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					                      Focus on Mining Project Evaluation



                     Santa Rita project financing

No. 42
SRK’s
International
Newsletter




                 Initial ore mining at Santa Rita


                In January 2008 SRK took on the role of Independent Engineer (IE) for the project financing for
                Mirabela Nickel’s Santa Rita project located in Bahia state, Brazil.


                The Santa Rita project is an open pit mine with a      Despite negative sentiment surrounding the
                conventional nickel sulfide concentrator. Initially,   financial crisis and rapidly declining metals
                it was based on a proven and probable reserve          prices, Mirabela took the bold step of continuing
                of 84Mt with a grade of 0.61% Ni, mining               with project construction, albeit at a slower
                4.6Mt of ore a year and producing 17,000t of Ni        pace. Using equity funding, they initiated an
                concentrate, with a Ni grade of 13% plus Cu and        expansion study to 6.4Mt a year, based on an
                Co by-products.                                        increased reserve of 120Mt. In January 2009,
                                                                       SRK was engaged again to audit the new reserve
                SRK’s initial IE report supported the project
                                                                       and expansion plan. Mirabela successfully raised
                but flagged a number of risk issues and
                                                                       additional equity funding and procured bridging,
                recommended subsequent follow-up work. The
                                                                       offtake and trade finance to support continued
                report was submitted to prospective lenders and
                                                                       construction activities.
                in September 2008, SRK made presentations to
                selected syndicate members in New York and             SRK signed off on the new scope and cashflow
                London. Letters of Commitment were due from            model for the project in April 2009; funding for
                lenders when the financial crisis hit, as the firm     US$190M was successfully concluded with the
                of Lehman Brothers failed. Needless to say, the        first loan drawdown shortly thereafter.
                project financing did not proceed.
                                                                                                           …continued




                                                       1
                                 SENEGAL
                        Koundara                            MALI
UINEA-BISSA U
                                     Mali

                Santa Rita project financing…
                            Gaoual
                                              Tongue                            Siguiri
                                     Labe                  Dinguiraye
                (continued)
             Boke
                    GUINEA Pita
                                                       Dabola
                                     Dalaba                             Kouroussa
                     Fria              Mamou                                  Kankan
                          the
             Throughout Kindiaoften painful
               Boffa
                                                   Faranah                      maintaining its independence,
             process, SRK kept a close watch
               Conakry
                                                                                performed the role of devil’s advocate
             on developments at the request
                       Forecariah
             of prospective lendersOand, while
                                            Kissidougou                 Kerouane
                                                                                with the site team during regular site                            AFR ICA
                               SIERRA LE NE                                     visits. The team’s response indicates
                                                                                   Beyla
                                                                        Macenta they found this interaction invaluable.


                   N e a l R i g by                             LIBERIA        The stalled financing, expanded
                                                                              Nzerekore
                                                                               scope, and lengthened construction
                                                                               schedule inevitably combined
         D  r. Neal Rigby,                                                     to increase project capital
         SRK Global Group                                                     RIO TINTO
                                                                               costs. Nevertheless, the project
                                                                              LICENCE
         Chairman, is a                                                       Aconstruction was successfully
                                                                                REAS

         Corporate Mining                                                      completed in October 2009 and
         Consultant with 36                                                    the first concentrate was produced
         years’ experience in                                                  in November 2009. At the time of
         the mining sector.                                                    this writing, commissioning was
         For the past 20                                                       progressing according to plan.
         years, he has served
         as a senior participant in dealmaking,                                Neal Rigby: nrigby@srk.com
         supporting the rationalisation,
         merger, disposal and acquisition of
         international mining companies and
         mining finance institutions: his role to
         define the fundamental value, risks
         and opportunities of mining projects.
         Neal has undertaken conceptual
         through feasibility studies in over 50
                                                                                                                                     SRK       recently completed a
                                                                                                                                     comprehensive Due Diligence (DD)
         countries worldwide, for a wide range
                                                                                                                                     study on a complex mining operation
         of projects.
                                                                                                                                     in Southern Africa. The copper mining
         Neal Rigby: nrigby@srk.com                                                                                                  operation consists of a complex
                                                                                                                                     array of surface and underground ore
                                                                                                                                     production operations together with
                                                                                                                                     primary and secondary beneficiation
                                                                                                                                     facilities. SRK’s approach to DD
                                                                                                                                     studies is to involve professional
                                                                                                                                     staff in an integrated multi-discipline
                                                                                                                                     approach. The presence of water
                                                                                                                                     affects the geotechnical design,
                                                                                                                                     both surface and underground,
                                                                                                                                     and further complexity is added
                                                                                                                                     if several end products require
                                                                                                                                     different process routes and different
                                                                                                                                     markets. Smelting and refining add
                                                                                                                                     more environmental requirements.
                                                                                                                                     Particularly on the African continent,
                                                                                                                                     the continuous supply of electrical
                                                                                                                                     power and the need for emergency
                                                                                                                                     power are important for continuous
                                                                                                                                     operations.
                                                                                          SAG and ball mill building at Santa Rita
                                                                                                                                     SRK put together a multi-disciplined
                                                                                                                                     team of 18 engineers and scientists




                                                                                                     2
   Due diligence study on a complex
   mining operation in Southern africa




                                                                                                             RogeR DixoN

                                                                                                         Roger Dixon
                                                                                                         is a Corporate
                                                                                                         Consultant and
                                                                                                         Chairman of SRK’s
                                                                                                         Johannesburg
                                                                                                         office. He has 37
                                                                                                         years’ experience
Typical Southern African open pit in the early stages of development                                     in mining
                                                                                                         engineering, with
                                                                                                         projects relating to
to complete the DD in time; the team                           and Performance Standards. Once,          engineering studies, mineral reserve
would have few parallels in mining                             converting Mineral Resources              estimation, due diligence studies
consultancies worldwide.                                       to Mineral Reserves was settled           on platinum, gold and copper and
                                                               between the Geologist and the Mining      feasibility studies on open-pit and
As part of the DD a multi-discipline                           Engineer but today, compliance
risk assessment workshop was                                                                             underground operations.
                                                               with environmental and social
held, with client participation to                             requirements is paramount.                Roger helped formulate the Mine
identify key obstacles in reaching                                                                       Health and Safety Act of 1996. He
planned production commitments. The                            Logistics and communication proved        was involved in preparing the South
geologist and process engineer, the                            to be a challenge. However, the           African Code for reporting resources
rock engineer and geohydrologist and                           technical team met each evening to        and mineral reserves (SAMREC Code)
the tailings and waste disposal engineer                       discuss issues; this interaction proved   in 2000, and mineral asset valuation
were amongst the diverse disciplines                           invaluable in understanding the           (SAMVAL Code) in 2008. He currently
represented.                                                   interdependencies involved.               chairs the Committee for Mineral
The workshop, a marathon session,                              Translating the technical issues into a   Reserve International Reporting
covered the operations from exploration                        financial model is key. The SRK team      Standards (CRIRSCO), which has
through mine design and development                            put together an interactive model that    representatives from the major mining
to production and transportation of                            reflected two business cases – one        countries around the world.
the finished metal products. The                               including Inferred Resources and one      Roger Dixon: rdixon@srk.co.za
client, taking on the residual risks, put                      excluding them. The model showed
together a program for mitigation to be                        how changes at any stage of any of
managed on an ongoing basis to reduce                          the interlinked processes affect net
the operation’s risks.                                         present value (NPV) and cost per unit
                                                               of production.
The size of the Environment and Social
team (5) reflects the importance of                            Roger Dixon: rdixon@srk.co.za
compliance with the Equator Principles




                                                                                     3
g i e lS o N c o u tiNho                      Mining Project evaluation in brazil
Gielson Coutinho,
Principal Mining
Engineer, has 14
years’ experience
in the Brazilian
Mining Industry.
He works with
mining companies
to improve their
operations.

In 1998, Gielson helped found
Gemcom’s office in Belo Horizonte;
in 2005, he was appointed director of
SRK Brazil. With experience in project
management, mine planning, feasibility
studies and due diligence, his projects
involve open pit mining in iron ore.

Gielson Coutinho:
gcoutinho@srk.com.br
                                           Iron ore in Granhães, Minas Gerais, Brazil, showing the contact of an itabirite ore body with the country rocks


aNtoNio giRoDo                             In Brazil mining is energised by a                              projects involved with iron ore, gold,
                                           supportive economic and political                               copper, nickel sulfides and laterites, zinc,
Antonio Carlos                             environment. As South America’s                                 asbestos, and limestone for cement.
Girodo, Mining                             leading economy, Brazil is rich in history
                                                                                                           SRK is participating in several studies
Engineer and                               and culture, with a combination of
                                                                                                           including geological prospecting,
Metallurgist, has 40                       geography, population and economy
                                                                                                           exploration, feasibility studies, mine
years’ experience                          that only a few countries such as the
                                                                                                           planning and design, modelling and
working in gold,                           USA and China share. Brazil ranks
                                                                                                           resource estimating, and mining
iron, nickel, copper,                      among the world’s top-five producers
                                                                                                           infrastructure, including issues
cobalt, potash,                            of agricultural goods and mineral
                                                                                                           concerning power and water supply and
bauxite and                                commodities. Having controlled
                                                                                                           the environment.
phosphate mining.                          inflation, the country has a stable
He teaches part-time at the Mining         political system, high employment and                           Mining in Brazil is steadily growing
Engineering School of the Federal          falling risk ratings. Foreign investments                       more complex. For example, in the iron
University of Minas Gerais. His industry   are welcomed and mining will reach                              ore industry, Brazil produced only high-
knowledge is vast; his particular          US$25 billion in 2010.                                          grade, direct-shipping hematitic ore until
interests are mathematical modelling,                                                                      the beginning of the ‘70s. As hematites
                                           SRK established an office in Brazil
geological modelling, geostatistics and                                                                    are frequently accompanied by soft
                                           in 2005 and presently employs 20
resource estimating. Girodo is an SRK                                                                      and rich itabirite orebodies, companies
                                           professionals and 10 associates with
Brazil associate.                                                                                          started mining this ore based on
                                           experience in geology, mining and
                                                                                                           hydrogravitic methods (mainly spiral
Antonio Carlos Girodo:                     process engineering, and metallurgy. The
                                                                                                           concentrators), magnetic concentrators
girodo@srk.com.br                          fast-growing team of mathematicians
                                                                                                           and reverse flotation, because those
                                           and computer scientists, economists,
                                                                                                           methods work where all others fail.
                                           financial analysts, and environmental
                                                                                                           When demand for iron ore outran
                                           specialists deals with world-class mining
                                                                                                           supply in 2003, the price rose 71%; and
                                           enterprises and with complex, integrated
                                                                                                           in 2004, 21%. This high value made
                                                                                                           mining the low-grade ores economic.


                                                                  4
                                              environment and closure due diligence
                                           Over the last 15 years, the importance                      Closure and rehabilitation costs are
                                           of environmental, social and closure                        the largest environmental costs
                                           issues in the evaluation of mineral                         associated with mining projects but
                                           properties (MPE) has significantly                          are often overlooked because they
                                           changed. While once these issues were                       generally occur decades into the future.
                                           generally considered insignificant, they                    When discounted as part of the Net
                                           have evolved into an integral component                     Present Value calculation, they may be
                                           of most MPEs. Many investors have                           insignificant compared to development
                                           specific environmental, social and                          costs. Nonetheless, the mining industry
                                           closure standards that are as important                     has advanced the practice of mine
                                           as the resources, mine design and                           closure considerably over the past
                                           technical feasibility, due to their potential               two decades to control future costs
                                           to increase the predevelopment costs                        and minimise the risks of developing a
                                           and slow the return on investment.                          mine requiring perpetual care. Although
                                                                                                       the cost of perpetual care would
                                           With the advent of environmental and                        be insignificant in NPV calculations,
                                           social benchmarks, such as World                            corporate business practices, and
                                           Bank and IFC standards, and the                             political and social pressures over the
                                           Equator Principles, most new mining                         long-term management of closed mines
                                           developments today are subject to a                         is changing the way mining companies
                                           level of scrutiny previously unheard                        evaluate the business risks associated
                                           of. Extended permitting and approval                        with closure.
                                           processes are commonplace, often
                                           lengthening the predevelopment                              Jeff Parshley: jparshley@srk.com
                                           phase of a project by years. Post-
                                           approval delays in project development
                                           are occurring more frequently due
                                                                                                                    J e f f Pa R S h l e y
However, the concentration of low          to lawsuits and protests by citizens
grade (CPI) ore involves extensive         and special interest groups. Several
milling that demands great amounts         projects have even been stopped due                                  J eff Parshley, P.G.,
of energy – a significant problem in       to environmental or social concerns.                                 C.E.M., Principal
Brazil. Another problem is the low         Although rare, global political and                                  with SRK Reno, has
product yield of the ore and the huge      environmental trends suggest more                                    over 29 years of
amounts of tailings CPI ores generate.     frequent occurrences in the future.                                  project experience
This presents a difficult environmental                                                                         throughout North
problem since mine sites lack sufficient                                                                        America, Latin
places to store these residues.                                                                                 America, and Europe.
                                                                                                                He holds a degree
Many businesses are involved in                                                                                 in geology from Dartmouth College,
acquisitions and mergers today, and                                                                             Hanover, New Hampshire. Jeff’s
SRK Brazil is participating in project                                                                          expertise includes mine closure and
evaluations and studies that require                                                                            remediation, mine environmental
highly specialised skills in sensitive                                                                          studies, mine permitting, and
areas. As this trend continues,                                                                                 environmental geochemistry.
bringing more complex problems, SRK
professionals will be well prepared to                                                                          Jeff Parshley: jparshley@srk.com
face these challenges.



Gielson Coutinho: gcoutinho@srk.com.br




                                             Mine permitting and approval processes can lengthen the predevelopment phase of a project by years




                                                                         5
        Palladon’s iron Mountain project, utah

    T he Iron Mountain project is located   In the 1950s and 1960s, former
    near Cedar City, Utah. The District     owners drilled on site, but the core
    was discovered in 1849 by Mormon        samples are no longer available. SRK
    Pioneers, and the iron deposits were    worked with Palladon to design a
    mined almost continuously from 1851     drill program for Comstock-Mountain
    to 1995, producing an estimated         Lion deposit and adjacent stockpiles
    88.2Mt. The new board of Palladon       to verify the historic database and
    Ventures Ltd, the current owner,        estimate a resource for a Preliminary
    commissioned SRK to review the          Economic Assessment; the resource
    project and comment on its merits.      includes 40.35Mt at an average grade
                                            of 45% Fe. SRK concluded the high
                                            costs of off-mine freight and shipping
        leah Mach                           clearly favored producing higher
                                            value products. The iron mineralogy
                                            of the orebodies is predominantly
L eah Mach is based                         magnetite, which has certain value in
in SRK’s Denver                             downstream steelmaking. In addition,
office and is a                             the project infrastructure is good.
Principal Resource
Geologist with 23                           SRK commissioned an assessment
years’ experience in                        to examine both the US and export
                                                                                                  Greenfield polymetallic project site
geological studies,                         market potential. Currently, the US
including resource                          imports over 95% of its alternative
estimation. She is                          iron units, while China’s demand                     SRK      was commissioned by a
a Qualified Person                          continues to be strong. SRK                          Chinese company to review a copper
with regard to National Instrument          concluded that the Iron Mountain                     project located in East Africa. The
43-101 and JORC requirements. Leah          project had merit and that there were                objectives of the review were to use
has international experience in resource    opportunities for project optimisation.              the data provided to analyse and
estimation, project management, and         Meanwhile, Palladon is using SRK’s                   provide summaries of the results
assay protocols and quality control and     work in discussions with prospective                 for the client, and comment on any
has been involved in feasibility studies,   investors and off-take partners.                     material flaws detected in the project.
due diligence and resource estimation in
                                            Leah Mach: lmach@srk.com                             The SRK team visited the project site in
precious metals, base metals, and iron
                                            Joanna Poeck: jpoeck@srk.com                         2009, reviewed the materials and held
ore projects.
                                                                                                 discussions with the current owner.
Leah Mach: lmach@srk.com
                                                                                                 The property holds licences within a
                                                                                                 substantial mining agreement area.
                                                                                                 The mineralisation on site is typical of
                                                                                                 a volcanic massive sulphide deposit
                                                                                                 comprising a precious metal-rich
                                                                                                 oxide zone overlying massive sulphide
                                                                                                 lenses containing copper and zinc.
                                                                                                 The East African nation has shown
                                                                                                 strong support for the project, and will
                                                                                                 participate in a net smelter royalty of
                                                                                                 5.0% on precious metals and 3.5% on
                                                                                                 other metals.

                                                                                                 A NI43-101 technical report on the
                                                                                                 project’s feasibility was completed and a
                                                                                                 South African engineering firm updated
                                                                                                 the process plant design and estimates
                                                                                                 for capital and operating costs.
                                               Mining at Palladon’s Comstock-Mountain Lion pit




                                                                 6
 technical review of a polymetallic
                                                                                        yoNgliaN SuN
 project in east africa
                                                                                    D  r Yonglian Sun is a
                                                                                    Principal Consultant
                                                                                    with over 20 years’
                                                                                    experience in
                                                                                    rock mechanics,
                                                                                    geotechnical
                                                                                    and mining
                                                                                    engineering across
                                                                                    four continents.
                                                                                    His international
                                                                                    experience includes site investigation,
                                                                                    analysis and geotechnical modelling in
                                                                                    open pits, underground mines and tunnels,
                                                                                    and evaluating mining projects. Recently,
                                                                                    he coordinated and led large due diligence
                                                                                    projects, for successful listing on the Stock
                                                                                    Exchange of Hong Kong Limited. Yonglian
                                                                                    established the SRK China Beijing office in
                                                                                    2005 and opened a second office in 2009;
                                                                                    SRK China now has 32 full-time employees
                                                                                    providing due diligence and technical
                                                                                    reviews, exploration management and
The deposit has been subdivided          Diesel generators will be rented for
                                                                                    audits; mine design, scoping, and feasibility
and regrouped into 3 zones as oxide,     two years to supply power; then,
                                                                                    studies.
supergene and primary. A three-          heavy fuel oil generators will be
dimensional geological model was         purchased. Water will be supplied by       Yonglian Sun: ysun@srk.cn
prepared to outline the mineralised      fresh water wells. Concentrates will
domains. SRK recalculated the            be trucked to the nearest port.
resource and confirmed the
                                         Overall, the project complies with
                                                                                        JoaNNa Poeck
company’s estimates.
                                         local/national environmental legislative
SRK investigated the mining              requirements and conforms with             Joanna Poeck is a
methods, mining phases, processing       World Bank/International Finance           Mining Engineer in
for three ore types by cyanidation       Corporation environmental standards.       SRK’s Denver office
and by flotation, the design of the                                                 with 6 years of
waste dumps and the disposition of       Yonglian Sun: ysun@srk.cn
                                                                                    project experience
acid-generating rocks to build the                                                  throughout USA,
interception dyke, and the non-acid                                                 Canada, Europe
generating rocks to build the tailings                                              and Australia. Her
dam and mine.                                                                       expertise includes
                                                                                    open pit design,
SRK concluded preliminarily that
                                                                                    mine scheduling, pit optimisation and
additional geological exploration is
                                                                                    truck productivity analysis. She completes
recommended to upgrade resources
                                                                                    pre-feasibility studies, life of mine designs,
to higher categories and to define
                                                                                    and optimised schedules for iron ore, gold,
more resources at depth so as to
                                                                                    coal and diamond deposits using Vulcan
possibly expand mine life. In terms
                                                                                    software. Before joining SRK, Joanna
of the processing aspects, SRK
                                                                                    worked at Maptek, managing the Vulcan
recommends further metallurgical
                                                                                    technical services team in consulting,
test work be conducted in order
                                                                                    training and technical support.
to determine feasible grinding
size, reagent scheme and related                                                    Joanna Poeck: jpoeck@srk.com
operational parameters.




                                                               7
                                                    a geological risk approach to valuing
                                                    early-stage exploration projects



    DeboRah loRD

W   ith 18 years’
experience,
Deborah Lord, BSc,
MAIG specialises
in valuing
exploration assets
and independent
expert reporting
to standard for
the Australian
Securities Exchange. Her expertise
with SRK reaches across a range
of commodities through a variety of
geological environments. Deborah
recognises the broader application of        The valuation of exploration projects                               has to be understood before the project
risk and value to the exploration industry   that do not contain defined resources                               can be sold or developed. The technical
and applies valuation principles to asset    is complex, as consideration must be                                understanding is then tempered against
management in supporting corporate           made of both technical and market                                   market factors.
decision-making.                             factors. Technical factors include the
                                                                                                                 SRK has developed a probability (risk)
                                             level of geological understanding of the
Deborah Lord: dlord@srk.com.au                                                                                   based approach to exploration valuation
                                             project area, the targeted mineralisation
                                                                                                                 – the Geological Risk Method (“GRM”;
                                             style, and the distribution and magnitude
                                                                                                                 Lord et al., 2001; Morley, 2007). This
                                             of mineralisation indicators defined by
  aliSoN MoRley                                                                                                  relies on identifying likely target value (TV)
                                             previous exploration (e.g. geochemistry
                                                                                                                 outcomes from successful development
                                             or geophysics). Market factors may
A  lison Morley, MSc, BSc, Grad.             include recent comparable transactions,
                                                                                                                 of a resource of particular target size
                                                                                                                 (TS), and discounting this figure by the
DipAppFin, MAusIMM, has over 12              geography, infrastructure costs and
                                                                                                                 cost and probability of success through
years’ experience                            commodity prices.
                                                                                                                 the five stages of the exploration and
as an Underground
                                             SRK’s valuation approach considers both                             development cycle, to arrive at an
Mine Geologist and
                                             technical and market factors. Analysis of the                       expected value (EV). The TS is based on
Superintendent,
                                             technical aspects of the project form the core                      the geological understanding of the area,
gaining hands-on
                                             of the valuation method as the probability                          and uses data from previous exploration
experience at
                                             of the realisation of mineralisation potential                      and nearby operations.
Broken Hill and
Mount Isa. She has
managed a large                                                                                                    Exploration Stages
team of geologists.                          EV = P x TV - C                  A                  B                  C                  D                  E                            $
In 2004, Alison joined                       EV = Expected Value of                                                                Detailed                                  Expected value to be
                                                                            Project           Reconnai-            Drill                               Feasibility
SRK where she participated in valuing             Discovery at Stage       Generation PA       ssance     PB      Testing   PC
                                                                                                                                   Resource
                                                                                                                                   Definition   PD       Study       PE
                                                                                                                                                                            delivered to the mining
                                                                                                                                                                                    division
exploration prospects and mines. She
                                              P = Probability of success     CA = $           CB = $              CC = $           CD = $                CE = $              Expected NPV of
has completed numerous Independent                                          EVA = $           EVB = $            EVC = $           EVD = $              EVE = $             target deposit style
Geologist’s Reports and due diligence         C = Cost of each stage
and fatal flaw studies of mining company     TV = Target Value                         Risk               Risk              Risk                Risk                 Risk
assets.                                           (NPV of deposit style)
                                                                                  Geological Investigation Stages                                      Economic Evaluation Stages

Alison Morley: amorley@srk.com.au                                                     Schematic diagram of the geological risk method (after Lord et al., 2001)

                                                                                  Lord D., Etheridge M. A., Willson M, Hall G and Uttley P (2001) ‘Measuring Exploration
                                                                                           Success: An alternate to the discovery-cost-per-ounce method of quantifying
                                                                                           exploration effectiveness’ Society of Economic Geologists Newsletter, No 45, April.
                                                                       8
                                                         trekkopje
                                                     T  rekkopje is the site of a green fields       of global consultants over a 20-month
                                                     project, consisting of a very large, low-       period to develop the Definitive Feasibility
                                                     grade, shallow uranium resource hosted          Study (DFS) that was issued in 2008. While
 Grass-roots iron ore exploration, central Western   in calcium carbonate cemented (calcrete)        South African consultants worked on the
 Australia, courtesy: Giralia Resources              conglomerates. It rests in the arid desert      process, infrastructure, environmental
                                                     region of western Namibia, in southwestern      and permitting aspects of the project,
                                                     Africa, situated in gently sloping terrain.     SRK worked closely with the client team
                                                                                                     to review the exploration program to
                                                     Trekkopje will be an open pit operation,
                                                                                                     ensure that all work was 43-101 compliant.
                                                     primarily using large hydraulic excavators
                                                                                                     SRK developed Resource and Reserve
                                                     loading haul trucks. With a planned
                                                                                                     statements and mine plans; provided
                                                     production rate of 100,000t/d of crushed
                                                                                                     metallurgical, site geochemistry and
                                                     ore and an average stripping ratio of 0.23:1
                                                                                                     hydrogeology assessments; performed site
                                                     (waste to ore), the mine life is expected to
                                                                                                     geotechnical evaluation and engineering
                                                     last approximately 13 years, based on the
                                                                                                     design, including pit slope and heap leach
                                                     current resources. The crushing plant will be
                                                                                                     pad design, and performed economic
                                                     designed to crush ore at a rate of 7,000t/h
                                                                                                     modelling. Late in the DFS program,
                                                     to a product size of 100% passing 38mm.
                                                                                                     UraMin was acquired by the world energy
                                                     It will consist of two Primary Crushers and
                                                                                                     expert AREVA, as part of their global
                                                     two Secondary Crushers running parallel,
                                                                                                     uranium supply strategy.
                                                     each with a throughput of 3,500t/h. The ore
                                                     will then be agglomerated and conveyed to       Terry Mandziak: tmandziak@srk.com
                                                     an on-off heap leach pad, sized to contain      Neal Rigby: nrigby@srk.com
The geological risk of each project is               300 days of ore. Uranium will be recovered
quantified by assessing geological features          from the heap leach pad using a carbonate/
indicative of four key success factors               bicarbonate solution and ion-exchange.
for deposit formation (source, pathway,              Based on the current mine plan, the majority
fluid and trap). Market parameters                   of the spent ore and waste will be placed             teRRy MaNDziak
are considered in the GRM through                    back into the shallow open pits, allowing
comparable market transactions for                   for an overall reduced mining footprint and           Terry Mandziak,
deposits and exploration plays with similar          concurrent reclamation.                               a University of
commodities and target sizes, and the                                                                      Saskatchewan
                                                     Beginning in mid-2006, UraMin Inc. (the
expected exploration and infrastructure                                                                    graduate, has over 16
                                                     owner at the time), commissioned SRK to
costs to define a resource at the specified                                                                years of diversified
                                                     coordinate and lead a multidisciplinary team
TS. The market data is used in the                                                                         professional experience
GRM as a dollar value per tonne of                                                                         in project coordination
metal as determined by the market at a                                                                     and project design,
given time – equivalent to the yardstick                                                                   including tailings and
method of valuation – and as cost                                                                          heap leach projects in North America,
discounts for exploring and developing                                                                     South America, Turkey, China and Africa.
the project from one stage to the next.
The final EV is then benchmarked                                                                           Since joining SRK’s Denver office in 2004,
against traditional valuation approaches.                                                                  Terry has managed a multidisciplinary
                                                                                                           team of consultants for several projects,
The GRM represents a science- and                                                                          including the Trekkopje Feasibility Study,
market transaction-based valuation                                                                         in addition to performing due diligence on
approach, which is easily auditable, and                                                                   tailings and heap leach projects across
accounts for the collective technical                                                                      the globe.
knowledge of the project being valued, in
concert with market conditions preceding                                                                   Prior to joining SRK, Terry spent five years
and at the time of the valuation.                                                                          managing heap leach pad construction
                                                      Mining ore at Trekkopje
                                                                                                           projects and seven years designing
Louis Bucci: lbucci@srk.com.au                                                                             tailings and heap leach pad projects from
Deb Lord: dlord@srk.com.au                                                                                 concept through final development.
Alison Morley: amorley@srk.com.au
Peter Williams: pwilliams@srk.com.au                                                                       Terry Mandziak: tmandziak@srk.com


                                                                                9
                                              Partnering with Polymetal: from iPos to
                                              compliance audits for ongoing reporting
ie S t y N h u M P hR ey S

D  r Iestyn Humphreys
is Managing Director
of SRK (UK) Limited
and a Director of the
SRK Group. With 20
years’ experience in
the metals and mining
sector, he manages
due diligence projects
for exploration
companies and financial institutions
seeking access to capital markets.
Our teams have authored Independent
Engineer’s and Qualified Persons’ Reports
on discoveries in Europe, the Americas,
Australasia, Asia and Africa. For SRK he
helps secure regulatory approvals for        Dukat Mine (Polymetal) in Far Eastern Federal District, Russian Federation
IPOs, GDRs, and ADRs on international
exchanges. Historically, he has helped
write mineral valuation and reporting       S  ince 2003 to the present, SRK has                           processed 3.2Mt of ore to produce
                                            partnered with JSC Polymetal in its                            12.8Moz of silver and 0.2Moz of gold.
codes and contributes to the CESR Listing
                                            annual declarations of Mineral Resources                       By January 2009, the company reported
Requirements initiative.
                                            and Ore Reserves. The declarations                             total Ore Reserves of 390Moz silver and
Iestyn Humphreys:                           meet the terms and definitions in the                          5.2Moz gold contained within 65.5Mt of
ihumphreys@srk.co.uk                        2004 Australasian Code for Reporting of                        ore grading 185.5g/t silver and 2.5g/t gold.
                                            Exploration Results, Mineral Resources
                                                                                                           On an annual basis, a significant
                                            and Ore reserves – the JORC Code, an
                                                                                                           (2009: 80%) portion of the Ore Reserve
                                            internationally recognised reporting code
                                                                                                           declaration in Polymetal’s Annual report
                                            as defined by the Combined Reserves
                                                                                                           supported by the Compliance Audits
                                            International Reporting Standards
                                                                                                           were completed by SRK from consulting
                                            Committee (CRIRSCO).
                                                                                                           practices in Europe and the Russian
                                            Today, Polymetal is a public holding                           Federation. The process SRK follows
                                            company listed on the London Stock                             combines annual desktop studies and
                                            Exchange (SRK Mineral Expert’s Report                          sample site visits completed on a three-
                                            2006), the Russian Trading System Stock                        year rolling basis. To ensure material
                                            Exchange and MICEX. The company                                and transparent disclosure, SRK reviews
                                            operates and manages extensive mineral                         the entire discipline spectrum from
                                            properties located in the Urals, Siberian                      exploration through geology, resource
                                            and Far Eastern Federal Districts of                           estimation, mining, metallurgy and
                                            the Russian Federation. These mineral                          environmental to mineral economics.
                                            properties comprise 30+ separate                               This process is greatly aided by the
                                            licences with a total area exceeding                           company’s established twin reporting
                                            7,100km2 covering the development                              system, specifically developed for
                                            spectrum from advanced staged                                  computerised estimation and modern
                                            exploration, to developing and mature                          pit optimisation techniques, as well as
                                            operating mines. In the 9-month period                         manual techniques that comply with
                                            ending 30 September, the company                               local regulatory reporting requirements.



                                                                  10
                                                Project evaluation course
                                              Mike Warren and Paul Hodkiewicz,             papers. The attendees indicated they
                                              Principals at SRK Australia, presented       appreciated being provided with such
                                              a training course on Project Evaluation      a comprehensive set of notes and
                                              in Singapore in May 2009. The course,        reference material.
                                              entitled “Valuation and Financial
                                                                                           Paul and Mike have been asked to
                                              Assessment of Mining Projects - a
                                                                                           present the course twice in 2010.
                                              complete guide to due diligence in
                                                                                           Singapore is the likely venue but there
                                              mining,” attracted 18 attendees who
                                                                                           was also some interest in running the
                                              came from mining and exploration
                                                                                           course in Jakarta and/or Bali.
                                              companies, as well as accounting and
                                              finance firms.                               Mike Warren: mwarren@srk.com.au
                                              As a result of contacts made at the
                                              course, SRK is now providing geological
                                              consulting to one of the mining
                                                                                                     M i k e wa R R e N
                                              companies, and supplying Leapfrog™
                                              software training to assist the mining
                                              company to visualise their deposits in 3D.         M   ike Warren is
                                                                                                 a Principal Mining
                                              In December 2009, Mike and Paul ran                Engineer with 30
                                              the course again in Singapore, with an             years’ experience,
                                              attendance increase to 31. The attendees           including on-site
                                              came from a range of companies based               and head office
                                              in Asia, with the majority from mining             roles. He leads the
                                              companies; however, the attendees were             project evaluation
                                              mainly non-technical staff who worked              team within SRK
                                              in roles such as accounting, business              Australia and has
SRK recognises that organic
                                              analysis, business management and                  managed due diligence and valuations on
development and acquisition continues
                                              business development.                              a range of mining projects. Mike provides
to fuel the growth of companies
operating in the Russian Federation           The course attendees receive a thick               technical skills to underground and open
and the broader Commonwealth of               volume of documentation from the                   cut mines. He has added technical-
Independent States (CIS). This growth         course, which includes copies of the               economic modelling and evaluation skills
coupled with the widespread geographic        presentations and a large collection               to his strong technical background. He
location of mining and exploration            of reference articles and technical                has prepared Independent Reports for
properties within these companies                                                                IPOs on exchanges in Toronto, Hong Kong
and the continued need for access to                                                             and New York.
global debt and equity capital markets,
                                                                                                 Mike Warren: mwarren@srk.com.au
places increasing demands on in-
house technical resources and external
consultants. To meet this demand
SRK continues to draw on its global
resources and local expertise to:

• Establish further CIS regional practices
• Develop Mineral Resource and Ore
  Reserve management systems/
  protocols tailored to the needs of local
  and international regulatory requirements
• Play a direct role in the various
  international initiatives to align state
  approved reserve reporting systems
  with the CRIRSCO template
Iestyn Humphreys:
ihumphreys@srk.co.uk                           SRK Project Evaluation Class



                                                                              11
      Due diligence in coal – do SRk clients
      get good value for their money?

  T  he short answer to this important         the most senior technical specialists,
  question is Yes – SRK brings value to        managers and board members.
  clients, licence holders and advisers
                                               SRK teams can advise on a spectrum
  during the due diligence process,
                                               of issues, covering not only mining and
  whether it involves an IPO, purchase,
                                               geology/reserves, but also geotechnical,
  sale, or borrowing. We are able to do this
                                               hydrogeology, environmental, processing,
  because of the experience, breadth of
                                               infrastructure and financial issues. The
  knowledge, and communication skills of
                                               team is able to carry out associated
  our multidisciplined coal teams.
                                               detailed assessments if they are needed,
  SRK has staff located in all the major       from scoping to feasibility studies and
  coal producing areas of the world and        software modelling using numerous
  most have worked for many years              proprietary software packages.
  “at the sharp end” of the industry, as
                                               Our due diligence and independent
  technical specialists and managers, before
                                               reporting skills have been employed over
  entering the consultancy business. Team
                                               the past 5 years by major clients, including
  members are able to communicate with
                                               SUEK, the largest steam coal producer
  the “workforce at the face” as well as
                                               in Russia and a world top-ten producer.
                                               The company has over 40 open pits,
    k e i t h Ph i l Pott                      underground mines, washing plants and
                                               associated infrastructure located between
Keith has worked in                            western Siberia and Vladivostok. SRK has
                                                                                                Oxidised volcanic clearing
the coal industry for                          mobilised up to six multidisciplined teams,
35 years, spending                             including specialist Russian technical
the first 17 years                             translators, to visit the assets. SRK has        SRK      has been evaluating minerals
with the state-owned                           prepared updated reserve statements              projects in southern West Kalimantan
coal industry in the                           and IPO documentation (not yet used!),           Indonesia for the past four years. This
UK before becoming                             working closely with SUEK in preparing           work has been focussed primarily on
a consultant. He                               LoMps and financial budgets for these            advising various clients on exploration
joined SRK in 1996                             tasks and, in 2010, is continuing to work        and development programs for iron ore.
and is a Principal                             with the client.
Geologist and Corporate Consultant.                                                             Iron mineralisation in this region is
                                               Keith Philpott: kphilpott@srk.co.uk              hosted predominantly within shales
Keith is responsible for the coal group
in the UK office and has extensive                                                              which have been hydrothermally
experience managing due diligence                                                               altered and selectively replaced by
commissions across the world. He                                                                massive hematite. SRK established
has been responsible for many reports                                                           a spatial association between iron
and resource/reserve assessments to                                                             mineralisation and porphyritic plutonic
international standards.                                                                        rocks early on, and proposed a
                                                                                                magmatic-hydrothermal model of
Keith Philpott: kphilpott@srk.co.uk                                                             formation. This model formed the
                                                                                                basis of future exploration programs
                                                                                                designed by SRK for the district.

                                                                                                Drilling programs that SRK
                                                                                                implemented have confirmed a
                                                                                                magmatic-hydrothermal origin for iron
                                                                                                formation. However, in addition to
                                                                                                intersecting hematite mineralisation,




                                                                     Coal stocks at Tygnuisky


                                                                12
  Re-evaluation of the base and precious
  metal potential south of the kalimantan arc

                                                                                             louiS bucci

                                                                                       Dr Louis Bucci is an
                                                                                       Economic Geologist
                                                                                       with over 13 years’
                                                                                       international
                                                                                       experience
                                                                                       investigating
                                                                                       mineralised
                                                                                       hydrothermal
                                                                                       systems. He has
                                                                                       worked on gold, base metals, nickel,
                                                                                       iron ore, manganese and molybdenum
                                                                                       across four continents. Louis interprets
                                                                                       technical datasets in assisting clients to
                                                                                       focus their exploration resources and
                                                                                       efforts. He has extensive experience in
                                                                                       geological due diligence, fatal flaw and
                                                                                       project analysis for Competent Person’s
SRK also identified geological and         Through this project evaluation work in     Reports for global financial institutions
alteration features consistent with        West Kalimantan, SRK has identified         and security exchanges globally, and
porphyry- or epithermal-style base         a potentially new base and precious         for feasibility study projects.
and precious metal systems in the          metals district, in an area historically
drill core. Such features include the      targeted solely for iron ore. Most          Louis Bucci: lbucci@srk.com.au
extensive development of volcanic          recent exploration results indicate that
and deformation breccia, and the           the iron mineralisation may represent
alteration of sulphide – quartz –          one phase of an overall evolving               k at e b a S S a N o
chlorite – epidote – carbonate. These      multi-element magmatic-hydrothermal
results were somewhat unexpected,
as the projects of interest occur
                                           system. As such, base and precious          Dr Kate Bassano
                                           metal deposit styles within the             (PhD, BSc, MAIG) is
significantly south of the currently       Kalimantan Arc should be considered         a Geology Consultant
accepted limits for the Kalimantan Arc     in exploration models for the southern      with over five years of
– a geological district characterised by   West Kalimantan, and should consider        experience in mineral
gold and precious metals mines with a      a re-evaluation of the southern margin      exploration geology
porphyry or epithermal affinity.           of the Kalimantan Arc.                      and geochemistry,
The project’s owners recognised the        SRK thanks the International                with exposure to
significance of SRK’s interpretation       Commerce Corporation Pte Ltd for            numerous deposit
and the recent exploration findings,       their permission to publish this article.   styles. Kate’s expertise is in ore deposit
and are working closely with us to                                                     geochemistry and geochronology, and
develop sophisticated exploration          Louis Bucci: lbucci@srk.com.au              the mapping of regionally deformed
programs to simultaneously target          Kate Bassano: kbassano@srk.com.au           metamorphic terrains, with a specific
iron ore and base and precious metals                                                  interest in base and precious metals,
systems within the district.                                                           and iron ore.

                                                                                       Kate Bassano: kbassano@srk.com.au




                                                                 13
         k e N Re i Pa S

K  en Reipas, P.Eng.,
                                              Red Mountain gold project located in
is a Principal
Mining Engineer
with over 28 years’
                                              british columbia, canada
experience in mine
engineering, mine
production and
consulting. Prior
to joining SRK, he
worked at several
Canadian open pit and underground
mining operations, involved in the bulk
mining of iron, coal, gold and base
metals. His positions included Chief
Engineer and Mine Superintendent.
Since 1997, Ken’s consulting projects
have included technical studies and
reports, mine planning and reserves,
project economics, and due diligence
reviews, involving northern projects,
mine rehabilitation, mine reopening and
care and maintenance.

Ken Reipas: kreipas@srk.com



    ke l ly S e x S Mith                  T he Red Mountain Project near             tramway, and tunnel and shaft. Road
                                          Stewart, British Columbia has been the     access was selected
                                          subject of extensive exploration and
Kelly is a Principal                      development activities since 1989.
                                                                                    • Power supply. Overland BC Hydro
Geochemist in                                                                         power line was selected over on-site
SRK’s Vancouver                           Seabridge Gold Inc. (“Seabridge”)           diesel generation.
office with over 17                       acquired the Red Mountain Project in      • Operating schedule, considering
years’ experience.                        February 2002 to provide exceptional        the mountain location and
She holds a B.Sc.                         returns to shareholders by maximising       avalanche hazards. Seasonal
in Geological                             leverage to the gold price that was         operation from May to October was
Sciences from                             expected to rise. Seabridge’s business      selected over year-round operations
the University of                         plan was to find, evaluate, acquire,        for safety and reliability
British Columbia                          explore and develop gold deposits.        • Mill location and basic process. An
and a M.Sc. from the Colorado School      Management decided that Seabridge           on-site mill using a grinding and
of Mines. Kelly specialises in the        would not build or operate mines, but       cyanidation leaching (CIP) circuit
geochemical characterisation of mine      would look to partner or sell assets        was selected over the alternative of
wastes. Her experience includes           that were ready for production.             using flotation to produce a sulphide
design and supervision of geochemical                                                 concentrate for offshore marketing
                                          In 2003 Seabridge commissioned SRK
test programs, geochemical modelling,
                                          Toronto to prepare an Independent         • A conventional type of mill was
development of conceptual waste
                                          Engineering Study on the Project.           selected over a portable type, due to
management plans, and prediction
                                                                                      the tonnage required (1000tpd) and
and monitoring of water quality from      SRK evaluated previous studies and
                                                                                      the very fine grind needed
tailings, waste rock and pit walls.       recommended the best development
                                          alternatives for various aspects of the   • The full use of backfill was selected
Kelly Sexsmith: ksexsmith@srk.com                                                     to maximise the mining recovery of
                                          project, including:
                                                                                      the resources. Minimising backfill was
                                          • Method of access to the site location     considered to reduce costs, but the
                                            in challenging mountainous terrain.       potential savings did not justify a lower
                                            Options included road access, aerial      recovery of the mineral resource

                                                          14
                                                      el chanate gold project, Mexico

                                                    With the significant increase in the gold     SRK has also been involved in providing
                                                    price over the last several years, some       technical analysis for potential mergers
                                                    smaller mines have had the opportunity        and acquisitions that Capital Gold may or
                                                    to become bigger mines. Capital Gold          may not execute. Using a combination
                                                    Corporation’s El Chanate heap leach gold      of public domain and/or site specific
                                                    mine, located in the Sonoran desert of        data, SRK has acted as technical advisor
                                                    Mexico is one such operation.                 and independent engineer to evaluate
                                                                                                  potential orebodies, mine plans and
                                                    Subsequent to completion of SRK’s             economic models.
                                                    Independent Engineer role for the
                                                    lending banks, SRK was retained by            SRK will continue to provide Capital
                                                    and worked closely with Capital Gold          Gold Corporation with the technical
                                                    personnel to help define potential            expertise needed to make informed
                                                    corporate and operational strategies          investment and operational decisions in
                                                    to maximise shareholder value and             order to meet the company’s corporate
                                                    the growth of the company. Specific           strategy in the years ahead.
                                                    work has included revised geologic
                                                                                                  Bret Swanson: bswanson@srk.com
                                                    modelling and resource estimation, pit
                                                    optimisation, preparation of phased
                                                    mine plans and production schedules,
                                                    mine equipment fleet modelling
                                                                                                            b R e t S wa N S o N
                                                    and estimation, development of a
                                                    disturbance schedule, compilation
                                                    of an NI 43-101 technical report                    B  ret C Swanson
 View of former exploration camp from portal area
                                                    and scoping and targeting of in-fill/               (BE Mining)
                                                    exploration drilling programs.                      MAusIMM is a
                                                                                                        Principal Mining
                                                    The culmination of a series of “what-
Having selected the optimum                                                                             Engineer with 15
                                                    if” scenarios and recommended
development plan for the project, SRK                                                                   years of global
                                                    work plans has given management
prepared a life-of-mine production                                                                      mining experience.
                                                    and site personnel a much better
plan and cash flow model.                                                                               His recent work
                                                    understanding of the true potential at
                                                                                                        has involved
In late 2007, Seabridge commissioned                El Chanate and what work is required
                                                                                                        contributions to
SRK to update the costs and                         to realise its potential.
                                                                                                        numerous feasibility, pre-feasibility,
economics of our 2003 Technical                                                                         preliminary assessment, independent
Report. Results were reported in                                                                        engineer, Competent Person’s Reports
an updated Preliminary Economic                                                                         and mine site support while employed
Assessment in January 2008.                                                                             with SRK Denver.
Throughout this period, SRK                                                                             Bret Swanson: bswanson@srk.com
Vancouver provided ongoing
environmental management services
to Seabridge, including annual site
inspections, water quality monitoring,
annual regulatory reporting, and
closure planning to ensure the site
is in compliance and no outstanding
regulatory concerns could delay future
development activities.

Seabridge is now seeking a joint
venture partner or acquirer for the
Red Mountain Project.

Ken Reipas: kreipas@srk.com
Kelly Sexsmith: ksexsmith@srk.com                    The El Chanate Mine, Sonora Desert, Mexico




                                                                                15
        independent review of world-
        wide exploration portfolio

    In connection with the acquisition                             The challenge of this unique assignment
    of Falconbridge Ltd., the integration                          was to mobilise an experienced and
    planning team of Xstrata plc                                   credible team capable of reviewing a
    commissioned SRK to provide                                    worldwide portfolio containing early- to
    technical guidance for the evaluation of                       development-stage exploration assets
    Falconbridge’s exploration assets.                             and prepare a timely technical overview.

    SRK’s assignment was to complete                               SRK’s unique worldwide presence was
    a desktop review of Falconbridge’s                             instrumental in mobilising five teams
    greenfield exploration assets with                             to visit six regional exploration offices
    a view towards summarising the                                 in five countries on three continents.
    characteristics of the portfolio, providing                    Within six weeks, a team of 14 SRK
    an independent assessment of their                             geologists had reviewed over 60 active
    realisable value and commenting on the                         exploration projects in 14 countries to
    capabilities of the exploration team.                          assess their merit, rank the portfolio
                                                                   on the basis of qualitative metrics –
                                                                   essentially the perceived potential
JeaN-fRaNÇoiS                                                      of yielding a positive discovery – and
coutuRe                                                            provide a “fair market value” opinion,
                                                                   based on a market approach and
                                                                   comparative transaction analysis.
D  r. Jean-François
Couture, P. Geo, is a                                              Although subjective, the ranking
                                                                                                                  Surface Miner in continuous mode
Principal Geologist                                                proposed by SRK based on a very limited
based in Toronto                                                   review, aimed at providing a first-order
and Director of SRK                                                independent overview of the portfolio, to     PT Indo Rak Resources (RAK),
North America.                                                     guide Xstrata in realising the value of the   a subsidiary of Middle East Coal
He is a Qualified                                                  exploration assets as part of integrating     and a joint owner of the Marwa
Person within the                                                  Falconbridge into Xstrata. Critical to        Wahau deposit along with PT TOP,
definition of several                                              this assignment was SRK’s capacity to         commissioned SRK to undertake a
international                                                      mobilise quickly a credible review team       feasibility study of the property. The
regulatory requirements (National                                  and deliver a timely technical review.        thermal coal greenfield project, sitting
Instrument 43-101, JORC). His                                                                                    over a large resource, is poised to be
                                                                   Jean-François Couture:
expertise lies in geological and                                                                                 one of the biggest open-cast projects
                                                                   jfcouture@srk.com
structural modelling, ore deposit                                                                                in Kalimantan.
modelling, digital data integration,
exploration project review, due                                                                                  It is located in the District of Marwa
diligence and resource evaluation.                                                                               Wahau, Kutai Timur, East Kalimantan,
He has authored and co-authored                                                                                  Indonesia. Of the two blocks,
independent technical reports for                                                                                North and South, the North block is
precious and base metals, uranium                                                                                thoroughly explored. The workable S2
exploration and mining projects in                                                                               seam has a reported JORC resource
Canada, Argentina, Burkina Faso,                                                                                 of around 500Mt; the coal is known to
Chile, China, Finland, Guyana, Ghana,                                                                            extend into the South Block.
Kazakhstan, Mexico, Niger, Sweden,                                                                               Beginning in 2008, SRK assisted
South Africa and the United States.                                                                              RAK in evaluating the deposit with an
Jean-François Couture: jfcouture@srk.com                                                                         independent audit of its exploration data
                                                                                                                 and reported resources. Following that
                                                                                                                 study, SRK joined SMGC, a geological
                                                                                                                 consultant from Jakarta, in advising RAK.

                                                                                                                 In March 2009, SRK started a scoping
                                                                                                                 study of the North block using the
    14 SRK geologists reviewed over 60 active exploration projects in 14 countries                               geological models and resources

                                                                                     16
  Marwa wahau coal project–
  preliminary feasibility study
                                                                                             MaRaJul haque

                                                                                            M   arajul Haque is
                                                                                            a Mining Engineer,
                                                                                            specialising in mine
                                                                                            planning, equipment
                                                                                            selection, optimising
                                                                                            production
                                                                                            sequencing and
                                                                                            economic modelling.
                                                                                            He has worked with
                                                                                            international mining
                                                                                            equipment manufacturers, planning
                                                                                            and implementing coal mining projects.
                                                                                            Marajul recently developed an application
                                                                                            based on MS-Excel that helps determine
                                                                                            equipment requirements, mining fleet
                                                                                            composition and size, and cost estimates.
                                                                                            He is presently involved with a coal project
                                                                                            in South Kalimantan, Indonesia, while he
                                                                                            completes his MBA degree in finance.
prepared by SMGC. The study used             This method is most apt for areas
comparative methods of scope                 with flat terrain and low dipping coal         Marajul Haque: mhaque@srk.co.in
definition and cost estimating.              seams with long strike length. It
                                             facilitates early backfilling, reduces the
The current 2009 report estimates the        need for external dumps, improves                   kouSik boSe
total geological resource to be 937Mt        environmental outcomes and promotes
within the North block. Only measured        progressive rehabilitation.
and indicated resource categories were                                                      Kousik is a Mining
applied to estimate potentially mineable     The mine is planned for 21Mt per annum         Engineer working
coal, forming the basis of mine planning     with a project life of 19 years. The           in open-cast coal
and economic evaluation. An early            quantity of open-pit mineable coal from        mines, with mining
interpretation of slope stability and a      the North block is estimated at 388Mt          companies and
basic understanding of groundwater           at a life-of-mine stripping ratio of 1.42:1.   mining consulting
conditions was completed by others.          No inferred category resources were            firms. With projects
                                             included in the calculation. SRK evaluated     in mine operations,
The pre-feasibility study defines            different mining technologies and              planning, and
an open-cut strip mining operation           selected the preferred option. SRK has         consulting, he uses
utilising conventional truck and             also planned for the mine and support          software, such as Whittle Optimisers,
shovel equipment for overburden              infrastructure for the target capacity.        extensively. His special interest is in
removal, Continuous Surface Miner
                                                                                            mine modelling, optimisation studies and
for coal mining and waste backfilling        Based on this work, SRK recommended
                                                                                            design. Kousik started with SRK’s UK
to maximise in-pit dumping thereby           that the project proceed to a definitive
                                                                                            office in Cardiff, with coal his specialty.
ensuring minimal environmental               feasibility study.
                                                                                            He is presently working on the
disturbance. The method divides the
                                             Marajul Haque: mhaque@srk.co.in                feasibility study for a major coal project
coal block into longitudinal strips of
                                             Arunabha Duari: aduari@srk.co.in               in South Kalimantan, Indonesia.
similar width from one end of the block
                                             Kousik Bose: kbose@srk.co.in
to the other. Once coal is removed from                                                     Kousik Bose: kbose@srk.co.in
                                             Barendra Nath Paul: bpaul@srk.co.in
one strip, it is backfilled with the waste
rock generated from the next strip.


                                                                     17
  Dav iD Pat t i NS oN

Dr David                                     talvivaara
Pattinson, Principal
Metallurgical
Engineer, joined
SRK in 2005 and
specialises in
metallurgy and
mineral processing
aspects of
technical studies,
due diligence and project execution.
David has over 28 years of experience
in the non-ferrous mining industry.
During his career he has been
involved in plant design, construction
and commissioning with an
international engineering company
and has experience in consultancy for
reimbursable, EPCM and lump-sum
contract work. David is SRK’s Project
Manager for the Talvivaara project.

David Pattinson: dpattinson@srk.co.uk


                                         T alvivaara is a Greenfield mine          hydrometallurgical pilot plant. The
J aM e S g i l b eRt SoN                 development, located in eastern           project follows Equator Principles and
                                         Finland. It is the first application of   received its Environmental Permit in
James Gilbertson                         the bio-heap leaching process for         2008. At present throughput is being
is a Senior                              the economic exploitation of low-         ramped up and full scale production
Exploration                              grade, nickel-zinc sulphide ore bodies.   should be achieved during 2010.
Geologist with                           Although not yet in full production,
                                                                                   There are a number of interesting
SRK Exploration                          Talvivaara already stands out for using
                                                                                   aspects of the Talvivaara project due
Services. He has 10                      new, innovative technology and for
                                                                                   to the application of bio-heap leaching.
year’s experience                        the speed at which the project has
                                                                                   Non selective bulk open pit mining
in the mining                            been implemented.
                                                                                   will be used to develop the two ore
and exploration                          Pekka Pera, the CEO of Talvivaara         bodies and ore blending will not be
industry, including                      Mining Company Plc, initiated the         required. In pilot testing, relatively
three as a Resource Geologist with       project after acquiring the mining        high metal extractions were achieved
SRK (UK). James conducts exploration     rights and historical research from       by crushing the ore to only minus
logistics, planning and reviews,         Outokumpu in 2004. A handpicked           8mm. The crushed ore is stacked 8 to
resource estimates and audits, and       team of specialists completed a           10 metres high on large HDPE-lined
QA/QC management. He reviewed            Pre-Feasibility Study in 2005 and         leach pads, and bacterial leaching
the geology and resource estimation      a Bankable Feasibility Study in           takes place in two stages over four
for the Talvivaara project and helped    December 2006. A 17,000 tonne bio-        years. The bacteria used were found
compile JORC-compliant Mineral           heap leach was built in mid-2005 to       naturally within the surrounding
Resource and Ore Reserve statements.     demonstrate that the leaching process     environment and the temperature
James Gilbertson:                        could operate effectively during the      within the heap can reach 80°C.
jgilbertson@srkexploration.com           cold Finnish winters at temperatures      Metals precipitated from the pregnant
                                         below -20°C. Metals were recovered        solution include NiCoS, ZnS and CuS.
                                         as precipitated sulphides in a




                                                         18
                                          SRk involvement
                                        SRK      has been involved with          SRK’s role as Independent Engineer
                                        the Talvivaara project since 2006.       will gradually change to operational
                                        SRK was appointed by Talvivaara          monitoring and it is likely that this
                                        to prepare a Mineral Experts             will continue until the end of 2010.
                                        Report for listing on the London
                                        Stock Exchange, and subsequently
                                        by Standard Bank Plc to prepare
                                        a Technical Audit Report for                   SabiNe aNDeRSoN
                                        debt finance. Additionally SRK
                                        has prepared a revised JORC
                                        compliant resource estimate and
                                                                                       Sabine, Senior
                                                                                       Mining Engineer,
                                        has provided assistance during
                                                                                       joined SRK in 2005,
                                        additional financing. For project
                                                                                       performing technical
                                        implementation, SRK was appointed
                                                                                       assessment of
                                        to undertake the role of Independent
                                                                                       exploration and
                                        Engineer on behalf of the banks and
                                                                                       mining projects,
                                        report quarterly on all aspects of the
                                                                                       in support of
                                        development.
                                                                                       acquisitions, debt
                                                                                       and equity finance.
                                                                                       Her experience includes project
                                                                                       evaluation and valuation, economic
                                                                                       analysis, multi-disciplinary due
                                                                                       diligence, project managing numerous
                                                                                       commissions, and preparing scoping
 Talvivaara site
                                                                                       and pre-feasibility studies. Sabine
                                                                                       is responsible for SRK’s Financial
The development includes all on-site                                                   Evaluation of the Talvivaara project.
reagent systems and infrastructure,
                                                                                       Sabine Anderson: sanderson@srk.co.uk
including a fresh water supply
system, a new power line, a rail spur
and large lined waste storage ponds.
It is recognised that the Talvivaara
operation may well have set the
standard for a new generation of low
grade open pit mining operations.

The mine should produce 15 million
tonnes of ore a year, over a 22-year
mine life. Annual metal production
is estimated at 33,000 tonnes Ni,
61,000 tonnes Zn, 10,000 tonnes
Cu and 1,300 tonnes Co. To date,
approximately €700 million has been
invested in the project.

David Pattinson: dpattinson@srk.co.uk

Sabine Anderson: sanderson@srk.co.uk
                                        Stacker – bio heap leach
James Gilbertson:
jgilbertson@srkexploration.com




                                                                   19
     capstone Mining corp’s Minto Mine

  SRK began its relationship with              and, with funding in place, Minto was
  Minto Exploration Ltd. (a 100%-owned         constructed and commissioned within a
  subsidiary of Capstone Mining Corp.) in      very aggressive timeline and budget.
  2006, when it conducted a due diligence
                                               Upon startup, SRK assisted the mine with
  review of the Minto copper-gold-silver
                                               operational support and has continued
  mine project for a major bank. At that
                                               to provide on-going technical assistance
  time, the company had just completed
                                               ever since. SRK performs geochemistry,
  a feasibility study and was fast-tracking
                                               rock mechanics, hydrogeology and
  construction at the mine. SRK’s
                                               resource/reserve estimation for the
  favorable review assisted the bank in
                                               operation and has provided mine
  making a decision to invest in the project
                                               planning services on an as-needed basis.
                                               Exploration success at Minto has led to
                                               SRK’s involvement in estimating new
g o R Do N D o e RkS eN                        mineral resources and reserves and
                                               providing 43-101 compliant technical
                                               reports and preliminary feasibility studies
G   ordon Doerksen,                            for new resource areas.
P.Eng., PE, is a
Principal Consultant,                          Minto’s aggressive “can-do” attitude
Mining, in SRK’s                               has led to significant improvements in
Vancouver office.                              copper production since start-up, and
His technical                                  more opportunities are still available. SRK
strengths are                                  is currently reviewing the underground
built on 20 years’                             mining potential of the deeper and high-
                                                                                               Contamination from illegal discharges
experience at                                  grade zones, where extraction using open
operating mines                                pits is not economical.
in production, management and                  As the Yukon’s only copper mine               D  uring 2009, SRK took on several
engineering roles. He has worked with          continues to expand and evolve, SRK           compliance audits for project funders.
coal, trona, aggregates, gold, copper          is fully committed to provide technical       Through this work, SRK witnessed
and poly-metallic, in both underground         and operational support to help mine          mines move from merely aiming for
and open-pit mines. Gordon’s expertise         personnel make informed decisions and         compliance with in-country environmental
is in mine design, scheduling, equipment       continue to exceed expectations.              legislation to adopting good practice as
selection, costing, project management                                                       outlined in the Equator Principles and
and practical solutions to operational         Gordon Doerksen: gdoersken@srk.com            other guidelines. Mining companies
problems. He manages due diligence                                                           and financial organisations are working
audits, technical reports, economic                                                          to achieve international best practices.
assessments, and feasibility studies.                                                        Several projects have focussed on
                                                                                             refurbishing mining and processing
Gordon Doerksen: gdoerksen@srk.com
                                                                                             activities in Zambia and the DRC,
                                                                                             where new players address complex
                                                                                             environmental and social legacy issues.

                                                                                             Financial and legislative drivers are
                                                                                             advocating environmental and social
                                                                                             management over the life of an
                                                                                             operation. However, while many mines
                                                                                             are simultaneously in the development,
                                                                                             operations and closure stages, attention
                                                                                             is largely focussed on new development
                                                                                             projects. Attention to legislative
                                                                                             compliance is imperative, but the
                                                                                             development stage cannot be considered
                                                                                             in isolation from other stages. The
                                                                 Minto main pit operations
                                                                                             ramifications of this neglect include:



                                                                20
                                                                                                        bRioNy libeR

                                                                                                   B  riony Liber is a
                                                                                                   Senior Environmental
   taking a holistic view in mining                                                                Scientist in SRK’s

   reviews and audits                                                                              Johannesburg office.
                                                                                                   Briony has over 11
                                                                                                   years’ experience
                                                                                                   in environmental
                                                                                                   impact assessment,
                                                                                                   public involvement,
                                                                                                   environmental management and
                                                                                                   implementation of management plans.
                                                                                                   In the last year, Briony has developed
                                                                                                   knowledge of the Equator Principles
                                                                                                   and IFC guidelines, having worked on
                                                                                                   an ESIA for a mine in the Democratic
                                                                                                   Republic of Congo and on several
                                                                                                   environmental auditing projects at
                                                                                                   Zambian and South African mines.

                                                                                                   Briony Liber: bliber@srk.co.za




                                                                                                   h e N R i e t ta S a lt e R
                                               Successful rehabilitation of a tailings dam
                                                                                                   D  r. Henrietta
                                                                                                   Salter is a Principal
• Limited attention to existing liabilities.     community relations and difficulty in             Scientist in SRK’s
  By focussing resources only on new             obtaining funding                                 Johannesburg office.
  developments, existing liabilities           • Turnover of difficult assets. As assets           She has over 17
  often increase and opportunities for           become less financially viable to one             years’ experience
  progressive rehabilitation and clean up        company, others may see an opportunity            in environmental
  are missed, even though they would             to invest. Affected communities can be            impact assessment,
  reduce the final costs at closure.             exposed to several mining companies               water and waste
  Particularly for refurbishment projects,       over a few years that should manage the           management and environmental
  neglect or poor practice can significantly     assets, but the turnover often results in         auditing and due diligences. She
  degrade the environment                        delayed or incomplete implementation of           managed the preparation of an
• Management systems focus on                    commitments. Unrealistic commitments              Equator Principles-compliant ESIA/
  new developments. When existing                made in the past can result in strained           ESMP for a project in the Democratic
  operations at a site are not included,         community relationships and a difficult           Republic of Congo, as well as auditing
  serious pollution incidents can result in      operational environment                           compliance with the Principles and
  significant non-compliance, jeopardising                                                         due diligence work on copper, coal,
                                               In many of these reviews, SRK has the
  project funding and licence to operate                                                           zinc, gold, platinum group metals and
                                               opportunity to consider the operations
                                                                                                   uranium mines.
• Social uncertainties around possible         in their entirety. SRK concludes that
  closure. In one case several operations      operations simultaneously meet                      Henrietta Salter: hsalter@srk.co.za
  were geographically dispersed and at         legislative requirements in some areas
  different stages in the life of mine. With   of the operations yet are non-compliant
  the focus on new development, limited        in other areas. The former areas of
  closure planning was evident at the          compliance tend to correspond with new
  site of the possible closure resulting       developments.                                 Briony Liber: bliber@srk.co.za
  in socio-economic uncertainty which                                                        Dr Henrietta Salter: hsalter@srk.co.za
                                               The holistic review allows SRK to assist
  manifested in community threats,                                                           James Lake: jlake@srk.co.za
                                               clients in identifying areas that need
  action, and dissatisfaction. Lack of
                                               attention, to bring the full spectrum
  attention to these issues can damage
                                               of the operations to compliance level,
  reputations and perpetuate poor
                                               minimising or avoiding risks.

                                                                               21
J ay P e N N i N g t o N
                                           growing up with a gold mine – SRk’s
                                           multi-level project support at hycroft
J  ay Pennington
is a Certified
Professional
Geologist and
Principal Mining
Geologist in SRK’s
Elko, Nevada office.
He is a Qualified
Person for NI43-101
reporting under CIM
regulatory guidelines. He has over 24
years of international experience in
precious and base metals exploration,
resource geology, mine feasibility
and due diligence. His expertise is
interpreting mineralising systems,
integrating digital data and resource
evaluation. With 12 years’ industry
experience in Australia and Southeast
Asia, he was Chief Geologist at the     Cutaway view of modelled gold mineralisation through the Cut 4 Pit at Hycroft
Grasberg Deposit in Indonesia. Jay’s
recent consulting work consists of
domestic and international mine         Allied Nevada Gold Corp. was formed                            oxide and sulfide ores. Following a
development and due diligence for       in 2006 after purchasing a portfolio of                        favorable outcome, they approached
mine financing.                         over 100 precious metal prospects in                           SRK to prepare permitting documents
                                        Nevada (NV). Their flagship property,                          and engineering designs to expand the
Jay Pennington: jpennington@srk.com     Hycroft, located 60 miles west of                              historic leach pad. In less than 18 months
                                        Winnemucca, NV, was reactivated after                          the company was mining and leaching
                                        a 10-year dormancy period to establish                         oxide ore and pouring gold offsite. The
                                        cash flow to fund on-site exploration and                      company, however, had set its sights on
                                        to develop advanced projects in other                          a much larger sulfide resource beneath
                                        parts of the State. Since 2006, as the                         the mined-out oxide pits.
                                        price of gold has risen from US$700 to
                                                                                                       During the production ramp-up period,
                                        US$1,100 per ounce, interest in historic
                                                                                                       SRK teamed with Allied and independent
                                        Nevada mines has been rekindled and
                                                                                                       specialists to build the geologic base
                                        some sites are coming back on line with
                                                                                                       from which a 2.0Moz gold equivalent
                                        new development strategies. Though
                                                                                                       mineral resource was generated. Initial
                                        the Carlin Trend is Nevada’s “headliner”
                                                                                                       work included digitising and verifying
                                        mining district, the state’s “supporting
                                                                                                       data from nearly 4,000 historic drill
                                        cast” of gold producers over the last
                                                                                                       holes. SRK then took responsibility for
                                        two decades have been shallow, open-
                                                                                                       storing and managing the drill database.
                                        pit oxide operations receptive to bulk
                                                                                                       Geologic support involved probabilistic
                                        mining and low-cost heap leaching.
                                                                                                       modelling of lithology, alteration and
                                        The underlying sulfide zones of these
                                                                                                       merging interpretations of logged oxide
                                        deposits that are not heap-leachable have
                                                                                                       and cyanide soluble gold to produce a
                                        been largely ignored and often undrilled.
                                                                                                       “leachable ore” horizon. The scale of the
                                        In 2007, Allied, who subcontracts most                         property would have made the cost/time
                                        of their technical work, selected SRK                          investment prohibitive, for this type of
                                        for due diligence of a Hycroft restart                         modelling, using a conventional sectional
                                        that would involve production of both                          approach. Next, the team produced a

                                                               22
   Mountain Winnemucca
                                                      Site visit could be critical for
                                                      identifying the potential fatal flaws
    View         Getchell          Independence
         Hycroft  Trend                Group
  Wildcat                         Elko

                                       Maverick
  Reno

                                                  T
                                Carlin Springs
                                Trend               he picturesque Serra da Canastra              Although the stream running through
                                                  Kimberlite Province in southwest Minas          the kimberlite at the bottom of the
            Hasbrouck/
                            Battle                Gerais is one of several diamondiferous         steep valley was identified as a
                          Mtn/Eureka
            Three Hills
                            Trend                 locations in Brazil. The kimberlite bodies      potential problem during the desktop
                                                  are mostly buried along the extensive           study, only the site visit revealed the
      Producing
                          N E VA D A              valley floors and beneath scree                 magnitude of the problem. In the early
      Advanced
      Exploration                                 deposits. The region has produced               morning hours, fifty minutes of hard
      Exploration
      Gold Trends                                 approximately 2 million carats of               tropical rain produced a flash flood
                            Las Vegas
                                                  diamonds since the mid-1930s.                   that converted a peaceful crystal-clear
                                                                                                  stream into a raging current with flows
                                                  SRK and Mineral Services jointly                estimated at 20-50m3 per second.
                                                  completed a technical audit of the
                                                  Canastra 1 kimberlite pipe. A small             This event would certainly materially
                                                  team of diamond mining specialists              affect the mining approach and the
                                                  flew in to value the Canastra project in        capital to be spent upfront to manage
                                                  preparation for a possible bid.                 surface water. Without the site visit,
                                                                                                  this flaw could not have been identified
                                                  With both time and cost constraints
                                                                                                  from the data provided.
                                                  for this assessment, it was critical to
                                                  concentrate on “big picture” issues             Jarek Jakubec: jjakubec@srk.com
                                                  material to the outcome.

                                                  Auditing diamond properties is one
                                                  of the most challenging due diligence                     JaRek Jakubec
                                                  assignments, because the resource
                                                  cannot be re-sampled or the grade/value               J  arek Jakubec,
comprehensive structural framework                verified within the audit time frame.                 C. Eng has over 25
to serve as domain boundaries for the             However, identifying other issues and                 years of operating
ensuing round of resource estimation.             potential fatal flaws could provide critical          and consulting
In parallel, Allied/SRK prepared an               information for the project acquisition.              experience in
intensive infill-drilling program that,                                                                 mining, geology and
                                                  The Canastra 1 pipe is located near
once completed, added 6.1Moz gold                                                                       rock mechanics,
                                                  the beautiful Casca d’Anta waterfall,
equivalent to the company’s resource                                                                    including technical
                                                  on the steep valley floor, where
base, upgraded many of these resources                                                                  and managerial
                                                  regional rainfall is estimated between
to reserves, and more than doubled                                                                      positions in operating mines in Canada,
                                                  1,300 – 1,700mm per year.
Allied’s share price. Geologic modelling                                                                Botswana and the Czech Republic. As
is currently being refined, and as new                                                                  an SRK Engineer based in Vancouver,
drilling data arrives, SRK is shifting from                                                             Jarek has worked on 70 projects on
probabilistic to deterministic modelling                                                                all continents, completing technical or
using an extensive 3D toolkit.                                                                          operational audits, and due diligence
                                                                                                        studies, publishing technical papers
SRK has leveraged the relationship at
                                                                                                        and speaking at conferences. Jarek is a
Hycroft to support Allied in promoting
                                                                                                        Qualified Person for 43-101 reporting.
its other properties. SRK’s capability for
rapid assessment and 3D manipulation                                                                    Jarek Jakubec: jjakubec@srk.com
of exploration data has allowed it to
host project demonstrations, gaining
valuable exposure to prospective new
clients and showcasing SRK software
and talent, while advancing Allied’s
marketing objectives.

Jay Pennington: jpennington@srk.com


                                                   General view of Serra da Canastra kimberlite


                                                                                23
                                                evaluating ciS projects




      Dav i D Pe a R ce

David is the
Managing Director                         W   hen evaluating projects in Russia,          than comparable international projects
of SRK Russia                             Kazakhstan and other CIS countries, a key       at the time, with data spacing guided by
and is based in                           challenge is that their data and technical      the assessment of deposit complexity.
Moscow. He has                            studies have been developed following           Where the assessment was appropriate,
over 20 years’                            resource reporting guidelines that differ       the data spacing often matched
experience, 11 of                         from the standards many international           that required to meet geostatistical
which were on mine                        investors or consultants use. SRK has been      requirements. Also, while the drill core
sites. With SRK he                        involved in CIS projects for many years and     is often no longer available, the drillhole
has led several large                     has developed approaches to help clients        “passports” are stored in either corporate
multi-disciplinary audits for financing   evaluate and optimise projects.                 or state archives
and stock exchange listings including     SRK has made these key observations:           • Resource estimates are typically derived
the listing of ENRC (2007) and Vedanta                                                     using standardised polygonal methods,
(2003) on the London Stock Exchange.      • While the quality assurance and control        which generally produce comparable
                                            systems often did not involve duplicates       global results to more sophisticated
David Pearce: dpearce@srk.ru.com            or standards, independent laboratory           methods but which can in some cases
                                            checks involving 5-10% of all samples          produce less reliable local estimates
                                            provide sufficient insight into the
                                                                                         • There are often multiple technical
                                            accuracy of the samples. However, a
                                                                                           studies available, though data required
                                            key challenge can come when the core
                                                                                           internationally (e.g. the Bond Work Index)
                                            recovery is poor, due to the extensive
                                                                                           may not be available. It is important
                                            use of single-tube core barrels
                                                                                           to understand what studies exist to
                                          • Often, far more geological data, including     help plan future work and to explain
                                            underground exploration, is available          differences if new studies give different
                                            with CIS projects than with international      results.
                                            projects, providing a greater appreciation
                                                                                         • As the technical studies are rarely based
                                            of the geology
                                                                                           on computerised models, the effort
                                          • Soviet exploration programs were               involved in updating life-of-mine plans or
                                            typically better controlled and guided         evaluating alternative cut-off grades can
                                                                                           result in mines operating sub-optimally
                                                              24
                                                    Sino gold

                                               In 2006, Sino Gold Limited commissioned                       The SRK report was tailored to meet the
                                               SRK to provide an Independent Expert                          Listing Rule requirements of HKEx and was
                                               Report on the mines and exploration assets                    included by Sino Gold in their prospectus.
                                               of the company, with the report intended                      The listing was successful and Sino Gold
                                               to be submitted to the Stock Exchange                         became the first mining company jointly
                                               of Hong Kong Limited (HKEx). Sino Gold                        listed in Australia and Hong Kong. The
                                               was already listed on the Australian Stock                    White Mountain mine was successfully
                                               Exchange but wanted to have a dual listing                    commissioned in late 2008.
                                               in Hong Kong. The SRK team inspected
                                                                                                             Peter Smith is an Environmental
                                               and reported on the Jinfeng gold mine and
                                                                                                             Scientist who previously worked for
                                               exploration tenements in China, which
                                                                                                             Sino Gold and SRK China was happy
                                               were owned by the company or were in
                                                                                                             to attract Peter to work for SRK in our
                                               Joint Venture (JV) with Chinese partners.
                                                                                                             Beijing office. Two SRK staff joined Sino
                                               The Jinfeng gold mine is located in                           Gold in their Sydney office and were
                                               Guizhou Province, as shown in the map                         part of the exciting period of exploration
                                               below. Jinfeng had a reserve grade                            and operation of both Jinfeng and
                                               averaging 5.4g/t gold and was to be mined                     White Mountain. In 2009, Eldorado Gold
                                               by both open-pit and underground mining                       of Canada completed a merger and
                                               methods. The metallurgy of the Jinfeng                        took over management of Sino Gold
                                               ore was not straightforward, requiring                        to create a company with almost 19
                                               processing by the bio-oxidation method to                     million ounces of gold in measured and
                                               achieve good recovery of gold.                                indicated resources.

                                               The exploration assets included the                           Mike Warren: mwarren@srk.com.au
 Reviewing drill core at a Russian project     White Mountain project in Jilin Province,
                                               three JVs in Shandong Province and four
                                               JVs in the “Golden Triangle,” which is
SRK’s approach aims to:
                                               located in the border area of Guizhou
• Use existing data as much as possible        and Guangxi Provinces.
• Advise and supervise verification drilling
  to check historic data and infill studies                                                                                  CHINA
  to collect missing data                                                                                                          Jinfeng
• Computerise the data to evaluate                                                      SICHUAN
  alternatives quickly                                                                  PROVINCE

• Develop international style scoping,
  prefeasibility and feasibility studies in                                                                                                 HUNAN
  conjunction with Russian studies                                    YUNNAN                                                               PROVINCE

• Benchmark the projects against                                     PROVINCE
                                                                                                                 GUIZHOU
  comparable international projects                                                                              PROVINCE
• Help the client implement the
  changes needed to realise the planned                                                           Guiyang
  performance targets
• Help CIS clients raise international debt                                                        Anshun

  and equity finance through advising on
                                                                                                                                     0        N    200Km
  how the studies can meet the levels of                                                         Zhenfeng
  confidence and accuracy required                       Kunming                                   Jinfeng
                                                                                                                                     Railway
By combining SRK’s local knowledge with                                                 Ceheng                                       Township, Highway
international experience, SRK has been
                                                                                                            GUANGXI
able to help clients optimise projects and                                                                  PROVINCE
                                                                                                                                         Luizhou
                                                   Location map for Jinfeng gold mine
meet local regulatory requirements in the
most efficient way.

David Pearce: dpearce@srk.ru.com


                                                                               25
  geology beyond the resource

A fundamental part of SRK’s approach          risks are often associated with other
to project evaluation is the recognition      aspects, such as geo-metallurgy and
that many of the risk areas associated        environmental impact. In these specific
with mining projects are driven by lack       examples, key assumptions are dependent
of understanding of the geology of the        on mineralogy and the representivity of
deposit in question. Typically, there is      sampling campaigns, which are often
significant focus on the impact of geology    limited in scope and breadth. Assessing
on the resource. This is justifiable, since   the geological representivity of the data,
the resource is the key asset of a mining     which underpin downstream assumptions
project and a long list of project failures   for other disciplines, is therefore a key
can be attributed to poor resource            part of the geologist’s role in any project
estimates. However, from a number             evaluation.
of project reviews over recent years,
                                              Recognising these factors, the geologist
it is apparent that the key geological
                                              has a responsibility to communicate with
                                              other team members, especially those
                                              with an engineering rather than geological
R i c h a R D c l ay t o N                    background, to assess the key geological
                                              assumptions impacting these other
                                              disciplines. The geologist can then assess
Richard Clayton is a                          the level of geological understanding
Resource Geologist                            supporting these assumptions and help
whose primary                                 identify any risk areas and/or opportunities
expertise is in the                           for improvement.
production and
critical evaluation                           In summary, the geologist must look
of mineral resource                           beyond the resource and assess the
                                              impact of geology on the project as a
estimates and
management of                                 whole. Recognising this fact is a key               A   nvil Mining Limited, a public company
                                              strength for SRK’s holistic approach                listed on the Toronto and Australian
multi-disciplinary,
                                              to project evaluation and assessing                 Stock Exchanges, is engaged in
due-diligence projects. He is a
                                              geological risk in particular.                      exploring and developing base metals
member of SRK Australia’s project
                                                                                                  mineral properties in Southern Africa.
evaluation team based in Sydney,
                                              Richard Clayton: rclayton@srk.com.au                Anvil’s principal development asset, the
and his experience covers a broad
                                                                                                  Kinsevere Copper Project, is located in
range of commodities and geographic
                                                                                                  the Democratic Republic of Congo and
locations. Richard’s involvement with
                                                                                                  is managed via its 95% interest in a
multi-disciplinary teams provides
                                                                                                  local joint venture. Relying on input from
the background and experience to
                                                                                                  various technical teams located on three
assess the impact of geology on other
                                                                                                  continents, the company completed
disciplines –metallurgy, mining and
                                                                                                  a Feasibility Study in 2007. Additional
environment, in particular.
                                                                                                  exploration drilling and technical updates
Richard Clayton: rclayton@srk.com.au                                                              led to a further update following which,
                                                                                                  the company sought access to the debt
                                                                                                  capital markets to fund construction and
                                                                                                  commissioning of an SX-EW plant with
                                                                                                  rated capacity of 60ktpa of LME grade A
                                                                                                  quality electrolytic copper cathode.

                                                                                                  In 2008, as the independent engineer,
                                                                                                  SRK completed a full technical due
                                                                                                  diligence of the project and authored an
                                                                                                  Independent Engineer’s Report (IER).



                                                             Copper oxide mineralisation – Peru



                                                                   26
  kinsevere copper Project: due diligence in the DRc




                                              Kinsevere Mine (Anvil) in Haut-Katanga Province, Democratic Republic of Congo



Since local knowledge and specialist         In 2009, SRK again worked with                               Iestyn Humphreys:
input for review of milling-in-raffinate     Anvil, maintaining the original team of                      ihumphreys@srk.co.uk
technology was key, SRK established          consultants. Following the development
a multi-disciplinary team from its           of updated mining plans and construction/
European and Southern African practices      commissioning schedules, Anvil
supplemented by expert associate             announced that it had reached an
metallurgists. The process did not           agreement for US$200m of debt and
identify any fatal flaws but presented       equity financing with Trafigura Beheer
specific recommendations, which were         B.V., the second largest independent
incorporated in a detailed action plan.      commodity trader in the global non-
                                             ferrous market. The updated IER was
During the second half of 2008, as turmoil
                                             made available to all parties.
mounted in the financial markets and
copper prices declined, the company          Following recent (December 2009)
was unable to secure funding and in          shareholder approvals, syndication of
November 2008 all construction activities    the Trafigura project finance remains a
were placed on hold. At this stage the       possibility. The intellectual capital vested
plant construction was 35% complete          in the process to date is significant, and
with detailed engineering 77% complete.      the updated action plans and the IER
In the ensuing six months, sustaining        remain the principal independent technical
dry conditions in the open-pits while        due diligence reference documents. The
completing technical optimisation studies    ability to retain a core team of consultants
and the detailed action plan were critical   with local and specific experience,
to maintain the momentum and identify        through a global network of practices, to
alternative sources of funding should        support access to the international debt
market conditions change.                    capital markets is crucial.




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Every type of mining project in all environments everywhere in the world.


To learn more about SRK and how we might help you with your next
mining challenge, please visit:




www.srk.com

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