BH-15 46 17.40 2.00 1155 11 BH-16 884 15.00 16.00 1177 12 BH-17 509 12.00 13.00 1196 13 BH-17 497 0.00 1.00 1192 14 BH-19 333 13.00 13.60 1119 15 BH-19 321 1.00 2.00 1115 16 BH-20 432 0.00 0.65 1210 17 BH-20 443 11.00 12.00 1208 18 BH-21 896 11.00 12.00 1163 19 BH-21 900 15.00 16.00 1180 20 BH-22 585 0.00 0.80 1170 21 BH-22 592 7.00 8.00 1169 22 BH-22 607 24.00 25.00 1168 23 BH-23 626 14.00 15.00 1167 24 BH-23 640 28.00 29.00 1166 25 BH-24 676 12.00 13.00 1165 26 BH-25 319 24.00 24.9 1114 27 BH-26 465 20.50 22.00 1193 28 BH-26 456 11.00 12.00 1197 29 BH-26 449 4.00 5.00 1198 30 BH-27 832 12.70 12.90 1185 31 BH-27 829 10.00 11.00 1201 32 BH-28 73 3.00 4.00 1143 33 BH-28 88 18.00 19.00 1137 34 BH-29 649 6.00 7.00 1164 35 BH-29 659 16.00 17.00 1187 36 BH-30 466 0.00 0.70 1212 37 BH-30 472 6.00 7.00 1211 38 BH-30 482 16.00 17.00 1195 39 BH-31 545 12.00 13.00 1173 40 BH-31 537 4.00 5.00 1194 41 BH-31 533 0.00 1.00 1191 42 BH-32 939 10.00 11.00 1153 43 BH-33 772 17.00 18.00 1203 44 BH-33 758 3.00 4.00 1205 45 BH-34 562 4.00 5.00 1172 46 BH-34 584 26.00 26.80 1171 47 BH-35 293 17.00 18.00 1117 48 BH-35 287 11.00 12.00 1118




Sample No From To 49 BH-36 190 15.00 16.00 1134 50 BH-36 175 0.00 1.00 1141 51 BH-37 984 2.00 3.00 1150 52 BH-38 397 11.00 12.00 1124 53 BH-38 396 10.00 11.00 1126 54 BH-38 392 6.00 7.00 1111 55 BH-38 388 2.00 3.00 1112 56 BH-39 258 4.00 5.00 1127 57 BH-39 260 6.00 7.00 1120 58 BH-40 913 0.00 1.00 1161 59 BH-40 917 4.50 5.25 1125 60 BH-40 915 2.00 3.00 1109 61 BH-41 815 2.00 3.00 1200 62 BH-49 1042 19.00 20.00 1175 63 BH-50 733 12.00 12.90 1188 64 BH-50 724 3.00 4.00 1202 65 BH-51 906 4.00 5.00 1181 66 BH-52 223 8.00 9.00 1151 67 BH-53 221 20.00 20.90 1152 68 BH-53 214 13.00 14.00 1140 69 BH-53 207 6.00 7.00 1129 70 BH-54 947 4.00 5.00 1139 71 BH-54 953 13.20 14.00 1122 72 BH-6 194 2.00 3.00 1131 73 BH-67 978 25.00 26.00 1176 74 BH-67 975 22.00 23.00 1162 75 BH-67 971 18.00 19.00 1108 76 BH-76 1031 31.00 32.00 1160 77 BH-81 1000 47.00 48.00 1121 78 BH-81 989 36.00 37.00 1178 79 BH-82 1068 15.00 16.00 1199 80 BH-82 1077 24.00 25.00 1148 81 BH-82 1076 23.00 24.00 1174 82 BH-9 40 13.00 14.00 1157 83 BH-9 42 15.00 16.00 1156 84 ADBH 425 8.00 8.65 1149 85 ADBH 430 12.00 13.00 1209 86 N1 523 12.00 13.00 1110 87 N1 511 0.00 1.00 1113 88 N2 740 6.00 7.00 1206 89 N2 734 0.00 1.00 1207




Sample No From To 90 MBH-1 172 19.00 20.00 1145 91 MBH-1 153 0.00 1.00 1135 92 MBH-2 780 5.00 6.00 1204 93 OTB-1 17 6.00 16.15 1159 94 OTB-1 22 16.15 21.00 1158 95 OTB-2 353 14.00 15.00 1116 96 OTB-3 707 15.75 17.00 1189 97 OTB-3 704 13.00 14.00 1190 98 OTB-4 253 20.00 20.20 1128 99 OTB-4 240 7.00 8.00 1132 100 OTB-6 132 8.00 9.00 1142 101 OTB-6 142 18.00 19.00 1136 102 OTB-7 400 2.00 3.00 1123 103 OTB-7 406 8.00 9.00 1130 104 OTB-8 928 10.00 11.00 1133 105 OTB-8 923 5.00 6.00 1144

106 BH-57 1459 0 4 1719 107 BH-62 1456 1 2 1720 108 BH-63 1458 3 6 1721 109 BH-58 1378 22 23 1722 110 BH-58 1370 15 16 1723 111 BH-58 1388 32 33 1724 112 BH-60 1355 52 53 1725 113 BH-60 1346 43 44 1726 114 BH-61 1523 25.1 26.1 1727 115 BH-56 1103 20 21 1728 116 BH-61 1532 36.6 37 1729 117 BH-64 1624 40 41 1730 118 BH-64 1630 47 48 1731 119 BH-65 1462 2 3 1732 120 BH-68 1637 30 31 1733 121 BH-66 1552 11.5 13 1734 122 BH-66 1543 3 4 1735 123 BH-69 1562 25 26 1736 124 BH-69 1576 39 40 1737 125 BH-69 1571 34 35 1738 126 BH-70 1612 9.1 11.1 1739 127 CRM

1740

128 BH-71 1593 54 55 1741 129 BH-71 1604 65 66 1742 130 BH-71 1582 41 42 1743




Sample No From To

131 BH-83 1087 14 15 1744 132 BH-83 1095 21 22 1745 133 BH-84 1405 43 44 1746 134 BH-84 1395 33 34 1747 135 BH-85 1335 71 72 1748 136 BH-85 1330 66 67 1749 137 BH-86 1433 49 50 1750 138 BH-86 1440 56 57 1751 139 BH-87 1421 13 14 1752 140 BH-87 1414 6 7 1753 141 BH-55A 1698 11.2 12.7 1779 142 BH-55A 1694 4.9 5.85 1780 143 BH-59A 1770 56 57 1781 144 BH-59A 1755 41 42 1782

4.4.4. Regression analysis between check sample and internal wet chemical analysis

Figure 4.4.4-1 Regression between check sample and internal wet chemical analysis

4.4.5. Specific Gravity Specific Gravity was tested at CSIR - Institute of Minerals and Materials Technology (Council of Scientific and Industrial Research), Bhubaneswar, Orissa, India.

Around 100kg of various grades of iron ore was collected and handed over. The result is presented below:

Fe_Wet

Fe_C

heck

6055504540353025

60

50

40

30

20

S 0.496239R-Sq 99.4%R-Sq(adj) 99.4%

Regression95% CI95% PI

Fitted Line PlotFe_Check = 1.040 + 0.9725 Fe_Wet



Table 4.4.5-1 Physical property of iron ore

# Details Value 1 Bulk density, g/cc 2.82 2 Sp. Gravity 3.71 3 Angle of repose, 0 ( 20 mm) 32028’’ 4 Porosity, % 24.0

4.4.6. QA/QC Procedure A QA/QC system is designed to check the quality of performance of an independent assay laboratory being used for a particular project. The laboratory in question may well have a good reputation, be certified or accredited and have their own internal QA/QC system but it is always good practice, as prescribed by JORC, to use a QA/QC programme to add credibility to sample assay results which are the building blocks for a resource estimation.

Three types of QA/QC samples should be used, namely, blanks, duplicates and Certified/Standard Reference Material (“CRM” or “SRM”). These three types collectively should comprise approximately 10% of the total samples sent for submission, on a batch by batch basis. The QA/QC samples should be fed into the normal stream of samples submitted to the external lab such that the lab is unaware that of the identity of the QA/QC samples (i.e. blind QA/QC).

Figure 4.4.6-1 Dr Teigler verifying the samples at site laboratory

CRM/SRM: These are usually commercially prepared samples of known iron content. Insert into the sample stream at a rate of 1 in 30. Details of CRM/SRM used by internal lab are presented in Annexure E. The QA/QC of internal as well as external lab is presented in Annexure F.

Duplicates: Duplicate samples are made by splitting the final pulverised sample into two. The resulting assays should be the same or similar and within acceptable tolerance limits for accuracy. Insert into the sample stream at a rate of 1 in 30.

Blanks: Blank samples consist of barren material with little or no iron content and should be collected from the same source for the life of the project. The low iron content should be checked and verified internally using XRF. The samples should be prepared using the same process of crushing and pulverising. A bulk sample may be prepared at one go, and stored, to provide enough final pulverised material for a large number of individual samples. The resulting assays should show a low iron content and act as a check on cross contamination between samples. Insert into the sample stream at a rate of 1 in 30.



At the end of the project the results of the three different QA/QC sample methods are analysed using simple statistical and graphical techniques to show how well they performed and highlight any problems.

4.4.7. Drillhole Database Integrity All borehole and sampling data has been archived electronically by IMC and a copy will be handed over to Earthstone.

4.4.8. Balance Area Out of the 16sqkm, around 1.50sqkm was under exploration and showing iron ore mineralisation. Surface geological reconnaissance in the balance area has shown low probability of iron ore mineralisation. However, it is recommended to execute magnetic surveys in order to locate more basins. Using magnetic surveys will also be the most effective way to sterilise areas to be used for dumps and mining infrastructure.



5. STATISTICAL EVALUATION OF THE OREBODY

5.1. Statistical evaluation of various elements The probability plot of Fe% is presented in figure below:

The probability plot of Fe% at 25% Cutoff is presented in figure below:

Figure 5.1-1 Probability plot of Fe% (95% CI)

Fe

Perc

ent

100806040200

99.99

99

95

80

50

20

5

1

0.01

Mean 46.24StDev 14.15N 1581AD 132.904P-Value <0.005

Probability Plot of FeNormal - 95% CI

Fe_25% Fe Cutoff

Perc

ent

80706050403020

99.99

99

95

80

50

20

5

1

0.01

Mean 50.49StDev 7.942N 1401AD 76.309P-Value <0.005

Probability Plot of Fe_25% Fe CutoffNormal - 95% CI



Histogram of Fe% is presented below:

Histogram of Fe% at 25% Cutoff is presented below:

Figure 5.1-2 Histogram of Fe%

Fe

Freq

uenc

y

8070605040302010

300

250

200

150

100

50

0

Mean 46.24StDev 14.15N 1581

Histogram of FeNormal

Fe_25% Fe Cutoff

Freq

uenc

y

66605448423630

160

140

120

100

80

60

40

20

0

Mean 50.49StDev 7.942N 1401

Histogram of Fe_25% Fe CutoffNormal



Histogram of SiO2% at 25% Fe Cutoff is presented below:

Figure 5.1-3 Histogram of SiO2%

Histogram of Al2O3% at 25% Fe Cutoff is presented below:

Figure 5.1-4 Histogram of Al2O3%

SiO2_25% Fe Cutoff

Freq

uenc

y

484032241680

400

300

200

100

0

Mean 10.17StDev 6.692N 1401

Histogram of SiO2_25% Fe CutoffNormal

Al2O3_25% Fe Cutoff

Freq

uenc

y

17.515.012.510.07.55.02.5

200

150

100

50

0

Mean 6.015StDev 2.011N 1401

Histogram of Al2O3_25% Fe CutoffNormal



Histogram of TiO2% at 25% Fe Cutoff is presented below:

Figure 5.1-5 Histogram of TiO2%

Histogram of P% at 25% Fe Cutoff is presented below:

Figure 5.1-6 Histogram of P%

TiO2_25% Fe Cutoff

Freq

uenc

y

0.70.60.50.40.30.20.10.0

250

200

150

100

50

0

Mean 0.2681StDev 0.1026N 1401

Histogram of TiO2_25% Fe CutoffNormal

P_25% Fe Cutoff

Freq

uenc

y

4.23.63.02.41.81.20.60.0

400

300

200

100

0

Mean 0.7530StDev 0.2904N 1401

Histogram of P_25% Fe CutoffNormal



Histogram of S% at 25% Fe Cutoff is presented below:

Figure 5.1-7 Histogram of S%

Histogram of V% at 25% Fe Cutoff is presented below:

Figure 5.1-8 Histogram of V%

S_25% Fe Cutoff

Freq

uenc

y

0.60.50.40.30.20.10.0-0.1

1000

800

600

400

200

0

Mean 0.01643StDev 0.04420N 1401

Histogram of S_25% Fe CutoffNormal

V_25% Fe Cutoff

Freq

uenc

y

0.480.420.360.300.240.180.120.06

900

800

700

600

500

400

300

200

100

0

Mean 0.07220StDev 0.02108N 1401

Histogram of V_25% Fe CutoffNormal



5.2. Regression Analysis Between Different Elements Fe versus SiO2, Al2O3, TiO2, P, S and V: The regression equation is The regression equation is Fe = 59.8 - 0.769 SiO2 + 1.08 Al2O3 - 32.1 TiO2 - 1.38 P - 20.3 S + 24.7 V Scatter plot of SiO2% vs Fe% is presented below:

Figure 5.2-1 Scatter plot of SiO2% vs Fe%

Scatter plot of Al2O3% vs Fe% is presented below:

Fe

SiO

2

6050403020100

70

60

50

40

30

20

10

0

S 4.53508R-Sq 86.8%R-Sq(adj) 86.8%

Fitted Line PlotSiO2 = 51.78 - 0.8203 Fe



Figure 5.2-2 Scatter plot of Al2O3% vs Fe%

Scatter plot of TiO2% vs Fe% is presented below:

Figure 5.2-3 Scatter plot of TiO2% vs Fe%

Scatter plot of P% vs Fe% is presented below:

Fe

Al2

O3

6050403020100

30

25

20

15

10

5

0

S 2.08468R-Sq 44.2%R-Sq(adj) 44.2%

Fitted Line PlotAl2O3 = 12.73 - 0.1312 Fe

Fe

TiO

2

6050403020100

1.0

0.8

0.6

0.4

0.2

0.0

S 0.0737726R-Sq 85.0%R-Sq(adj) 85.0%

Fitted Line PlotTiO2 = 0.8990 - 0.01242 Fe



Figure 5.2-4 Scatter plot of P% vs Fe%

Scatter plot of S% vs Fe% is presented below:

Figure 5.2-5 Scatter plot of S% vs Fe%

Scatter plot of V% vs Fe% is presented below:

Fe

P

6050403020100

5

4

3

2

1

0

S 0.297173R-Sq 25.9%R-Sq(adj) 25.8%

Fitted Line PlotP = 0.1066 + 0.01241 Fe

Fe

S

6050403020100

0.7

0.6

0.5

0.4

0.3

0.2

0.1

0.0

S 0.0638886R-Sq 18.5%R-Sq(adj) 18.4%

Fitted Line PlotS = 0.1250 - 0.002150 Fe



Figure 5.2-6 Scatter plot of V% vs Fe%

Figure 5.2-7 Contour Plot of Thickness (m) vs North (m), West (m)

Fe

V

6050403020100

0.5

0.4

0.3

0.2

0.1

0.0

S 0.0185451R-Sq 35.9%R-Sq(adj) 35.8%

Fitted Line PlotV = 0.02327 + 0.000980 Fe



Figure 5.2-8 Contour Plot of Fe% vs North (m), West (m)

Figure 5.2-9 Contour Plot of P% vs North (m), West (m)



6. GEOLOGICAL MODELLING

6.1. Geological Database All data provided were added to a Surpac database, which includes the following information:

Table 6.1-1 Geological database structure

Surpac Table Description

COLLAR The drillhole locations are in x, y and z coordinates. It also notes the drillhole depth and hole path.

SURVEY No down-hole surveys were conducted. The collar RLs were picked up from the topography DTM.

LITHO Includes borehole id, litho interval, core recovery, main lithology, minor lithology, grain size, color, core angle, alterations, minerals.

ASSAY Includes borehole id, sample number, assay interval, assay data of iron (Fe%, SiO2%, Al2O3%, TiO2%, P%, S% and V%).

STYLES The table required by Surpac for the graphical colour coding of the geology and grade ranges for the assays.

TRANSLATION Optional table, not used

6.2. Borehole Data Entry and Validation All data pertaining to boreholes have been entered for the purposes of resource modelling. The data have been formatted electronically into a master spread sheet. From this master spread sheet, three further data sheets (CSV File) have been prepared: Collar (“collar”), Lithology (“litho”) and Quality (“assay”) for import into Surpac. The following list indicates the data entered into Surpac.

6.3. Lithology sectional analysis Eight transverse cross section lines were created for the orebody at a spacing of ~100m interval, as per the exploration drilling.



Figure 6.3-1 Cross section lines

A B

D C

Section lines

Boreholes

N

Boreholes

Section lines Orebody boundary on surface



Details of the sections lines are given below:

Table 6.3-1 Details of the section lines

Cross Section Line

From South to North Western Point no 1 Eastern Point no 2

North West North West CSL_1 3,456,901.39 287,015.05 3,456,956.55 287,701.35 CSL_2 3,456,984.81 286,804.79 3,457,047.43 287,583.85 CSL_3 3,457,067.33 286,583.26 3,457,147.50 287,580.76 CSL_4 3,457,157.90 286,462.00 3,457,247.24 287,573.56 CSL_5 3,457,247.13 286,324.00 3,457,345.24 287,544.62 CSL_6 3,457,348.42 286,335.93 3,457,438.89 287,461.55 CSL_7 3,457,458.71 286,460.00 3,457,531.71 287,368.26 CSL_8 3,457,569.01 286,584.07 3,457,598.43 286,950.15

Figure 6.3-2 Section lines in Surpac

Section Line 5



Figure 6.3-3 Section along section line 5

6.4. Topographic model Spot heights and topographic contours were generated using DGPS and imported into Surpac to generate DTM for modelling. The coordinate system and datum used throughout the project is UTM and WGS84 Zone 30N respectively.

Figure 6.4-1 Topographic surface (DTM) & contours

Borehole with litho and assay

Surface



6.5. Grade sectional analysis Orebody outer line was digitized in the sections based on the grade (Fe %) and litho units. Some weathering of orebody was also digitized in the eastern side of the mineralized zone.

6.6. Solid Model Once digitised in Surpac, the cross sectional profiles were stitched together to form solid wireframe models for the orebody. However, cognizance was taken of the topography and individual assays and the orebody was interpreted based on the drill hole positions.

Figure 6.6-1 Orebody outer line digitised in Surpac

Figure 6.6-2 Orebody wireframe model

6.7. Orebody Volume Table below indicates the volume of the modelled orebody:

Float Ore Main Ore



Table 6.7-1 Volumes of solid model

# Orebody type Volume (cum) 1 Main Ore 13,467,999 2 Float Ore 1,824,345 Total 15,292,344

6.8. Compositing of Borehole Data Downhole compositing was done at 1m and used in block modeling with the following: Fe%, SiO2%, Al2O3%, TiO2%, P%, S% and V%.

6.9. Block Model and Grade Estimation A block model was created to encompass the Tourza iron orebody.

6.9.1. Block Model Summary The block model was constructed with blocks of 20m x 20m x 1m. The block size of 20m in the X and Y direction has been based on approximately 1/5th of the average drill spacing. Sub blocks were also created with size of 5m x 5m x 0.5m.



Figure 6.9.1-1 Block model

6.9.2. Block Model Constraints The block model constrained by topography and wireframe model is given in the figure below:

Figure 6.9.2-1 Block model constrained by topography and orebody wireframes

6.9.3. Block Model Attributes The block model has attributes added to it. It is in these attributes that the grade values and relevant statistical information is are stored. It should be noted that all numerical attributes have been assigned a background value of (-) 9. The reason for this is to readily identify blocks that were not estimated by a given calculation.



Table 6.9.3-1 Block model attributes

Radicals Block Attributes Fe% Al2O3% SiO2% TiO2% P% S% V%

fe al2o3 sio2 tio2

p s v

6.9.4. Specific Gravity The Specific Gravity of 3.71 has been used in the model.

6.10. Resource estimation by modeling The Inverse Distance Weighting (IDW2) method of interpolation was applied for estimating the elements of the

orebody.

Figure 6.10-1 Block model with Fe% grades

Figure 6.10-2 Block model with Fe% > 50



Figure 6.10-3 Block model with Fe% > 56

6.10.1. Block Model Volume Comparisons A comparison was made between the volume of the wireframe model and that of the block model at 25% Fe Cutoff. The results are tabulated in table below. This was done to verify that the volumes obtained by the block model are true to the solid model.

Table 6.10.1-1 Solid and block model volume comparison

Solid Model (m3) Block Model (m3) % Difference

15,292,343.86 14,029,787.50 91.74%

6.10.2. Block model validation The block model is validated with the digitized cross sections; one of the sections (along section line 5) is presented below:

JORC Compliant Mineral Reserve Statement Page 62 Tourza Iron Ore Proect, Morocco


Figure 6.10.2-1 Block model validation

Surface line



6.11. Resource assessment by conventional method Oolitic ironstone deposit of Touza ,Morocco is a flat bedded type with a very gentle inclination to east-northeast and occupies a net area of 454,814.61sqm. Ironstone occurs on top in most part of the deposit with very little overburden. Only in the eastern part towards downdip direction some overburden of metasedimentary exists. The total plan outcrop and the subcrop measures an area of 669,659.04sqm.

In view of the of regular habit of ironstone with predictable change in trend, sharp physical contrast with lower floor contact of slate/phyllite and low dip, drill hole layout was optimized to a square grid pattern of 100m x 100m in order to estimate the ore quality and quantity in terms of tonnage, densities, shape, physical characteristics, grade and mineral content with high level of confidence.

A total of 75 vertical boreholes intersected the primary ore zone. A single continuous unit of Iron ore was met with in all boreholes as per anticipation. The frequency histogram of Fe% of grade is depicted in Figure 5.1-2. The distribution pattern is as follows:

Table 6.11-1 Fe distribution pattern in boreholes

Number of boreholes Fe grade % Percentage share of boreholes 53 >50 71 % 20 36-50 27% 2 32-36 2%

In 2 section lines a small lower grade ore body was met with in hanging wall portion.

The thickness of ironstone met with in the boreholes varies from 3m to 31.7m with an overall arithmetic mean of 18.21m. The ore quality shows least variation and can be considered isotropic.

As a check the resource has been estimated also by area –thickness method. The total area of exposed ore and the subcrop boundary is considered and the total ore volume computed by the average thickness factor of all the boreholes. This works out to 45,241,559 t. The difference is <4% and is permissible.

The estimate of float ore was made from plan area as mapped in field, the average thickness of intercepts met with in 7boreholes around the main orebody.

An attempt has been made to compute the Indicated resource. In the eastern part in as many as 6 section lines the orebody shows lateral extension below overburden. Rather Orebody is open down the dip direction. So the lateral extension has been extrapolated 100m in dip direction.

Figure 6.11-1 Frequency histogram of weighted average grade in 75 boreholes



Figure 6.11-2 Frequency histogram of width of iron ore There is poor correlation between grade and width.

Figure 6.11-3 Width of iron ore zones in meters (x-axis) against corresponding Fe grade (%) The above is based on intercepts in 75 number of positive boreholes of main orebody (Correlation coefficient = +0.33). The resource tables are given in next chapter.



7. STATEMENT OF JORC MINERAL RESOURCES Mineral resource of Tourza Iron Ore Property as on April 2012 is given below. The Mineral Resource Statement has been estimated from the Block Model generated in Surpac based on data quality, drillhole spacing and the interpreted continuity.

Table 7-1 Mineral Resource using Surpac at 25% Fe Cut-off

Classification Resource (Mt) Fe % SiO2 % Al2O3 % TiO2 % P % S % V % Measured Resource 52.05 50.1 11.7 6.6 0.3 0.70 0.02 0.07

Fe Range Resource (Mt) Fe % SiO2 % Al2O3 % Tio2 % P % S % V %

25% -> 30% 1.75 28.7 40.3 13.7 0.6 0.44 0.01 0.04 30% -> 40% 7.33 38.6 23.8 8.6 0.5 0.62 0.04 0.05 40% -> 50% 6.10 44.9 13.4 6.2 0.3 0.77 0.03 0.06 50% -> 52% 5.07 51.1 9.3 6.1 0.3 0.74 0.01 0.08 52% -> 54% 8.96 53.1 8.1 5.8 0.3 0.72 0.01 0.08 54% -> 56% 14.89 55.0 7.2 5.8 0.2 0.72 0.01 0.08

+56% 7.95 56.7 6.9 6.0 0.2 0.70 0.01 0.08 Cutoff 25% 52.05 50.1 11.7 6.6 0.3 0.70 0.02 0.07

The grade vs tonnage curve on estimated resource from Surpac model is presented below:

Figure 7-1 Grade vs tonnage curve

• Mineral Resource estimate validated by conventional methods of resource estimation (standard cross-section method & area-thickness method) based on 75 number of positive boreholes is as follows:

28.70

38.57

44.88

51.14 53.07 55.02 56.71 52.05 50.30

42.97

36.87 31.81

22.84

7.95

-

10.00

20.00

30.00

40.00

50.00

60.00

28.70 38.57 44.88 51.14 53.07 55.02 56.71

Tourza Grade vs Tonnage Curve

Fe %

Resource (Mt)



Type of Ore Measured Resource (Mt) Grade % FeMain Orebody 47.02 50.09Hangingwall Orebody 0.15 36.96 Total 47.17 50.05Float ore 3.69 >51Grand total 50.86

Table 7-2 Mineral Resource using Conventional Method

• There is a very good agreement in estimation of tonnage in conventional and block model methods. The difference is only 2.3%.

7.1. Total Resource Confidence Limit • The tonnage estimate depends on orebody outline, thickness, ore continuity along dip and strike

directions and density. Amongst these, the width is the only variable of significance for volume estimation. With normal distribution, the coefficient of complexity is expressed as:

C = V / (MK)

Where V = Variance of width M = Mineralization factor K = Modulus of contact complications

• Since the iron ore widths have mostly been measured by close spaced borehole apart from actual measurement in scarp section with practically no interbands, the ratio between net ore area and gross ore area will be 1 (M). K is represented by the ratio between the perimeter of best fitting ellipse and length of actual “Measured” boundary line (K). The confidence limit of tonnage estimate is determined by the following expression:

Confidence Interval (C.I.)

Where, C.I. = Confidence limit,

t = correction factor for smoothing out a normal distribution curve where a small number of samples are involved. Here it is taken as 2 at 95% Fiducian Level as per table value, N = Number of intercepts, C= Coefficient of complexity.

Table 7.1-1 Confidence Limit of Estimated Tonnage (“Measured” Category)

Number of Ore intercepts (N) V M K C C.I.

(95% Fiducian Level) Tonnage

(million tonnes)

75 0.395 1 1.12 0.353 ±6% 50,860,380.33±6%

• The gross error limit thus worked out ±6% on tonnage estimate. • The permissible error limit for “Measured” Resource category under international and Indian national

system is as follows: USGS / USBM 0-20%. Russia - 20-30%, CIM, Canada - 20%, India - 10-20% (Vide Misc. Pub. GSI, No.58, 1981). Therefore the error in estimation of tonnage in the present case is well inside the stipulated limits.



7.2. Ore quality • The Oolitic iron ore comprises an aggregate of magnetite, martite, hematite and goethite with variable

quartz, minor clay and carbonate. • Phosphorous is the only deleterious impurity with overall average of 0.7%. • The overall averages for SiO2, Al2O3, TiO2 are 10%, 6% and 0.2% only and the content of sulphur,

vanadium are negligible.

The mineral resource estimation has been carried out by a team from IMC as given below:

Dr Ernst Bernhard Teigler, based out of Germany, is Head of Business Segment Geology, Appraisal and Development and Head of the Department Geology and Borehole Survey division of DMT, the parent company of IMC Group. He is also a Member of South African Council for Natural Scientific Professions (SACNSP, Registration Number 400174/05) and has sufficient experience which is relevant to the style of mineralization and type of deposit under consideration, and to the activity he is undertaking to qualify as Competent Person in terms of Australian Code for Reporting of Exploration Result, Mineral Resources and Ore Reserves (JORC Code 2004 edition).

Dr MM Mukherjee, based out of India, is Principal Consultant, IMC. He has recently become a member of AusIMM. He worked in Geological Survey of India and reached the position of Deputy Director General. He has over 35 years of experience in mineral exploration and has worked in similar deposits. He was also a Member of the ‘Working Group for Introduction of UNFC System in India’ on behalf of Government of India in 2003.

Mr TN Gunaseelan, based out of India, is Director, IMC and Managing Director of IMC India. He is also a Member of The Geological Society of South Africa and has over 24 years of experience which is relevant to the style of mineralization and type of deposit under consideration and carry out mine planning and feasibility studies and to arrive at reserves from resources as per JORC standards.

Field work which included reconnaissance to supervision of drilling, logging and sampling was carried out by IMC field geologists Mr P Seetharam, Mr Keshav S Walvekar and Ms Indrani Basak under the supervision of Dr MM Mukherjee and reviewed by Dr Ernst Bernhard Teigler. Topographic survey was carried out by IMC team comprising Mr RK Sharma and Mr S Sridharan. Mr Somnath Gain from IMC has carried out the geological modeling using Surpac software.

The exploration project is directed by Mr Pankaj Sinha, Director, IMC-SRG. Mr SK Naik, COO of Earthstone is responsible for the integrity of the exploration and various laboratory analysis results.



MINING & BENEFICAITION



8. MINING

8.1. Mining Method Conventional mechanized opencast mining is proposed. The mining process will involve drilling-blasting-excavating-trucking-crushing.

8.2. Open Pit Optimization The open pit optimization for the Tourza deposit was carried out using the resource block model created by IMC and Whittle 4X Lerchs-Grossman open pit optimisation software. The resource model was imported from Surpac and technical and economic parameters were applied to the block model to create a net value block model for open pit optimization in Whittle. In using the partial percentage model, it was assumed that the portions of ore and waste within the blocks could be identified using grade control procedures and preferentially selected during mining.

Total cost of mining and processing was considered at $22.6 /t of finished product. The price ex-mines was considered for optimization at $58/t based on the sale order with Earthstone for FOB $90/t ex-Agadir. For the purpose of optimization all ores were considered for processing.

The cut-off grade for ore is 25% Fe. Mining dilution of 3% and mining losses of 2% were applied to the optimization. A pit slope angle of 48° overall was used.

The base case open pit optimization produced from pit, as shown in Figure 8.2-1.

Ultimate Pit with topography

Float Ore in one section view Main Ore in one

section view



Figure 8.2-1 Optimised Pit Shell

8.3. Open Pit Design Based on the pit optimization the final open pit was designed. Design parameters are summarised inTable 8.3-1.

Table 8.3-1 Final Pit Slope Criteria

Maximum Vertical Bench Separation (m)

Bench Face Angle (º)

Berm Width (m)

Pit Wall Angle (º)

10 70 5 48

8.4. Geotechnical and hydro-geological issues The project is not likely to have any significant geotechnical and hydrogeological issue.

Since the mining is to be carried out in the orebody which is above ground in most of the parts, formation of benches and appropriate slopes for safe operation of the mine is not likely to be a problem.

The boreholes did not intercept any water body. Also, the area has scanty rains and the mineralized body being mostly a hill, any significant issue with water management for operation of the mine is not anticipated.

However, it is recommended that in due course of mining, above studies may be conducted.

8.5. Proved Reserves The mineable reserve was estimated using the final pit design. Dilution was applied to the resources within the pit by adding 3% of low grade ore at 25% Fe and losses were applied at 2%.

The mineable reserve estimate which is categorized as Proved Reserves is summarized inTable 8.5-1.

Table 8.5-1 Tourza Proved Reserves

Mineable Resource (Mt) Fe (%) 50.10 50.43

The final pit contains a total of 72.76 Mt of rock. There is a total of 22.66 Mt of waste rock and 50.10 Mt of economic, proved iron ore reserve.

Float Ore Section

Main Ore Section



8.6. Life of Mine Production Schedule A production schedule was prepared based on discussions with Earthstone. Based on the grade distribution and market survey it was ascertained that about 7.6 Mt of material can be extracted at Fe >56% with practically no waste stripping. This material can be simply crushed and sold as DSO. For the first 5 years it is planned to produce DSO. Subsequently, it is proposed to beneficiate the ores. The schedule is summarised on an annual basis as below:

Table 8.6-1 Tourza Open Pit LOM Production Schedule

Year ROM (Mt/y) Fe (%) Waste (t) Strip Ratio Ore Type 1st to 5th year 1.5 56.71% - - DSO 6th to EoL 4.0 49.31% 1.90 0.47 BO

8.7. Haul Road and Site Layout The proposed site for the main waste dump is located to the west of the open pit, between the pit and the process plant. Because of the flat topography the top of the dump is also flat. The surface area of the proposed final dump design is approximately 1sqkm, height of the dump will be ~10m and it has a capacity to hold over 10Mm3 of waste rock.

The process plant is proposed ~1 km to the west of the pit. Haul roads are designed from the pit to the process plant following the existing tracks.

Ore is hauled to finger stockpiles adjacent to the primary crusher for reclaiming and feeding to the process plant by front end loader.

Figure 8.7-1 Backhoe operating at site

8.8. Equipment IMC understands that contractor is deputed for experimental mining. The mine will operate on a three 8-hour shift basis for 312 days per year. The major mining equipment requirement is given inTable 8.8-1.



Table 8.8-1 Major Mining Equipment

Equipment Type Description Fleet Drill 89mm 2 Shovel 2.94cum 3 Dumper 36t 7 Dozer 200hp 3 Grader 150hp 2 Front End Loader 3cum 1 Water Sprinkler 28kl 2



9. IRON ORE PROCESSING PLANT MN Dastur Limited, India have been engaged for carrying out the processing studies. While further work is going on, as of now based on preliminary test works carried out at National Metallurgical Laboratory (NML), Jamshedpur, India and Institute of Minerals and Materials Technology (IMMT), Bhubaneshwar, India, IMC have summarized the observations below:

• The samples collected for test work indicate that the ore consists of mainly magnetite with sizeable hematite, small quantity of goethite and silicate minerals.

• The magnetite is easily separable at about 150 µm. However, hematite is difficult to liberate because of its close association with silicates even at small micron size. It may require grinding to -44 µm for any significant recovery of iron value.

• The grade of the samples tested ranged between 53-56% Fe. • The test works established the possibility of producing a composite concentrate analysing +64% Fe

with about 55% yield. • Both the testing agencies found gravity separation not effective and adopted LIMS first for recovery of

magnetite concentrate. • LIMS test was carried out in two-stages, roughing and cleaning. IMMT fed the material at 106 µm for

all the stages of LIMS, whereas NML used 150 µm feed for roughing, concentrate obtained from which was reground to 74 µm for further liberation before subjecting the same to cleaning.

• Following basic process steps are envisaged at this stage: o Reducing the ROM ore to -150 µm through appropriate combination of crushers and grinding mill. o Treating the -150 µm ground material in Stage-I LIMS, further grinding of concentrate thus

produced to -74 µm size and final cleaning of the same in Stage-II LIMS to produce magnetic concentrate.

o Grinding of non-magnetics obtained from both the LIMS to 44 µm and subjecting the same to high intensity magnetic separation in WHIMS.

o Composite concentrate produced from LIMS and WHIMS are treated in a thickener to partially dewater the same.

o Final dewatering of thickener underflow in filter press to produce concentrate-cake with about 10% moisture.

o Treating WHIMS tails in high rate tailings thickener before disposing off the thickener underflow at about 55% solids to a pre-selected tailings pond.

o The water recovered from both thickeners at about 150 µm suspended solids is recycled to plant. • Detailed feasibility study needs to be undertaken. • The schematic flow sheet of the process adopted by NML for carrying out the Phase-I test work is

given below:



Figure 9-1 Process recommended by NML

Ground to -44µ

Magnetics Non-Magnetics

Magnetics

Non-Magnetics

Magnetics Non-Magnetics

Ground to -74µ Ground to -63µ

As received sample

Crushed to -1.68mm

Ground to -150µ

Magnetics Non -Magnetics

LIMS-1

LIMS-2 WHIMS-1

WHIMS-2



10. INFRASTRUCTURE The following infrastructure facilities are proposed:

• Power: Power is proposed to be received at plant’s main receiving and step-down substation (MRSS) at 60 kV voltage level from National Grid Substation at Rashidiya, located about 60 km away from the plant site, over double circuit overhead line.

• Emergency power: Diesel generator set of adequate capacity at 380 V is proposed.

• Plant telephone system

• Loudspeaker intercommunication (LSIS) system

• Closed circuit television (CCTV) system

• Data network system

• Water requirement: Total make-up requirement for the project would be in the tune of 260 cu m/hr. Source of water needs to be identified.

• Repair and maintenance shop

• Stores

• Administrative building

• Canteen

• First-aid station

• Weigh Bridge

• Bachelor accommodation



11. ENVIRONMENT ASPECTS • No significant environment impact issues are reported by Earthstone. The area is devoid of any forest.

• It is recommended that studies particularly related to beneficiation plant, its impact and mitigation measures are carried out.

• Budget of $2 million is tentatively provided for the mine closure.



12. MARKETING Earthstone is reportedly one of the leading producer and exporter of Iron Ore in Indonesia since 2009 and the finished products in form of Calibrated Ore (+10/-40mm) & Fines (-10mm) are being exported to China. As informed, the company is having contract with various buyers to meet the annual sales target and is well placed to serve the growing demand of Asian countries.

The company is targeting to export iron ore as Lumps as DSO initially for first 5 years. Thereafter, the ore would be beneficiated and sold as concentrates.

Currently, the company has an export order for selling DSO 60%+ Fe at $80/t FOB Agadir. The company has obtained export license and has initiated exploratory mining through contractor and is currently exporting the first shipment of 45,000t +/- 10% from Agadir.

The robust demand from China has been reflected in iron ore prices from last five years. Although China’s output of domestic iron ore has been surged in recent years, breaking through 1 billion t mark in 2010 and monthly average output arriving more than 100 million t in June 2011, China’s reliance on imported iron ore is over 60%. Moreover, in India, exports are expected to remain tight after the Supreme Court recently banned most iron ore mining in the Bellary district in the southern state of Karnataka, which supplies approximately 25% of that country’s exports. This will give ample opportunity to this group to export substantial quantity of product from this project to China.



FINANCIALS



13. FINANCIALS

13.1. Production schedule Given below is the production schedule from the mine for DSO and BO:

Table 13.1-1 Production Schedule

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020-1 1 2 3 4 5 6 7 8 9

Reserve 50.10 50.10 48.60 47.10 45.60 44.10 38.60 34.60 30.60 26.60 ROM-DSO - 1.50 1.50 1.50 1.50 1.50 - - - - ROM-BO - 4.00 4.00 4.00 4.00

Year

2021 2022 2023 2024 2025 2026 202710 11 12 13 14 15 16

Reserve 22.60 18.60 14.60 10.60 6.60 2.60 - ROM-DSO - - - - - - - ROM-BO 4.00 4.00 4.00 4.00 4.00 4.00 2.60

Year

13.2. Capex Table 13.2-1 Capex

Area US$ million For DSO mining For BO Mine Closure Total

Pre-operative expenditure including exploration, beneficiation studies etc.*

2.34 - - 2.34

Mining** - - - - Process plant and facilities - 120.00 - 120.00 Transport # - - - - Agadir port facilities ## - - - - Mine closure - - 2.00 2.00 Total 2.34 120.00 2.00 124.34

* The pre-operative expenditure has already been spent so far. **No capex has been provided for mining as contractor is engaged. #Transport is done by contractor. ## All port facilities are in place and these need to be hired. No land cost has been considered as it is understood that the land belongs to the government and is available free of cost as part of mining lease.

13.3. Operating cost • The operating cost of DSO and beneficiated ore (BO), FOB ex-Agadir is given below:

Table 13.3-1 Opex

Cost head DSO ($/t) BO ($/t) Ore Mining 5.26 10.52 Waste Mining - 1.47 Processing - 9.61 General & Administration 1.00 1.00 Total Cost ex-mines 6.26 22.60 Transportation Mine to Port 24.00 24.00 Port Charges 5.82 5.82 Rent of storage space 1.90 1.90 Total Cost FOB ex-Agadir 37.98 54.32



• The cost of mining is based on quotes received from the contractors by Earthstone. • Processing costs are derived from MN Dastur’s report. • Transport and Agadir port costs are based on quotes received by Earthstone. • The above cost does not include royalty. It is understood that there is no royalty applicable on ores that

is exported. The cost also does not include cost of capital, working capital and mining cost is based on contractors quote.

13.4. Economic Viability • Currently, the company has an export order for selling DSO basis 60% Fe at $80/t FOB from Agadir.

The company has initiated exploratory mining through contract and is currently exporting the first shipment of 45,000t +/- 10% from Agadir.

• The market price of beneficiated ore FOB ex-Agadir is considered at $110/t based on the current CIF China price of $153/t.

• At this stage, since the realization is much higher than the DSO cost, the production of which is planned for first 5 years, no cost escalations and price forecast has been considered.

• The cost of beneficiated ore estimated as on date is much lower than the current market price of beneficiated ore. The production of beneficiated ore is planned after 5 years.

• Thus, considering the current prices and cost of mining, the mine is considered economically viable.



14. JORC COMPLIANT RESERVE STATEMENT • This prospect has been studied in detail and the resources have been categorized under measured

category as per JORC 2004 standards. • Method of mining and production schedules have been arrived at. It is proposed to mine in the first 5

years high grade material, crush it and sell as DSO. From the 5th year onwards the ore will be beneficiated and sold as Pellet Feed Fines.

• Mining dilutions and losses have been considered. Open pit optimization was carried out. Detailed year wise pit layouts have to be carried out. Earthstone have planned to engage contractor for mining.

• Preliminary studies on beneficiation have been carried out. Detailed feasibility has to be carried out on beneficiation.

• No significant environment issues are envisaged. However, detailed EIA has to be prepared. • Exploratory mining of DSO has been initiated. • The capex and opex have been estimated. The market price considered for assessing the economic

viability is based on Earthstone having a sale order. • Based on the above, the total mineable iron ore quantity as given below is categorized as JORC

Compliant Proved Reserve.

Table 14-1 JORC Compliant Proved Reserve Statement

Type of ore Reserve (Mt) Average Grade (%Fe) DSO 7.60 56.71% BO 42.50 49.31%



15. CONCLUSIONS • Tourza Oolitic iron ore deposit can be classed as a high tonnage, high grade one amongst similar class

of deposits in the world. • The deposit is bedded, nearly subhorizontal, shows gradual thickness variation and with least partings

of other rocks. The contact with overlying and underlying rocks is sharp and physically identifiable. So the deposit is geometrically simple.

• Resource/Reserve has been estimated by diamond core drilling on a 100x100m grid with a high degree of accuracy and precision.

• The study has been carried out as per JORC 2004 standards. • The concession holds JORC Compliant Measured Resource of 52.05 Mt @ 50.17% Fe at a cutoff of

25% Fe. • The concession holds JORC Compliant Proved Reserve of 50.10 Mt @50.43% Fe), which includes

about 7.6 Mt DSO (56.71% Fe) and balance 42.5Mt as BO (49.31% Fe). • Detailed exploration and prefeasibility study has been found to be positive and experimentally open-pit

mining has been producing lumpy ore. It has been transported to Agadir port for export. This DSO project has been proved to be economic at the present market price.



DISTRIBUTION LIST

TOURZA IRON ORE - GEOLOGICAL MODELLING & JORC RESOURCE/RESERVE

COPY No.

Copies of this report have been distributed as shown below: Copy Type Recipient

1 Original Earthstone Mining and Minerals Limited

2 Copy IMC-SRG Consulting (P) Ltd

Key Words: Mining, Resources, Reserves, JORC, Morocco, Africa, Tourza, Iron Ore

Disclaimer and forward looking statements:

The JORC mineral resource and reserve presented in the report represents IMC’s assessment and opinion as of April 2012. This report has been prepared by IMC for the exclusive use of Earthstone on the basis of instructions, information and data supplied by Earthstone and other advisors. No warrantee or guarantee, whether expressed or implied, is made by IMC with respect to the completeness or accuracy of any aspect of this document and no party, other than the client, is authorised to or should place any reliance whatsoever on the whole or any part or parts of the document. IMC do not undertake or accept any responsibility or liability in any way whatsoever to any person or entity in respect of the whole or any part or parts of this document, or any errors in or omission from it, arising from negligence or any other basis in law whatsoever. Likewise IMC disclaim liability for any personal injury, property or other damage of any nature whatsoever, whether special, indirect, consequential or compensatory, directly or indirectly resulting from the publication, use or application, or reliance on this document.

This note may contain “forward looking statements” which are based on assumptions made by IMC. Assurance or warranty cannot be given, that any of the future results or achievements, expressed or implied, contained will be realised.

Project Personnel: Signature Name / Designation

Production:

Somnath Gain, Senior Consultant

Verification:

Dr MM Mukherjee, Principal Consultant

Dr Ernst Bernhard Teigler, Principal Consultant

Approval:

Pankaj Kr Sinha, Director

TN Gunaseelan, Managing Director

Date: April 2012

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