Ingeco 302 Molibdeno

NI 43-101 TECHNICAL REPORT MERLIN MOLYBDENUM RHENIUM PROJECT FEASIBILITY STUDY NORTHWEST QUEENSLAND, AUSTRALIA
Prepared by Lycopodium Minerals QLD Pty Ltd in accordance with the requirements of National Instrument 43-101, Standards of Disclosure for Mineral Project, of the Canadian Securities Administrators
Qualified Persons: Neil Lincoln, P.Eng, Study Manager, Lycopodium Minerals QLD, Pty Ltd. Mehmet Yumlu, Principal Mining Engineer, AMC Consultants Pty Ltd, MAusIMM (CP). RPEQ John Horton, Principal Geologist, Golder Associates Pty Ltd, FAusIMM (CP), MAIG Gordon McPhail, Technical Discipline Executive, FSAIMM, PrEng, SLR Consulting Australia Pty Ltd Art Ibrado, Metallurgist and Project Manager, M3 Engineering and Technology, QP, MMSA
Submitted to: IVANHOE AUSTRALIA LIMITED Level 13, 484 St Kilda Road Melbourne, VIC 3004 Australia Effective Date of Report: 16 April 2012
Lycopodium Report 3092-STY-002 File Location: 16.04 Rev: 0
0 REV NO.
16.04.2012 DATE
FINAL ISSUE REVIEW
NL BY
IM DESIGN APPROVED
NL PROJECT APPROVED
MERLIN MOLYBDENUM RHENIUM PROJECT NI 43-101 REPORT
Table of Contents
1.0 SUMMARY 1.1 Overview 1.1.1 Ownership 1.2 Geology and Mineral Resources 1.3 Mineral Reserves 1.4 Operating and Cost Data 1.5 Financial Analysis 1.6 Conclusions 1.7 Recommendations INTRODUCTION 2.1 Terms of Reference and Purpose of this Report 2.2 Previous Work 2.3 Qualifications of Consultants 2.4 Site Visits RELIANCE ON OTHER EXPERTS PROPERTY DESCRIPTION AND LOCATION 4.1 Property Location 4.2 Land Tenure 4.3 Osborne Mine 4.4 Other Considerations ACCESSIBILITY, CLIMATE, LOCAL INFRASTRUCTURE AND PHYSIOGRAPHY 5.1 Accessibility 5.2 Physiography and Climate 5.3 Infrastructure and Local Resources HISTORY GEOLOGICAL SETTING AND MINERALISATION 7.1 Regional Geology 7.2 Local Geology 7.3 Local Stratigraphy 7.3.1 Hanging Wall Granite 7.3.2 Metasiltstone 7.3.3 Black Shale 7.3.4 Phyllite 7.3.5 Quartzite 7.4 Mineralisation 7.4.1 Mo-Re Mineralisation 7.4.2 Copper Mineralisation 7.4.3 Mount Dore Zn and Polymetallic Mineralisation DEPOSIT TYPES 8.1 Mount Dore Deposit 8.2 Merlin Deposit EXPLORATION RESOURCES, 5.1 5.1 5.1 5.2 6.1 7.1 7.1 7.3 7.4 7.5 7.6 7.6 7.6 7.6 7.6 7.7 7.9 7.10 8.1 8.1 8.1 9.1 1.1 1.1 1.1 1.2 1.4 1.4 1.5 1.5 1.6 2.1 2.1 2.2 2.2 2.4 3.1 4.1 4.1 4.1 4.3 4.3
2.0
3.0 4.0
5.0
6.0 7.0
8.0
9.0
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April 2012 Lycopodium Minerals QLD Pty Ltd
10.0
DRILLING 10.1 Drilling Summary 10.2 Drilling Locations and Additions 10.3 Drilling Methods 10.4 Collar Surveys 10.5 Down Hole Surveys 10.6 Recoveries and Rock Quality SAMPLE PREPARATION, ANALYSIS AND SECURITY 11.1 Ivanhoe Methods 11.1.1 Sampling Process 11.1.2 Sampling Preparation 11.1.3 Analysis Process 11.1.4 Bulk Densities 11.1.5 Magnetic Susceptibility 11.1.6 Logging 11.1.7 Database management 11.1.8 Adequacy of Sampling 11.2 IAL Quality Control Procedures and Quality Control Procedures 11.3 Regular QAQC Sample Monitoring 11.3.1 Certified Reference Materials (Standards) 11.3.2 Field Blanks 11.4 Duplicates 11.5 Alternate Assaying 11.6 Checking Programs 11.6.1 Programs 11.6.2 Twin Drilling Program 11.7 Security and Chain of Custody 11.8 Adequacy of Sample Preparation, Analytical and Security Procedures DATA VERIFICATION MINERAL PROCESSING AND METALLURGICAL TESTING 13.1 Introduction 13.2 Metallurgical Samples and Composites 13.3 Comminution Tests 13.4 Preliminary Flotation Tests 13.5 Flotation Testwork at Metcon 13.6 Tails Thickening Tests 13.7 Roasting 13.8 Recommendations for Further Testwork
10.1 10.1 10.2 10.5 10.6 10.6 10.7 11.1 11.1 11.1 11.1 11.2 11.3 11.4 11.5 11.5 11.6 11.6 11.7 11.8 11.8 11.12 11.13 11.18 11.18 11.20 11.24 11.24 12.1 13.1 13.1 13.1 13.5 13.7 13.7 13.27 13.28 13.33
11.0
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14.0
MINERAL RESOURCE ESTIMATES 14.1 Resource Domains 14.1.1 Grade Domains 14.2 Data Preparation 14.2.1 Drilling and Assays 14.2.2 Recovery 14.2.3 Dry Bulk Density 14.2.4 Default Grades 14.2.5 Compositing 14.2.6 Declustering 14.3 Variography 14.4 QKNA 14.5 Geological Block Model 14.6 Grade Estimation Parameters 14.7 Estimation Results 14.8 Model Validation 14.9 Mineral Resource Classification 14.10 Mineral Resource Statement 14.11 Recommendations MINERAL RESERVE ESTIMATE 15.1 Modifying Factors MINING METHODS 16.1 Geotechnical 16.1.1 Geological Setting 16.1.2 Rock Strength 16.1.3 In-situ Stress 16.1.4 Weathering 16.1.5 Defect Summary 16.1.6 Geotechnical Domains 16.1.7 Rock Mass Classification 16.1.8 Stability Assessment 16.1.9 Support Requirements 16.1.10 Stability Pillars 16.1.11 Hydrological Assessment 16.1.12 Drainage / Flood Control 16.1.13 Water Balance 16.1.14 Groundwater Chemistry 16.2 Mining Methods 16.2.1 Geological Setting and Orebody Characteristics 16.2.2 Mining Method Selection 16.3 Mine Design 16.4 Mining Schedule 16.4.1 Overview 16.4.2 Schedule Productivity Rates 16.4.3 Schedule Constraints 16.4.4 Base Case Schedule 16.5 Backfill 16.6 Materials Handling 16.7 Mining Mobile Fleet
14.1 14.1 14.1 14.8 14.8 14.9 14.10 14.11 14.12 14.15 14.15 14.20 14.21 14.25 14.27 14.28 14.31 14.32 14.36 15.1 15.3 16.1 16.1 16.1 16.3 16.3 16.4 16.5 16.9 16.9 16.10 16.13 16.18 16.19 16.20 16.20 16.22 16.22 16.22 16.23 16.26 16.32 16.32 16.33 16.35 16.37 16.39 16.41 16.42
15.0 16.0
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17.0
RECOVERY METHODS 17.1 Process Plant Design Criteria 17.1.1 Process Design Criteria Molybdenum Concentrator 17.1.2 Process Design Criteria Concentrate Treatment Plant 17.2 Process Description 17.2.1 Process Description Molybdenum Concentrator 17.2.2 Process Description Concentrate Treatment Plant 17.3 Reagents and Consumables 17.4 Water Requirements 17.5 Power Consumption 17.6 Control Philosophy 17.7 Plant Services 17.7.1 Mobile Equipment 17.7.2 Buildings 17.7.3 Other Services INFRASTRUCTURE 18.1 Mine Services 18.2 Process Plant Infrastructure 18.3 Tailings Facility Design MARKET STUDIES AND CONTRACTS 19.1 Marketing Studies 19.2 Molybdenum 19.2.1 Supply 19.2.2 New projects and future supply 19.2.3 Consumption 19.2.4 Prices 19.2.5 Market outlook 19.3 Rhenium 19.4 Marketing Strategy 19.5 Contracts 19.5.1 Mining 19.5.2 Haul Road Access to Osborne 19.5.3 Process Plants ENVIRONMENTAL STUDIES, PERMITTING AND SOCIAL OR COMMUNITY IMPACT 20.1 Environmental Licensing Framework 20.1.1 Environmental Authorities 20.1.2 Environmental Management Plans 20.1.3 Rehabilitation Plans 20.1.4 Groundwater Extraction Licences 20.1.5 Environmentally Relevant Activities and Annual Fees 20.2 Addressing Environmental Concerns 20.2.1 Air Quality 20.2.2 Noise 20.2.3 Land Resources 20.2.4 Water Resources 20.2.5 Nature Conservation Values 20.2.6 Social and Community Values 20.2.7 Cultural Heritage Values 20.2.8 Ore Processing Operations 20.2.9 Air 20.2.10 Noise 20.2.11 Land Resources 20.2.12 Water 20.2.13 Nature Conservation Values
17.1 17.1 17.1 17.4 17.6 17.6 17.12 17.22 17.23 17.23 17.23 17.25 17.25 17.26 17.26 18.1 18.1 18.2 18.3 19.1 19.1 19.1 19.1 19.2 19.2 19.3 19.4 19.4 19.8 19.8 19.8 19.9 19.9 20.1 20.1 20.1 20.2 20.2 20.3 20.3 20.3 20.5 20.5 20.5 20.6 20.6 20.6 20.7 20.7 20.8 20.9 20.9 20.9 20.10
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20.3 20.4 20.5 20.6 20.7
20.2.14 Social and Community Values 20.2.15 Cultural Heritage Values Tailings Disposal Site Water Management General Site Waste Rehabilitation Site Environmental Monitoring 20.7.1 Air 20.7.2 Noise 20.7.3 Land 20.7.4 Water 20.7.5 Nature Conservation
20.10 20.10 20.10 20.11 20.12 20.13 20.14 20.14 20.14 20.14 20.15 20.15 21.1 21.1 21.1 21.1 21.2 21.2 21.3 21.7 21.7 21.7 21.8 21.9 21.9 21.9 22.1 22.1 22.1 22.1 22.1 22.2 22.2 22.3 22.3 22.3 22.3 22.3 22.3 22.4 22.4 22.4 22.5 22.6 22.6 22.6 22.6 22.6 23.1 24.1
21.0
CAPITAL AND OPERATING COSTS 21.1 Capital Costs 21.1.1 Summary Capital Costs 21.1.2 Scope 21.1.3 Exclusions 21.1.4 Mining Capital Costs 21.1.5 Process Plant Capital Costs 21.1.6 Crushing Plant 21.1.7 Infrastructure Capital Costs 21.1.8 Owners Costs 21.1.9 Contingency 21.2 Operating Costs 21.2.1 Summary Operating Costs 21.2.2 Operating Cost Basis ECONOMIC ANALYSIS 22.1 Introduction 22.1.1 Principal Assumptions 22.1.2 Metal Sale Prices 22.1.3 Product Sales 22.1.4 Exchange Rates 22.1.5 Taxes 22.1.6 Goods and Services Tax 22.1.7 Carbon Trading Scheme 22.1.8 Royalties 22.1.9 Native Title Compensation 22.1.10 Other Royalties / Agreements 22.1.11 Revenue Deductions 22.1.12 Reclamation 22.1.13 Project Financing 22.2 Financial Model 22.3 Model Inputs 22.4 Analysis 22.4.1 Production summaries 22.4.2 Capital Cost Summary 22.4.3 Operation Cost Summary 22.4.4 Economic Results ADJACENT PROPERTIES OTHER RELEVANT DATA
22.0
23.0 24.0
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25.0
INTERPRETATION AND CONCLUSIONS 25.1 Geology 25.1.1 Merlin Little Wizard Mo-Re Deposit 25.1.2 Mount Dore Cu Deposit 25.1.3 Mount Dore Zn and Polymetallic Deposit 25.1.4 Resource Estimate 25.2 Mining Methods 25.3 Metallurgical Testing 25.4 Process Plant 25.5 Infrastructure 25.6 Risks 25.7 Capital and Operating Costs 25.8 Financial Analysis RECOMMENDATIONS 26.1 Geological 26.2 Geotechnical 26.3 Mining 26.4 Metallurgical Testing 26.5 Process Plant 26.6 Tailings Storage Facility REFERENCES
25.1 25.1 25.1 25.2 25.2 25.3 25.3 25.5 25.6 25.7 25.8 25.9 25.9 26.1 26.1 26.1 26.3 26.3 26.4 26.4 27.1
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List of Figures
Figure 4.1.1 Figure 4.4.1 Figure 5.2.1 Figure 5.3.1 Figure 7.1.1 Figure 7.2.1 Figure 7.3.1 Figure 7.4.1 Figure 7.4.2 Figure 9.1 Figure 9.2 Figure 10.2.1 Figure 10.2.2 Figure 11.1.1 Figure 11.3.1 Figure 11.3.2 Figure 11.4.1 Figure 11.5.1 Figure 11.5.2 Figure 11.5.3 Figure 11.5.4 Figure 11.5.5 Figure 11.6.1 Figure 11.6.2 Figure 11.6.3 Figure 11.6.4 Figure 12.1 Figure 13.2.1 Figure 13.2.2 Figure 13.2.3 Figure 13.5.1 Figure 13.5.2 Figure 13.5.3 Figure 13.5.4 Figure 13.5.5 Figure 13.5.6 Figure 13.5.7 Figure 13.5.8 Figure 13.5.9 Figure 13.5.10 Figure 13.5.11 Figure 13.5.12 Figure 13.5.13 Figure 13.5.14 Figure 13.5.15 Figure 13.5.16 Project Location (near Selwyn) Merlin Molybdenum Rhenium Project Region - Mining Leases Mount Dore Panorama Looking North from Mount Dore South Local Infrastructure Geology of the Eastern Fold Belt Geology Map for the Mount Dore District Typical Host Rocks for the Merlin-Mount Dore Deposit Molybdenite Occurrence Examples Sighted by Golder Copper Mineralisation Examples Sighted by Golder Structural Interpretation for Section 27 750N (Mount Dore South) Structural Interpretation for Section 28 550N (Mount Dore NorthMerlin) Plan of Resource Drilling with Respect to Mount Dore Cu (left) and Merlin Molybdenum Rhenium Mineralisation (right) Merlin and Mount Dore Wireframe Models with New Resource Drilling Since mid-2010 Scatter Plot of Pairs of Dry Bulk Density Measurements Project Summary CRM for Mo and Re Project Summary Field Blanks Core and Field Duplicate Scatter Plots Cu Reassays vs. Geochemical Analyses (MEICP41) Cu Reassays vs. Cu Sequential Analyses (CUPHT06) Ivanhoe 2004-2007 Cu Sequential Reassays (left) and Selwyn Cyanide Soluble Reassays Mo Reassays vs. Ore Grade Analysis (MEOG62) Re Reassays vs. Ore Grade Analysis (MEOG62) Project Summary of Routine Check Samples Twin Drilling MDQ0153 - Ivanhoe RC (blue) vs. Ivanhoe Diamond (red) Drill Hole Twin Drilling - Ivanhoe and Previous Company RC (blue) vs. Ivanhoe Diamond (red) Drill Holes Twin Drilling - Ivanhoe diamond (blue) vs. Ivanhoe Diamond (red) Drill Holes Recent Little Wizard Cross Cut Exposures provided by IAL Plan View of the orebody showing the locations of the metallurgical samples (red dots). Section N7605350, 50-m window looking north showing the origin of some of the metallurgical samples (blue segments). Section N7605450, 50-m window looking north showing the origin of some of the metallurgical samples (blue segments). Conventional Molybdenum Flotation Circuit Rougher Molybdenum Recovery vs. time at three grind sizes. Effect on % of solids on Rougher Kinetics Effect of % Solids on 1st Cleaner Kinetics Effect of Sodium Silicate on 1st Cleaner Grade Effect of Regrind on 1st Cleaner Grade Regrind Effect on 1st Cleaner Recovery Effect of ORP on 2nd Cleaner Molybdenum Grade Effect of ORP on 2nd Cleaner Copper Content Standard Testing Flowsheet Effect of Primary Grind Size on Primary 3rd Cleaner Concentrate Primary Grind Flotation Upgrading by Stage Collector Series Secondary Grind Size vs Grade and Recovery Two Stage Copper Depression Three Stage Copper Depression 4.1 4.4 5.1 5.3 7.1 7.4 7.5 7.8 7.10 9.2 9.2 10.3 10.4 11.4 11.10 11.11 11.13 11.16 11.16 11.17 11.17 11.18 11.20 11.22 11.22 11.23 12.4 13.2 13.3 13.3 13.9 13.10 13.10 13.11 13.12 13.13 13.13 13.14 13.15 13.17 13.18 13.19 13.19 13.20 13.21 13.22
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Figure 13.5.17 Figure 13.5.18 Figure 13.7.1 Figure 13.7.2 Figure 13.7.3 Figure 14.1.1 Figure 14.1.2 Figure 14.1.3 Figure 14.2.1 Figure 14.2.2 Figure 14.3.1 Figure 14.3.2 Figure 14.5.1 Figure 14.5.2 Figure 14.7.1 Figure 14.8.1 Figure 14.8.2 Figure 14.8.3 Figure 14.8.4 Figure 15.1 Figure 15.2 Figure 16.1.1 Figure 16.1.2 Figure 16.1.3 Figure 16.1.4 Figure 16.1.5 Figure 16.1.6 Figure 16.1.7 Figure 16.2.1 Figure 16.2.2 Figure 16.2.3 Figure 16.3.1 Figure 16.3.2 Figure 16.3.3 Figure 16.3.4 Figure 16.3.5 Figure 16.3.6 Figure 16.4.1 Figure 16.4.2 Figure 16.4.3 Figure 16.6.1 Figure 17.7.1 Figure 17.7.2 Figure 22.4.1 Figure 22.4.2 Figure 22.4.3 Figure 22.4.4 Figure 22.4.5
Copper / Molybdenum Separation Without Regrinding Molybdenum / Graphite Ratio vs Concentrate Grade Roasting Test on Molybdenum 7th Cleaner Concentrate (FT-C01-20) Temperature = 600C Roasting Tests on Mineral Park Molybdenum Concentrate, Sulphur Content at the Roasting Products Molybdenum Roasting Capacity Scatter Plot of Mo versus Re, Cu, S and Zn Assays for Merlin Samples Mo and Re Grade Distribution for Lower Mineralisation Package Cu & Zn Grade Distribution for Upper Mineralisation Package & Mount Dore South Distribution of All Sample and Composite Lengths Distribution of Merlin Domain Sample and Composite Lengths Mount Dore Example Variogram Models Example Variogram Models for Merlin Mount Dore North Lower Plan View of Wireframes for Mo (left), Cu (middle) and Polymetallic (right) Domains Mount Dore North Section 28 600N Model Categorical Fields and Domains Mount Dore North Section 28 600N Model Estimates for Cu, Zn, Mo & Re Example Estimation Quality Parameter Results Example SWATH Discrete Gaussian Comparison for Cu Discrete Gaussian Comparison for Mo at Merlin Tonnes vs COV MMU and Mining Dilution Merlin Cross Section at 5350 mN - Looking North Weathering Profiles (BOCO and BOPO) at Merlin (7600 mE) Stereographic Projection of Defects (Davis, 2010) Stereographical Projection of Defects in Mount Dore Granite Stereographical Projection of Defects in Kuridala Formation Stereographic Projection of Defects in the Stavely Formation Crown Pillar Surface Exclusion Zone - Section 5350mN looking North Merlin Orebody Dimensions Long Section Looking West Underhand DAF Mining Underhand LHOS Mining Method Stage 1 Decline Development (January 2012) Isometric View looking North Mine Design and Stoping Blocks - 3D View Mine Design and Stoping Blocks Section 28550N Merlin Mine Design Long Projection Looking West Typical LHOS Level Development (Lens 6 and 7) Typical DAF Level Development (Main Lens 5) Total Ore Tonnes and Mo % by year Total Ore Tonnes and Re ppm by Year Lateral Metres (Year 2011 already completed) Merlin Relative to Others Concentrator Plant Flowsheet Concentrate Treatment Plant Flowsheet Metal Production (in MoO3) and Unit Operating Costs Sales Revenue by Product Annual and Cumulative After-Tax Cash Flow ATCF Sensitivity Analysis NPV Sensitivity Analysis
13.25 13.26 13.28 13.29 13.30 14.2 14.3 14.4 14.13 14.13 14.18 14.19 14.24 14.25 14.28 14.29 14.30 14.30 14.31 15.3 15.5 16.2 16.5 16.6 16.7 16.7 16.8 16.19 16.23 16.25 16.25
16.26 16.27 16.28 16.30 16.31 16.32 16.38 16.38 16.39 16.41 17.27 17.28 22.6 22.7 22.7 22.8 22.9
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MERLIN MOLYBDENUM RHENIUM PROJECT NI 43-101 REPORT - SUMMARY
Page 1.1
1.0 1.1 Overview
SUMMARY
Ivanhoe Australia Limited (IAL) has a number of mineral prospects located in far North West Queensland, Australia. Within the Mount Isa Mining District, IAL holds eleven mining leases, of which six mining leases relevant to this report are permitted for exploitation of molybdenum (Mo), rhenium (Re) and copper (Cu) mineralisation. A zone of molybdenum / rhenium mineralisation (the Merlin deposit) has been identified within these leases and, along with proposed associated infrastructure and processing facilities is known as the Merlin Molybdenum Rhenium Project (the Project). The Mount Dore and Merlin deposits occur within this district in North West Queensland. The deposits occur vertically adjacent to each other, with the Mount Dore copper deposit near surface and Merlin at depth. The Merlin deposit is the subject of this report. The Project is based on the extraction and processing of a high grade molybdenum rhenium resource (Merlin deposit) located approximately 145 km south east of Mount Isa and 53 km north of IALs Osborne mine complex. The mine site for the Project is located adjacent to the decommissioned Selwyn Starra mine and the proposed process plant will be located at the existing Osborne site. Access to site is by chartered aircraft to a sealed airstrip from Mount Isa, Brisbane or Townsville, or by road from Mount Isa and Townsville via Cloncurry, 140 km to the north. The Project is anticipated to process a nominal 500,000 tpa ore and produce on average 4,700 tpa of molybdenum and 7 tpa rhenium. Chemical grade molybdenum oxide and rhenium as ammonium perrhenate will be produced as saleable products. A copper flotation concentrate and 10,100 tpa of concentrated sulphuric acid will be produced as by-products. 1.1.1 Ownership
IAL acquired mining leases and the Osborne mine, concentrator and infrastructure from Barrick (Osborne) Pty Ltd in October, 2010. The acquisition was inclusive of a two million tonne per annum (Mtpa) Cu / Au concentrator and associated maintenance and office facilities, a 24 megawatt (MW) gas / diesel power station, accommodation village for 470 people, and a sealed airstrip. IAL is currently 59% owned by Ivanhoe Mines Limited, which is listed on the Toronto Stock Exchange (TSX) under the list code IVN. Ivanhoe Cloncurry Mines Pty Ltd (ICM), a wholly owned subsidiary of IAL, is the entity through which IAL is operating in the region where the Project is located. ICM has been granted mining leases that cover the majority of the defined resource, with a granted exploration tenement covering all other relevant and surrounding areas. The recent application for coverage for rhenium and molybdenum extraction under the mining leases was successful. ICM also owns the pastoral lease covering the deposit.
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Page 1.2
1.2
Geology and Mineral Resources
The Mount Dore and Merlin deposits occur within the Cloncurry district in North West Queensland, Australia. The deposits occur vertically adjacent to each other, with Mount Dore near surface and Merlin at depth. The Merlin deposit is the subject of this Project study. The Mount Dore copper oxide deposit was first explored in the 1950s, however it has undergone no significant mining, although sulphide base metal deposits have been exploited nearby. Mount Dore and Merlin are part of a wider exploration focus for IAL over a number of tenements within the region. IAL commenced exploration at Mount Dore in 2003 targeting the extension and definition of the known copper oxide deposit. In late 2008 IAL discovered below the Mount Dore deposit is a package of significant copper and Zn mineralisation along with anomalous Mo. Contained within this sequence is a discrete set of mineralised structures containing unusually high grade Mo and Re, together with minor Cu and Zn. This Mo-Re mineralisation is known as the Merlin deposit. Exploration drilling for the Mount Dore Copper Heap Leach Project intersected the Merlin deposit and studies of the Project have been performed in parallel with studies for the development of the Mount Dore Copper Heap Leach Project. Drilling has defined the Merlin mineralisation with a 50 m by 50 m grid pattern of vertical and inclined diamond drill holes to vertical depths ranging from 60 m to 580 m over a 1,000 km strike length. The Merlin drilling has also delineated the overlying Mount Dore North copper deposit that contains significant polymetallic mineralisation, particularly zinc (Zn), which occurs below the oxide zone. IAL requested Golder Associates Pty Ltd (Golder) to undertake an independent resource estimate of the Mount Dore and Merlin deposits to assist their evaluation of both the Cu and Mo-Re mineralisation in the pre-feasibility study. This was completed and documented in the NI43-101 report issued October 2010. A preliminary economic assessment (PEA) was completed for Mount Dore (August 2011) and Merlin (September 2011) by sub-consultants commissioned by IAL. Subsequent to the last resource estimate (effective date July 2010) IAL has completed:
In 2010, 18 additional drill holes, 10 targeting the Merlin mineralisation and eight targeting a small upper Mo lens at Mount Dore. In 2011, an infill drill program for the Mount Dore copper with additional 58 drill holes, 10 of which were extended to intersect the upper portions of the Merlin resource. Assorted water bores, including eight underground dewatering holes.
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Page 1.3
Mo is typically produced as a minor by-product from low grade Cu porphyry systems, however, at Merlin the high grade Mo is the primary target and Mo together with Re will be produced from the Project as a concentrate, rather than as a by-product of copper sulphide flotation. Merlin was previously reported in a NI 43-101 technical report submitted in 19 Oct 2010 (Golder, 2010), which was reproduced for the pre-feasibility study by AMC (2011b). Additional drilling at Merlin has confirmed the location and grade of the resource. A minor increase in resource tonnage is attributed to two small extensions of the resource at the northern and southern ends. An independent mineral resource estimate update by Golder Associates Pty Ltd (Golder), in late 2011 for Merlin and Little Wizard using a 0.3% Mo cut-off is the basis of the current study has an effective date of 5 December 2011 and includes: 6.7 Mt at 1.4% Mo and 23 ppm Re Indicated Mineral Resource 0.2 Mt at 0.8% Mo and 13 ppm Re Inferred Mineral Resource The Cu and Zn mineralisation around Merlin is generally below the economic grade required for underground mining and only present as small potential target zones. These are not the focus of the current study. Mo-Re and Cu mineralisation at Mount Dore is hosted within a tectonised sequence of metashale, metasiltstone, schist and phyllite belonging to the Proterozoic Kuridala Formation in the Eastern Fold Belt of the Mount Isa Inlier. This stratigraphic package lies to the west of the over-thrust Mount Dore Granite and extends north-south along strike for several kilometres and dips eastward underneath the granite. A massive, easterly-dipping, intensely-silicified quartzite ridge on the western side of the area forms the footwall to the deposit. Copper and Mo-Re mineralisation is hosted within variable proportions of interfingered black carbonaceous and grey micaceous metasiltstone and grey metashales with thicker beds of phyllite and schist. These metasedimentary units exhibit recrystallisation textures but retain relict sedimentary features in outcrop. IAL is currently developing the Project by means of an exploration decline, with plans for underground drill delineation and underground mining. Lower grade Mo mineralisation along with the Cu and Zn at depth, mostly occur in the footwall of the Merlin vein along with a few other high grade Mo splay veins. The depth of the Cu and Zn mineralisation and the anticipated underground development of Merlin preclude the mining of the lower grade polymetallic mineralisation other than by underground methods. For consistency of reporting, the same Cu and Zn cut-off grades are applied for reporting as used for the Mount Dore open pit project, although only a smaller tonnage at a higher cut-off grade resource is likely to be economic with underground mining. Consequently the lower zone of Cu-Zn mineralisation is reported separately as Mount Dore North lower.
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Page 1.4
1.3
Mineral Reserves
The Mineral Reserve estimates were prepared after selection of the mining methods as described in Section 16. The Merlin Mineral Reserves using Indicated Mineral Resources, constrained to 28100mN to 29055mN northing and 4288mRLto 3820mRL elevation, are set out in Table . Table 1.3.1
Category Proved Probable Total Reserve Mt 7.11 7.11 77,797 77,797 128,881 128,881
Merlin Mineral Reserves

Mo t Re kg Mo % 1.09 1.09 Re ppm 18.12 18.12
Note:Figureshavebeenroundedandhencemaynotaddupexactlytothegiventotals. Reservesreportedatcutoffvalueof$200/tforDAFand$150/tforLHOSstoping.
For the Project the initial life is based on the known mineral reserves is approximately 15 years.
1.4
Operating and Cost Data
Average operating costs for the Project are summarised in Table 4.1. Table 1.4.1 Average Operating Costs
Cost Centre Mining Processing (Concentrator + Crushing) Processing (Concentrate Treatment) Haulage General & Administration Total A$/t Ore 147.22 33.43 48.72 10.60 19.37 259.34
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Page 1.5
The initial Project cost to first production is estimated at A$345M. An additional A$52M of capital in year 1 is scheduled for an optimised molybdenum trioxide purification plant. The life of mine capital cost is estimated at A$492.4M as shown in Table 1.4.. Table 1.4.2 Capital Cost Estimate Summary
Capital Upgrade to Concentrate Treatment Plant ($AM) $39.7 $3.3 $8.6 $51.6
Main Area
Initial Capital (A$M) $90.9 $72.4 $83.6 $32.7 $32.2 $33.3 $345.0
Life of Mine Capital ($AM) $168.2 $72.4 $123.3 $48.0 $35.6 $44.9 $492.4
Mining Crushing & Concentrator Concentrate Treatment Infrastructure Owners Costs Project Contingency Project Total
1.5
Financial Analysis
Annual cash flow projections for the Project were estimated by IAL over the Projects production life based on the production schedule, sales revenue, production costs, capital expenditures and corporate costs (taxation, royalties, etc.). The financial indicators examined included after-tax cash flow (ATCF), net present value (NPV) at 8% discount rate, internal rate of return (IRR) and payback period and are summarised in Table 1.5.1. The Project payback period is approximately six years from first capital spend (assumed to be 1 January 2012). Table 1.5.1 Financial Analysis Results
Value $1,091M $397M 22.9
Indicator ATCF NPV IRR
1.6
Conclusions
Infill drilling completed in 2011 has resulted in similar grade and structural location as expected. The projected mine life is approximately 15 years and can sustain a steady state production rate of 500,000 tpa to the process plant. Mining methods include a combination drift-and-fill (approximately 60% by ore tonnes) and long hole open stoping (approximately 40% by ore tonnes).
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Page 1.6
The new process plant will consist of a molybdenum concentrator and concentrate treatment plant which will be located north of the existing Osborne copper concentrator plant, and utilise part of the existing ROM pad. The molybdenum concentrator is expected to treat 500,000 dry tpa of ore to produce a molybdenum-rhenium concentrate of approximately 30% Mo and a copper concentrate by-product. The concentrate will be further processed at an adjacent concentrate treatment plant to produce saleable chemical grade molybdenum oxide, ammonium perrhenate and concentrated sulphuric acid. The initial capital cost is estimated at A$345.0M and the life of mine capital cost is estimated at A$492.4. Economic analysis shows the Project is viable with ATCF of A$1,091M, NPV of A$397M and IRR of 22.9% using the assumptions outlined in section 22.
1.7
Recommendations
Continue development of the Project decline to be able to access and develop the mineral reserve. Complete additional metallurgical testwork to support the process plant design. Continue value engineering improve the process design and layout of the process plant. Commence front end engineering design of the process plant to initiate work on long lead equipment items. Continue to explore in the region to extend the project life.
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MERLIN MOLYBDENUM RHENIUM PROJECT NI 43-101 REPORT - INTRODUCTION
Page 2.1
2.0 2.1
INTRODUCTION
Terms of Reference and Purpose of this Report
This Technical Report on the Merlin Molybdenum Rhenium Project (the Project) at Mount Dore in North West Queensland, Australia, compiled on behalf of Ivanhoe Australia Limited (IAL), was prepared by:
Mehmet Yumlu, AMC Consultants Pty Ltd (AMC). John Horton, Golder Associates Pty Ltd (Golder). Neil Lincoln, Lycopodium Minerals Queensland Pty Ltd (Lycopodium). Gordon McPhail, SLR Consulting Australia Pty Ltd (SLR). Larry McHugh, Orchard Material Technology (OMT).
The report is prepared in accordance with the Canadian Securities Administrators (CSA) National Instrument 43-101 (NI 43-101), Standards of Disclosure for Mineral Projects. Consistent with regulatory obligations conferred upon reporting entities, the technical report is lodged on CSAs System for Electronic Document Analysis and Retrieval (SEDAR). Heading numbers in this report align to those listed in the instructions for completing a NI 43-101F1 Technical Report for lodgement on SEDAR. The technical report references reports prepared for the FS, which has been compiled by Lycopodium. All reference sources for the report are listed in Section 27.0. The study components were compiled as follows:
Golder - Geology and mineral resource estimate. AMC - Geotechnical, mining and mineral reserve estimate. Metcon Research - Metallurgical test work. Pocock Industrial - Metallurgical test work. OMT Metallurgical parameters for process plant. Lycopodium Process plant design and implementation. SLR - Tailings design IAL - Infrastructure, organisational structure, marketing, operating and capital cost summaries and financial analysis.
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Page 2.2
IAL was provided with a draft of this report to review for factual content and conformity with the brief.
2.2
Previous Work
IAL engaged Golder in mid 2010 to complete an independent resource estimate of the Merlin and Mount Dore mineral resource, suitable for a pre-feasibility mining study for both potential open cut and underground mining operations. Estimated mineral resources arising from this study were publicly released to the Australian Stock Exchange (ASX) on 4 August, 2010 (refer to www.asx.com.au under listing code IAL) under JORC reporting requirements. The resources were then subsequently issued as a NI 43-101 report in October 2010, when IAL listed on the Toronto Stock Exchange (TSX). AMC Consultants completed previous PFS assessments for the Merlin and Mount Dore (Mount Dore South and Mount Dore North) deposits, assessing two distinct mining options:
Open pit oxide copper leach exploitation of the Mount Dore resource (AMC, 2011a), concentrating on the Mount Dore South area which has a deeper oxidation profile. Underground exploitation of the Merlin Mo-Re resource (AMC, 2011b). Merlin resource underlies the Mount Dore North Cu resource.
Subsequent to this work, additional drilling was undertaken to test the geotechnical aspects of the Merlin resource. Follow-up on a small shallow molybdenum occurrence in Mount Dore North was completed for 18 additional drill holes. The resources for Mount Dore and Merlin were re-estimated with this additional data in August 2011 and form the basis of initial mine design work for Merlin conducted by AMC. In late 2011, IAL undertook an infill drilling program with 58 drill holes, testing the pit and near pit area for the Mount Dore copper oxide leach study. This drilling formed the basis of the current resource estimate. Eight drill holes tested the upper lower grade portion of the Merlin mineral resource, with no material impact on the Mo-Re resource estimate at Merlin.
2.3
Qualifications of Consultants
The individuals presented in Table 2.3.1, by virtue of their educations, experience and professional association, are considered Qualified Persons (QP) as defined in NI 43-101, for this report. The Qualified Persons meet the requirements of the independence as defined in NI 43-101. Section responsibilities are also listed below.
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Page 2.3
Table 2.3.1
Persons Who Prepared this Technical Report
Qualified Persons responsible for the preparation of this Technical Report Qualified person Mr. N. Lincoln Position Study Manager Employer Lycopodium Minerals Queensland Pty Limited Golder Associates Pty Ltd AMC Consultants Pty Ltd Independent of IAL Yes Date of last site visit 1 March 2012 Professional designation P.Eng Report sections 1,2,3,17,18.2,19,20, 21, 22, 24, 25.3 (part), 25.4, 25.5 (part), 25.6, 25.7, 25.8, 26.5, 27 4,5,6,7,8,9,10,11,12, 14,23,25.1,26.1 15, 16, 18.1, 21 (part), 25.2, 25.5 (part), 25.6 (part) 25.7 (part) 26.2, and 26.3 18.3, 25.5 (part), 26.6 13, 25.3 (part), 26.4
Mr J Horton
Principal Geologist Principal Mining Engineer
Yes
3-9 Nov 2011 9-10 June 2010
FAusIMM (CP), MAIG MAusIMM (CP), RPEQ
Mr M. Yumlu
Yes
Dr G. McPhail
Technical Discipline Executive Metallurgist and Project Manager
SLR Consulting Australia Pty Ltd M3 Engineering and Technology Corporation
Yes
24-25 October 2011 No Visit
FSAIMM, PrEng
Dr A. Ibrado
Yes
Qualified Professional Member, MMSA
Other experts upon whose contributions the Qualified Persons have relied are presented in Table 2.3.2. Table 2.3.2 Persons Who Contributed to this Technical Report
Independent of IAL No Yes No No Yes Date of last site visit 1 March 2012 No Visit No Visit No Visit No Visit
Expert S. McEwen C. Taylor K. Bolden R. Coe L. McHugh
Position Senior Project Manager Senior Associate Manager, Corporate Finance Manager, Environment CEO
Employer IAL URS IAL IAL OMT
Report sections 18, 19 20 21, 22 20 13, 25.3 (part), 26.4
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Page 2.4
2.4
Site Visits
Mehmet Yumlu visited the site during 9-10 June 2010. He inspected facilities at Osborne and Mount Dore. John Horton visited the site on multiple occasions for the purpose of the original resource evaluation including week long visits in February 2010, April 2011, September 2011, with the latest site visit from 3 November to 9 November 2011. Neil Lincoln visited the site on 24 August 2011 and 1 March 2012. He inspected facilities at Osborne and the Merlin exploration decline. Gordon McPhail visited the site on 24 and 25 October 2011. He inspected the existing tailings and water management facilities at Osborne and at Mount Dore. The site of the new facilities at Osborne was also inspected. Art Ibrado has not visited the site.
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MERLIN MOLYBDENUM RHENIUM PROJECT NI 43-101 REPORT - RELIANCE ON OTHER EXPERTS
Page 3.1
3.0
RELIANCE ON OTHER EXPERTS
The legality and currency of mining tenure is outside the expertise of the Project team. For Item 4 on property tenure, Lycopodium has relied entirely on the advice of tenement management experts in IAL and a previous tenement search results as follows:
Minter Ellison Lawyers prepared a report, dated 19 October 2010, on the status of the Mt Dore mining tenements. This report was included as Appendix B in the previous NI 43-101 Technical Report prepared by Golders Associates, dated 19 October 2010 (Golder, 2010). The solicitors report concluded the Mount Dore mining licences appear to be in good standing and unencumbered. Lycopodium has relied upon this advice and on advice from IAL that lease renewals were subsequently completed. On this basis no further advice was sought by Lycopodium on the standing of the tenements.
Lycopodium has relied upon the market studies from IAL for Item 19 of the NI 43-101 report. Lycopodium has relied upon the environmental advice from IAL for Item 20 of the NI 43-101 report. Lycopodium has relied upon the financial analysis from IAL Item 22 of the NI 43-101 report. Lycopodium has reviewed the inputs and basis for the financial analysis.
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MERLIN MOLYBDENUM RHENIUM PROJECT NI 43-101 REPORT - PROJECT DESCRIPTION AND LOCATION
Page 4.1
4.0 4.1
PROPERTY DESCRIPTION AND LOCATION
Property Location
The Project is located in northwest Queensland, Australia, approximately 145 km southeast of Mount Isa and 700 km west-southwest of Townsville (21 4S latitude and 140 18 longitude). The Project is near the gazetted locality of Selwyn (refer to Figure 4.1.1). Access is by chartered aircraft via an all-weather airstrip from Mount Isa and Townsville, or by road from Cloncurry 140 km to the north.
Figure 4.1.1
Project Location (near Selwyn)
4.2
Land Tenure
Mining Leases are required for the Project and have been obtained. The Project area is covered by Mining Leases (MLs) within the Mount Isa Mining District Details of the five Mining Leases relevant to the Merlin mineral resource area (Mount Dore Mining Leases) are listed in Table 4.2.1. The location of the Mount Dore Mining Leases is shown in Figure 4.4.1. Figure 5.3.1 and Figure 10.2.1 indicate the location and extent of the mineralisation with respect to the Mining Lease boundaries. Exploration Permit for Minerals EPM 10783 underlies the Mount Dore Mining Leases and surrounds them. EPM 10783 includes a small exclusion in ML 2688. The Mount Dore Mining Leases are 100 percent owned by Ivanhoe Cloncurry Mines Pty Limited (ICM), a wholly owned subsidiary of IAL, and are located on the Starcross Pastoral Holding, also owned by ICM. The Mount Dore Mining Leases contain the Merlin and Mount Dore resources which overly each other.
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April 2012 Golder Associates
Page 4.2
The Mount Dore Mining Leases are all valid for the purpose of mining gold, silver, copper, cobalt, molybdenum, zinc and lead. IAL has applied for the addition of rhenium to minerals listed for exploitation. This addition is progressing and IAL expects it to be finalised by the end of June 2012. Mining Lease boundaries were resurveyed to confirm their location (Lodewyk, 2010). Subsequent to an audit conducted by legal firm, Minter Ellison (Golder 2010), IAL confirmed the successful renewal of a number of the Mining Leases. There are no pending renewal applications and all Mining Leases are current until at least 2020. Current lease expiry dates are presented in Error! Not a valid bookmark self-reference.. Table 4.2.1
Tenure Type Number 2688 2689 ML: Mining Lease 2690 2691 2566 EPM^ 10783
Ivanhoe Cloncurry Mines Pty Ltd Tenure

Name Area (ha) 125.48 129.6 129.6 120.46 32.37 238 subblocks (approx 75,684 ha) Granted 21-Jun-79 27-Apr-78 24-Aug-78 12-Jul-79 6-Dec-73 26-Oct-95 Expirers 30-Jun-20 31-May-29 31-May-29 31-Jul-20 31-May-29 25-Oct-12
Mount Dore Extended No 1 Mount Dore Extended No 2 Mount Dore Extended No 3 Mount Dore Extended No 4 Marilyn 1
Exploration Permit for Minerals
Conditions of Mining Leases include the requirement to pay rates and rents. These payments are up-to-date. The annual rentals for the year beginning 1 September 2011 totalled $219,356.60 for all 20 granted mining leases held by Ivanhoe Cloncurry Pty Limited. Rentals for the Mount Dore Mining Leases made up $26,364.87 of this total. Cloncurry Shire Council rates for the 6 month period ending 30 June 2012 for all 20 granted Ivanhoe Cloncurry Mines Pty Limited Mining Leases totalled $143,177. Rates for the Mount Dore group of contiguous mining leases (MLs 2566, 2688, 2689, 2690, 2691, 2692, 2693, 2694, 2733, 2745 and 2746) made up $130,237 of this total. Cloncurry Shire Council rates are also payable for Starcross Pastoral Holding ($3,109 for the 6 month period ending 30 June 2012). An annual rental of $1,704 for the period 1 July 2011 to 30 June 2012 is payable to Cloncurry Shire Council for Starcross Pastoral Holding. Queensland State Mineral legislation imposes a royalty on the sale of minerals. The royalty for copper is calculated on a sliding scale and expected to be approximately 4%, while the royalty for sale of Mo is 2.7% and sale of Re is 2.5%. There are no known risks to the titles that may affect access or rights to the Mining Leases.
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Page 4.3
4.3
Osborne Mine
On 25 May 2010, IAL announced the strategic acquisition of the Osborne copper and gold mine and associated plant. The Osborne mine and infrastructure are located 50 km south of the Project on Mining Lease (ML) 90040, and will provide infrastructure to service the Project. The Osborne bore field is on ML 90057 and a rail load out facility (adjacent to Phosphate Hill) on ML 90068. The Kulthor Cu / Au underground deposit is on ML 90158. The deposit and the majority of surface infrastructure is located on Chatsworth Station, between Carbo Creek and Little Sandy Creek. The bore field is located on Kheri and Pathungra Station, approximately 25 km south of Osborne.
4.4
Other Considerations
There are existing environmental approvals in place that cover the development of the exploration decline including an amended Environmental Authority and Plan of Operations that were approved in June 2010. The mining operation will need additional permitting with particular reference to management of waste rock, ore and tailings in addition to the management of groundwater from the Mt Dore aquifer, which overlies the Merlin mineralisation. This permitting will require a Water Licence, an additional environmental authority amendment and an amended Plan of Operations. This permitting has been completed. There are no significant known environmental liabilities on the Mt Dore mining leases; however, there are many historic and more recent workings on surrounding project mining leases, which will need to be addressed during the permitting process. The existing financial assurance requirement is $4,149,708 (24th June 2009) for all of IVAs tenements that include Mount Dore. The regulatory authority is still reviewing the financial assurance requirement from the June 2010 Plan of Operations amendment. It is likely with changes in government policy and provision of more detailed assessment of mining disturbance on surrounding project mining leases that the financial assurance will increase. There are no known cultural heritage issues that will potentially impact on the proposed Merlin operation. The only old workings noted in the Mount Dore project area consist of a collapsed adit and a shaft which is believed to be minor in extent. Existing local infrastructure is discussed in Section 5 and displayed in Figure 5.3.1.
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Page 4.4
Figure 4.4.1
Merlin Molybdenum Rhenium Project Region - Mining Leases
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MERLIN MOLYBDENUM RHENIUM PROJECT NI 43-101 REPORT - ACCESSIBILITY, CLIMATE, RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY
Page 5.1
5.0
ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY Accessibility
5.1
The Project is in located in far North West Queensland, Australia, approximately 145 km southeast of Mount Isa and 700 km west-southwest of Townsville (refer to Figure 5.2.1). Access to site is made by chartered aircraft via an all-weather airstrip from Mount Isa and Townsville, or by road from Cloncurry, 140 km to the north. Mount Isa is the largest city and main supply centre for the region, while Cloncurry is a smaller local supply town. The population of Mount Isa and surrounding area is approximately 35,000 and the population of Cloncurry is 2,400.
5.2
Physiography and Climate
The area in which the Project is located forms part of the interior lowlands physiographic region, with topography varying between gently-undulating plateaux and local hilly terrain. Surface elevations vary from about 200 m to 400 m above sea level. Vegetation consists of arid spinifex and sparse eucalypt trees. Eucalypt-spinifex grass-woodland vegetation predominates on deep soils. Grass with scattered scrub is common within flat, open, soil-filled drainages. The area has a semi-arid climate with temperatures averaging from 10 to 25C in the winter and from 25 to 40C in the summer. Average rainfall is 350 mm, with this occurring mostly during the summer months of December to March. The weather is acceptable for exploration and mining operations year-round. Figure 5.2.1 displays a panorama view of Mount Dore - Merlin viewed from the central area and looking towards Mount Dore North. The quartzite ridge that forms the footwall to the Kuridala formation is on the left and the hanging wall granite occurs as hills on the right of the figure. Exploration roads are evident in the centre where Merlin and Mount Dore North drilling has been undertaken.
Figure 5.2.1
Mount Dore Panorama Looking North from Mount Dore South
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Page 5.2
5.3
Infrastructure and Local Resources
IAL through its 100% owned subsidiary ICM is the leaseholder of Starcross Pastoral Holding. As the leaseholder, it holds the surface rights to the land over the Merlin and Mount Dore areas, and no compensation agreement for mining activities is required for the Project. Local infrastructure is indicated in Figure 5.3.1 and includes:
Selwyn exploration camp (old Selwyn mine camp) and gazetted locality. Merlin decline (in progress), portal buildings and waste dump. Starra historic mine workings, decommissioned mill site, waste dumps, tailings dams and water supply dam. Existing gazetted road going through past the Selwyn mine camp. Planned haul road to Osborne on which some work has commenced.
Power The Cannington Lateral gas pipeline lies 50 km to the south and provides natural gas to the existing dual fired gas/diesel power station at the Osborne processing facility. Water IAL has rights to extract 260 Ml of water from the Mount Dore aquifer and has a number of bores in place that meet current supply requirements. IAL has a pipeline to the Burke River Bore Field that can supply up to 100 l/sec and has annual rights to extract 1,000 Ml from this field. Tailings storage facility IAL has a partly filled licensed tails dam that was in use when the Selwyn Operation closed in 2003. Osborne Copper Concentrator IAL owns and operates the existing Osborne copper concentrator facility. Personnel The location of IALs tenements, i.e. to the south of the major mining centre of Mt Isa and west of Queenslands coastal mining belt, means it is in close proximity to a potential pool of skilled operational personnel available to work on a fly in fly out (FIFO) basis.
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Page 5.3
Figure 5.3.1
Local Infrastructure
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MERLIN MOLYBDENUM RHENIUM PROJECT NI 43-101 REPORT - HISTORY
Page 6.1
6.0
HISTORY
At Mount Elliott, 20 km north of Mount Dore, copper mining began in the early 1900s. A mining and copper smelting operation was established and linked by rail to Cloncurry. This operation closed in the 1920s. It was during the early part of the 1900s that copper was most likely first mined from Mount Dore from outcropping oxides, although total recorded production up to 1961 was only 5.9 tonnes of copper. The first modern drilling was conducted in 1957. Mount Dore was subsequently passed through a series of owners by corporate acquisitions, mergers and joint ventures, including the companies: Amoco (later Cyprus Minerals Australia Company), Mungana Mines Limited (later Elders Resources Limited) and Sunland Petroleum (later Arimco NL). Selwyn Mines Limited purchased the property and recommenced operations on the Starra Line and Mount Elliott but suffered from difficulties with the operation due to low copper prices in December 2002 and went into receivership. In September 2003 ICM acquired the tenements, exploration data and pastoral station from the receivers of Selwyn. Between September 2003 and June 2008, IAL completed an additional 19,273 m of drilling. During a reverse circulation (RC) drilling campaign, aimed at identifying additional near-surface copper occurrences to the north of the Mount Dore deposit, a drill hole intersected significant molybdenite mineralisation. This prompted a review of drilling data to determine the potential of the area, which led to the identification of the 700 m long, north-north-easterly-trending Merlin Zone that contained molybdenite at the northern end and molybdenum oxide at the southern end. Additional analytical work was conducted to investigate the associated rhenium content. The analyses returned high values. The Merlin Zone lies within the northern area of the overall Project, from 7 605 000 mN to 7 606 150 mN, with the Little Wizard bonanza shoot at the far south edge of the Merlin Zone. The majority of drilling on the Merlin Zone has been completed by diamond drilling (DD), and a lesser portion by reverse circulation drilling (RC). Most of the drilling was undertaken by IAL, with a minor amount by previous companies. IALs work also included twinning of RC and DD holes, which indicated that the RC drilling underestimates copper and molybdenum grades and is one reason why RC was discontinued by IAL. The history of exploration and mining at Mount Dore includes: 1900s 1957 1976 - 1980 1989 - 1991 High grade surface copper enrichment mined. Initial drilling. Cyprus completed 40 diamond and 47 percussion drill holes. Cyprus completed 8 diamond drill holes, plus 54 Airtrack and 15 RAB near surface drill holes. Arimco completed 5 RC and diamond drill holes.
1999
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MERLIN MOLYBDENUM RHENIUM PROJECT NI 43-101 REPORT - HISTORY
Page 6.2
2003
Ivanhoe Cloncurry Mines (ICM fully owned by IAL) acquired the Mount Dore tenements from the receivers of Selwyn Mines. IAL undertook widespread exploration with some drilling at Mount Dore. IAL RC drilling completed to define near surface extent of the mineralisation at Mount Dore South. IAL drilling at Mount Dore south targeting secondary copper zone. IAL drilling at Mount Dore North targeting the Merlin mineralisation. Merlin scoping study completed (SRK, 2010). IAL completed nominal 50 m infill drilling and definition of Merlin.
2003-7 2007
2008 2009 2010
2011
Preliminary economic analysis of the Merlin Project (AMC 2011b). Preliminary economic analysis of the Mount Dore Cu Oxide (AMC 2011a).
Previous estimates of the Mount Dore copper deposit are detailed by Golder (2010) and indicate the progress and history of the Project and how the copper resource was previously defined and supported by other companies prior to IAL. Previous public resource estimates that are available through the ASX or TSX (under Sedar) under either IAL or IVN listing codes or the IAL website include:
QG, 2008 IAL 2008 QG, 2009 IAL 2009a IAL 2009b QG, 2010 Golder 2010
Mount Dore Resource estimate. ASX market release of Mount Dore Resource estimate. Mount Dore and Merlin Resource estimate. ASX market release of Merlin Resource estimate. ASX market release of Mount Dore Resource estimate. Mount Dore and Merlin Resource estimate. Mount Dore and Merlin Resource estimate.
This report replaces previous technical studies. For reference the related previous public resource project studies include:
SRK, 2010 AMC 2011a AMC 2011b
Merlin Scoping Study. Mount Dore Copper Heap Leach Project Preliminary Economic Assessment. Merlin Project Prefeasibility Study.
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MERLIN MOLYBDENUM RHENIUM PROJECT NI 43-101 REPORT - GEOLOGICAL SETTING AND MINERALISATION
Page 7.1
7.0 7.1
GEOLOGICAL SETTING AND MINERALISATION
Regional Geology
Descriptions of geological setting presented here are based on work by Lazo and Pal (2009) and Carter et al. (2009). Starra Line is part of a wider exploration focus for IAL over a number of tenements in the same region. This area lies within the Eastern Fold Belt of the Mount Isa Inlier, see Figure 7.1.1. The Project area stratigraphy is part of the Soldiers Cap Group and Young Australia Group (which are lateral facies equivalents), and which are part of regional Cover Sequence 3. The depositional age for these Groups is 1712-1654 Ma, while the main phase of deformation and metamorphism is considered as equivalent to the Isan Orogeny at 1530-1480 Ma, associated with the Williams-Naraku Batholith.
Figure 7.1.1
Geology of the Eastern Fold Belt
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Page 7.2
For the Mount Elliott, Starra and Mount Dore district the IAL tenement package is a highly prospective locality hosting four advanced projects (Merlin, Mount Dore, Starra and Mount Elliott) as well as significant copper-gold and molybdenum-rhenium exploration projects. The majority of the copper-gold deposits in the area belong to the Iron Oxide Copper Gold (IOCG) style of mineralisation and tend to focus on geological and structural elements, namely being in close proximity to:
The contact of the Kuridala and Staveley Formations. Regionally extensive north-south trending shear and fault zones (long-lived faults that have been the principal conduits for fluid flow and alteration). Late northeast and northwest trending structures. Proximity to a Williams-Naraku Batholith intrusion.
Figure 7.2.1 demonstrates the surface relationship. The plan shows the north-south linear belt of the metasedimentary packages of Stavely and Kuridala Formations, in part bisected by the Mount Dore Fault Zone (MDFZ), increasingly intense northwest-northeast faulting around prospect locations. The whole metasedimentary package is buttressed either on one or both sides by granites, generally in close proximity to the major prospects. Proterozoic lithologies of interest in the Project area are the Staveley Formation and the Kuridala Formation. The Staveley Formation comprises a >2000 m thick linear belt of shallow water, wellbedded to brecciated variably calcareous, ferruginous, feldspathic, micaceous, and siliceous sandstone, siltstone, and phyllite, impure limestone (marble), and lenses of breccia, together with schist and banded calc-silicate rocks (mainly near granite), and minor basalt lava, conglomerate, and banded quartz + hematite +/- magnetite rock. The Stavely Formation has a depositional age of <1720 20 Ma. The Kuridala Formation is a tightly folded package of moderately deep-water turbiditic sediments (schistose greywacke, siltstone and shale) with quartzite, carbonaceous and pyritic slate and calc-silicate rocks. The thickness of this sequence is >2000 m, although neither the top nor the base of the Kuridala Formation is well established. The Kuridala Formation has a depositional age of <1681 5 Ma. The series of linear batholith scale granitic intrusives are significant lithologies in the Mount Elliott to Mount Dore district. These include the Wonga Granite (Gin Creek Granite ) (1760-1730 Ma) which was emplaced contemporaneously (into CS2), and the Williams-Naraku Batholiths (Mount Dore, Squirrel Hills, Yellow Waterhole, Wimberu Granites and SWAN Diorite) (1556-1504 Ma) outcrop over a large area in the EFB and were emplaced in late syn- to post-Isan Orogeny time. Several dykes and sills intrude the Kuridala and Staveley Formations. In Mount Elliott, distinct bedding concordant basalt intrusives (metamorphosed to amphibolite) were noted in the host Kuridala Fm. The same concordant dykes and/or sills were noted in Mount Cobalt, Lady Ella, and Starra.
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Page 7.3
A complex regional metamorphic history (comprising six sequences) and peaking prior to the emplacement of Williams-Naraku intrusives has been proposed. The Mount Elliott - Mount Dore district has been mapped at greenschist facies to amphibolite facies metamorphism. The basement and cover sequences were deformed and metamorphosed by the Isan Orogeny (ca 1600-1500 Ma). Up to seven deformational events in the Eastern Fold Belt have been postulated. Of these deformation events four major events impact on the Project area:
D1: Early thrusting. D2: Upright north-south large scale folding synchronous with the peak of metamorphism. D3: Folding of D2 folds. Brittle-ductile deformation with intrusion. D4: Upright north-south folding. Brittle events producing northeastnorthwest faults are integral to the formation of many of the deposits in the region.
7.2
Local Geology
Mo-Re and Cu mineralisation at Mount Dore is hosted within a tectonised sequence of metashale, metasiltstone, schist and phyllite, belonging to the Proterozoic Kuridala Formation in the Eastern Fold Belt of the Mount Isa Inlier. This stratigraphic package lies to the west of the over-thrust Mount Dore Granite, and extends north-south along strike for several kilometres and dips eastward underneath the granite (refer to Figure 7.2.1). A massive, easterly-dipping, intensely-silicified quartzite ridge on the western side of the area forms the footwall to the deposits.
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Page 7.4
Figure 7.2.1
Geology Map for the Mount Dore District
7.3
Local Stratigraphy
Mo-Re and Cu mineralisation is hosted within variable proportions of interfingered black carbonaceous and grey micaceous metasiltstone and grey metashales, with thicker beds of phyllite and schist. These metasedimentary units exhibit recrystallisation textures, however they retain relict sedimentary features such as bedding. Brief descriptions of these units, which appear to have a spatial correlation with mineralisation, are included below and can be related to the example core photographs in Figure 7.3.1.
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Page 7.5
Figure 7.3.1 7.3.1
Typical Host Rocks for the Merlin-Mount Dore Deposit
Hanging Wall Granite
The Mount Dore Granite, dominating the eastern section of the Project area, is part of the extensive Williams-Naraku Batholith. This intrusion forms the unmineralised hanging wall to the Cu and Mo mineralisation, and conceals the greater part of the Cu and Mo deposit.
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Page 7.6
7.3.2
Metasiltstone
The metasiltstone consists of recrystallised quartz grains, with a micro-mosaic texture with occasional incipient K-feldspar grains of hydrothermal origin. Another variety of the metasiltstone appears to have a slightly silky sheen due to fine muscovite (sericite) and is probably derived from clayey or muddy protolith. The metasiltstone is the predominant unit in the metamorphic sequence. 7.3.3 Black Shale
The carbonaceous metashales consist of extremely fine-grained oriented muscovite (sericite). The dark colour is attributed to the presence of abundant ultrafine graphite along laminations (generally <5% of rock). The black shale unit occurs predominantly within the hanging wall to the Merlin mineralization and the footwall of the Mount Dore Granite. However, it is also observed as a mineralization host rock, as well as in a footwall position. This unit branches into at least three discrete lithological units above the mineralization to the north, and is interpreted to be offset by vertical structures down dip. 7.3.4 Phyllite
The phyllite occurs predominantly as a single unit, which broadly follows the geometry of the bounding granite and quartzite. Mineralization can be contained within the phyllite, however it also sits in a footwall position from 7,505,600 m N moving south. This unit has been modelled with a view to using it as a geological marker unit throughout the deposit. 7.3.5 Quartzite
The footwall unit to the Kuridala Formation forms a narrow linear and north-south trending ridge west of the Project area. This massive, intensely silicified quartzite ridge, with little internal texture, dips east and is less than 40 m in true thickness. This zone may define the Mount Dore Fault and may serve as the boundary between the host metasedimentary package of the Kuridala Formation and underlying siltstone and shale units of the Staveley Formation.
7.4
Mineralisation
Mount Dore is a collection of polymetallic deposits containing copper, zinc, silver, gold, lead, cobalt and molybdenite with rhenium. High grade molybdenum is concentrated in the Merlin deposit. All significant mineralisation occurs within the Kuridala Formation. The near surface mineralisation has been extensively oxidised such that the copper rich zones outcrop as copper oxides above a thick zone of chalcocite mineralisation. The primary zone includes chalcopyrite, sphalerite, galena and molybdenite as the visible ore minerals. Mineralisation dips to the east beneath the Mount Dore granite body in a zone of about 180 m true thickness and mineralisation is considered to be open to the north where diamond drill holes have discovered primary copper sulphide ores, with potential zinc silver, gold and molybdenum.
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Page 7.7
The high grade Mo-Re mineralisation zone at Merlin comprises one or more narrow high grade veins between generally 2 and 10 m in width defined over a strike length of 1000 m and between depths of 60 and 580 m. This is surrounded by weak low grade mineralisation, predominantly in the footwall. Cu and Zn mineralisation increase at depth where Merlin overprints the lower Mount Dore North copper zone. Molybdenite also occurs as stylolitic fracture fill, disseminations and preferential infill of folded bedding planes. Molybdenite mineralisation in this form is often one to over 10 m thick and is considered continuous between holes 25 to 50 m apart. Narrow patchy clay zones (illite, montmorillonite) are noted in some of the fractures infilled by molybdenite. The geometry demonstrated for the different mineralising styles in plan in Figure 10.2.1 and 10.2.2 and in cross section in Figure 14.7.1. 7.4.1 Mo-Re Mineralisation
Fracture-controlled and breccia-matrix molybdenite mineralisation is hosted within K-feldspar-altered and albitised black shales and siltstones, which lie above and below the foliated schist and phyllite (Lazo and Pal, 2009). The footwall structure at the base of the foliated phyllite and schist appears to have the strongest Mo and is inferred to have developed good open structures due to competency contrast. This basal contact also appears to have acted as a barrier for the Mo-rich fluids, resulting in concentration of the metals favourable structures just below the contact. The mineralised matrix-breccias contain sub-rounded clasts of K-feldspar and clay-altered siltstone with very minor clay; with molybdenite partially to completely replacing the breccia matrix. Minor patchy pyrite and chalcopyrite within the matrix are commonly enveloped by molybdenite. The molybdenite breccias are between several centimetres to several metres thick but most commonly less than one metre in thickness.
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Page 7.8
Figure 7.4.1 displays examples of the molybdenite observed by Golder in sampled drill core. Error! Reference source not found.
Figure 7.4.1
Molybdenite Occurrence Examples Sighted by Golder
Infill drilling has continued to demonstrate a consistent mineralised structure. At depth additional structures are defined. The style of mineralisation can vary from a few narrow zones of massive molybdenite to a broader zone of mixed mineralisation. Molybdenite also occurs as stylolitic fracture fill, disseminations and preferential infill of folded bedding planes. Molybdenite mineralisation in this form is patchy but often over ten metres thick and the zone is considered continuous between holes 25 m to 50 m apart. Narrow patchy clay zones (illite, montmorillonite) are noted in some of the fractures infilled by molybdenite. Mo and Re are strongly correlated within the mineralisation. This is partly related to the occurrence of Re, which can largely only occur within the mineral structure of molybdenite, the primary Mo bearing mineral. Molybdenite oxidation has been recently discovered in a clay zone, however it is relatively rare as the Merlin mineralisation largely does not extend to surface. High molybdenum assays without rhenium and sulphur are used to mark the transition zone from assay results if visual logging is not available.
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7.4.2
Copper Mineralisation
The bulk of the currently known Cu mineralisation in the Project area consists of secondary Cu oxides and carbonates (chrysocolla, cuprite, chalcotrichite, pseudomalachite, minor to trace azurite and malachite) and native Cu after chalcocite. This oxide zone is underlain by a transition zone dominated by chalcocite (replacing pyrite, chalcopyrite, and sphalerite) and trace covellite (Lazo and Pal, 2009). The oxides and native Cu penetrate deeper into the transition zone within major shears and fault zones. Primary Cu mineralisation was emplaced in breccias and fractures that were best developed in the metasiltstones and black shales and are only weakly developed in the schists and phyllites. Two major episodes of Cu mineralisation have been recognised:
an earlier chalcopyrite-pyrite-sphalerite-bornite assemblage emplaced into brecciated metasiltstone; and black shale with associated K-feldspar quartz, and a later dolomite-hosted breccia with chalcopyrite-pyrite sphalerite.
Trace to minor galena, cobaltite, arsenopyrite and molybdenite are noted in the primary sulphide zone. Both types of primary Cu sulphide became the source for the secondary enrichment zones for Cu by weathering, after the unroofing of the granite cover by erosion. Very little gossan is developed over the deposits. Surface oxidation of the primary sulphides produced overlapping zones of copper rich minerals dominated by a suite of secondary copper sulphide and copper oxide minerals, as well as native (metallic) copper. The supergene process at Mount Dore involves the conversion of the primary copper and other sulphides to predominately chalcocite followed by further oxidation to produce chrysocolla, native copper, cuprite and pseudomalachite.
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Figure 7.4.2 displays examples copper minerals observed by Golder in sampled drill core. Error! Reference source not found.
Figure 7.4.2 7.4.3
Copper Mineralisation Examples Sighted by Golder
Mount Dore Zn and Polymetallic Mineralisation
Significant zinc accumulations occur in Mount Dore North, both within the copper zone and the area surrounding it. Zinc displays some evidence for depletion towards the surface, although this could also be related to primary emplacement. The occurrence of significant Cu in some Mo zones and Zn in many Cu zones (in Mount Dore North) indicate polymetallic zoning. For modelling the primary economic minerals, Mo and Cu are used to define principal domaining. Outside this, the potential for Zn and other potentially economic elements such as Pb, Au, Ag, Co and low grade Mo-Re have been used to define an outer polymetallic domain suitable to constrain these estimates without trying to over domain the resource by considering each separately. The recovery of Zn and Pb is currently uncertain and is not considered a material aspect of the current mineral resource estimate.
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MERLIN MOLYBDENUM RHENIUM PROJECT NI 43-101 REPORT - DEPOSIT TYPES
Page 8.1
8.0
DEPOSIT TYPES
Primary Cu occurrences at Mount Dore are typical of many hydrothermal Cu deposits in the Kuridala Formation south of Cloncurry. Mo-Re mineralisation is classified as late-stage hydrothermal mineralisation.
8.1
Mount Dore Deposit
The Mount Dore Deposit has polymetallic (Cu, Au, Ag, Zn, Pb, Mo and Co), secondary Cu and Mo-Re mineralisation along the Mount Dore Fault Zone. The deposit is hosted in tectonised carbonaceous metapelites, metasiltstones, schists and phyllites of the Proterozoic Kuridala Formation. The Mount Dore Granite to the east has been thrust over the Kuridala Formation, with an east-dipping contact forming the hanging wall to mineralisation. Similar to the Merlin Mo-Re deposit, the polymetallic mineralisation and the resulting secondary Cu zone have been emplaced along breccias parallel to the granite contact. The bulk of the currently known Cu mineralisation in the Project area consists of secondary Cu oxides and carbonates (chrysocolla, cuprite, chalcotrichite, pseudomalachite, minor to trace azurite and malachite) and native Cu after chalcocite. This oxide zone is underlain by a transition zone dominated by chalcocite (replacing pyrite, chalcopyrite, and sphalerite) and trace covellite. The oxides and native Cu penetrate deeper into the transition zone within major shears and fault zones. Primary Cu mineralisation was emplaced in breccias and fractures that were best developed in the metasiltstones and black metashales but only weakly developed in the schists and phyllites.
8.2
Merlin Deposit
Merlin mineralisation is hosted within carbonaceous metapelites and metasiltstones. The molybdenite mineralisation occurs as breccia infill, disseminations, stylolites and irregular fracture infill along and adjacent a major fault contact between the underlying Staveley Fm and overlying Kuridala Fm. Much of the Mo-Re mineralisation at Merlin, and the overlying Cu mineralisation at Mount Dore, remain concealed under extensive granite. The high-grade, northeast-trending and east-dipping molybdenite mineralisation occurs at the base of the carbonaceous metapelite unit (Kuridala Formation) and above the calc-silicate banded unit (Staveley Formation). The contact is complex and this is manifest as several high grade lenses in some holes. Evidence from drilling suggests an overlap of the Mo-Re and the polymetallic mineralisation phases. Fracture-controlled and breccia-matrix Mo mineralisation is hosted within K-feldspar-altered and albitised black shales and siltstones, which lie both above and below the foliated schist and phyllite.
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MERLIN MOLYBDENUM RHENIUM PROJECT NI 43-101 REPORT - DEPOSIT TYPES
Page 8.2
The footwall structure at the base of the foliated phyllite and schist appears to have the strongest Mo and is inferred to have developed good open structures due to competency contrast. This basal contact also appears to have acted as significant barrier for the Mo-rich fluids, thus resulting in concentration of the metals in the favourable structures just below the contact. The mineralised matrix-breccias contain sub-rounded clasts of K-feldspar and clay-altered siltstone with very minor clay, with molybdenite partially to completely replacing the breccia matrix. Minor patchy pyrite and chalcopyrite within the matrix are commonly enveloped by molybdenite. Molybdenite also occurs as stylolitic fracture fill, disseminations and preferential infill of folded bedding planes.
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MERLIN MOLYBDENUM RHENIUM PROJECT NI 43-101 REPORT - EXPLORATION
Page 9.1
9.0
EXPLORATION
Several factors have influenced the exploration program undertaken at Mount Dore North and Merlin, including the factor that neither resource outcrops at surface. Additionally, the Cu mineralisation at Mount Dore North is depleted near surface. As result, drilling is the primary method of mineral resource delineation and other surface sampling and exploration methods are not material to the mineral resource estimate. Geological mapping completed by Cyprus in the 1970s forms the basis of the current local geology as presented in Figure 8.1.1. This mapping was detailed and compiled at a range of scales down to 1:5000 in places. In 2011, IAL commenced more detailed mapping and structural interpretation at Mount Dore Merlin, with the assistance of two specialist contractor structural geologists (Moye, 2011). Relogging of two selected sections of drill core was used to build a more robust structural model for the resource, as evidenced by the example presented in Figure 9.1 and Figure 9.2. Key conclusions of this work indicate that:
Thrusting in both plan and section is evident as the thrusted occurrence of the hanging wall granite contact also explains the repetition and offset of the footwall quartzite both to the south and at depth within Mount Dore - Merlin. The overlying granite contact thrust cross cuts the Kuridala Formation acutely. Mount Dore South is structurally more open with synclinal folding present, complicated faulting and significant breccia zones (refer to Figure 9.1). This presents as variable dips, with some flat areas of brecciation and tensional zones and appears to have resulted in broader zones of mineralisation with higher grade Cu mineralisation in places. At Mount Dore North the structural regime becomes tighter within the Kuridala Formation (refer to Figure 9.2). It is dominated by a large syncline bounded high-strain reverse faults, with a broad zone of heterogeneous mega-breccia to the west that overprints the Staveley-Kuridala contact in the near the SQT quartzite. Whereas the Cu and Zn mineralisation is more dispersed throughout the available east dipping structures, Mo is mostly confined to a single structure and displays evidence of later emplacement and fault milling.
Small faults offset the lithology and probably the mineralisation in both NW-SE and NE-SW alignments. The current resources are defined by drill sampling. Other exploration related sampling consists of soil and rock chip sampling is not significant and has not been assessed. The type, location and adequacy of drilling and drill sampling is discussed in Section 10 and Section 11.
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MERLIN MOLYBDENUM RHENIUM PROJECT NI 43-101 REPORT - EXPLORATION
Page 9.2
Figure 9.1 Structural Interpretation for Section 27 750N (Mount Dore South)
Figure 9.2 Structural Interpretation for Section 28 550N (Mount Dore North-Merlin)
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MERLIN MOLYBDENUM RHENIUM PROJECT NI 43-101 REPORT - DRILLING
Page 10.1
10.0 10.1 Drilling Summary
DRILLING
Mineralisation at Mount Dore and Merlin is largely restricted to the Kuridala Formation and internal and bounding structures. These dip at approximately 50 to the east, and can be as steep as 70 or as shallow as 30. The Merlin high grade Mo mineralisation forms narrow planes or zones typically only a few metres in width. These zones average 3.9 m in true width and vary between 1 m and 20 m (note: a minimum 2 m width is applied for resource domaining). The high grade Mo zone is surrounded by low grade Mo mineralisation, approximately 50 m in width. For the Cu mineralisation, the higher grades form planar zones around 4 m to 10 m in width. These are included within the lower grade envelope used for mineral resource domaining and estimation. The domains are between 5 m and 30 m in width at Mount Dore North and are more amorphous in shape at Mount Dore South, where they are between 30 m and 150 m in true width. Section 14 provides cross sections examples of the mineralisation widths modelled. Figure 10.2.1 provides an overview of the extent of the Merlin Mo-Re and Mount Dore Cu mineralisation. Most drill holes are vertical or inclined between 60 and 80 to the west. This results in oblique intersections in most cases with apparent intersection widths much larger than the true width of the mineralisation. Mineralisation typically dips at approximately 50 to the east and has been intersected acutely by the easterly inclined drilling creating longer intersections than true width. This scenario increases with depth as the drilling tends to steepen as it steps outwards. All resource estimation was undertaken using 3D modelling methods that account for the drill intercepts in true space and the different intersection lengths achieved by the drill orientation. The drill orientation approach undertaken by IAL is the most practical given the terrain and target depth. Since Merlin underlies Mount Dore with drilling often intersecting both mineralisation zones, the drilling data was assessed together. For statistical and resource assessments the spatial split of the resources allows the area is subdivided into three distinct mineralised zones for assessment and reporting, including:
Mount Dore South (south of 28 100N), which represents a deeply weathered Cu dominated zone historically targeted for exploration for near surface Cu oxide material suitable for leach extraction. Mount Dore North (north of 28 100N) is less deeply weathered but overlain by a depleted zone. This means the Cu does not outcrop at surface and has only been defined by more recent extension drilling. Polymetallic mineralisation with notable Zn mineralisation occurs in the primary zone.
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Page 10.2
Merlin and lower Mount Dore North (lower sequence north of 28 100N). This lower Cu and polymetallic (mainly Zn) mineralisation contains some lower grade and some very high grade Mo-Re veins referred to as Merlin. Discovery and drill definition of the Merlin MoRe mineralisation resulted in the delineation of both the lower and upper Cu zones in 2009 and 2010.
Note Mount Dore south and north upper are subject to a separate open pit development assessment and are not reviewed in this report.
10.2
Drilling Locations and Additions
Historic drilling was focused predominantly at the Mount Dore South area and comprised of mostly diamond core, with some near surface percussion and open hole drilling. Initial IAL drilling at Mount Dore South included some near surface RC drilling used to further test the up dip Cu extent. Following the discovery in 2008 of the high grade Mo-Re resource at Merlin, IAL concentrated on diamond core drilling for mineralisation. A systematic resource definition diamond drilling program in Mount Dore North was undertaken until the underlying Merlin deposit was delineated to a nominal 50 m drill spacing. During this period RC drilling was only used to precollar deeper diamond drilling, in known waste sequences. Consequently, the Mount Dore North Cu and Merlin Mo-Re deposits are well defined by regular modern diamond drilling completed by IAL. This drilling, and the historic and early IAL drilling for Mount Dore South, was the basis of the previous NI 43-101 estimate (Golder, 2010). A map of the drill hole collar locations is shown on the geology plan in Figure 10.2.1. This figure also indicates the areas used for reference and the extent of the mineralisation. In late 2010 and in 2011, IAL extended its drilling program, with a series of additional drilling programs for geotechnical, infill and dewatering purposes. This additional drilling forms the basis of the update for the resource estimate. The additional drilling included:
One drill hole omitted from the resource estimate deadline in mid 2010 (MDQ0368). Seven unassayed water bores completed around August 2010. Ten assayed geotechnical holes completed in October 2010, which intersect deep Merlin areas (MDQ0384, MDQ0403 to MDQ0405, MDQ0407 to MDQ0409 and MDQ0412 to MDQ0414). Eight infill drill holes at Mount Dore North completed around June 2011, targeting a small localised Mo anomaly in the upper Mount Dore North mineralisation (MDQ0369 to MDQ0372 and MDQ0374 to MDQ0377). Eight underground drainage holes completed around August 2011, four of which are sampled. Assays for this study are not yet returned. Four others were cut short due to water flow and will be extended later.
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Page 10.3
Fifty eight surface drill holes targeting Cu oxide mineralisation at Mont Dore North and Mount Dore South between August and October 2011. These were designed to infill selected zones within the defined pit or potential extensions. Nine holes (MDQ0415 to MDQ042, MDQ0472, MDQ0475 and MDQ0476) were targeted at pit design walls for geotechnical purposes several of which do not as yet have assay results as they are awaiting logging and geotechnical sample return. Three holes are twinned with previous RC drilling (MDQ0454 with MDQ0185, MDQ0455 with MDRC13, and MDQ0456 with MDQ0184). Ten drill holes were extended at Mount Dore North to intersect the upper reaches of Merlin of which eight have assays returned. In total 44 assayed drill holes are included in this study with a further 6 sampled, however the assays were not reported in time. The remaining holes should be assayed in due course when geotechnical work is completed.
Figure 10.2.1
Plan of Resource Drilling with Respect to Mount Dore Cu (left) and Merlin Molybdenum Rhenium Mineralisation (right)
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Page 10.4
The Merlin mineralisation was intersected in ten new drill holes completed in 2010. A further 8 low grade areas of Merlin were intersected from the 2011 Mount Dore North pit drilling extensions (plus an additional two intersections still awaiting assay). All intersections compared favourably with the 2010 interpretations, intersecting similar mineralisation at similar locations. Consequently, the existing interpretation required only minor amendment to account for the new drilling results. Extensions to the Merlin mineralisation are indicated in Figure 10.2.2, and include:
Extension of the mineralisation to depth at 29,000 m N (MDQ0368). Extension of the mineralisation to the south at 28,200 m N (MDQ0413), which reduces the gap between Merlin and Little Wizard.
The additional drilling at Mount Dore North, targeting the upper Mo zone, resulted in only minor mineralisation of up to 0.12% Mo in one drill hole. These results will further restrict the small target zone and indicates that the upper Mo mineralisation is less continuous. The original decision not to attempt to define any upper Mo zone has been continued with the Mo mineralisation generally contained within the existing Cu domains for estimation.
Pit designs provided for reference here are from the Mount Dore Cu PEA for reference (AMC, 2010a). At Mount Dore North the pit design sits well above the Merlin resource.
Figure 10.2.2
Merlin and Mount Dore Wireframe Models with New Resource Drilling Since mid-2010
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Page 10.5
10.3
Drilling Methods
Drilling by others prior to IAL ownership included a range of drilling types and sample procedures, which predominate in the Mount Dore South Cu area. Mount Dore North, and in particular Merlin, are characterised predominantly by IAL diamond drilling. Table 10.3.1 summarises the drilling methods, which include:
DDH-U underground diamond drilling; DDH surface diamond drilling; WB water bore using RC or percussion methods; RAB rotary air blast (near surface percussion); AT air track (near surface percussion); and RC reverse circulation drilling used for surface drilling as well as precollars for deeper diamond drilling. Table 10.3.1 Summary of Drilling Companies, Date and Method
Number of Drill Holes DDH-U DDH 8 15 8 1 8 2 2 4 5 3 17 19 67 115 60 10 10 67 401 16 70 86 7 38 1 2 7 70 45 2 WB RAB/AT RC DDH 1,147 4,729 3,486 351 2,472 652 611 306 1,266 725 3,561 6,246 16,597 32,289 15,644 14,187 104, 269 3,120 1,764 27,894 1,693 1 ,196 11,159 7,815 3,196 955 1,764 4,528 472 Total Drilling Length (m) WB RAB/AT RC
Year 1976 1977 1978 1979 1989 1992 1993 1994 1999 2000 2004 2007 2008 2009 2010 2011 Total
Company Previous Company Previous Company Previous Company Previous Company Previous Company Previous Company Previous Company Previous Company Previous Company Previous Company IAL IAL IAL IAL IAL IAL
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Page 10.6
10.4
Collar Surveys
The majority of the drill hole collars in the Mount Dore and Merlin areas have been accurately positioned using the prevailing industry standards and is summarised in Table 10.4.1. Here Surveyed method relates to only surveys known to be completed by IVL. Table 10.4.1
Company IAL IAL IAL pre-IAL pre-IAL pre-IAL Drill Type DDH & RC DDH & WB DDH-U DDH DDH* RC & percussion
^
Collar Survey Method

Holes (number) 380 7 10 5 51 123 Holes (%) 66% 1% 2% 1% 9% 21%
Survey Method Surveyed (differential GPS or theodolite) GPS coordinates Planned (recent and yet to be surveyed) Surveyed GPS coordinates GPS coordinates
* In most case the historic data tagged as GPS was surveyed by theodolite ^ Underground drill holes are not assayed and collars not yet surveyed
10.5
Down Hole Surveys
Recent down hole surveying techniques at Mount Dore - Merlin have been performed by an electronic Reflex instrument (EZ-SHOT) survey tool, which operates in both single and multi-shot modes. Generally these survey shots are taken initially at 30 m intervals in diamond core holes, but at much greater intervals (or sometimes even not at all) in the RC pre-collars. The single shot surveys are written down at the drill site and manually entered into the acQuire database. This device relies on magnetism to determine the drill hole azimuth, so it will be affected by magnetic minerals. Since 2009 the same survey tool has been used regularly to resurvey the drill hole in multi-shot mode at 6 m intervals down-hole. This data is uploaded into the drilling database. Prior to IAL ownership, the most common form of down hole surveying was conducted by Eastman single shot camera. As there appears to be very little magnetite, pyrrhotite or other magnetic minerals at Merlin or the oxide zones at Mount Dore, the azimuths should be reliable. A small number of holes drilled in 1999 in the southern part of the deposit were surveyed with a Maxibor instrument, with good correlation to the magnetic single shot surveys during drilling. Validation of the down hole surveys was undertaken by IAL based on several criteria, including survey intervals greater than 50 m and survey deviations in dip or azimuth >3. The down hole surveys were reviewed and historical records checked. Two programs of gyroscopic down hole survey were undertaken to both resurvey earlier suspect IAL drill hole surveys identified in the internal review and also to locate some of the deeper Merlin drilling more accurately. These were surveyed in 2009 using hired GyroSmart (Reflex) and Multishot Ez Track camera (Reflex) and in 2010 a Humphries SR Gyro operated by Surtron Technologies. A total of 24 drill holes were check surveyed in late 2009 and 57 in mid 2010.
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Page 10.7
The implementation of the acQuire database allows the replacement of earlier down hole surveys with more accurate methods through use of a priority system. The implementation of the survey review by IAL and resurveying of many drill holes has corrected or removed many of the down hole surveys that were previously suspect or inadequate. Table 10.5.1 summarises the down-hole survey method for the drilling within the Mount Dore Merlin mineral resource area. There remain some deep drill holes which rely heavily on down holes surveys that may be too widely spaced to accurately locate the drill hole location at depth. Down hole surveying of deep drilling, which is down to 836 m at Merlin, will always present issues with locating drill holes for accurate design purposes. IAL have minimised these issues by using accurate gyroscopic survey methods wherever possible. Typically, the location of narrow veins such as Merlin is redefined for production by underground drilling and mine development. Down hole survey data and methods are considered appropriate for resource evaluation. Table 10.5.1
Company IAL 387 139 381 1,528 0 7,480 36 877 1 PreIAL 179 5 0 0 393 0 2 0 367 Down Hole Survey Comments Collar Sighting using a compass (note this is typically used at the collar to start the drill hole trace inclination) Eastman single shot camera Gyroscopic nonmagnetic instrument (from 2011) Gyroscopic nonmagnetic instrument by Surtron Maxibor nonmagnetic instrument (1999) Multishot Reflex Ez-Shot (from May 2009) Planned orientation Single Shot Reflex (to May 2009) Unknown, probably mostly Eastman surveys for historic holes
Down Hole Survey Method Summary
Survey Method CollSight Eastman GyroNS GyroSR Maxibor MSFlexi Plotting SSFlexi Unknown
10.6
Recoveries and Rock Quality
In 2009, Qualitative Group (QG) noted that much of the core from the southern section of Mount Dore is very broken, with very low Rock Quality Designation (RQD), but the quality of the core appears much better in the Merlin Zone. The rock at Merlin and Mount Dore North is generally less weathered and more competent, with less shearing and faulting than further south, and core recovery is significantly greater as a consequence. IAL record RQD and other geotechnical information as part of their routine core logging. Orientated core is available for some of the drilling that is not vertical and where reliable orientations could be obtained. The core is sufficiently broken that only some core is orientated. Core recovery within near-surface oxide zones can be quite poor, but below the oxide zone, overall core recovery was excellent, and only a few broken zones were encountered that could impact the accuracy and reliability of results. The majority of the drilling by IAL at Mount Dore North - Merlin is by industry standard practises applied diligently by IAL.
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Diamond drilling by IAL indicates average recovery of 95%. Core inspected is generally good and of high quality with few broken or lost core zones. Recovery of pre-IAL drilling is more variable with records being too incomplete to adequately summarize. Some early drilling at Mount Dore in weathered zones may have poor recovery however the core inspected is generally acceptable.
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MERLIN MOLYBDENUM RHENIUM PROJECT NI 43-101 REPORT - SAMPLE PREPARATION, ANALYSIS AND SECURITY
Page 11.1
11.0
SAMPLE PREPARATION, ANALYSIS AND SECURITY
Sample quality and procedures in this section concentrate on the recent IAL work, which dominates the drill hole database used for mineral resource estimation. Historic drilling procedures and quality sampling is poorly documented.
11.1
11.1.1
Ivanhoe Methods
Sampling Process
Most IAL RC drilling was drilled as precollars, often commencing in the overlying granite that was not sampled if there was no visible mineralisation. RC samples were collected via a cyclone output for one metre intervals, which was split at the cyclone to obtain an eighth (10-15%) split subsample. Some early samples used spear splitting when no splitter was available. IAL diamond core samples were generally HQ (i.e. 63.5 mm drill core) in diameter and split along the long axis with the right hand half (looking down hole) of the core sampled on regular 2 m intervals. Since late 2010 some sub-sampling of diamond drilling was allowed at geological contacts with particular reference to the high grade Merlin mineralisation intervals. Logging and quality procedures have improved during the course of the Project and include core marker checks, centre line marking, high grade zone flagging, roller core tables, separation of core cutting areas, and semi-automated core cutting jigs. 11.1.2 Sampling Preparation
Samples were collected by IAL and dispatched to the Australian Laboratory Services Pty Ltd (ALS) assay laboratory in Mount Isa. The sample preparation process reviewed by Golder in November 2011 included:
Sorting and checking. Weighing. Drying at 100C as necessary. Coarse-crushing using a 9 mm jaw setting, for approximately 70% passing 6 mm. Splitting by 1 cm riffle splitter for a split to obtain 3 to 4 kg. Fine Boyd crushing to 90% passing 2 mm. Splitting to obtain a 1 kg. Pulverizing with LM2 with testing of 1 in 40 samples screened to ensure 90% passing 75 m.
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Page 11.2
Subsampling by scoops for four subsamples, weighing either 200 g or 50 g each for different assaying purposes. Cleaning by compressed air or by barren flush if the samples were marked as high grade. Analysis Process
11.1.3
All IAL samples were analysed by ALS for Mo, Cu, Re, and Au. Significant geochemical results were reanalysed with ore grade analysis methods. Primary analytical methods comprise:
Inductively Coupled Plasma Optical Emission Spectrometry (ICP-OES). Inductively Coupled Plasma Mass Spectrometry (ICP-MS). Atomic Absorption Spectrometry (AAS).
The majority of the assays for IAL samples were assayed by ALS using the following procedures for Mo, Cu, and Re using an ICP-OES / ICP-MS finish. Methods used for the assays include:
ME-ICP41 / ME-MS42 multi-element geochemical analyses, using two-acid digestion. OG46 Cu and Mo assays, using two-acid digestion. ME-ICP61 - multi-element geochemical analyses, using four-acid digestion. OG62 - Mo, Cu, Re assays, using four-acid digestion. Similar diluted methods for concentrate type grades where samples were very high grade.
Gold was determined by a 30 g fire assay fusion, with the sample cupelled to obtain a prill, digested with Aqua Regia, and finished by AAS with a detection limit of 0.01 g/t Au. Assaying for Mo, Cu, and Re was initially determined by a geochemical assay method, using a two-acid digestion. This was refined to improve assay precision, by changing the procedure to a four-acid digestion method for all ore grade samples. As part of the switch in procedures by IAL early in the Project, all significant initial two acid digest assays were reanalysed using a four acid digest method. Prior to sampling, Sample Cut Sheets are created by the geologist logging the drill core or by a quality assurance / quality control (QAQC) technician to guide samplers in compiling dispatches for shipping. These sheets are then used to create the Sample Shipment Memos (SSMs), which provide a set of instructions for the laboratory. Each Sample Dispatch sheet comprises details for 70 routine and QAQC samples and corresponds to one bulk bag for shipping purposes. In addition to the samples listed above, pulp duplicate samples were prepared by the laboratory and returned to the Selwyn core yard for storage and for selection for independent check sampling.
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Additional quality control measures implemented during the drilling program include:
Reduced usage of cloth sample bags by using plastic bags to eliminate dust contamination issues. Flushing of all sample preparation equipment after mineralized samples. Flagging of high-grade samples. Bulk Densities
11.1.4
The available bulk density data provides a series of samples that were measured using different density determination methods. Until mid 2009, IAL undertook bulk density determinations (BD) at regular intervals of 5 m to 10 m. A 10 cm to 20 cm length of core was used, with the selected BD sample cut in half to allow measurement while the rest of the core was sampled and prepared for analysis. The BD determination method used a wax dip approach where the samples are weighed dry and during immersion in water to determine their bulk density relative to that of water. A correction is made for the buoyancy and mass of the paraffin wax which has varied from 0.8 t/m3 to 1 t/m3 over time as different waxes have been used. The method is a high quality approach that is well accepted and used in the industry, but was discontinued due to time constraints and safety concerns. In 2008, QG reviewed the process used at the time and considered the method, scale calibration, reference measurements (a piece of basalt in every 10 samples), and data handling were all suitable. A trial program measuring bulk density using different methods was undertaken in late 2009 by IAL. The purpose of the trial was to derive a method more suitable for measuring drill core at Merlin, which could contain both massive molybdenite and clayey material (Hillier, 2009). This program used several techniques and confirmed the previous waxed immersion method was suitable. It also indicated other methods performed comparably, including water immersion, direct volume measurement and vacuum sealing. This trial program indicated that density derived from stoichiometric calculations were generally too high. The trial program included multiple subsamples from Merlin and Little Wizard Mo intercepts totalling 58 specimens. These correspond to 30 separate sample intervals. From mid 2010, a program of density measurements was resumed using a standard water immersion method on whole core specimens of approximately 20 cm to 30 cm in length. This method was also applied to some older drill core for comparison. The database also indicates a water immersion method was used on some core by IAL in 2008. Bulk density data is also available for pre IAL drilling between 1997 and 2004. This data is not documented and it is understood to be derived from a simple water immersion method. In 1,687 cases there are multiple density measurements for specimens within the same sample interval. Comparison of these density pairs provides a measure of variability presented in Table 11.1.1 as the half absolute relative difference (HARD).
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The relatively low HARD values for all the comparisons indicate reasonable precision for each method. There are insufficient comparisons between the four main methods or periods of data collection to draw any statistically significant conclusions. A plot of all the data comparison in Figure 11.1.1 generally indicates a tight cluster of data of approximately 2.5 t/m3. There is no evidence that any of these data sets differ significantly. Table 11.1.1 Comparison of Bulk Density Pairs from the Same Sample Interval
Pairs 318 8 55 5 702 599 Mean 1 2.70 2.62 2.53 2.48 2.52 2.63 Mean 2 2.56 2.62 2.41 2.43 2.38 2.64 Difference NA 0.01 NA 0.05 NA NA HARD 1.46 1.04 1.38 1.37 1.46 0.73
Method Comparison 2008-2009 wax duplicates 2008-2009 wax vs. 2010 immersion 2008 immersion duplicates 2008 immersion vs. 2010 immersion historic duplicates 2010 immersion duplicates
Figure 11.1.1 11.1.5
Scatter Plot of Pairs of Dry Bulk Density Measurements
Magnetic Susceptibility
Magnetic susceptibility is measured for each 1 m length of drill core. This has previously been used to identify the red rock unit in the lower sequence of the Kuridala Formation that contains the mineral magnetite. Data entry errors were noted in data collected between March 2008 and December 2009. These errors were largely corrected but some doubt in the integrity of the data still exists. Magnetic susceptibility values can be grouped into readings that are high and low. In Mount Dore NorthMerlin, high magnetic susceptibility marks the contact between the hanging wall carbonaceous meta-sediment and underlying calc-silicate, which is often just above the Merlin zone.
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11.1.6
Logging
Geological logging comprises recording the core size, sampling intervals, the lithology zone (lith zone), the dominant lithology (lith1 and lith2), major silicate minerals, the dominant alteration and alteration minerals, the opaque minerals in order of abundance, brecciation and the nature of clasts and matrix, the oxidation horizon and the major geotechnical properties including: rock strength along with the joint breaks and fracture logging. Measurement of vein character and structure is dependent on the availability of the down hole drill / orientation lines. Drill hole logging is entered directly into pocket acQuire using regular laptops. Validation of the logging codes is completed after data entry. The data is then downloaded onto the main server every day, reducing the risk of data loss and compromise of data integrity. Logging has been setup using a defined lithological sequence. Recent petrological work indicates greater influence of magmatic units, magmatic fluids and alteration being responsible for some if not all of the variations previously noted within the Kuridala formation. Relogging and reworking of the logging has commenced and has only been completed for 100 m spaced sections. 11.1.7 Database management
IAL has been using acQuire to manage and store the companys geological database since 2009. Assay data is imported electronically from the laboratory (ALS). Assay priorities are assigned by assay method if different methods were used for the same interval. Best assay is assigned the highest priority. Repeats are not averaged to produce the best assay, which is considered good practice. The original two-acid digest used by ALS (OG46) was not performing properly, leading to a low-bias for the Mo and Re assays by up to 20%. This method was replaced with a four-acid digest method (OG62) where Mo values are above 500 ppm and most significant early biased assays replaced. These different methods do not affect the Cu assays. Further information is provided by Sketchley (2009). Down hole surveys have priorities based on method used, however at Mount Dore - Merlin the main method used so far is electronic single shot. The results of the down hole surveys are written onto survey forms by the driller, and entered manually into the database (seven degrees is added to the magnetic azimuth to align the reading with the local grid). In 2010, QG noted there is potential for transcription errors, however the data is also available electronically, meaning that further validation is possible. Collar surveys also have priorities commencing with drill hole set-outs by GPS. These are then superseded when picked up by a contract survey company using differential GPS. Drill hole logs are generally entered directly into acQuire data logger software at the core shed, allowing the entry forms to perform basic validation during logging. QAQC data routinely loaded into the acQuire database with site personnel dedicated to managing and monitoring the QAQC data.
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11.1.8
Adequacy of Sampling
There were no diamond drilling or core recovery factors that might have resulted in sampling bias for samples from competent rocks below the oxide zone. Additionally, the sampling procedures set up and followed for diamond drilling provided samples which adequately represent the whole original drill core. It is possible that poor recoveries for drilling in incompetent rocks, could affect the quality of assays. Although modern RC drilling systems typically use face sampling bits to eliminate contamination by channelling cuttings back up the centre of the drill stem, recoveries are variable and low enough that they could affect the final assay results. This is supported by analytical results from twinning of RC and diamond drill holes that indicate a significant low bias for the RC drilling samples, discussed in more detail in Section Figure 11.6.2. As there was a tendency to drill more vertically to steeply-inclined drill holes, recovered lengths of some mineralized intersections are greater than the true thicknesses. There could be a grade bias introduced as a result of drilling non-orthogonal intersections.
11.2
IAL Quality Control Procedures and Quality Control Procedures
IAL has dedicated database management and QAQC staff who:
Ensure all relevant data is entered and collated into the commercial integrated database system, acQuire. Monitor QAQC data for assaying and survey information. Undertake equipment calibration.
IVN, IALs majority shareholder, regularly reviews IALs operations for data handling and geological procedures, assay and sample preparation laboratory and QAQC data. These reviews are completed at four month intervals. The reviews provide a high level of technical assistance to the site geologists and also function as a regular review of processes and procedures. The latest review includes Sketchley (2011). The routine sampling process includes extensive QAQC work amounting to 22% of all assay results. This proportion is well above typical industry practice, demonstrates a commitment to quality and includes:
10 batches of check samples. Regular QAQC sampling completed for each dispatch of 70 samples including: 59 routine samples (as two batches of 29 and 30 samples). 4 standard reference materials (2 per batch randomly inserted at site). 2 field blanks (one per batch randomly inserted at site).
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2 pulp duplicates (one per batch inserted at laboratory in a fixed position). 2 coarsely-crushed duplicates (one per batch inserted at laboratory in fixed position). 1 core duplicate (randomly inserted at site).
Some RC diamond twin drill hole comparisons.
Other than half core sampling, all sample preparation and assaying is undertaken by the independent laboratory ALS, offsite, at Mount Isa, Townsville and Brisbane. Referee check assay samples were sent to Activation Laboratories Ltd. (Actlabs) in Perth, Western Australia, and Ancaster, Ontario, Canada; Genalysis in Perth, Western Australia, and Townsville, Queensland; and Becquerel in Mississauga, Ontario, Canada. Additional check assaying, part of a metallurgical testing program, was conducted by Burnie Research Laboratory in Burnie, Tasmania. The sample preparation, analytical, and security procedures were adequate to ensure high quality drill hole assay data was acceptable for geological modelling and reliable mineral resource estimation. There is an unbroken chain of custody from the site to the analytical laboratory, sufficient reference materials used to control analytical processes, appropriate analytical procedures accounting for rock matrices, and provision of acceptable levels of precision, and sufficient check assays have been done to demonstrate that the data are unbiased. Data was imported into the database via an automated process that has essentially eliminated transcription error issues. Record duplication issues do arise when querying the database to obtain data sets for statistical analyses and plotting. These issues are managed by manual checking of exports in spreadsheets through comparison of data and conditional statements. Since the database has some built in quality control plotting routines, a mixture of manual and limited automated routines was used for compiling and plotting comparisons. The manual portion of the work is required to maintain an ongoing working data verification process.
11.3
Regular QAQC Sample Monitoring
Quality control procedures used by IAL comprise:
Inserting Standard Reference Material (SRM), Field Blank (FB), and Duplicates (DP) materials into sample dispatches. Use of internal reference materials and pulp replicates by the analytical laboratory.
SRMs are used to measure accuracy; FBs, to check for contamination and mix-ups and DPs used to monitor precision at several stages of sample preparation.
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Digital assay results were imported into an acQuire database, and the laboratorys values for SRMs and FBs were compared to the established SRM pass-fail criteria. Sample batches that passed were given a Priority 1 status, whereas batches that failed were given a Priority 3 status, and the laboratory was asked to re-assay until they passed at which point they were re-assigned a Priority 1 status. Monitoring charts that recorded the performance of individual SRMs with respect to certified or accepted tolerance limits were maintained to monitor performance. 11.3.1 Certified Reference Materials (Standards)
All CRM used by IAL for monitoring Cu, Mo and Re performance had round robin programs completed that provided statistical tolerance limits for passing and failing data. Monitoring charts for each CRM were previously presented by Golder in 2010. Overall performance has been good with only a low number of failures, including:
Cu had an initial slightly-high bias that diminished with time. Mo was initially biased slightly low with failures due to digestion issues rectified with a procedural change. Re initially had poor precision, however it improved with time.
Only a few failures remain from batches deemed to be barren. CRM used by IAL for exploration work on the Project are either commercial standards purchased from Geostats Pty Ltd (GSTAT), Ore Research and Exploration Pty Ltd (OREAS), and CDN Resource Laboratories Ltd (CDN), or matrix-matched standards developed by Ore Research and Exploration Pty Ltd, and CDN Resource Laboratories Ltd. A total of 35 different SRM and blank types were used for over 5,100 assay determinations, comprising several elements (refer to Table 11.3.1). The SRM comprise series for oxide and sulphide material. A summary of all SRM results is provided as half relative differences in Figure 11.3.1, which allows all the SRM to be plotted on a time order basis. In these plots the relative variance is displayed as the relative percentage half difference (RPHD), i.e. the half difference relative to the mean of the paired data. For SRM sample pairs the RPHD represents half any deviation from the expected value. 11.3.2 Field Blanks
Monitoring charts for FBs are presented in Figure 11.3.2 and indicate a low incidence of contamination and mix-ups. Some carry over or contamination was noted for Mo and Re, following extremely high grade samples. This issue was caused by rock fragments caught in the coarse jaw crusher and the issue rectified at an early stage. Poor results for Zn indicate the blank material drawn from granite probably contains some Zn values.
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Table 11.3.1
Mount Dore - Merlin Project - Standard Reference Materials to 28/6/ 2010

Usage Source End Yr Name ? ? ? ? ? CDN-CGS-10 CDN-CGS-15 CDN-CM-5 CDN-CGS-11 CI-1 MLB-1 MLE-1 MLH-1 MLL-1 MLM-1 MEH-3 MEL-3 MEG-3 BM7 GMO-03 GBM907-7 GBM398-4 GBM903-4 GBM307-15 GMO-01 GBM303-5 MD Granite 22P 54Pa 50Pb 52Pb 50c 52C
53Pb
CRM Name A C D E F MEH-1 MEL-1 MEL-4 MEM-1 MEO-1 MLB-1 MLE-1 MLH-1 MLL-1 MLM-1 MEH-3 MEL-3 MEM-3 MDH-1 MDH-2 MDH-3 MDL-1 MDL-3 MDM-1 MDM-2 MDM-3 FB Blank MEH-2 MEM-2 MXL-1 MXL-2 MXL-3
MXM-1
Notes:
CRM Value Company Au (g/t) 0.12 0.1 1.4 0.45 0.06 CDN CDN CDN CDN CDN CDN CDN CDN CDN CDN CDN CDN CDN) Geostats Geostats Geostats Geostats Geostats Geostats Geostats Geostats IAL ORE ORE ORE ORE ORE ORE
ORE
Num Start . Yr 197 201 178 161 130 131 525 281 298 57 37 5 17 49 19 31 211 307 248 140 4 821 26 721 271 1 586 981 167 454 306
187
Cu (%) 1.65 2.5 2.45 0.65 0.06 1.55 0.451 0.319 0.683 0.275 0.156 0.098 0.137 0.15 0.145 2.01 0.444 0.926
Zn (%)
Mo (ppm)
Re (ppm)
2004 2007 2004 2007 2006 2007 2006 2007 2004 2007 2008 2009 2008 2011 2010 2011 2008 2011 2008 2011 2009 2011 2009 2011 2010 2011 2009 2011 2010 2011 2008 2009 2008 2010 2008 2011 2008 2011 2009 2011 2011 2011 2008 2011 2011 2011 2008 2011 2009 2011 2011 2011 2004 2008 2004 2011 2009 2010 2010 2011 2011 2011
2009 2011
1.73 0.57 0.294 0.73 0.175 0.016 0.038 0.047 0.03 0.03 1.65 0.248 0.548 0.445 0 0.166 0 0.459 0 -0.002 -0.002 2.9 0.841 0.307 0.836 0.346
0.623
50
0.435 0.004 0.005 0.137 0.336
130 85,800 16,100 810 8,860
0.19 122.5 23.1 1.48 13.98
1.3973 0.0861 5,329 1.4263 0.4022 0 0 0 0 979 0.6343 0.0003 -0.002 -0.002 1.55 0.744 0.3338 0.742 0.344
0.546
0 0
0.3891 0.5117 1.0921 0.1718 0 0
4670 2006 2011 1017 2004 2011
591 267
OREAS MM = Mount Elliott matrix-matched series CDN MM = Merlin matrix-matched series ALS = Internal laboratory SRM
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Figure 11.3.1
Project Summary CRM for Mo and Re
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Final Final Data Data : : Standards Standards by by Sequence Sequence : : FB FB : : Mo_MEOG62_pct Mo_MEOG62_pct : : 01-Jul-2006 01-Jul-2006 to to 16-Sep-2011 16-Sep-2011
0.18 0.16 0.14 0.12 0.10 0.08 0.06 0.04
Mo
27-Feb-2009 9-Mar-2009 28-Apr-2009 2-Jun-2009 21-Aug-2009 30-Oct-2009 10-Feb-2010 24-May-2010
Assay Value
0.02 0.00 -0.02 -0.04 -0.06 -0.08 -0.10 -0.12 -0.14 -0.16 23-Feb-2009
RETURNDATE
Expected Value
Warning
Error
Threshold
Error
Warning
Normal
Final Final Data Data : : Standards Standards by by Sequence Sequence : : FB FB : : Re_REOG62_ppm Re_REOG62_ppm : : 01-Jul-2006 01-Jul-2006 to to 16-Sep-2011 16-Sep-2011
0.21 0.20 0.19 0.18 0.17 0.16 0.15 0.14 0.13 0.12 0.11 0.10 0.09 0.08 0.07 0.06 0.05 0.04 0.03 0.02 0.01 0.00 -0.01 -0.02 23-Feb-2009
Re
27-Feb-2009 11-Mar-2009 13-May-2009 22-Jun-2009 11-Sep-2009 4-Dec-2009 24-Mar-2010 23-Jun-2010
Assay Value
RETURNDATE
Expected Value
Warning
Error
Threshold
Error
Warning
Normal
Final Final Data Data : : Standards Standards by by Sequence Sequence : : FB FB : : Cu_MEOG62_pct Cu_MEOG62_pct : : 01-Jul-2006 01-Jul-2006 to to 16-Sep-2011 16-Sep-2011
0.13 0.12 0.11 0.10 0.09 0.08
Cu
Assay Value
0.07 0.06 0.05 0.04 0.03 0.02 0.01 0.00 -0.01 23-Feb-2009
27-Feb-2009
11-Mar-2009
19-May-2009
25-Jun-2009
6-Oct-2009
5-Jan-2010
15-Apr-2010
9-Feb-2011
RETURNDATE
Expected Value
Warning
Error
Threshold
Error
Warning
Normal
Final Final Data Data : : Standards Standards by by Sequence Sequence : : FB FB : : Zn_MEICP41s_ppm Zn_MEICP41s_ppm : : 01-Jul-2006 01-Jul-2006 to to 16-Sep-2011 16-Sep-2011
280.00 260.00 240.00 220.00 200.00 180.00
Zn
Assay Value
160.00 140.00 120.00 100.00 80.00 60.00 40.00 20.00 0.00 -20.00 29-Nov-2007 19-Mar-2008 16-May-2008 8-Jul-2008 16-Oct-2008 17-Nov-2008 6-Feb-2009 2-Mar-2009 3-Apr-2009 28-May-2009 12-Aug-2009 30-Oct-2009 8-Feb-2010 12-May-2010
RETURNDATE
Expected Value
Warning
Error
Threshold
Error
Warning
Normal
Final Final Data Data : : Standards Standards by by Sequence Sequence : : FB FB : : Au_AA25_ppm Au_AA25_ppm : : 01-Jul-2006 01-Jul-2006 to to 16-Sep-2011 16-Sep-2011
0.22 0.20 0.18 0.16 0.14 0.12 0.10
Au
Assay Value
0.08 0.06 0.04 0.02 0.00 -0.02 -0.04 -0.06 -0.08 -0.10 29-Nov-2007
19-Mar-2008
16-May-2008
8-Jul-2008
16-Oct-2008
17-Nov-2008
23-Jan-2009
17-Feb-2009
27-Feb-2009
9-Mar-2009
12-May-2009
16-Jun-2009
18-Sep-2009
15-Dec-2009
30-Mar-2010
22-Jul-2010
RETURNDATE
Expected Value
Warning
Error
Threshold
Error
Warning
Normal
Source: Ivanhoe Acquire Database Plot
Date: Dec 2011
Figure 11.3.2
Project Summary Field Blanks
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11.4
Duplicates
Four levels of DPs are available from IAL sampling protocols:
Field duplicates were obtained from drill core or RC cuttings. Crusher split duplicates from crushed samples. Pulp duplicates from pulverized samples. Laboratory analytical repeats.
Table 11.4.1 summarises the available duplicate data. All but the field duplicates and half core duplicates were collected by ALS as part of the regular QAQC protocol. The variance achieved at each level can be compared to assess the level of precision achieved at each step of the sampling process. Table 11.4.2 compares the average absolute RPDH after ignoring low grade values close to detection limit. This table only presents the ore grade analyses. Other geochemistry and earlier analysis methods display similar trends and levels of precision. Figure 11.4.1 displays the combined field and core duplicates as scatter plots. Table 11.4.1 Number of Duplicate Samples by Analytical Methods
Element/ Method/ Units Half Core Field Duplicate Duplicate Crusher Split Pulp Duplicate Laboratory Repeat Blanks Standards Au AA25 ppm 307 433 42 1158 1168 1300 4408 1616 2284 Cu MEOG62 % 0 386 41 762 766 1500 3455 870 1522 Mo MEOG62 % 2 402 42 794 798 1586 3624 929 1582 Re REOG62 ppm 2 394 41 780 787 1539 3543 901 1561
Duplicate Code COREDUP FD DUP CRUSH PULP LABREP Total Duplicates BLK STD
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Table 11.4.2
Precision of Significant Duplicates (as RPHD)

Element/ Method/ Units Au AA25 ppm 19 23 32 15 11 9 10 10 3 1 1 13 8 5 2 2 18 8 5 4 4 Cu MEOG62 % Mo MEOG62 % Re REOG62 ppm
Duplicate Code COREDUP FD DUP CRUSH PULP LABREP
Half Core Field Duplicate Duplicate Crusher Split Pulp Duplicate Laboratory Repeat
Notes: Average absolute RPHD (Relative percent half difference) excludes duplicate pairs where the check assay is less than 10 times the detection limit
Figure 11.4.1
Core and Field Duplicate Scatter Plots
11.5
Alternate Assaying
The normal assaying process for Mount Dore - Merlin samples results in a number of potential reassays by ALS at different laboratories, which often involve:
Initial assaying by ALS at Mount Isa using a 2 acid digest for a geochemistry suite with a spectrum of elements using an ICP-AES instrument with emission spectrometry, which can read all elements simultaneously.
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A secondary analysis by ALS in Brisbane using a 4 acid digest for ore grade analysis of Cu, Mo and Re ICP-MS with mass spectrometry, which reads the elements in sequence. Separate analysis of select Cu samples for Mount Dore by Cu sequential analysis completed by ALS in Perth. There are also other permutations of ICP-AES and ICP-MS for both 2 and 4 acid digests as well as concentrate assaying methods for very high grades.
The acQuire database retains all the assays and has an order of precedence for reporting the best or most accurate assay method for each element. This order was reviewed to determine that a suitable precedence was applied. The best or preferred assay derived for the major elements and the most significant domains were audited to determine the assaying method used in the resource estimate. The result summarised in Table 11.5.1 indicates: For Mount Dore Cu:
One third of all assays come from historic drilling with little QAQC support. 60% of the Cu assays come from recent ore grade analysis methods. 7% of the Cu assays come from geochemical analysis, which may have a slight under call.
For the narrow high grade Merlin Mo-Re domain:
Significant Cu assay are by ore grade methods. Significant Mo assays are by ore grade methods or similar reliable methods such as XRF or concentrate methods for very high grades. The majority of Re assays are by the standard ore grade method OG62. 1% of the Re assays are missing where Mo and Cu assays are present.
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Table 11.5.1
Source of Best Assay for Merlin Mo and Mount Dore Cu Domains

Merlin (MODOM>0) Cu Mo % assays 78% 21% 0.1% 0.1% Method MEOG62 MOOG62 MEXRF15c MEOG46 MEICP41s MEICPDil MECON02 MEOG62h % assays 90% 4% 2% 1% 1% 0.5% 0.5% 0.3% Method REOG62 MEMS61 MEMS42 Re % assays 93% 6% 1% Method MEOG62 MEOG46 MEICP61s MEICP41s
Mount Dore (CUDOM>0) Cu Method Unknown* MEOG62 MEOG46 MEICP41s GA145 CN MEMS61 CUOG46 MEICP61s % assays 34% 34% 25% 7% 1% 0.2% 0.1% 0.0% 0.0%
* Unknown includes all historic assays by the previous companies from 1976 to 2000
The multiple assays provide additional checks on accuracy. Figure 11.5.1 displays the major datasets available for Cu. Figure 11.5.2 provides a second comparison of the total assays from the Cu sequential analysis suite. Although not blind to the laboratory the difference in methods and large database available provide some indication of slight understatement of grade by the geochemical method MEICP41 that uses only a two acid digest. The upper detection limit for most methods is evident and excluded from the variance statistics included in Figure 11.5.1. MEICP41 has an upper limit of 1% Cu, above which the samples are always reassayed with an ore grade method. Although QAQC sampling is limited for the early Ivanhoe work between 2004 and 2007, separate Cu sequential analyses provide some additional support of the primary Cu assays. This indicates no bias and minimal variance in the cyanide soluble assay. Figure 11.5.4 displays the reassays for Mo and Figure 11.5.5 for the small set of reassays for Re. Due to standing IAL analysis instructions, Zn is only reassayed by a higher order analysis method when over detection for the geochemical analysis. Hence there are no duplicate assays for different methods for Zn for comparison. In these figures, HRD is the half relative difference between the assay pairs and is an indicator of bias. HARD is the absolute HRD and is an indicator of variance. All reassay data sets indicate acceptable variance for the methods used.
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Figure 11.5.1
Cu Reassays vs. Geochemical Analyses (MEICP41)
Figure 11.5.2
Cu Reassays vs. Cu Sequential Analyses (CUPHT06)
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Figure 11.5.3
Ivanhoe 2004-2007 Cu Sequential Reassays (left) and Selwyn Cyanide Soluble Reassays
Figure 11.5.4
Mo Reassays vs. Ore Grade Analysis (MEOG62)
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Figure 11.5.5
Re Reassays vs. Ore Grade Analysis (MEOG62)
11.6
11.6.1
Checking Programs
Programs
Ten external check assay programs were completed for Mount Dore, including:
MD1 Digestion method checks for Cu and Mo. MD2 Metallurgical checks for Mo (2009). MD3 Discovery checks of Re (2008). MD4 Analytical method checks for Mo and Re. MD5 Routine checks for Cu, Mo, Re, Au, and Zn. MD6 Routine checks for Cu, Mo, Re, Au, and Zn. MD7 Routine checks for Cu, Mo, Re, Au, and Zn. MD8 Routine checks for Cu, Mo, Re, Au, and Zn. MD9 High grade ratio checks for Mo and Re. MD10 Routine checks for Cu, Mo, Re, Au, and Zn (2010 and 2011) (refer to Figure 11.6.1).
MD1 to MD9 were outlined by Golder in 2010 with findings summarised here:
MD1 - Early checks between ALS methods OG46 (two-acid digest) and OG62 (four-acid digest) indicated similar results for Cu, up to 20% higher values for Mo. OG62 was adopted for all Mount Dore and Merlin assaying and all previous assays >0.05% Mo for OG46 were reassayed with OG62.
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MD2 - As part of a metallurgical testing program, a total of 16 half-core samples were submitted to Burnie Research during February 2009, as part of a metallurgical testing program. Results indicate that the ALS OG62 assays compare quite favourably with the Burnie XRF assays. MD3 - A total of 349 pulp samples were submitted to Actlabs during November 2008, for initial checking of Re analyses by neutron activation. The results show no significant bias. MD4 - Initial Mo and Re checks against several laboratories were undertaken due to the lack of available SRM for Mo and Re during the initial discovery. A total of 536 samples, originally analysed at ALS, were sent to Genalysis, Actlabs, and Becquerel laboratories for Mo and Re analyses. Wet digestion methods included four acid digest at ALS, Genalysis and Actlabs for Mo and Re. Dry preparation methods included neutron activation for Re at Actlabs Becquerel. Compared to neutron activation the original ALS results of the Re agreed with Actlabs, but were slightly high compared to Becquerel. Wet chemical digestions results for Re indicate ALS are slightly higher than Genalysis and Actlabs. Wet chemical digestion results for Mo indicate ALS, Genalysis and Actlabs assays are comparable. MD5 to MD8 - Routine check sampling by IAL comprised four pulp duplicate samples per dispatch of 70 submitted samples, which were taken from fixed positions at the laboratory and returned to the work site. The batches included samples drawn from all exploration projects by IAL. Assays by Genalysis shows no significant bias except: MD5 ALS analyses were lower for Cu and higher for Mo (suspected to be an issue at Genalysis) MD6 ALS analyses were higher for Mo (suspected to be an issue at Genalysis) MD7 ALS analyses were lower for Mo.
MD9 - Selection of 285 high grade samples was undertaken as routine check sampling failed to adequately sample the high Mo and Re zones of the Project. Analysis at Genalysis indicated higher Mo grades, but within the high grade bias noted for Genalysis by SRMs. Cu and Re show no bias. MD10 - Three batches of routine check sampling by IAL has been completed since June 2010 (date of the last technical report). These are plotted separately in Figure 11.6.1 and include between 635 and 703 assay values for different elements.
A summary of the available check samples for ALS method OG62 for Cu, Zn, Mo and Re is provided in Figure 11.6.1. It includes data pairs of between 933 and 1,300 routine check samples, for the different major elements analysed and subset for the Mount Dore - Merlin area. The most recent routine check samples completed since mid 2010 (MD10) are identified and indicate some follow-up is required for Mo and Zn, though neither of these trends are of significant concern.
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Page 11.20
The slightly lower grade Mo assays reported by Genalysis are consistent with some of the previous special check assay programs (see Golder 2010) where SRM indicate the most likely bias is at Genalysis. Higher grade Zn assays by Genalysis are consistent with the high digestion likely for the four acid method used. IAL should consider using a more complete digestion method for all Mount Dore North samples due to the potential economic importance of Zn and also the potential for contamination of Mo and Cu concentrate products. The poor Zn result do not affect the current work and resource estimates but do indicate an area where IAL need to refocus their QAQC process as Zn could potentially become a significant economic element in the future.
Figure 11.6.1 11.6.2 Twin Drilling Program
Project Summary of Routine Check Samples
The initial discovery hole at the Project was an RC hole MDQ0153, which was twinned by the diamond drill hole MDQ0153A. The two holes were collared 3.3 m apart at the same elevation and drilled at minus 90o. The diamond drill hole is down dip from the RC hole, and lithological contacts are calculated to be about 4 m lower in depth; however, grade breaks are at similar depths (refer to Figure 11.6.2).
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Page 11.21
The mineralisation zones for Cu, Mo and other elements correlate well with some evidence that the RC drilling is smoother. Down hole contamination is not evident; however the RC drilling is generally lower grade for Cu, Mo and Re. Following this twin drill hole pair, all drilling at Mount Dore - Merlin was completed using diamond drilling to avoid potential bias. This has ensured that all sampling from the Project and most Mount Dore North sampling is from diamond drilling. RC drilling methods were completed in phases at Mount Dore South by IAL from 2004 to 2007 and by previous companies. In 2011, IAL completed a further three twin drill holes to test RC holes by IAL and earlier percussion holes. Figure 11.6.3 displays twin drill hole comparison of these drill holes. This variability can be compared to the normal variance encountered with close spaced diamond drilling displayed by some IAL twin holes that have resulted from redrills, wedges and close spaced collars presented in Figure 11.6.4. Table 11.6.1 compares the average grades for the overlapping intervals. The Ivanhoe diamond-diamond twin drill hole pairs presented indicate considerable variability for all elements, including Cu. The three Ivanhoe RC-diamond twin drill hole pairs for MDQ0153-MDQ0153a, MDQ0184-MDQ0456 and MDQ0185-MDQ0454 indicate a generally similar mineralisation profile with two drill holes reporting higher average grade for Cu and one reporting lower grade. These mixed results are consistent with the variability noted for diamond twin drill hole pairs and suggest the potential bias for Cu cannot be supported. There is also no evidence for down hole contamination, though RC drilling generally has a smoother profile consistent with the larger sample size and a smaller sample variance as expected. The fourth IAL diamond twin drill hole paired with an earlier RC drill hole drilled by a previous company has a very different grade profile with little correlation. Even though globally there is minimal difference in average Cu the results do raise some concerns regarding the veracity of the older RC drilling. The only other percussion twin drill hole completed by a previous company, MDQ-94-56 paired with MDRAB-11, displays a similar Cu grade profile. It is very much smoother for the RAB hole, however produces very different results for Au. The number of twin drilling results is not sufficient to confirm or deny the concerns with previous RC recovery and sample quality and possible bias.
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Figure 11.6.2
Twin Drilling MDQ0153 - Ivanhoe RC (blue) vs. Ivanhoe Diamond (red) Drill Hole
Figure 11.6.3
Twin Drilling - Ivanhoe and Previous Company RC (blue) vs. Ivanhoe Diamond (red) Drill Holes
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Figure 11.6.4
Twin Drilling - Ivanhoe diamond (blue) vs. Ivanhoe Diamond (red) Drill Holes
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Table 11.6.1
Length (m) 182.0 108.0 108.0 56.0 60.0 49.1 162.0 114.0 109.7 Original Hole Hole Cu Au Mo Re
Twin Hole Average Comparison

Twin Hole Hole MDQ0456 MDQ0454 MDQ0455 Cu Au Mo Re Cu Difference Au 7% 22% 1% 58% Mo 66% 10% 65% 67% -49% -4% Re 80%
MDQ0153 0.51 0.08 0.11 2.4 MDQ0184 0.42 0.09 0.00 0.0 MDQ0185 0.32 0.05 0.00 MDRC13 0.38 0.43 0.07 0.05
MDQ0153a 0.40 0.08 0.22 5.5 -24% 0.38 0.05 0.00 0.41 0.07 0.00 0.34 0.05 0.00 0.39 0.07 0.09 MDQ0116A 0.12 0.05 0.00 0.0 MDQ0161A 0.16 0.04 0.01 MDQ0288 25% -9% -9% 26%
-11% -66% -18%
DDH to RC total
MDQ0116 0.09 0.03 0.00 0.0 MDQ0161 0.29 0.05 0.00 0.0 MDQ0188 0.30 0.07 0.01 MDQ0287 0.29 0.19 0.55 8.3 0.26 0.08 0.23 MDQ-94-56 0.34 0.04
MDQ0154 0.23 0.07 1.10 12.8 MDQ0154w1 0.21 0.05 0.96 12.3 -9% -28% -14% -57% -22% 172% 2% -49% MDQ0188a 0.26 0.07 0.00 0.0 -13% 0.20 0.07 0.14 MDRAB-11 0.34 0.17
0.23 0.13 0.16 1.5 -22% -39% -109% -138% -27% -21% -53% 1% 120%
DDH to DDH total
11.7
Security and Chain of Custody
All bulk bags for shipping samples are sealed with individually numbered tamper-proof security tags and transported by an IAL vehicle to the ALS laboratory in Mount Isa. SSM, corresponding to the shipment dispatches, were sent electronically to the laboratory, and shipments were examined on arrival at the laboratory. The SSM were returned to IAL and marked with details confirming the state of security seals on boxes, the samples comprising each batch, and laboratory report numbers assigned to each batch. Following completion of assaying, samples were stored at the laboratory and then transported back to the Selwyn core shed by an IAL vehicle for long-term storage.
11.8
Adequacy of Sample Preparation, Analytical and Security Procedures
The sample preparation, analytical, and security procedures were adequate to ensure high quality drill hole assay data acceptable for geological modelling and reliable resource estimation. There is an unbroken chain of custody from the site to the analytical laboratory. Sufficient reference materials have been used to control analytical processes. Appropriate analytical procedures were used that take rock matrices into account and provide acceptable levels of precision. Sufficient check assaying has been done to demonstrate that the data are unbiased. Use of field data loggers, direct data importing, inbuilt quality control and verification systems provided by the acQuire database minimize data handing and potential manual errors. The acQuire database also has security and records logs all changes to the database.
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MERLIN MOLYBDENUM RHENIUM PROJECT NI 43-101 REPORT - DATA VERIFICATION
Page 12.1
12.0
DATA VERIFICATION
IAL has applied modern drilling, sampling and surveying methods to derive the data used as the basis for the current mineral resource estimate. Golder has reviewed the data and considers it suitable for mineral resource estimation. Previous independent verification of the mineral resources is available as outlined below:
IAL drilling and mineral resource estimates have achieved similar Cu grades and volumes to those defined by previous workers at the Mount Dore South Cu deposit (refer to Golder (2010) for a description of previous results). QG (2010) reviewed eight drill holes and confirmed the range of grades observed in the assay log correlated well with the observed abundance of MoS. In particular high grade >1% Mo correlated with Mo breccia in the core. QG (2010) undertook some database validation for the 2009 NI 43-101 report, including an audit of 5% of drilling at Merlin, which highlighted some minor issues that were resolved at the time.
Other reviews include the following:
The majority shareholder IVN regularly reviews the operations of IAL for procedures, laboratory and QAQC (refer to Sketchley, 2009, 2010, 2011). These reviews, completed at four month intervals, provide a high level of technical assistance to the site geologists, and serve a regular review of processes and procedures. IAL has demonstrated a resolve to address the concerns previously raised by these reviews and to constantly improve their practices. IAL undertakes extensive QAQC work, amounting to 22% of all assay results. This proportion is above typical industry practice and demonstrates a commitment to quality. IAL demonstrates a continuing commitment to sample security in their sample dispatch processes. IAL reviewed all surface and down-hole survey work (IAL 2010). Following previous reviews, IAL committed to resurveying all collars and many down hole surveys. IAL have continued to commit to detailed gyroscopic down hole surveys for ongoing drilling programs. Original IAL collar surveys and tenement locations were located by an independent surveyor. Poorly defined or unusual down-hole surveys have been resurveyed using more accurate gyroscopic methods to remove survey uncertainty in most cases. This remains an area of constant review and assessment due to the length of some of the deeper drill holes.
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In 2009, the drilling data was migrated to an acQuire database. This provides on-entry data validation and improves the data integrity and capture processes. The database migration process included a review of the database and inclusion of meta-data required. IAL has continued to address issues raised during the migration process.
In 2010, Golder reviewed the available procedures and processes while on site including, drilling, sampling, logging, standard down hole survey, database and interpretation processes used for the majority of the IAL drilling program. At that stage Golder did not observe density measurement or other periodic processes such as ground survey and gyroscopic down-hole survey processes. Subsequently these processes have been observed and the processes used are considered suitable. Golder completed the verification and audit in 2010 and described these in the initial technical report (Golder 2010). In summary:
Golder reviewed one complete drill section across Mount Dore North and observed significant sections of massive molybdenite. ALS provided 642 batches of assay records covering Mount DoreMerlin drilling from November 2007 to August 2010. These were compiled independently by Golder and used to verify the database provided by IAL for 32,140 assay intervals. This identified only a few areas for further validation and correction. 12 pages of hardcopy assay certificates (approximately 360 assays) from pre IAL drilling were validated against the drill database. This represents 3% of the pre IAL drilling data and is limited to a sample of the available certificates. No issues were found, except for rounding of Cu analyses to 3 decimal places. This is not considered material to the mineral resource estimate. 20 pages of hardcopy assay certificates (approximately 800 assays) from drilling completed by IAL in early 2004 were validated against the drill database, representing one quarter of the early IAL drilling data. The data were consistent after accounting for later reassays of some of the earlier work. Lodewyk provided point survey data directly to Golder. These were compiled to verify the collar locations provided by IAL. Two significant discrepancies from the 322 drill hole collars compared were attributed to collar mix-ups, which were later resolved. Golder compiled 1,089 results from the detailed gyroscopic down hole surveys from 21 drill holes. These were completed by IAL in 2009 and by Surtron Technologies Pty Ltd in 2010. Some filtered values were confirmed as erroneous and were removed. 129 pages of hardcopy density measurement worksheets were reviewed, covering measurements made between March 2009 and September 2009. Approximately 1 in 10 measurements were selected and checked against the data used in the resource estimate. A low error rate of five errors from 309 records indicates acceptable data compilation.
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In 2011 Golder performed additional verification, including the following:
Inspection of four drill rigs at the Mount Dore North and South areas on three different site visits. A review of core from 37 surface drill holes from both Mount Dore North and South from both current and previous drilling, over two different site visits. Chalcotrichite and chalcopyrite mineralisation was evident in some core. Chalcocite and chrysocolla mineralisation was also identified in places. The presence of copper minerals was confirmed and the high grade copper content of chalcocite and chalcotrichite specimens was confirmed with a handheld XRF. Molybdenum mineralisation was evident in many drill holes as stringers and as thick massive veins. An audit of historic records (pre 2004) was completed. All records for 12 drill holes were reviewed in detail, for density, assays, collars and down-hole surveys. These included significant drill holes from all periods of drilling. Some minor issues in recording azimuths for drilling caused Golder to review 49 drill holes with IAL completing the validation and correction. In total 15 drill holes were selected for assay validation, representing 12% of the database. Only a few minor assay corrections were required. Golder independently surveyed some collars with a hand held Garmin GPS60csx for eight drill hole locations with acceptable variance for the accuracy of the GPS (5 m).
In early December 2011, Golder inspected the progress of the Merlin decline, which is currently at 1,700 m in length. Underground dewatering holes were completed in 2011 to continue dewatering the Kuridala Formation. This allowed the first development through the quartzite and into the Kuridala to intersect the uppermost mineralisation at Little Wizard on 22 December 2011. IAL provided photographs of the of the exposed Mo mineralisation at Little Wizard (refer to Figure 12.1). Face sampling has been completed, though assays are not yet available. IAL indicated the main mineralisation structure reflected in drilling results, which confirm significant brecciation and mineralisation extend into the footwall. The photographs indicate the high grade mineralisation expected for Little Wizard. Further development of the Little Wizard or Merlin mineralisation is not planned for the near term until the feasibility study and processing facilities at Osborne are completed.
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Figure 12.1
Recent Little Wizard Cross Cut Exposures provided by IAL
Additional comments include:
Although no independent density samples are available, the values supplied by IAL are typical for those expected for the rock types, which have a low observed porosity and high silica content. The values indicate little variability in dry bulk density and are similar to surrounding properties that Golder has worked on. A variety of density measurement methods have been used with comparable results. Golder considers the drill hole database, its collation using specialised third party database software and the processes meet industry standard practices. The drilling data is suitably supported and maintained for use in mineral resource estimation.
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MERLIN MOLYBDENUM RHENIUM PROJECT NI 43-101 REPORT - MINERAL PROCESSING AND METALLURGICAL TESTING
Page 13.1
13.0 13.1
MINERAL PROCESSING AND METALLURGICAL TESTING
Introduction
Early metallurgical testwork was carried out in 2009 by Burnie Research Laboratories (BRL) to determine crushing, grinding and flotation characteristics, and with sighter tests for ferric leaching, roasting and calcine leaching to determine metal deportment through the process. Due to the low concentrate grades achieved during this testwork, a more extensive program of work was initiated at Metcon Research (Metcon). Flotation testwork on fresh samples was carried out by Metcon in 2010 to refine the flotation plant flowsheet and to improve concentrate grades. Samples of molybdenum rougher flotation tails were prepared by KD Engineering & Metcon and shipped to Pocock Industrial Inc (Pocock) in slurry form for solids liquid separation (SLS) testing in late December 2010. Limited testwork has been and will be completed for treating the concentrate to produce saleable rhenium and molybdenum products.
13.2
Metallurgical Samples and Composites
The samples were selected to ensure coverage over the depth and strike length of the deposit. In addition all lithologies and mineral styles were covered. Of the identified lithologies, only siltstone, black shale and phyllite are mineralized, and as such, the metallurgical test samples are predominantly represented by these three lithologies. A fourth lithology is also defined in the metallurgical samples as breccia. This refers to brecciated rock of one of the three main lithologies, with mineralized fill. The majority of the mineralisation occurs in the siltstone, followed by black shale. Only a small portion of the mineralisation is hosted in phyllite. In total, 1,100 kg of crushed ore (-2mm and -12mm) were sent to Metcon in January 2010. The samples were split into 345 individual drill segment samples, representing 27 drill holes. Figure 13.2.1 shows in plan the location of the metallurgical samples within the mining zone. Figures 13.2.2 and 13.2.3 are sections along the mining cone showing the typical vertical distribution of some of the metallurgical samples.
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Page 13.2
Figure 13.2.1
Plan View of the orebody showing the locations of the metallurgical samples (red dots).
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Page 13.3
Figure 13.2.2 Section N7605350, 50-m window looking north showing the origin of some of the metallurgical samples (blue segments).
Figure 13.2.3
Section N7605450, 50-m window looking north showing the origin of some of the metallurgical samples (blue segments).
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The Merlin orebody can be subdivided in to four main ore types, namely, black shale, siltstone, phyllite and breccia. Each ore type was sampled and tested separately or as composites with other rock types, depending on the nature of the test being performed. Table 13.2.1 shows typical head sample analyses for each ore type. Table 13.2.1 Ore Type Samples and Typical Assays
Sample Siltstone Breccia Black Shale High Cu Low Mo Mo % 4.90 0.97 0.39 0.08 Re ppm 104 19 7 1 Cu ppm 2850 1210 1375 2720 Pb ppm 255 196 111 145 Zn ppm 1101 844 608 243 SiO2 % 66.9 57.2 60.5 62.6 C % 0.73 0.39 4.46 0.70
*Per samples submitted to BRL Thin section grain mineralogy was performed on fractions of each ore type, along with a separate optical mineralogy assessment. This work determined that ores were predominantly composed of microcline and quartz with high and variable contents of albite, chlorite and muscovite. Sulphides included molybdenite, pyrite, chalcopyrite, sphalerite, galena and minor chalcocite. Variable quantities of carbon were also present in all ores as disseminated grains or in aggregates associated with fine silica. By far, carbon was found to be most abundant in black shake. Molybdenite had only moderate associations with carbonaceous gangue and silicates. Half of all the samples received by Metcon were combined to generate a bulk composite, Composite 1, on which majority of the testwork was undertaken. Two additional bulk composites, Composite 2 and Composite 3, were generated from a blend of each ore type, to produce high-copper containing samples. These two composites were used to test the robustness of the copper separation process. The makeup of the three composites by lithology and chemical analysis is shown in Tables 13.2.2 and Table 13.2.3, respectively. Table 13.2.2. Composites Flotation Tests Lithological Composition, % Black Shale Siltstone Phylite 27 52 7
Composite Composite 1
Breccia 13
Table 13.2.3 Chemical Analyses of Flotation Test Composites Composite Composite 1 Composite 2 Composite 3 Mo % 1.03 0.83 2.59 Re ppm 17 Cu % 0.29 0.529 1.46 Fe % 2.27 2.54 2.49 S % 1.63 1.49 2.55 C % 1.07 Graphite % 0.41
The remaining samples were used to generate composites for individual lithologies. These were tested using the standard flotation procedure minus the regrind stage because of the insufficient amount of samples available.
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13.3
Comminution Tests
As part of the testwork program carried out by BRL in August 2009, a series of PQ and HQ core samples were sent to AMMTEC in Perth for comminution testwork. Four samples of the major lithologies were sent for testing:

Breccia Black Shale Siltstone High Copper Low Molybdenum (Breccia)
Approximately 25 kg of each lithology was supplied for testing. The work included sample preparation, unconfined compressive strength (UCS), Bond abrasion index (Ai) determination, Bond rod-mill work index (RWi) determination (closing screen size: 1180 microns) and Bond ball-mill work index (BWi) determination (closing screen size: 106 microns). Five specimens of as received core were selected from each lithology for UCS determinations. Upon completion of the UCS testing, the fragmented samples were combined with the respective remaining core. Each ore sample was then control crushed to < 20 mm and thoroughly homogenised by passing each sample three times through a rotary sample splitting device. Three sub-samples were split out of each sample. A 5 kg sub-sample was screened at -19.0+12.5 mm to generate feedstock for the Bond abrasion index determination. A second sub-sample was control crushed to < 12.5 mm and used for Bond rod mill work index determination, while a third sample was control crushed to < 3.35 mm for Bond ball mill work index determination. The test data is summarised in Table 13.3.1 below. Further details of the comminution testwork conducted at AMMTEC can be found in found in BRLs report (See References). Table 13.3.1 BRL Comminution Test Data
RWi kWh/t 17.2 24.1 20.2 20.9 BWi kWh/t 17.3 25.5 18.0 18.1
Sample Breccia Black Shale Siltstone High Cu Low Mo
Average UCS MPa 30.2 39.4 51.5 26.4
Ai 0.19 0.27 0.24 0.23
The comminution test data together with blend ratios representing the first 1 7 years of production and then for the next 8 25 years, provided by IAL based on the mine schedule, were used to form the basis of the design criteria for the comminution circuit. This information was used by OMC in the comminution circuit design and is summarised in Table 13.3.2.
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Table 13.3.2
Lithology Black Shale Siltstone Phyllite* Breccia Ore Parameters Ai RWi BWi
Feed Blend Summary

Year 1 7 Composition % 40 40 10 10 Year 8 25 Composition % 20 60 10 10
0.234 21.6 20.7
0.227 20.8 19.2
* As no comminution testwork was conducted on the phyllite lithology, these parameters were extracted from the OMC database. Futher to the testwork conducted at AMMTEC, three additional samples, Composite 1, black shale and siltstone, were tested at Phillips Enterprises of Golden Co, USA. The test data is presented in Table 13.3.3. Table 13.3.3 Phillips Enterprises Comminution Test Data
Closing Screen Size (m) 150 150 150 BWi (kWh/t) 18.1 23.8 14.9
Sample Composite 1 Black Shale Siltstone
As the black shale and siltstone test data was received subsequent to the modelling carried out by OMC, and at the end of the feasibility study, updated ore parameters were used for additional confirmatory modelling. Table 13.3.4 Updated Ore Parameters for Design
Year 1 7 0.234 21.6 19.8
Ore Parameters Ai RWi BWi
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13.4
Preliminary Flotation Tests
Preliminary metallurgical testwork was carried out by Burnie Research Laboratories (BRL) in Tasmania in 2009, to investigate primary grind size, collector and depressant requirements, regrind conditions and cleaning parameters. However, although molybdenum recoveries near 90% were achieved, concentrate grades were less 35% Mo and contained greater than 1% copper. The testing highlighted a number of significant issues, which contributed to the unsatisfactory flotation response of these ore types:
The presence of high levels of the carbonaceous gangue as graphite. Graphite flotation responds in a similar manner to the molybdenite thus yielding concentrates diluted with carbon. Silica is collected into the concentrate, either as associations with carbon, or as fine silica by entrainment. Addition of sodium silicates mitigated the problem to some extent. A range of base metal sulphide also floated freely into the concentrates.
This work has been previously reported by BRL (see References)
13.5
Flotation Testwork at Metcon
The flotation testwork performed at Metcon was subdivided into four phases. Details of these tests and their results may be found in Metcons reports, which are listed in the References section. Below is a summary of each phase of the work.
Phase I focused on optimising conventional flotation conditions and running locked cycle testing on a composite representative of the entire ore body. The primary goal was to evaluate the potential of eliminating the ferric chloride leach and post roast leach from the flowsheet using conventional molybdenum flotation techniques. The test work indicated the ferric chloride leach could be eliminated. However the molybdenum concentrate grade could not be upgraded above 35-40% molybdenum using conventional techniques. A post roast leach would be required to achieve higher molybdenum grades. The primary contaminants were gangue and carbon. All indications were that the gangue reporting to the concentrate was associated with the carbon.
Phase II expanded the testwork to non-conventional techniques for concentrate grade improvement; the evaluation of higher grade copper composites to test the robustness of copper depression; and the potential of producing a saleable grade by-product copper concentrate. No technique was found to improve the molybdenum concentrate grade above the 35-40% molybdenum range. The testing showed that a three stage copper depression circuit eliminates the need for a ferric chloride leach even with high copper content ores. A flowsheet incorporating a regrind can be used to produce a saleable grade by-product copper concentrate. The copper concentrate contains 3-5 g/t gold and 70-90 g/t silver.
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Phase III looked at 18 variability samples and an initial evaluation of roasting requirements. In nine of the 18 variability samples, saleable grade molybdenum concentrate was produced. The contaminant responsible for concentrate downgrading was identified as graphite. Molybdenum losses to the throwaway tail stream averaged 5-7%. The deportment of molybdenum to recycled tail streams averaged 10-15%. Accounting for recovery from the recycle streams overall molybdenum recoveries of 90% were predicted.
Phase IV - Locked Cycle Flotation. Locked cycle testing on composite 1 material was undertaken to accurately predict closed circuit performance with the optimised flowsheet and thus validate the grade-recovery relationship predicted from open circuit testwork. The locked cycle testwork indicated that recovery of molybdenum to the copper concentrate was higher than anticipated, therefore giving lower recovery to the molybdenum concentrate. It was also demonstrated that improved recovery could be achieved at a finer primary grind 80% passing 110m. In the last cycle of this test, 90.7% of the molybdenum reported to a concentrate containing 27.7% Mo and 0.19% Cu. However this recovery may be biased high due to extended flotation times in the last cycle. Copper results also improved with 84.5% of the copper reporting to a concentrate containing 13.5% Cu and 2.9% Mo. The reported molybdenum losses were 5.2% from the bulk circuit and 4.0% to the copper concentrate. More testwork is required to further improve rejection of molybdenum from the copper concentrate and thus improve overall molybdenum recovery.
Only highlights of this study that are pertinent to the process design and economic analysis of the project are included in this report. Rougher Flotation All of the Phase I testing was conducted using Composite 1 and utilising a conventional molybdenum flotation circuit as displayed in Figure 13.5.1. The optimum operating parameters were determined through a series of batch tests. Subsequently a locked cycle evaluation utilising the optimum parameters was performed. Optimum primary grind, % solids, and rougher flotation time were determined with a series of rougher kinetics tests floated at differing primary grinds and % solids. The grind results are depicted in Figure 13.5.2, and % solids in Figure 13.5.3. From this data the primary grind was selected as a P80 of 106m, the rougher flotation solids as 30%, and primary rougher flotation time set as 15 minutes. Error! No bookmark name given.
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Figure 13.5.1
Conventional Molybdenum Flotation Circuit
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Figure 13.5.2
Rougher Molybdenum Recovery vs. time at three grind sizes.
Figure 13.5.3
Effect on % of solids on Rougher Kinetics
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First Cleaner Pulp Density (Tests FT-C01-05 to FT-C01-06) The optimum location for collector addition, 1st cleaner % solids, and first cleaner flotation time were determined with a series of 1st cleaner kinetics tests. Adding the kerosene to the primary grind was compared to adding the kerosene to the rougher flotation. There was only a minor difference between the two and a collector addition to flotation was selected as the standard. Nevertheless, provision to add to either location should be provided in the plant. The effect of % solids on 1st cleaner kinetics is graphed in Figure 13.5.4. Unlike the rougher flotation, where recovery is the primary objective, starting in the first cleaner, concentrate grade became the primary objective. From the data, the 1st cleaner % solids were set at 12%.
Figure 13.5.4 Sodium Silicate Addition
Effect of % Solids on 1st Cleaner Kinetics
Sodium silicate is frequently used for insoluble depression in molybdenum circuits. To test the effectiveness of sodium silicate, a sodium silicate dosage series was conducted. Rougher concentrates were conditioned for 20 minutes with 0, 200, 400, 600, and 800 g/t of sodium silicate. 1st cleaner kinetics series were then conducted. The results are graphed in Figure 13.5.5. The addition of sodium silicate definitely improved the 1st cleaner concentrate grade. A 200 g/t addition rate was selected for future testwork. However, dosages of 400-600 g/t may have been slightly better.
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Figure 13.5.5 Regrind
Effect of Sodium Silicate on 1st Cleaner Grade
The effect of regrind on 1st cleaner kinetics was evaluated. The +44m fraction of rougher concentrate was subjected to 0, 2, 4, and 7 minutes of regrind prior to the first cleaner. The effect on concentrate grade is shown in Figure 13.5.6, and the effect on molybdenum recovery is shown in Figure 13.5.7. Regrind had a very slight positive effect on molybdenum grade, a slightly better effect on copper grade, and significant negative effect on recovery. Since upgrading was the primary object, a 2-minute regrind was selected for future test work. Based on the kinetics from all evaluations, 6 minutes of 1st cleaner flotation time was selected for future test work Figure 13.5.7 Regrind Effect on 1st Cleaner Recovery
. Figure 13.5.7
Regrind Effect on 1st Cleaner Recovery
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Figure 13.5.6
Effect of Regrind on 1st Cleaner Grade
1st Cleaner Mo Recovery %
100.0 80.0 60.0 40.0 20.0 0.0 0 2 4 6 8 10 12 14 1st Cleaner Flotation Time (minutes) 0 Grind Minutes 4 Grind Minutes 2 Grind Minutes 7 Grind Minutes
Figure 13.5.7
Regrind Effect on 1st Cleaner Recovery
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Second Cleaner Kinetics Tests The copper content in the 1st cleaner concentrate was averaging about 3%. To eliminate the ferric chloride leach circuit, the final molybdenum concentrate must contain below 0.45% copper. The most common copper depression technique used in molybdenum flotation is to use sodium hydrosulphide (NaHS). The amount of NaHS required for good depression is somewhat ore dependent and generally controlled by the oxygen reduction potential (ORP). To determine the required amount of NaHS for good copper depression and the optimum 2nd cleaner flotation time, a series of second cleaner kinetics tests with two different ORP levels was conducted. First cleaner concentrate was conditioned for 5 minutes with NaHS and timed 2nd cleaner concentrates collected. The effect of ORP on second cleaner molybdenum grade is shown in Figure 13.5.8 and on copper content in Figure 13.5.9. Molybdenum recovery, molybdenum grade, and copper content were basically the same at both ORP levels. Six minutes of second cleaner flotation time and NaHS levels at -500 mV ORP were selected for future test work.
Figure 13.5.8
Effect of ORP on 2nd Cleaner Molybdenum Grade
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Figure 13.5.9
Effect of ORP on 2
nd
Cleaner Copper Content
Locked Cycle Tests As part of the Feasibility Study, open circuit grade-recovery relationships were used (refer to Table 13.5.1) to estimate closed circuit performance of the selected flowsheet in order to generate a mass balance. These grade-recoveries were used for project economics. Unit recoveries are summarised in Table 13.5.2. Table 13.5.1
Metal Mo Cu
Grade-Recovery
Grade 30% 11%
Recovery from new process plant 88% 80%
Error! No bookmark name given.
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Table 13.5.2
Unit Operation Flash Flotation Rougher Flotation Scavenger Flotation Mo Cleaner 1 Mo Cleaner 2
Unit Recoveries
%Mo Grade 40.0 7.7 0.7 17.0 26.9
% Mo Recovery 40 65.6 27.7 84.4 95.7
It was recognised that this would have to be confirmed by running locked cycle tests to identify likely molybdenum and copper concentrate grades and recoveries which could be achieved in the plant. Locked cycle testing of Composite 1 was conducted with a 5-cycle test, (Test FT-C01-84), using the standard flowsheet indicated in Figure 13.5.10. This flowsheet replicates that selected for the process design. For this test, the primary grind was 80% finer than 110 microns, with extended times in the final cycle for rougher scavenger and 3rd cleaner scavenger (Cu cleaner scavenger) stages. A summary of the test results for the last three cycles is shown in Figure 13.5.10 Standard Testing Flowsheet. Table 13.5.3 Locked Cycle Test FT-C01-84
Product
Cycle
Mass Recovery % 2.60
Grade % Mo Cu 0.14 15.80 0.14 18.60 0.19 13.45
Recovery % Mo 87.05 6.58 82.62 10.33 90.74 4.04 Cu 1.64 85.40 1.18 87.86 2.88 84.45
Mo concentrate C Cu concentrate Mo concentrate D Cu concentrate Mo concentrate E Cu concentrate
29.52 4.75 30.48 6.60 27.73 2.93
1.22 2.37 1.37 3.14 1.32
The results above show that the grade and recovery used for the design and economic analysis are achievable. Unfortunately, due the modifications to the last cycle of the test, the reported recovery for this cycle is higher than what might be achieved in practice. In addition, due to the complexity of the flowsheet, it is usual to run more cycles to ensure that steady-state has been achieved. As such, this test is encouraging but will have to rerun in the future. Two other locked cycle tests were conducted at coarser grinds of (P80 of 180 and 140 microns), one of which did not use the copper collector A3302. Neither tests achieved acceptable recoveries and concentrate grades.
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Figure 13.5.10 Standard Testing Flowsheet
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Flash Flotation (Tests FT-C01-29 to FT-C01-32) The strong grade-size relationship led to the evaluation of flash flotation. A series of flash flotation tests, varying the flash grind size was conducted. The optimum flash grind size was inconclusive, but the results were very encouraging. The flash flotation produced a first cleaner concentrate which contained over 40% of the total molybdenum with a concentrate grade over 40% molybdenum. Primary Grind (Tests FT-C01-33 to FT-C01-36) With the acquisition of the Osborne plant by IAL, a two stage grinding circuit was evaluated. The potential of a circuit incorporating a flotation circuit after each stage of grinding was evaluated. The primary goal was to see if a saleable grade concentrate could be made from the primary grind flotation circuit. The series was run varying the primary grind size. Primary grinds were evaluated at 1000, 750, 500, and 250m with the secondary grind constant at 106m. The primary grind flotation concentrates were subjected to three stages of cleaning. The grade and recovery of the primary grind 3rd cleaner concentrates are shown in Figure 13.5.11. While the grade was higher with coarser primary grinds, none approached a saleable grade. The amount of upgrading per cleaner stage is shown in Figure 13.5.12. Additional cleaner stages in the primary flotation will not produce saleable grade.
80 70 60 % Mo 50 40 30 20 10 0 0 200 400 600 800 1000 1200 Primary Grind Size Microns Concentrate Grade Recovery
Figure 13.5.11
Effect of Primary Grind Size on Primary 3rd Cleaner Concentrate
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Concentrate Grade % Mo
40 35 30 25 20 15 10 5 0 Rougher Grind-1000 1st clnr Grind-750 2nd clnr Grind 500 3rd clnr Grind-250
Figure 13.5.12
Primary Grind Flotation Upgrading by Stage
Flotation Collectors (Tests FT-C01-47 to FT-C01-51) A series was run to test the effectiveness of various molybdenum collectors. The collectors tested were fuel oil, Cytec A-3302, PF3, a mixture of kerosene and 3302, and a mixture of kerosene and PF3. Results are tabulated in Figure 13.5.13. The mixture of kerosene and A3302 yielded the highest concentrate grade and lowest recovery. Since the focus was on concentrate grade this combination was selected for future test-work, but it may not be the collector which provides the highest economic return.
100 80 % Mo 60 40 20 0 Fuel Oil Flash Con Bulk Con Recovery 34.78 14.53 85.23 A-3302 38.45 17.08 82.7 PF3 41.17 13.79 85.78 Kero/A3302 41.59 19.12 79.29 Kero/PF3 43.92 14.7 81.32
Figure 13.5.13
Collector Series
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Secondary Grind Size (Tests FT-C01-55 to FT-C01-57) A series of tests was run to evaluate the effect of secondary grind size on flotation results. The tests were run with flash flotation followed by secondary grind P80 at 150, 210, and 300 m. The results are shown in Figure 13.5.14. Finer secondary grind consistently resulted in higher concentrate grade and higher recovery.
60 50 % Mo 40 30 20 10 0 0 50 100 150 200 250 300 350 Secondary Grind p80 Microns 3rd Cleaner Concentrate Bulk Flotation Recovery
Figure 13.5.14
Secondary Grind Size vs Grade and Recovery
Another test was conducted with a secondary grind of 300 m followed by a rougher/ scavenger and three stages of cleaners. The scavenger tail was sent to a tertiary grind at 200 m and subjected to an additional scavenger flotation. The result was a net loss in recovery as compared to a secondary grind of 200 m. Two-Stage Copper Depression (Tests FT-C01-58, FT-C02-01, FT-C03-01) While the Composite 1 copper content of 0.29% is representative of the entire ore body, the copper depression circuit must be able to handle ores from high grade copper zones. To test the robustness of the copper depression circuit, tests were conducted on all three composites. Each composite was floated with flash flotation and a flash first cleaner. The flash tail was ground to 150 m, floated and cleaned through three stages. The flash and bulk concentrates were classified at 53 m with the oversize reground for 5 minutes. The classification fines and ground product were conditioned with NaHS for 5 minutes and subjected to 2 stages of copper depression. Results are listed in Figure 13.5.15. Two stages of depression did not achieve the required copper content of less than 0.45% with the higher copper feed grade samples; however, 60% of the copper present was being rejected in each stage of depression. The amount of depression per stage indicated a three stage depression circuit would be adequate for ore types within the ranges tested.
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Concentrate Grade % Cu
15 10 5 0 Feed to Depression 1st Stage con 2nd Stage Con
Composite 1 4.61 1.18 0.22
Composite 2 7.66 2.59 0.6
Composite 3 14.01 3.3 0.76
Figure 13.5.15
Two Stage Copper Depression
Three-Stage Copper Depression (Tests FT-C01-74, FT-C02-02, FT-C03-02) The use of three stages of copper depression was tested on Composites 1, 2, and 3. Based on the previous test work it appeared minimal molybdenum upgrading was occurring after two cleaner stages, but a regrind was advantageous. The flowsheet was modified as follows:
The primary grind of 750 m was classified at 75 m prior to flash flotation. The flash flotation con was cleaned once. The flash flotation tail was ground to 180 m, combined with the minus 75 m fraction from classification, and floated in a rougher and first cleaner.
The flash and bulk first cleaner cons were combined, classified at 53 m, and the coarse fraction reground for 7 minutes. The classification step minus 53 m and regrind discharge were combined and floated in a second cleaner. The 2nd cleaner con was conditioned with NaHS for 5 minutes and subjected to 3 stages of copper depression. The results of the three stage copper depression are shown in Figure 13.5.16. As predicted from the earlier depression test work, 3 stages of copper depression dropped the molybdenum concentrate to 0.15% copper in all three composites. A ferric chloride leach circuit is not required.
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% Cu in Moly Concentrate
8 7 6 5 4 3 2 1 0 Depression Feed 1st Stage 1.87 0.44 2nd Stage Composite 2 0.15 3rd Stage Composite3 7.16
Composite1
Figure 13.5.16 Rhenium Recovery
Three Stage Copper Depression
Most rhenium is found as interstitial atoms locked in the MoS2 crystal. In primary molybdenum ore bodies the rhenium content is typically extremely low. Most recoverable rhenium is found in molybdenum produced as a by-product of copper mining operations. The Merlin deposit is unique in such that is it a high-grade primary molybdenum deposit with a high rhenium content. The rhenium and molybdenum content of the three composite concentrates is shown in Table 13.5.4. The concentrate molybdenum grades vary from 31 to 48%, but the molybdenum to rhenium ratio remains consistent. It appears the rhenium is evenly distributed with the molybdenum. Table 13.5.4
Composite No. 1 2 3
Mo to Re Ratio on Composite Concentrates

Mo % 36.53 31.72 48.63 Re ppm 502 429 685 Mo/Re Ratio 728 739 710
Gold and Silver Recovery (Tests FT-C01-58, FT-C02-01, FT-C03-01) These tests were analysed for gold and silver. The gold and silver in the copper concentrates is tabulated in Table 13.5.5.
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Table 13.5.5
Gold and Silver Values in Copper Concentrate

% Cu Au(g/t) 2.91 2.36 5.85 Ag(g/t) 73.6 68.0 101.3
Composite 1 Composite 2 Composite 3
9.33 12.21 23.90
Effect of Regrind (Tests FT-C01-75 to FT-C01-79) A series of tests were run to evaluate the overall effect of flash flotation and regrind on molybdenum performance. Composite 1 was used for this series, and a copper concentrate upgrading stage was included. The metallurgical data developed showed that the inclusion of a flash flotation step in the circuit yielded no benefits. The final molybdenum concentrate grade, with or without flash flotation, was 37%. The indicated recovery with flash flotation was slightly lower, but well within the testing error. Regrind on the other hand had a significant impact on both on molybdenum and copper concentrate grades. The effect of regrind on concentrate grade is tabulated in Table 13.5.6. The inclusion of a regrind increased the molybdenum concentrate grade by 4% molybdenum and the copper concentrate grade by 9% copper. Table 13.5.6 Effect of Regrind on Concentrate Grades
Regrind Molybdenum Concentrate - % Mo Copper Concentrate - % Cu 37.08 20.11 No Regrind 32.81 11.87
Another series of tests evaluating the effect of regrind was conducted (Tests FT-C01-80 to FT-C0181), but without a special copper cleaner stage. Results were quite similar to those seen above. With the addition of a regrind stage the molybdenum concentrate grade increased from 32.2 to 35% molybdenum and the copper concentrate grade increased from 9.5 to 17.4% copper. Regrind was included in the flowsheet as a means of improving concentrate grades, especially of the copper concentrate. Variability Tests Eighteen samples, composited from 4 different lithologies were blended for the variability testing. There was a wide range in assays, with molybdenum content varying from 0.19% to 7.8% molybdenum; copper content varying from 0.012% to 1.36% copper; and carbon content varying from 0.06% to 4.81%.
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Each sample was tested with the flowsheet shown in Figure 13.5.17. Due to insufficient sample weight, regrind of Mo cleaner 1 concentrate, which requires a double charge, was not included in the standardised flowsheet. In those samples with sufficient sample weight, additional tests at different primary grind and with the addition of a regrind were performed. Of the four major lithologies in the Merlin orebody, black shale, siltstone, breccia and phyllite, the graphite was found predominantly in the black shale, as shown in Table 13.5.7. Saleable grade concentrate was produced from the other three lithologies. Therefore, the proportion of black shale treated in the plant would be expected to significantly influence molybdenum concentrate grade produced. Table 13.5.7 Variability Flotation Tests Composite Black Shale Breccia Phyllite Siltstone Final Concetrate Grade, %Mo 15.87, 26.97, 12.74, 28.51 54.29, 55.04, 57.51 52.04, 52.79 55.32, 53.77,55.38, 50.78, 53.54, 54.14, 51.36
In the variability flotation study conducted on 18 composite samples, molybdenum recovery was calculated above 90% in 16 of the samples.
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Figure 13.5.17
Copper / Molybdenum Separation Without Regrinding
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The most significant conclusion from the variability testing was that graphite was identified as the constituent responsible for low molybdenum concentrate grade. In those samples with low graphite content, saleable grade molybdenum concentrate was consistently produced. In those samples with high graphite content, saleable molybdenum concentrate could not be produced. The relationship between graphite and concentrate grade is shown in Figure 13.5.18.
60 Concentrate Grade 50 40 30 20 10 0 0 20 40 60 80 100 120 140 Mo/Graphite Ratio y = 7.3576Ln(x) + 21.098 R2 = 0.9064
Figure 13.5.18
Molybdenum / Graphite Ratio vs Concentrate Grade
Implications for Process Design The locked cycle testwork has so far not demonstrated that the molybdenum grades and recoveries predicted from the batch testwork can be achieved, due to unanticipated molybdenum losses to the copper concentrate. This has some implications for the selected and costed flowsheet, as described in Item 17, Recovery Methods, as follows:
A finer primary grind size may be required. The ball mill originally selected has been re-sized to accommodate a change from a primary grind size P80 of 180 m to 110 m and a cost allowance included in the capital cost estimate. At present the relative benefits of a finer primary grind versus a finer regrind have not been quantified and it may be possible to revert to a coarser primary grind but regrind finer. A finer regrind size may be required. At present the regrind size selected for the plant flowsheet remains unchanged at a P80 of 44 m. Extended flotation times may be required in the copper depression stages. This may affect the size of the flotation columns selected and has not been quantified. There are opportunities to optimise reagent usage affecting the design of the reagent systems. This would be relatively minor and would be accommodated in the next phase of the project.
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13.6
Tails Thickening Tests
Solids liquid separation (SLS) tests were conducted on a sample of molybdenum rougher flotation tails to generate data to design, size, and predict performance of desired process equipment for this material specific application. The sample was prepared by KD Engineering & METCON Research and shipped to Pocock Industrial in slurry form for testing in late December 2010. The pH of the sample as received was 7.5, and decanted solution from the samples and tap water were used to make the necessary dilutions during SLS testing. Complete test data sheets, figures, and correlations referenced in this report are located Pococks report. A brief summary of some of the equipment sizing criteria and recommendations gleaned from the testing program follows:
The flocculant product selected from screening tests for best performance was Hychem AF 304, a medium to high molecular weight 15% charge density anionic polyacrylamide. The minimum dose anticipated is in the overall range of 30 to 40 g/t depending on material and feed solids concentration, and should be delivered at a maximum solution concentration of 0.1 to 0.2 g/L (diluted with thickener overflow prior to contact with thickener feed pulp in optimal range) for best performance. Two types of thickening tests were performed, i.e. static tests for conventional type thickener design, and dynamic tests for high rate type thickener design. Results of static (conventional) thickening tests indicated optimal feed solids concentration in the maximum range of 15% - 25% for conventional type thickeners to maintain sufficient settling velocities for minimum unit area equipment sizing basis recommended herein. For conventional thickener sizing, minimum recommended unit area design basis for the sample is 0.125 m2/t/d. This is an established minimum sizing recommendation based on Pocock Industrials vast experience with sizing conventional thickeners (and calculated unit area requirements based on static test results for the sample were either at or below this minimum design basis). With no flocculant addition or raking, reaching densities similar to those achieved on flocculated materials required significantly more time (on the order of 15 to 18 days for no flocculant or raking, versus 60 minutes with flocculant and raking). For tailings pond applications, the no flocculant or raking data and unit area predictions should be used. Results of dynamic (high-rate) thickening tests indicated optimal feed solids concentration in the maximum range of 15% - 20% to maintain sufficient settling velocities for minimum hydraulic equipment sizing basis recommended herein. Thickening tests conducted on the molybdenum rougher tails sample indicated a hydraulic net feed loading rate design basis in the maximum range of 4.25 5.50 m3/m2/hr would be optimal for this material. Predicted overflow clarity from the operating unit in this design range is <250 NTU (or <200 mg/l) TSS for pH 7.5 in optimal recommended flocculant dose range. Recommended maximum design thickener underflow density for a standard conventional or high rate type thickener is in the range of 65% - 69% solids by weight based on rheology data.
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13.7
Roasting
Roasting Tests Bench scale lab tests are generally not conducted for roaster design. However, the roasting of low grade concentrates is not a typical industry practice and presents several potential concerns. The Merlin concentrates contain 6-8% carbon. Theoretically the carbon should burn off in the roaster, but confirmation was required. Molybdenum calcine in the roaster contains less than 0.1% sulphur. Alkali metals can combine with the sulphur preventing a complete conversion to SO2. Potassium can complex with the rhenium preventing its volatilisation in the roaster. Certain combinations of gangue can have a eutectic effect and cause the roasting bed of solids to fuse. To evaluate the potential occurrence of the above concerns a program of laboratory roasting tests utilising small ceramic boats and a muffle furnace were established. Since the rhenium is either volatilised or remains with the solids, the % volatilisation can be calculated from an assay of the feed and roasted product. Once volatilised to the gas stream, rhenium recovery will follow established industry practice. To simulate roaster conditions samples of Merlin concentrate were placed in a muffle furnace, held at 600C, stirred once every twenty minutes, and product assay samples collected over 24 hours. The products were assayed for molybdenum, carbon, sulphur, and rhenium. The content of the carbon, sulphur, and rhenium in the product is graphed in Figure 13.7.1. In 8 hours over 98% of the rhenium and carbon were volatilised, but even after 24 hours the product contained over 2% sulphur.
1000
484
100
21.0 Grade
10
19
16
12 7 2.8
11.82
3.0
2.8
2.4
0.21
0.1 0 6
0.15
8
0.12
10 12
Re (ppm)
C (%)
S (%)
Sampling Time (hour)
Figure 13.7.1
Roasting Test on Molybdenum 7th Cleaner Concentrate (FT-C01-20) Temperature = 600C
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In a second series run under the same conditions, samples of Merlin concentrate and a control concentrate were run simultaneously. In this series 99% of the carbon was volatilised after 6 hours, but only 85% of the Merlin rhenium and 45% of the control rhenium were volatilised in 24 hours. After 24 hours the Merlin and control products contained 1.3 and 0.6% sulphur respectively. The testing procedures were altered. To improve oxidation, larger boats with very thin layers of concentrate were used. The roasting temperature was increased to 650C and a single product assay was collected after 15 hours. The products from both the Merlin and control concentrates dropped to less than 0.03% sulphur. The temperature required was much higher than with an operating roaster. To determine if this was a function of the test procedure or the Merlin concentrate, samples of concentrate known to roast well were obtained and subjected to the lab procedures. A series of tests were run at different roasting times and temperature, namely 4, 8, 10, and 12 hours at 550, 575, 600, 625, and 650C. Results are shown in Figure 13.7.2. Very similar results were obtained, indicating the higher temperatures are a function of the lab procedure. At this point it appears the carbon, sulphur, and rhenium will all volatilise in the roaster.
0.8
0.732
0.7
0.6
0.489
Sulfur (%)
0.5
0.421
0.475
0.466
0.4
0.342 0.322 0.274
0.333 0.273 0.232
0.343
0.339
0.3
0.263
0.262
0.258
0.2
0.170 0.137
0.210
0.091
0.1 4 6 8 10 12
Roasting Time (Hours)

550oC 575oC 600oC 625oC 650oC
Figure 13.7.2 Roasting Tests on Mineral Park Molybdenum Concentrate, Sulphur Content at the Roasting Products It is believed the difference between laboratory and production temperatures is because in a production roaster the majority of the heat is supplied by the exothermic reactions occurring in the roaster bed. The temperature in the solids bed is actually higher than the measured temperature of the gas stream.
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To evaluate the bed fluidisation, larger samples, operating at higher temperatures, will be evaluated. Insufficient Merlin concentrates are available. Gangue material from Merlin ores will be added to known concentrates to evaluate the fluidisation effect. Results of this ongoing testing will be reported elsewhere. Rhenium Production Limited testwork has been completed for treating the concentrate to produce saleable rhenium and molybdenum products. The process design criteria for the concentrate treatment plant is not supported by detailed metallurgical testing but based on operational experience common to the industry provided by OMT. For the feasibility study, OMT selected the process route and provided design criteria parameters to produce pure chemical grade molybdenum oxide and ammonium perrhenate (NH4ReO4). Process Technology- Roaster Design Basis A dry pyrometallurgical process centred around a multiple hearth roaster (MHR) was selected to recover molybdenum and rhenium. Roasting is considered the industry norm for roasting molybdenum concentrates (refer to Figure 13.7.3). Rotary kilns are the alternative pyrometallurgical technology, however, this approach is being phased out in most modern operations and are mostly found in outdated facilities in China and Russia. OMT does not recommend the use of kilns in this process due to their energy inefficiencies, their capacity limitations and inconsistent product quality.
GlobalCapacitybyMethod
30%
3%
MultiHearthRoaster Rotary&SingleHearthKiln PressureAutoclave
67%
Figure 13.7.3 Molybdenum Roasting Capacity
The other technology used, although not widely, is a hydrometallurgical autoclave. OMT does not recommend this technology as is it significantly more expensive to build and operate than MHR's and there are intellectual property restrictions. MHR's are sized based upon the grade of material and the throughput in order to optimize efficiencies. For the FS, OMT has selected a 12 hearth roaster, operating at 600-675C, sized based on 35,000 lbs Mo/day (16 t/day) throughput at 30% Mo in the concentrate that also maximizes the rhenium recovery. This production rate is considered conservative for a MHR of this size and type.
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The post roasting off gas handling processes includes indirect gas cooling, molybdenum containing dust collection by cyclones and electrostatic precipitators for maximizing molybdenum recovery. Rhenium recovery occurs in the wet gas cleaning system followed by SO2 removal as concentrated sulphuric acid for sale. Calcine from the roaster product will be cooled and sized for further processing via an ammonium dimolybdate (ADM) plant. ADM technologies are commonly practiced by the major molybdenum producers worldwide, such as Climax Molybdenum Co., Molymet, JinDuiCheng, China Molybdenum, Co. Ltd., and New China Dragon. These technologies have been in operation for many years at production sites in the United States, Europe, Chile, and China. Concentrate Grade The feasibility study is based on the concentrate analysis in Table 13.7.1 and was provided by OMT and was based on analysing concentrate samples for Merlin. Table 13.7.1 Concentrate Feed Grade Basis to the Roaster
Element Mo Re C F Se As Hg Cu Fe Zn S H2O Flotation Reagent (Kerosene) Value (dry basis) 30% 450ppm 5% 400ppm 40ppm 90ppm 310ppm 0.45% 1.56% 0.53% 21.05% 4% 1%
Recoveries Based on OMTs experience the recoveries in Table 13.7.2 are applicable to the concentrate treatment plant design. Table 13.7.3 summarises the overall recoveries used for project economics.
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Table 13.7.2
Unit Recoveries
% Recovery 99.5% 99% 98% 85% 100% 99% 99%
Unit Operation Mo Roaster Water Leach ADM Plant Re Roaster Wet Gas Cleaning SI + IX APR
Table 13.7.3
Overall Recoveries for Concentrate Treatment Plant

Metal Mo Re Recovery 96.5% 85%
Products Table 13.7.4 summarises the Mo and Re product quality. Table 13.7.4 Product Quality
Ammonium perrhenate (NH4ReO4). 99.9% 5ppm 69.4% 3ppm 3ppm 1ppm 2ppm 1ppm 3ppm
Element Product Quality Mo Re K Na Cu Fe Ca Al Mg W Si
Pure Chemical Grade Molybdenum Oxide (MoO3) 66.6% 100ppm 25ppm 10ppm 10ppm 10ppm 10ppm 20ppm 120ppm -
Reagent Consumption Reagent consumptions for the concentrate treatment plant are based on operational experience by OMT.
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Reference Facilities OMTs operational experience is based on the following facilities:

Climax Molybdenum, Fort Madison, USA Climax Molybdenum, Langeloth, USA Climax Molybdenum Co, Rotterdam, Netherlands JDC, Xian, China China Molybdenum Co, China General Molybdenum, Eureka, NV, USA Molycorp, Washington, PA, USA Climax Sierrita, AZ, USA Cyprus Metec, NJ, USA
13.8
Recommendations for Further Testwork
The following tests are recommended to improve molybdenum rejection from the copper concentrate:
Mineralogical evaluation of the copper depression circuit tailings streams to identify whether locking is indeed the major issue. Further studies on the effect of grind size, in particular regrind size, on molybdenum recovery. Further optimisation of flotation times in the copper depression stages. Further optimisation of ORP / NaHS additions in the copper depression circuit.
As only limited amounts of Composite 1 are available for testwork, Composites 2 and 3 may need to be used for these tests. Once these parameters have been investigated and optimised then a confirmatory locked cycle test using Composite 1 should be run. If this is not successful then further quantities of ore will need to be sourced for additional flotation testwork.
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The following tests are recommended to support the process design of the concentrate treatment plant:
Roasting, water leaching and ammonia leaching of molybdenum concentrates. Three samples were initially tested at Litz and Associates in Golden Colorado USA. Further testwork is required to verify that the molybdenum oxide produced in the roaster can produce pure chemical molybdenum oxide. Ion exchange (IX) and solvent extraction (SX) testwork. The purpose of these tests is to verify that the reagents specified by the OMT will perform as expected. The following processes will be tested: ion exchange for the recovery of molybdenum from the water leach filtrate; solvent extraction for the recovery of the rhenium from the rhenium containing weak acid from the wet gas cleaning plant using a synthetic sample; ion exchange for the purification of the rhenium containing liquid from the solvent extraction step using synthetic sample.
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MERLIN MOLYBDENUM RHENIUM PROJECT NI 43-101 REPORT - MINERAL RESOURCE ESTIMATE
Page 14.1
14.0 14.1
MINERAL RESOURCE ESTIMATES
Resource Domains
Geological domains are used to separate mineralisation of different mineralisation style or statistical nature. Domains attempt to create zones of statistical stationarity, where structure and controls are constant. When achieved, the domains are then suitable for statistical and geostatistical analysis and for grade estimation. 14.1.1 Grade Domains
Mount Dore South consists of a deeply weathered Cu system where domaining is relatively simple and based solely on Cu mineralisation, geology and structure. Mount Dore North Merlin has a significantly shallower weathering profile and polymetallic mineralisation that complicates domaining, with overlapping Cu-Mo-Zn dominated zones. This can be considered as two separate mineralisation packages. The upper package consists of Cu mineralisation structures within a broader zone of Zn mineralisation. The lower package which is the focus of this study is defined by the combination of:
Discrete consistent high grade Mo-Re mineralisation at Merlin. Higher grade Cu that is variable, but often within the same Merlin structural corridor. A broader zinc and Cu zone of mineralisation at depth. A broad zone of low grade Mo-Re underlying Merlin in the upper to middle depth extent of the package.
To resolve the polymetallic complexity, concentric domains are used to constrain the discrete economic target structures or zones with Cu for Mount Dore and Mo-Re for Merlin. Outer domains are then used to constrain the remaining anomalous and potentially economic polymetallic mineralisation, where present. Domains were first completed for the most economically significant elements, and then zinc and polymetallic domains were determined to incorporate the Cu and Mo-Re domains and remaining mineralisation. Mo Domaining (MODOM) Domaining based on Mo grade is based on a single nominal cut-off of 0.5% Mo to define the discrete mineralising structure that constitutes Merlin. This comprises narrow zones of massive molybdenite carrying high grade Mo and Re grades, either as a single narrow zone or a closely spaced cluster of narrower intercepts. The Merlin mineralisation consists of a distinct molybdenite rich narrow breccia zone with grades typically >10% Mo over short intervals.
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Page 14.2
The regular 2 m core sampling that was adopted for Cu mineralisation and used throughout the Merlin drilling campaign until 2010, has resulted in non selective sampling and produced a range of Mo grades from the typical rich intercepts to more moderate grades in 2 m samples. This relatively large sample size has contributed to considerable edge dilution and the smoothing of the grade distribution. Despite this dilution, the Merlin resource is of sufficiently high grade that a cut-off 0.5% Mo offers excellent discrimination of the high grade Mo zone into 4 defined narrow structural domains that display sufficient continuity to warrant separate grade estimation. The definition of the Merlin structural domains effectively accounts for all high Mo and Re grades from the remaining material, minimising any chance of smearing or overestimating Mo and Re in lower grade areas. The narrow structural domains present a target for narrow selective underground mining options. Re displays a close relationship with Mo and its occurrence and maximum concentration is intimately related to molybdenite occurrence and hence Mo grade. The segregation of the very high grade Mo and Re samples is well justified to improve the volume and grade estimates. A very good correlation exists, indicating an intimate association of the two metals (refer to Figure 14.1.1). Owing to the high molybdenite occurrence, Mo also correlates well with sulphur (S), though other sulphides also occur.
Figure 14.1.1
Scatter Plot of Mo versus Re, Cu, S and Zn Assays for Merlin Samples
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Page 14.3
The correlation of Mo with Zn and Cu is relatively poor. This is consistent with the interpreted occurrence of Cu which occurs in the same structural corridor but often drifts away from the high grade Mo zone at Merlin. Cu and Zn also increase with depth, becoming increasingly significant away from the main Merlin Mo-Re zone. The surrounding lower grade Mo mineralisation is included within an outer polymetallic domain. The statistical basis for domaining the high grade Mo zone (Merlin) using a cut-off grade of 0.5% Mo is supported by the distribution of grades (refer to Figure 14.1.2). Note that the histogram bin size changes to allow all the data to be plotted as the high grade tail is very long. Inclusion of grade margins, dilution and interburden within the Merlin interpretation incorporates many low to medium grade Mo samples below the 0.5% Mo cut-off. This occurs to the extent where most samples greater than 0.25% Mo are included in the interpretation. Mo is generally situated below the oxide weathering surface and generally displays little effective change across the weathering boundaries. Molybdenite appears to remain largely unoxidised in near surface high grade areas, such as Little Wizard. There is no expected loss of recovery due to oxidation that would warrant metallurgical domaining.
Figure 14.1.2
Mo and Re Grade Distribution for Lower Mineralisation Package
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Page 14.4
Cu Domaining (CUDOM) Domaining for Cu is in the Mount Dore North upper mineralisation package and Mount Dore South is based on a 0.25% Cu cut-off. This cut-off is supported by the grade distribution displayed in Figure 14.1.3 where there is an inflection in the grade profile at around 0.2% Cu. At this cut-off, interpretable domains can be defined that have significant continuity. Mount Dore South is predominantly a single wide shallow dipping zone within predominantly oxidised or partially oxidised material. At Mount Dore North it defines narrow zones that are within zones of lower grade or interburden.
Figure 14.1.3
Cu & Zn Grade Distribution for Upper Mineralisation Package & Mount Dore South
Excluding the Cu associated with Merlin in the lower mineralisation package, a total of six Cu mineralisation structures can be defined, with three in the upper Mount Dore North mineralisation package and three at Mount Dore South.
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Page 14.5
The 0.25% Cu cut-off criteria was relaxed to allow the inclusion of contiguous mineralised samples down to a lower cut-off of 0.15% Cu. This improved the interpretability of the domain structures which becomes more difficult as infill drilling progresses. This process also includes some edge dilution softening the hard domain boundary approach used for estimation. Polymetallic Domaining (P_DOM) Domaining on a Cu equivalent basis allows multiple elements to be considered for an encompassing polymetallic domain within Mount Dore North. Two discrete polymetallic domains are interpreted that define the upper and lower Mount Dore mineralisation packages. For the upper package, the polymetallic domain is based largely on the inclusion of Zn with Cu. There are only a few isolated locations where Au and Co are significant. Drilling at Mount Dore North has indicated that Zn and Pb incorporate all Cu domains below the oxidation profile and that the Zn mineralisation is more dispersed than the tighter Cu mineralisation. This approach is complicated by Zn and Pb, which are partially leached in the oxide and transition zones resulting in lower grades near surface. Grade distribution in Figure 14.1.3 for Zn indicates the upper package has considerable dilution and low grade has been included to define the overall package. The polymetallic domain for the upper package is based on a variable element occurrence that is dominated by:
Cu along the main Merlin structural corridor. Low grade Mo around the main Merlin structure, typically a few metres above and 20 m below the footwall. Zn and Cu in the down dip areas where low grade Mo is less common.
Cu equivalence was calculated using the available recovery and price assumptions from an early draft of the scoping study completed for the Project (SRK, 2010). The use of the Cu equivalence factor is used only as an interpretive tool to ensure significant mineralisation for some elements such as Zn are included in a concentric outer envelope that surrounds the main Cu and Merlin domains. Geology Domains (ROCK) A relogging program was undertaken in mid 2010 to resolve the inconsistencies in the geological logging and bring all drill holes up to the same standard of coding. Geological domaining was undertaken by an IAL site geologist and is based on 100 m spaced sections logged to date. Structural modelling is ongoing, however the current interpretation includes some faulting to account for the significant offsets noted during the relogging (refer to Figure 9.2).
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Page 14.6
Weathering Domains (MINL) In 2010, IAL undertook a relogging program to provide a more standardised basis for the definition of the oxidation profile based on physical characteristics, without the partial integration of assumed leaching characteristics. The logging was completed on 100 m sections and focused on the definition of two surfaces to define the three principal weathering types, defining the MINL domains. These surfaces include:
Base of complete oxidation (BOCO) - This is the contact between completely and partially oxidised material types based on degree of degradation of the core, conversion of feldspars to clay and internal limonitic dissemination throughout the core. Base of partial oxidation (BOPO) - This is the contact between partially oxidised and fresh material types and is based on the amount of oxidation on joint and fracture planes, presence of clays on fractures and presence or absence of calcite or vughs throughout the core.
The oxidation surface models are approximate as they are only compiled on 100 m sections, there is some intermixing of materials locally, oxidation logging includes some subjective decisions and there is sufficient faulting and other variation to complicate the simple surface model. The definition of the codes and associated wireframe models for each individual domain is defined in Table 14.1.1. Combined Domains (DOM) Although each domain for Cu, Mo and polymetallic mineralisation are defined and flagged separately these are combined for estimation and analysis purposes using an order of precedence that includes:
MODOM: Mo domains take precedence. CUDOM: Cu domains. P_DOM: polymetallic domains.
Since the polymetallic domains are defined by a copper equivalent cut-off they provide outer shells that encapsulate much of the copper domains. The polymetallic wireframes ignored areas adequately modelled by the copper domains and targeted only significant areas where additional value is provided by other elements, most notably low grade Mo or Zn.
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Page 14.7
For the lower mineralisation package Mo mineralisation at Merlin provides the most dominant economic target for underground mining. Higher grade Cu also follows a similar structural corridor as Merlin such that it is sometimes intermixed with Merlin in places and slightly separate. Domaining around Merlin has changed from the low grade Cu threshold used in 2010 and September 2011, to an encompassing dilution zone where it is warranted and a zone that extends to follow higher grade copper targets that may warrant extension of the underground development. Isolated higher grade zones and other low grade mineralisation is included in a broader polymetallic domain. The combination created three concentric domains. Table 14.1.1
Domain Field/ Value MODOM 4 5 6 7 CUDOM 1 2 3 4 6 7 P_DOM 1 5 7 REGION 10 20 30 MINL 2 3 4 LITH 1 2 3 4 5 Little Wizard Merlin - main vein Merlin - vein 6 Merlin - vein 7 Cu Mineralisation Upper sequence - vein 1 (north only) Upper sequence - vein 2 (north & south) Upper sequence - vein 3 (north only) Upper sequence - vein 4 (south only) Lower Sequence - vein 6 (south only) Lower Sequence - vein 7 (south only) Poly-metallic Mineralisation Upper sequence Lower sequence main zone & dilution(includes Merlin) Lower sequence low grade zone Area & Mineralisation Package Merlin & Mount Dore North Lower Mount Dore North Upper (>28 100N) Mount Dore South(<28 100N) Geology - Oxidation Completely oxidised material Partially oxidised material Fresh material Geology - Lithology Granite Kuridala Fm. Phyllite Kuridala Fm. Black Shale & Siltstone Quartzite (SQT) Stavely Formation g1111gra g1004phy g1111kf g1111sqt X-up (footwall) X-up (footwall) X-up (footwall) X-up (footwall) default g1111BOCO g1111BOPO Z-up (ie base) Z-up (ie base) default 1111p1 1111p5 1111p7 inside inside inside 1111c1 1111c2 1111c3 1111c4 1111c6 1111c7 inside inside inside inside inside inside
Individual Domain Codes

Wireframe Name 1107m4 1111m5 1107m6 1107m7 Wireframe Projection inside inside inside inside
Domain Description Mo Mineralisation
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Page 14.8
The combined domains for waste and ore materials (excluding weathering) are defined in Table 14.1.2. The domain codes roughly define a top down sequence and split the upper and lower mineralisation sequence to allow separate statistical analysis. The change in style of mineralisation from Mount Dore South to Mount Dore North at around 28,100 m N is not well defined by drilling in that area, making it difficult to determine how the upper and lower sequence of mineralisation that is evident in Mount Dore North joins to the single sequence defined in Mount Dore South. The current interpretation arbitrarily breaks the mineralisation into a lower mineralisation package that is separate from the southern near surface package, even though in some places they align and are a natural extension. This break is made to simplify the reporting of surface and underground targets and occurs between the two current open pits at Mount Dore. Table 14.1.2
Domain 1 2 3 4 5 6 7 8 9 Description Waste Granite Waste Phyllite Upper Ore sequence: Cu Upper Ore sequence: Polymetallic Waste Kuridala Lower Ore sequence: Mo (Merlin) Lower Ore sequence: High Cu & Dilution Lower Ore sequence: Polymetallic Waste - Quartzite and Suavely
Combined Domain Codes

Condition No mineralisation and ROCK = 1 No mineralisation and ROCK = 2 CUDOM > 0 CUDOM = 0 and P_DOM=1 No mineralisation and ROCK = 3 MODOM = 4,5,6,7 MODOM = 0 and P_DOM = 5 CUDOM = 0 and MO_DOM = 0 and P_DOM=7 No mineralisation and ROCK = 4 or 5
14.2
14.2.1
Data Preparation
Drilling and Assays
Drill hole data preparation included:
Addition of any missing sample intervals to the assay table. Splitting of long intervals back to 2 m intervals or less. This mostly affects unsampled intervals and assists compositing. Merging of available density data to sample intervals. From available drill hole geological logs and core recovery logs allocate unassayed intervals as unsampled recovered core or missing samples due to lost core recovery. Domain flagging in Vulcan software (refer to Table 14.1.1).
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Page 14.9
Application of default grades where selective sampling of recovered core may otherwise lead to estimation bias. This mostly affects waste areas in the oxide Cu domain at Mount Dore South where there is historic drilling. Compositing to 2 m intervals since most sampling was on regular 2 m intervals. Only non 2 m intervals were composited to avoid sample deflation in areas where 2 m samples were offset down hole. Calculation of declustering weights for statistical analysis. Top cutting of extreme grades after compositing, as defined in Table 14.2.1, was roughly based on the 99th percentile of potentially economic elements in groups of domains and weathering zones. Little Wizard was treated separately due to its small extent and high Mo and Re grade. Recovery
14.2.2
IAL record core recovery as a separate log based on core runs. Where there is no core recovered there can be missing logged intervals. Consequently the assay database was first filled with gaps, split on core run intervals and then average core recovery assigned to each down-hole assay interval. Where a drill hole has recovery logs but some intervals and assay results were missing then a 0 recovery was assigned, allowing the missing recovery data to be filled. The average recovery of 96% for all IAL diamond drilling should be revised down by 1% to account for the lost core where no recovery records were entered into the database. Recovery data is available for most IAL drilling. QG (2009) note poor recovery near surface at Mount Dore South in the earlier IAL drilling. The available data does not support this observation and further investigation is required.
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Table 14.2.1
Area Month Dore North Lower MINL Oxide Trans Fresh Oxide Month Dore North upper Trans Fresh Oxide Month Dore South Lt Wiz. Merlin Oxide Waste Trans Fresh Trans Fresh Cu % 1 3 3 1 4 2 4 5.5 4 5.5 3 0.2 0.3 0.3 Au ppm 2 0.75 0.75 2 0.75 0.75 2 0.75 0.75 1.5 0.7 0.6 0.5 0.5
Top Cuts by Grouped Domains

Ag ppm 15 50 50 15 50 50 15 50 50 50 50 20 20 20 Co ppm 200 400 400 200 500 500 900 900 1200 70 400 100 200 200 Fe % 25 25 25 25 25 25 25 25 25 25 25 25 25 25 S % 0.1 5 10 0.4 10 10 0.1 5 10 14 10 0.1 1 2.5 Pb % 0.1 1 0.6 0.1 0.6 0.6 0.1 0.2 0.3 0.02 0.4 0.3 0.4 0.4 Zn % 0.6 1 3.5 0.6 2 3.5 0.2 1 3 0.02 3 0.1 0.4 0.8 Mo % 0.1 0.5 0.5 0.1 0.5 0.5 0.1 0.1 0.1 20 10 0.04 0.1 0.1 Re ppm 0.2 6 6 0.2 2 2 0.2 5 5 300 150 0.2 1 1 Density 3 t/m 2.7 3.2 3.2 2.7 3.2 3.2 2.7 3.2 3.2 3.2 2.9 2.7 2.8 3.2
14.2.3
Dry Bulk Density
IAL determined bulk density from half core samples using several Archimedes based methods on site. Density data is derived from historic measurements and regular determinations every 5 m to 10 m from 2007 to mid 2009 for all core. IAL undertook a trial of different methods after which the slow wax method was replaced with a simple quicker water immersion method for measuring density on diamond core. Regular density measurements resumed in 2011 using a simpler water immersion method. Table 14.2.2 summarises the density determination methods for the available Mount Dore - Merlin data. Table 14.2.2
Company IAL Previous Company Total
Summary of Density Measurements

Number of Density Measurements 2,027 7,138 2,207 1,457 12,829
Density Method Water Immersion (2011) Waxed (pre 2010) Unknown Water Immersion
At times multiple density determinations were available for the same sample interval. This provides comparisons that relatively low variance and the difference between the available methods supports the use of all the available data as consistent and appropriate.
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Page 14.11
Table 14.2.3 summarises the dry bulk density data for each combined mineralisation-lithology domain and weathering type. Bulk density varies slightly with the degree of oxidation, however there is relatively little variation in density for the different lithology and mineralisation domains. The consistency of dry bulk density samples taken across Mount Dore - Merlin can be attributed to the relative lack of other sulphide minerals such as pyrite and the pervasive alteration that has made most lithology types similar. Even Merlin (Dom=6), which contains high grade molybdenite (a very dense mineral), does not appear to display larger density values on average. Table 14.2.3
Domain (DOM) 1 2 3 4 5 6 7 8 9 Total
Dry Bulk Density Averages by Domain and Weathering Type

Domain Description Waste: Granite Waste: Kuridala Upper Cu Upper Zn Waste: Kuridala Lower Mo Lower Cu Lower Zn Waste: Footwall 2.35 Average Density Oxide 2.38 2.22 2.61 2.11 2.46 2.62 2.69 2.55 Trans 2.48 2.55 2.48 2.60 2.49 2.54 2.56 2.51 2.57 2.50 Fresh 2.59 2.68 2.67 2.67 2.70 2.64 2.67 2.67 2.63 2.67 Number of Sample Intervals Oxide 31 68 26 7 20 1 1 2 0 156 Trans 202 334 1,939 289 961 52 44 57 76 3,954 Fresh 156 600 878 584 918 371 321 683 299 4,810
14.2.4
Default Grades
Selective sampling of drill core can result in estimation bias when only samples with visible mineralisation are selected for assaying. This bias is present in only a few early drill holes within the mineralised zones. It is more systematic in the peripheral waste zones, where the estimation of low grade mineralisation, waste and possible dilution material may become biased if the selective sampling is not addressed. For grade estimation purposes, all unsampled intervals were assigned a default grade of 0.001 for all potentially economic elements including Cu, Mo, Re, Zn, Pb, Au, Ag and Co. Other non economic elements such as Fe and S were left as missing. Table 14.2.4 summarises the proportion of each domain that is unsampled and set to default grades and that designated as lost core and left as missing and ignored during compositing.
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Table 14.2.4
Lost m 1,480 57 40 10 1,588
Sample Completeness Summary

Sampled m 63,433 7,959 9,725 6,847 87,964 Unsampled m 17,196 20,989 6,170 742 45,096 Lost % 2% 0% 0% 0% 1% Sampled % 77% 27% 61% 90% 65% Unsampled % 21% 72% 39% 10% 33%
Company
Drill Type DDH RC DDH Percussion Total
IAL
Previous Companies Total
14.2.5
Compositing
The majority of the drilling has been sampled on regular 2 m intervals. Only some sub-sampling or irregular intervals were undertaken by IAL. Prior to IAL ownership, some early drilling was sampled on less regular intervals. Though the estimate for open pitable Cu oxide resource could justify a larger composite size, 2 m was retained for all estimation and analysis as the preferred composite length as this will support selective open pit and underground mining options. Compositing the available data to 2 m presents potential variance deflation issues in some selected areas as there are several drill holes where sub-sampling down-hole at a geological contact has not always been followed by a regular sampling protocol. In most cases sampling returned to the 2 m regular intervals set from the drill collar, but in some cases the sampling returned to 2 m intervals from the geological contact. This presents an issue for generic compositing routines to achieve composite files that do not result in variance deflation. An adapted smart compositing approach was adopted whereby samples were only composited in Vulcan software if the samples were not within the desired length of 1.9 to 2.0 m, noting that all intervals larger than 2 m were already split to a maximum of 2 m. This was implemented by first assessing the database using a Visual Basic program to determine if the samples required compositing. Lost core was treated as missing during compositing and unsampled intervals were assigned default values for all elements with potential economic significance (other elements were treated as missing). Majority rules were used to preserve the flagged domain codes. The composites were assessed visually and statistically along the mineralisation boundaries to ensure the original sub 2 m intervals still honoured the boundary interpretations, which were based on the original sample intervals. This involved adjusting the interpretation for the Cu and polymetallic domains to reflect 2 m selectivity and enforcing the Mo domain boundary to break the compositing. Figure 14.2.1 displays the progression of the sample database from original intervals (left), split samples (middle) and final 2 m composites (right). For the entire database there are relatively few sub 2 m composites remaining after compositing.
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Page 14.13
Figure 14.2.1
Distribution of All Sample and Composite Lengths
Recent sampling protocols by IAL allow for sub-sampling and assaying less than 2 m intervals in and around the Merlin high grade Mo domains. Figure 14.2.2 compares the distribution of original samples and final 2 m composites for the high grade Mo domains at Merlin. This indicates that some 1 m and 1.5 m samples remain which require length weighting during estimation to avoid estimation bias that may result from the shorter intervals. Composites for Mount Dore Cu domains in Figure 14.2.2 indicate the majority of composites are 2 m in length and the inclusion of default grades within the domain is relatively small.
Figure 14.2.2
Distribution of Merlin Domain Sample and Composite Lengths
For only the mineralised domains, where selective sampling and the effect of default grades is minimal, it is possible to compare the length weighted average grades for the original samples and 2 m composites (refer to Table 14.2.5). The metal content is expected to increase due to both the addition of default grades to unsampled intervals and the handing of lost core which has been ignored and effectively assigned grades from neighbouring samples.
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Table 14.2.5
Average Length-Weighted Grades Before and After Compositing

Original Intervals 2 m Composites Length (m) 44,286 0.39 0.08 4.5 67 3.09 0.85 0.05 0.28 0.07 1.5 2.59 87 534 17 42 90% 89% 85% 79% 72% 70% 80% 80% 74% 55% 21% 72% 70% 78% 72% 44,217 44,217 44,217 44,217 33,822 32,778 44,217 44,217 44,217 44,217 10,451 33,822 32,778 36,375 33,822 0.38 0.08 4.1 57 3.10 0.85 0.04 0.23 0.06 1.0 2.59 87 534 17 43 100% 100% 100% 100% 76% 74% 100% 100% 100% 100% 24% 76% 74% 82% 76% Mean Grade Completeness
Element
Length (m) 44,422 40,134 39,322 37,557 35,293 32,165 31,102 35,628 35,627 32,658 24,218 9,427 32,166 31,102 34,485 32,166
Mean Grade
Completeness
Total Cu % Au ppm Ag ppm Co ppm Fe % S% Pb % Zn % Mo % Re ppm Bulk Density As ppm Mn ppm U ppm Ni ppm
The results for Cu indicate a small decrease in average grade, with a similar metal content for Cu, which is assayed consistently across the deposit, except for a few older drill holes where default grades have reduced the mean grade. The significant decrease in the mean grade for Mo, Re, Zn and Pb are a result of the inclusion of default detection limit grades for significant areas of older drilling throughout Mount Dore. This is mostly from early Mount Dore South drilling that was completed before the discovery of the Merlin and polymetallic zones further to the north. It is also from some more recent drilling which was selectively sampled to expedite the drilling results for the current study. The default samples are mostly situated in the oxide Cu domains of Mount Dore South where Zn and Mo mineralisation is not recognised to date. Though some Cu mineralisation could exist within the unsampled intervals the addition of the default grade will ensure neighbouring grades are not over extrapolated past drilling where logging did not recognise any mineralisation. Increases in the metal content and grade for the Merlin subset are present and relate to the fact that 8% of the core intervals within the interpreted Merlin domain are missing and logged as lost core. The current compositing practice essentially assumes lost core is of equal grade to the neighbouring cored samples. This adds 21% additional metal to the sampled core intervals, including a 10% increase in average grade. The increase in grade is indicative of lost core generally being near higher grade Mo zones. This is often observed to be in clayey zones associated with significant Mo mineralisation.
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The practice of isolating lost core intervals, rather than recording these within longer lower recovery intervals, contributes to the observed change in grade during compositing. 14.2.6 Declustering
Declustering was used remove potential biases in sample statistics that can arise from variable drill density. This can arise from purpose driven infill drilling of higher grade areas and local clustering and drill spacing variations due to inherent issues with placing drill holes and completing a deep drilling program used to define the Merlin mineralisation. Normal cell declustering without any boundaries can present issues for structural deposits where the edge cells become overweighted as the cell size is increased. A modified cell declustering algorithm, weighting the cells to the block model volume within each cell, was used. This allows domains to be declustered separately without introducing any boundary issues. The cell size was optimised for a cubic window size of 100 m and the origin offset 10 times. The calculated weights were used in addition to the sample length to weight samples for declustered statistics and log-probability plots.
14.3
Variography
The 2 m composites with top-cuts applied were used for all variogram analysis. Traditional semi-variograms provided erratic results in some instances and a combination of semi-variograms and inverted correlograms were used as a basis for all variogram modelling. All semi-variograms were scaled to the domain variance to enable the different variogram and correlogram types to be overlayed at the same scale. Variogram maps for the major element domains were assessed to ensure that the variograms support the shape and structure of the domains, which predominantly strike north-south and dip on average 50 towards the east. No variograms indicated any significant trend within the plane of mineralisation. This lack of plunge was also the case for Mo and Re where the overall grade trends suggest a northerly plunge might be present. The oxide Cu suggests a greater continuity northsouth than down dip. Despite this indication the geological interpretation still indicates reasonable down dip continuity for Cu, though this may be lost for Zn which is leached and occurs only in deeper patches in the oxide zone. Variogram models were primarily based on the inverted experimental correlograms and are plotted in black in all figures. In all cases the experimental semi-variogram was overlain (in green) and used to assist the interpretations. The semi-variograms suffer from being both erratic and not converging to the expected sill due to occurrence of grade pods within the resource. The semi-variograms were used as a guide to the shape and suitability of the correlograms for modelling and estimation.
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The dip of the principal mineralisation varies along the strike length from near vertical in the deeper sections of the Merlin Mo domains to near horizontal in flexures towards Mount Dore South for Cu domains. To remove these structural changes simple unfolding of the variograms and correlograms to a north-south reference plane dipping 50 towards the east was used for the principal model orientations. The validity of the variogram model derived from the unfolded composites was verified by overlaying the variogram models with directional semi-variograms and correlograms. Down-hole variograms with a lag of 2 m was used for all cross strike model orientations. Down-hole orientations vary from 60 to 90 towards the west and represent oblique intersections. Separate assessment of variograms at 60 to 90 was found to provide some conflicting results as the different orientations tend to be clustered. In most cases the down-hole data from the various orientations were combined to provide more robust results. However, some small longer range structures were ignored in some instances, where these were found to be present only in the vertical drill holes and likely to be slight down dip effects from the more dip parallel drilling. The majority of the drilling is spaced at 50 m. There is only limited regular 25 m infill drilling with other closer spaced drilling occurring in only some localities, such as at crossing drill holes, twin holes, near surface Mount Dore South drilling, 12.5 m infill at Little Wizard. Since many variogram structures appear to be less than the 50 m spacing, a 12.5 m lag was selected for unfolded experimental variograms and correlograms in order to provide sufficient lags to model the indicated structures. Longer 25 m lags were used for the directional variogram validation. Additional variogram parameters used in most cases for the unfolded variogram calculation include:
One or two structure spherical scheme models. Horizontal angle of 45 for modelling and 15 for assessing possible plunges. Vertical angle of 25. Horizontal distance of 50 m within the unfolded plane. Vertical distance of 6 m across the unfolded plane. Variogram models used a two to three structure spherical model in all cases.
The relatively short ranges evident for most variograms and the use of a short lag to help define these structures, at a quarter of the general drill spacing, make the variogram model particularly sensitive to the limited clusters of close space drilling and localised data arrangements.
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Initial analysis indicated considerable similarity between the variogram structures for some element groups, notably:
Zn Pb. Cu Co Au Ag. Mo Re. S Density. Fe.
Where possible, variogram model parameters were retained at similar values between orientations, domains and elements, so as not to produce artefacts in grade estimation. In particular, this was done to ensure element relationships or correlations evident between samples are respected implicitly during estimation and reflected in the mineral resource estimate. A 20 plunge to the North is evident in some cases, however there is insufficient data arranged in this orientation to provide reliable models. In most cases the domains were unfolded and the principal strike and down dip orientations modelled. This provides an approximation to the assumed plunge. The domains modelled for Mount Dore, with examples in Figure 14.3.1, include:
Cu Fr The fresh and transition zones of the Cu domains (CUDOM>0) were combined and unfolded to a generalised surface that reflects the variation in dip. Mount Dore North and South areas were assessed separately but were not found to vary sufficiently to warrant separate modelling. All elements were found to generally conform to the Cu variogram model. Orientations conform to a northerly plunging flattened anisotropy. Zn Fr - The fresh and transition zones of the polymetallic Mount Dore upper domains (P_DOM=1) were combined and unfolded to a generalised surface that reflects the variation in dip of the Cu zones. All elements were found to generally conform to the zinc variogram model and that modelled for the Cu domains. Orientations conform to a northerly plunging flattened anisotropy. Cu Ox The oxide Cu domains are relatively small at Mount Dore North and the variograms are dominated by Mount Dore South. Investigations indicated a significant change in variogram structure is present with a sub-horizontal down dip component. Unfolding was not applied as this orientation does not conform to the general structure. Instead, it is slightly shallower than the generalised geological dip and may be a result of a combination of geological flattening in the up-dip areas within the oxide domain and possible redistribution of mineralisation during weathering. For consistency with the other domains the major axis remains in the north-south orientation and the semi-major axis modelled with the longest range. All other elements were found to generally conform to the Cu variogram model.
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Cu correlogram models for Cu Fr copper fresh and transition domains
Cu correlogram models for Zn Fr copper fresh and transition domains
Cu correlogram models for Cu Ox copper oxide domains
Figure 14.3.1
Mount Dore Example Variogram Models
The domains modelled for Merlin, with examples in Figure 14.3.2, include:
Mo HG The high grade Mo-Re Merlin domain was unfolded to the principal structural planes. Three sets of variograms were identified and modelled based on the Cu, Zn and Mo variograms. Mo MG The medium grade zone around Merlin, which includes a dilution zone and some higher grade Cu and Zn extensions to Merlin provides a relatively small domain and data set. An omniplanar model was established for Cu. Mo LG - The low grade polymetallic zones is a mixed domain with different components dominated by anomalous Mo, Cu or Zn. The variogram are more erratic due to the occurrence of some stringer zones and a generalised model has been adopted. Cu MG The medium grade Cu zone at Mount Dore North Lower, surrounding Merlin is not robust as it was developed predominantly for dilution modelling and has the central core removed for the Merlin domain. The Mount Dore upper Cu models were applied and display suitable correlation to the experimental variogram for estimation purposes.
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Mo, Zn & Cu correlogram models for Merlin high grade domains (DOM=6)
Cu correlogram models for Merlin medium grade domains (DOM=7)
Figure 14.3.2
Example Variogram Models for Merlin Mount Dore North Lower
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Variogram models are summarised in Table 14.3.1. Table 14.3.1

Nugget C0 Cu FR Zn Fr Cu Ox Mo HG Mo HG Mo HG Mo MG Mo LG Cu * Cu * Cu * Cu & Co Au Ag Zn & Pb Fe S SG Mo & Re Cu * Cu * 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 Differential Sills C1 0.3 0.3 0.4 0.4 0.3 0.3 0.4 0.4 C2 0.3 0.3 0.4 0.4 0.5 0.5 0.4 0.4 C3 0.2 0.2
Variogram Models
Minor Axis (Down Hole) H1 4.5 4.5 11 11 3 3 11 11 H2 20 20 15 11 15 12 11 11 H3 20 20 Major Axis (Strike N-S) H1 10 10 10 20 20 30 20 20 H2 25 25 45 80 80 60 80 80 H3 150 150 Semi-Major Axis (Down Dip) H1 10 10 10 20 20 30 20 20 H2 25 25 120 80 80 70 80 80 H3 80 80
Domain
Element(s)
* Model applied to all other elements
14.4
QKNA
Quantitative Kriging Neighbourhood Analysis (QKNA) was undertaken to assist in selecting the search parameters. Three trial blocks were used to determine the sensitivity of the model estimates to the selection of the estimation parameters, and in particular search radius and number of samples. QKNA analysis is method of assessing the different search parameters for ordinary kriging by assessing four parameters including:
Slope of regression. Negative kriging weights. Reliance on simple kriging mean. Kriging variance.
Mount Dore and Merlin are relatively evenly drilled on 50 m grid centres that equate to a 50 m north-south by 70 m down dip drill hole spacing. Exceptions to this general spacing include:
Little Wizard drilling at 12.5 m centres for a small target area. At Merlin and Mount Dore North there are two 25 m lines of drilling with 50 m spaced drill holes on a diagonally offset grid. Fanning of drill holes to drill the depth extent of Merlin has resulted in some closer spaced drilling data in the upper sequences of mineralisation at Mount Dore North. A small area of shallow close spaced RC drilling in Mount Dore South. A few sections of wider spaced lines to the south and north of the drilled areas where infilling is not complete or not warranted.
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The general drill hole spacing would indicate a minimum strike and down dip search range of greater than 50 m is required for adequate sample selection. QKNA analysis confirms that a minimum 75 m lateral search is required to produce near optimal results. Block sizes used for parent cell estimation vary from 5 m E by 5 m RL for underground targets at Merlin to 10 m E by 10 m RL for open pit estimation. The majority of the mineralisation at Merlin and Mount Dore dip from between 30o to 80o and average around 50o. This angle increases the width of the search range required to ensure sufficient samples are used in grade estimation. The block is wholly defined and the data is not a subset with respect to the true area of influence needed for parent cell estimation. For this reason, it is recommended the minimum required cross strike search range required for grade estimation should be 8.5 m and 17 m respectively for the two parent cell sizes.
14.5
Geological Block Model
The block model mod1111v1.bmf has 1,145,602 blocks created in Maptek Vulcan Software V8.02, using multiple parent (maximum) block sizes for different domains, as defined in below in Table 14.5.1. Table 14.5.1
Model Parameter (m) Model Origin Model Limit Model Extent Parent Block Size (HW & FW waste, DOM=1,9) Parent Block Size (Kuridala ore & waste, Dom=2,3,4,5) Parent Block Size (Merlin high grade Mo, DOM=6,8) Parent Block Size (Little Wizard MODOM=6) Sub-block Size
Model definition
Easting 16,500 18,000 1,500 20 10 5 2.5 2.5 Northing 26,900 29,600 2,700 25 25 12.5 6.25 6.25 RL 3,700 4 ,440 740 20 10 5 2.5 2.5
Domain and category fields supplied for the model are defined in Table 14.5.2 with the values defined in Table 14.1.1 and Table 14.1.2. Sub-blocking is only undertaken for the mineralisation domain boundaries and the top and bottom of the Kuridala Formation. Other boundaries for oxidation, metallurgical domain, classification and other geological boundaries were flagged from wireframes and are not sub-blocked. This is commensurate with the accuracy of the models which are largely based on 100 m section interpretations. Additional categorical values, including the main domain code DOM (derived from the combination of Cu, Mo and polymetallic domains) are defined in Table 14.5.3.
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Table 14.5.2
Variable DOM MODOM CUDOM P_DOM ROCK MINL cu mo re ag au co fe pb zn s as mn ni u sg RESCAT REGION Default 0 0 0 0 4 2 -9 -9 -9 -9 -9 -9 -9 -9 -9 -9 -9 -9 -9 -9 -9 3 -9 Type short short short short short short float float float float float float float float float float float float float float float short short
Model field values
Description Main domain code Mo min domain flag Cu min domain flag Polymetallic domain based on Cu equivalent value Rock Code Weathering Flag estimated % value estimated % value estimated ppm value estimated ppm value estimated ppm value estimated ppm value estimated % value estimated % value estimated % value estimated % value estimated % value estimated % value estimated % value estimated % value estimated density t/m3 value Resource classification Mineralisation Package
Note that each DOM is estimated separately for all elements with the exception of:
MODOM: Mo domains are estimated independently as four separate lenses. CUDOM: Cu domains are estimated independently as six separate lenses. Lense 4 potentially represents the Mount Dore Lower sequence (i.e. the extension of Merlin) which is terminated as it coalesces with lenses 2 (the main upper sequence lenses that extends from Mount Dore North), at around 27 700 mN. P_DOM: polymetallic domains estimated independently as three separate lenses. MINL: Oxide is estimated separately to transition-fresh material.
Validation of the blocking accuracy was undertaken:
Visually, where blocking accuracy was viewed and corrected, particularly with regard to enforcing minimum 2.5 m horizontal width for the thin Merlin high grade Mo interpretations.
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By undertaking volume checks between the individual wireframes and block model codes indicate minimal global difference. Table 14.5.3 Additional categorical value definition
Value 1 2 3 4 5 6 7 8 9 1 2 3 4 0 10 20 30 Description Waste: HW Granite Waste: Upper Kuridala FM Min: Upper Seq - Copper + Zinc Min: Upper Seq - Zinc Waste: Lower Kuridala FM Min: Lower Seq - High grade Mo (Merlin) Min: Lower Seq - Copper + Zinc Min: Lower Seq - Zinc Waste: FW quartzite etc Measured Indicated Inferred Unclassified Waste Lower Mount Dore North mineralisation package, including Merlin Upper Mount Dore North mineralisation package Mount Dore South mineralisation package
Field Description
Field dom dom dom dom
Combined Domain
dom dom dom dom dom rescat rescat rescat rescat region region region region
Resource Classification
Region (Mineralisation Package)
Figure 14.5.1 displays the wireframe models in plan view to compare their extent. Note that the polymetallic domain includes the Cu domains. The abrupt southern extent for the polymetallic domain is only due to its extension along the existing Cu interpretations to extend the interpretation. The polymetallic zone becomes progressively smaller south of 28 100 mN.
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Indicated Resource Classification Polygon Overlain
Figure 14.5.1
Plan View of Wireframes for Mo (left), Cu (middle) and Polymetallic (right) Domains
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Page 14.25
Figure 14.5.2 displays example cross sections for the different coded fields.
Figure 14.5.2
Mount Dore North Section 28 600N Model Categorical Fields and Domains
14.6
Grade Estimation Parameters
Estimation by Ordinary Kriging (OK) was performed for all domains, with grade estimation for the parent cells listed in Table 14.5.1 and not the sub-cells. The parent cell size was used to limit the maximum size of the blocks to different sizes depending on the mineralisation type and anticipated mining method. The two predominant parent blocks sizes used for mineralised material includes:
10 m by 25 m by 10 m for mineralised waste and upper sequence mineralised sequences including all of Mount Dore South. This includes all areas that present a potential open pit target based on the current scoping study development plan. This block size is considered a suitable size for estimation of open pit Cu targets and is well supported by the 50 m drilling grid.
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5 m by 12.5 m by 5 m for all lower sequence mineralisation at Mount Dore North (i.e. north of 7 604 950 mN). This includes the narrow Merlin high grade Mo mineralisation that presents a narrow stope target where blocks much wider than 5 m would be an issue for grade estimation with the majority of the parent cell lying well outside the vein. Defined high grade Cu also presents as narrow lens in places requiring a narrow block width. The smaller block size of 5 m by 12.5 m by 5 m has been used for the wider lower grade Cu and polymetallic zone to provide opportunity for modelling stringer zones.
Search parameters were selected on the basis of the general drill spacing of approximately 50 m and QKNA results. Three search passes were undertaken as follows:
Pass 1: 75 m by 75 m by 20 m (strike, down dip and cross strike orientations). Pass 2: 150 m by 150 m by 30 m. Pass 3: 300 m by 300 m by 60 m.
All estimates were restricted to a maximum of 36 samples for Cu, polymetallic and waste zones and to a maximum of 20 composites for the narrow Merlin zone that used a smaller parent block size. The blocks were re-estimated if insufficient drill holes or number of composites were available on the previous search pass, such that the estimation passes enforced:
Pass 1: Minimum 10 composites from a minimum of 4 drill holes. Pass 2: Minimum 10 composites from a minimum of 4 drill holes. Pass 3: Minimum 2 composites.
Some parameters were varied on the basis of the two principal parent block sizes:
Open pit 10 m by 25 m by 10 m blocks or larger: Discretisation: 2 by 5 by 2 Maximum of 9 composites per drill hole Maximum of 36 composites.
Underground 5 m by 12.5 m by 5 m blocks or smaller: Discretisation: 2 by 5 by 2 Maximum of 5 composites per drill hole Maximum of 20 composites.
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Weighting the estimates by composite size avoids potential bias issues with the sub 2 m composites. Variables estimated by OK used the variogram models presented in Table 14.3.1. Cu and polymetallic domains were estimated separately for oxide and transition and fresh material using different variogram model parameters. The estimated variables included:
Potential economic elements Cu, Co, Zn, Pb, Mo, Re, Au and Ag with assigned default grades to avoid bias introduced by selective sampling of drill core. Non-economic elements Fe and S without assigned default grades. Dry bulk density measurements averaged for composite intervals.
Grade estimation was undertaken using Golder in-house software. This allowed the unfolding to individual surface or solid models. These were used to account for the small variations in dip that occur throughout the deposit. Most mineralised domains were unfolded to the middle of each mineralised wireframe (refer to Table 14.1.1). The main lower polymetallic domain (P_DOM=5) contains a bifurcation which complicates unfolding. A simple surface model following the top of the main Cu or Mo mineralisation was used for unfolding in this case. This surface was also used for unfolding the Kuridala Formation unmineralised material (DOM=2, 5). Hangingwall granite waste material was unfolded to the base of the granite. Footwall waste units were unfolded to the top of the quartzite.
14.7
Estimation Results
To ensure completeness of the block estimates and avoid potential issues for missing grades during mine planning the third and final search pass used large search radii to ensure most relevant blocks were assigned estimated grades. This ensured that nearly all mineralised blocks were assigned estimates. Remaining unestimated values in mineralised and waste domains were assigned 0.001 for potentially economic values and average domain grades for Fe and S. Figure 14.7.1 demonstrates the block grade estimates for the principal economic elements.
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Page 14.28
Figure 14.7.1
Mount Dore North Section 28 600N Model Estimates for Cu, Zn, Mo & Re
14.8
Model Validation
Validation of the block model included:
Visual inspection of the grade estimates. Global mean and variance comparisons (refer to Table 14.8.1). Review of estimation quality parameters such as: number of drill holes, number of samples, slope of regression, kriging variance, and average distance of samples (refer to Figure 14.8.1). SWATH plots, including a comparison of block model and declustered composite grade averages for East-West, North-South and Vertical slices (Figure 14.8.2).
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Page 14.29
Discrete Gaussian comparisons. This compares the block model distribution (grade - volume) to the declustered composite distribution after theoretical Gaussian adjustment for the change of support from 2 m composites to the two principal block sizes used for estimation (refer to Figure 14.8.3 and Figure 14.8.4). For Mo grade estimates within Merlin there is a higher level of smoothing evident for grades less than 1% Mo. These can be attributed to two areas: interburden within multiple high grade Mo intercepts where smoothing is inevitable and selective mining unlikely to be achieved, and low grade peripheral areas. Peripheral areas of low grade are typically thin and there is some small degree of risk that mining these areas may incur some loss of reserves.
Cu parameters for Mount Dore Cu Domains
Mo parameters for Merlin Domains
Figure 14.8.1
Example Estimation Quality Parameter Results
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Mount Dore Combined Copper Domain Swath Plots for Cu
Merlin Combined Domain Swath Plots for Mo
Figure 14.8.2
Example SWATH
Figure 14.8.3
Discrete Gaussian Comparison for Cu
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Figure 14.8.4
Discrete Gaussian Comparison for Mo at Merlin
Table 14.8.1
Element /Group Domain 1 Cu Waste 2 5 9 3 4 Cu Mineralisation 6 7 8 6 Mo Mineralisation 7 8
Comparison of Sample and Model Averages

Composites 17964 8984 13063 4767 11929 5024 801 1228 3295 801 1228 3295 Uncut Mean~ 0.004 0.045 0.055 0.018 0.53 0.10 0.36 0.36 0.22 1.38 0.021 0.021 Cut Mean~ 0.003 0.042 0.048 0.017 0.51 0.10 0.33 0.36 0.22 1.30 0.020 0.020 Cut Var~ 0.013 0.002 0.009 0.026 0.01 0.91 0.01 0.52 0.22 3.67 0.003 0.003 Model Mean* 0.008 0.040 0.048 0.015 0.51 0.10 0.34 0.33 0.22 1.35 0.018 0.020 Model Var* 0.001 0.038 0.046 0.002 0.41 0.09 0.25 0.25 0.14 1.03 0.011 0.009
Description Granite upper Kuridala lower Kuridala SQT & below Mt Dore Cu Mt Dore Poly Merlin Mo Merlin Cu Merlin Poly Merlin Mo Merlin Cu Merlin Poly
~ Composite statistics weighed by length and declustering weigh * Model statistics volume weighted
14.9
Mineral Resource Classification
Exploration work completed since the last mineral resource estimate has largely concentrated on the extension of the 50 m by 50 m infill drilling pattern at Mount Dore North. The target premise that 50 m spaced grid drilling is sufficient to define Indicated Mineral Resources has been retained and applied by defining the plan area where 50 m by 50 m drilling intersects the Merlin or lower Cu mineralisation, allowing for 25 m of extrapolation. Figure 14.5.1 presents the plan outline of the Indicated Mineral Resource, which does not directly correlate to the collar locations, but to the point of intersection with the mineralisation. The classification was then modified to account for areas of lower continuity including:
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Hanging wall and footwall lithology units for granite, quartzite and Stavely Formation, outside any mineralisation shapes was reset to unclassified. Waste zones outside the mineralisation shapes and within the Kuridala Formation were reset to Inferred Mineral Resource given that any mineralisation does not display the continuity required for a higher classification. A few blocks that lie above the depletion zone modelled at Mount Dore North were reset to Inferred Mineral Resource.
Figure 14.5.2 demonstrates the resulting classification viewed in section. There are a few small areas of more detailed drilling that are not considered suitable for Measured Mineral Resource classification, including:
12.5 m spaced drilling at Little Wizard defines a very small high grade zone. The limited extent and the variation in thickness and grade raise some concerns that Measured Mineral Resource classification may be optimistic. 2 infill lines of staggered 50 m drilling on 25 m offsets are available at Mount Dore North. These close down the drill spacing to about 35 m spacing. This is not considered sufficient for Measured Mineral Resource classification. An area of close spaced RC drilling at Mount Dore South provides sufficient drill spacing, however the previous RC drilling has some untested concerns about sample quality that require further investigation before Measured Mineral Resource should be considered.
14.10
Mineral Resource Statement
This Mineral Resource estimate is based upon, and accurately reflects, data compiled or supervised by Mr John Horton, Principal Geologist, who is a Fellow of the Australasian Institute of Mining and Metallurgy and a full time employee of Golder Associates Pty Ltd. Mr Horton has sufficient experience that is relevant to the style of mineralisation and the type of deposit under consideration and to the activity which he has undertaken to qualify as a Competent Person as defined in the 2004 edition of the Australasian Code for the Reporting of Exploration Results, Mineral Resources and Ore Reserves, or as a Qualified Person under NI 43-101. The total Mineral Resource estimate for Mount Dore and Merlin deposits is presented as two discrete packages of mineralisation. The Mount Dore upper resource is not presented here as it forms part of a separate study for the Mount Dore Cu heap leach and open pit development. The Mount Dore North lower package that includes Merlin presents an underground target currently being accessed by an underground decline that is in development. These mineral resources are presented in two exclusive parts at different cut-off grades, with further details in Table 14.10.1. The effective date for the resource estimate is 5 Dec 2011 which is the date the data was extracted from the Ivanhoe Acquire database.
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Resources at Merlin and Mount Dore North Lower include:
The Merlin and Little Wizard total Mineral Resource estimate at a 0.3% Mo cut-off is: 6.7 Mt at 1.4% Mo and 23 ppm Re Indicated Mineral Resource 0.2 Mt at 0.8% Mo and 13 ppm Re Inferred Mineral Resource This represents a 2.5% tonnage increase from the previous estimate in 2010. The Resource is inclusive of any Reserve statement.
The surrounding polymetallic zone also presents a significant low grade mineral resource with anomalous Mo-Re along with Cu and Zn. Under the current development scenario the grades in this surrounding mineralisation are likely to be too low for independent economic extraction though some small pockets of Cu dominated material may potentially be mined during production. Table 14.10.1 presents the resources at a 0.25% Cu cut-off for comparison with previous results and a low grade underground cut-off of 1.0% Cu. Table 14.10.1 Merlin Resources
Excluding Mount Dore North Upper Package and Mount Dore South Mineral Resource, Including Mount Dore North Lower Package Effective Date 5 Dec 2011
Cut-off
Region Lt. Wiz
Classification Indicated Indicated Inferred Indicated Inferred Indicated Inferred
Mt
Mo %
Re ppm 84.2 23.3 13.2 0.5 0.2 0.3 0.1
Cu % 2.26 0.33 0.43 0.51 0.47 1.16 1.17
Zn % 0.00 0.15 0.24 0.29 0.35 0.45 0.84
Pb % 0.01 0.02 0.02 0.04 0.04 0.06 0.07
Ag ppm 25.0 8.3 7.8 7.5 7.6 17.7 21.2
Au ppm 0.47 0.08 0.13 0.13 0.13 0.28 0.36
Co Density ppm 21 81 89 85 91 100 109 2.4 2.6 2.7 2.7 2.7 2.7 2.7
0.015 6.51 6.7 0.2 4.8 20.0 0.2 0.8 1.37 0.78 0.03 0.01 0.03 0.01
Mo >0.3 Cu* >0.25 Cu~ >1.0
Merlin Mt Dore Nth Lower Mt Dore Nth Lower
* Excludes resource reported at >0.3% Mo for Merlin, includes resources stated at >1% Cu ~ Excludes resource reported at >0.3% Mo for Merlin
For Merlin the Mo-Re resource is 90% fresh and 10% transition for the Indicated and 100% fresh for the Inferred. Geological logging indicates that even if the surrounding rock is slightly weathered the sulphide mineralisation is sufficiently massive that it has remained intact. It is assumed that all Mo occurs in sulphide form suitable for flotation processing since there is no significant occurrence of Mo oxide mineralisation recorded, though it must be noted that no specific assays have been undertaken to verify this observation. A summary of salient technical items and issues pertinent to the mineral resource estimate is presented as follows.
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Tenure
All resources are held by ICM, a wholly owned subsidiary of IAL, giving IAL 100% ownership.
Exploration
The majority of Mount Dore North - Merlin mineralisation is drilled by modern diamond drilling completed by IAL. Data has been collected and collated digitally using integrated commercial data management software, namely acQuire. IAL sampling is of regular 2 m intervals with recent changes allowing some sub-sampling at the high grade Merlin mineralisation. Density samples are generally undertaken every 10 m using an industry standard wax weight method. Over 10,000 measurements indicate a low variation in density values across most lithology, weathering and mineralisation types.
Quality Control
A Canadian expert, knowledgeable in IVNs activities has reviewed the IAL exploration procedures and QAQC at four month intervals. QAQC assaying by IAL is completed at a high frequency and covers 23% of all assays. IAL has completed several gyroscopic down hole survey programs to locate older suspect drill holes and some deep holes at Merlin (down to 836 m). IAL has resurveyed the majority of the older drilling and the mining tenements. Independent reviews have been completed by Quantitative Group and Golder Associates.
Mineral Resource Estimation
Polymetallic domaining and interpretations are defined in the following descending order of precedence. Merlin domains with >0.3% Mo. Cu mineralisation with >0.25% Cu. Remaining polymetallic zones (from Zn, low grade Mo or other elements) where Cu equivalent >0.25%. Note Cu equivalence is based on values presented in the Merlin scoping study and is only used to aid interpretation, not reporting.
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Grades are estimated from top-cut (or capped) 2 m composited assays using parent block ordinary kriging. Elements estimated include Cu, Co, Mo, Re, Zn, Pb, Au, Ag, Fe, S, Ni, Mn, As and U as well as dry bulk density. Unfolding to simple surfaces was used to improve search and sample selection and account for the variation in dip which varies from 30 to 80. Open pit potential parent block size for mineralisation is 10 m by 25 m by 10 m. Underground potential parent block size for mineralisation is 5 m by 12.5 m by 5 m. Indicated Mineral Resource classification is based on the completion of 50 m grid drilling. Extrapolation of interpreted mineralisation is limited to 25 m beyond existing drilling.
Resource Issues
The Merlin high grade Mo zone is on average 3.9 m in width and defined largely on a 50 m spaced square grid. Overall, the Merlin veins display good continuity. However, there are no close spaced drilled areas at Merlin to demonstrate the short range continuity of the vein i.e. if the vein is dislocated or pinches and swells. It is unlikely that this can feasibly be done until underground development allows the next phase of infill drilling from a more direct angle and in a more cost effective manner. Mount Dore is polymetallic with many potentially economic elements present. Some of these will not be recoverable or have very low recoveries for some processing options such as heap leach. These elements are presented but more work is required to test their economic significance. They are not part of the mineral resource statement, which includes only Cu, Mo and Re where metallurgical studies have indicated potential for reasonable recovery. Near surface mineral resource estimates are based on the assumption of a bulk open pit mining scenario where high quality grade control practises are employed. Drill spacing is currently at around 50 m. Though sufficient for Indicated Mineral Resource classification the area is structurally complex and there is still room for the thin high grade Merlin zone to be offset and folded locally. The block model size has been driven by geometry issues and the blocks estimated are smaller than can be adequately informed for the general drill spacing. Essentially the block estimates include significant smoothing and relate to a larger selectivity than the block sizes estimated. No specific close spaced drilling has been completed to date to assist the definition of the grade variability and demonstrate continuity of the Merlin vein at short range. The exception to this is the near surface Little Wizard bonanza zone that may not be indicative of the greater Merlin deposit. Such information will be required at the next stage of work and may be more practical to derive from underground drilling programs.
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Chalcocite persists well into the fresh zone. This Cu sulphide mineral is recoverable via heap leaching and is often a product of supergene enrichment. Its persistence as a dominant Cu mineral in the fresh zone indicates a potential primary source of chalcocite. Hence the fresh zone remains a target for heap leach open pit assessment. Significant additional Zn mineralisation exists outside of the quoted Cu mineralisation at Mount Dore North. Viable recovery of Zn is not yet demonstrated and stand alone Zn mineral resources are not included in the mineral resource statement but are provided for future reference.
Resource Estimate Changes
Ten additional drill holes at Merlin, mostly at depth resulted in minor extension and mostly confirmation of the Merlin mineral resource and structure. Eight additional near surface lower grade intersections of Merlin by extension drilling for the Mount Dore open pit drilling have made minimal impact on the mineral resource. The holes are in similar grades and intersections as previously modelled. 58 drill holes at Mount Dore were targeted at infilling key areas and pit wall areas for the Mount Dore North and South open pits defined during the PEA (AMC, 2011a).
14.11
Recommendations
Additional exploration program drilling should be targeted at Merlin, which is the focus of the current development plan. At this stage no Measured Mineral Resources are defined and the current 50 m spaced drilling is at the lower end of the Indicated Mineral Resource confidence range. Additional drilling is required to define:
The close range variability and continuity of the Merlin veins both for grade estimation and for mine planning purposes. This should be initiated with a small program of targeted surface drill holes followed by both exploration development and sampling and close spaced underground drilling in a few key areas. The general drill spacing should be reduced to 25 m. Given that underground development has been commenced, infill drilling would be most effective from underground both in terms of cost and possibly intersection angle.
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MERLIN MOLYBDENUM RHENIUM PROJECT NI 43-101 REPORT - MINERAL RESERVE ESTIMATE
Page 15.1
15.0
MINERAL RESERVE ESTIMATE
The Mineral Reserve estimates were prepared after selection of the mining methods as described in Section 16. The Merlin Mineral Reserves using Indicated Mineral Resources, constrained to 28100mN to 29055mN northing and 4288mRLto 3820mRL elevation, are set out in Table 15.1. Table 15.1
Category Proven Probable Total Reserve Mt 7.11 7.11 77,797 77,797 128,881 128,881
Merlin Mineral Reserves

Mo t Re kg Mo % 1.09 1.09 Re ppm 18.12 18.12
Note: Figures have been rounded and hence may not add up exactly to the given totals.
Cut-off Value AMC created a value model using the August 2011 resource block model and orebody wireframes. The value model indicates the value of each block of ore (expressed in A$/t of ore) estimated using the ore grades, metal prices, exchange rates and metallurgical recovery factors (supplied by IAL). The mine design and stoping shapes have been created using the respective cut-off value (COV) criteria (similar to cut-off grades). Based on the value optimisation study undertaken as part of the PFS the COV adopted was A$150/t for LHOS and A$200/t for DAF stopes. Any changes in metallurgical processing and infrastructure options, metallurgical recoveries, mining methods and modifying factors such as dilution and mining recovery, and changes in metal prices and mining and processing costs will have an impact on the COV and hence the Mineral Reserve estimates. The tonne-value curve (Figure 15.1) has a flat slope beyond COV of A$150/t indicating that a large increase in COV does not result in a correspondingly large reduction in mineral resource tonnes. The effect of increasing the COV by 25% from A200/t to A250/t, for example, results in approximately 10% reduction in mineral resource tonnes. Value Model The following royalty, metal prices, exchange rates and metallurgical recovery and processing costs are used to create value field in the resource block model (Table 15.2 through to Table 15.4).
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April 2012 AMC Consultants
Page 15.2
Table 15.2
FX
Exchange Rate, Royalty and Metal Prices

Unit AUD:USD % US$ / lb US$ / kg US$ / lb US$ / lb US$ / oz US$ / oz US$ / lb Base Case 0.83 2.70% 13.50 5,600 3.00 0.85 15.00 1,000 0.00
Exchange Rate Royalty Mo Re Cu Zn Ag Au Pb
Table 15.3
Metallurgical Recoveries
Mo-Re Ore Recoveries 87% 76% 85% 50% 50% 50% 0%
Metal Mo Re Cu Zn Ag Au Pb
Table 15.4
Ex-mine gate costs Roasting Mo-Re Ore
Processing Costs
Value 3.86 Unit A$/kg Mo metal Source IAL
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Page 15.3
Tonnage Grade Curve - Merlin Value Model

8.0 Ore Tonnes 7.0 Avg Net Value 1,200 1,400
6.0 1,000
Resource Tonnage Mt
5.0 800 4.0 600 3.0 400 2.0 200

Ave nett Value A$/T
1.0
0.0
0 100 150 200 250 300 350 400 450 500 550 600 650 700 750 800 850 900 950 50 1,000
Nett Value - Cut Off Grade A$T
Figure 15.1
Tonnes vs COV
15.1
Modifying Factors
Mining Recovery Mining dilution and recovery are based on a combination of factors including mining method, orebody geometry and thickness, and host rock conditions. For mining recovery, the following assumptions have been made:
Ore losses in wedges and orebody fringes are determined geometrically based on realistic stope design shapes. A minimum 2.0 m height is required for loaders to muck along the shanty back shoulders of the LHOS ore drives and DAF stopes along hangingwall. Vertical sidewalls are assumed along footwall contact for LHOS ore drives and DAF stopes thereby maximising recovery while accepting some dilution. Overall recoveries of 95% for LHOS and 98% for stope ore drives and 97% for DAF stopes are applied to the designs.
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Page 15.4
Mining Dilution Mining dilution will come from the following two sources:
Waste rock (hangingwall and footwall). Fill dilution.
Planned waste dilution is accounted for within the ore drives, DAF and LHOS design shapes and profiles. In addition, unplanned waste rock skin dilutions of 1.5 m from hangingwall and 0.5 m from footwall are assumed for LHOS stopes. No unplanned skin dilution is assumed for DAF stopes. Minimum Mining Unit For the two main mining methods selected for Merlin, i.e. the DAF and LHOS methods, the following MMUs (Figure 5.2) apply:
DAF mining using mechanised mining with 2-boom jumbos requires a profile of 5.0 m wide x 5.0 m high, with a variable length of drift. The DAF method is able to adapt reasonably closely to a variable orebody geometry and the profile is largely unaffected by the anticipated ground conditions. LHOS mining using mechanised mining with uphole drilling from 20 m spaced levels and applying a minimum stope excavation width of minimum 3.5 m, before unplanned over break (1.5 m in hangingwall and 0.5 m in footwall). Modelling of narrower widths for the stoping was shown to be inconsequential, based on the current resource interpretation. For the shallow to moderate dip and variable ground conditions at Merlin, it is expected to be difficult to achieve closer excavation in practice.
Although a minimum mining unit width of 5.0 m has been applied to the DAF areas, there is potential for operations to consider mining wider spans, probably with the use of additional support. This decision can only be made during the implementation phase and if proven successful, would potentially improve production schedules and reduce costs, albeit, marginally.
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Page 15.5
Figure 15.2
MMU and Mining Dilution
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MERLIN MOLYBDENUM RHENIUM PROJECT NI 43-101 REPORT - MINING METHODS
Page 16.1
16.0 16.1
16.1.1
MINING METHODS
Geotechnical
Geological Setting
Merlin mineralisation is hosted within a tectonised sequence of metashale, metasiltstone, schist and phyllite belonging to the Proterozoic Kuridala Formation in the Eastern Fold Belt of the Mount Isa Inlier. This stratigraphic package lies to the west of the over-thrust Mount Dore Granite and extends north-south along strike for several kilometres and dips eastward underneath the granite. A massive, easterly-dipping, intensely-silicified quartzite ridge in the western side of the area forms the footwall to the deposits (refer to Figure 16.1.1). Mineralisation is hosted within variable proportions of interfingered black carbonaceous and grey micaceous metasiltstone and grey metashales with thicker beds of phyllite and schist. These metasedimentary units exhibit recrystallisation textures but retain relict sedimentary features such as bedding and folding in outcrop. A brief description of the main lithological units includes:
Hangingwall Granite: known as the Mt Dore Granite, this unit is un-mineralised and forms the hangingwall to the mineralisation. Black Shale: the black shale occurs mainly in the hangingwall of mineralisation, stratigraphically below the Mt Dore Granite. In localised areas it is known to occur as a host to mineralisation in the footwall. Phyllite: the phyllite occurs as a single unit and is stratigraphically positioned above the quartzite. Mineralisation can occur in the phyllite in some areas, but it can also form the footwall of mineralised zones. Meta-siltstone: the meta-siltstone is the main unit of the metamorphic sequence and varies in composition. It mainly consists of recrystallised quartz with k-feldspar and muscovite. Footwall Quartzite: the quartzite unit has been interpreted as potentially defining the Mt Dore Fault Zone, serving as a boundary between the Kuridala Formation and the underlying siltstone and shale units of the Staveley Formation in the footwall. This unit is a massive, intensely silicified quartzite ridge that dips toward the east.
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Page 16.2
Figure 16.1.1
Merlin Cross Section at 5350 mN - Looking North
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Page 16.3
16.1.2
Rock Strength
The intact rock strength data is based on 60 Unconfined Compressive Strength (UCS) and Brazilian Indirect Tensile Strength (ITS) tests conducted on samples from eleven boreholes (Strata Testing Services, 2010 and 2011). Elastic modulii has also been recorded for most of these tests. Based on their location, the tests were categorised into representative lithological tests. Only those samples that appeared to fail through intact rock (not along a plane of weakness) have been included in this analysis. Rock properties are summarised in Table 16.1.1. These lithological units represent the majority of rock mass units at the Merlin Underground Mine. Table 16.1.1 indicates that the lithological units are rated as Strong to Very Strong rock as per International Society for Rock Mechanics (ISRM). The resource unit, which has not been tested due to insufficient samples, is expected to be weaker than the surrounding rock mass. Table 16.1.1
Lithological Unit Mount Dore Granite Phylite Black Shale Kuridala Calc Silicate Quartzite Staveley Calc Silicate UCS (MPa) 155.6 62.9 67.3 95.1 116.4 151.5
Intact Rock Properties

ITS (MPa) 14.9 10.1 11.4 8.3 12.5 E (GPa) 66.7 55.7 59.4 59.7 82.4 70.5 v 0.24 0.28 0.26 0.27 0.16 0.27 Density 3 (t/m )* 2.06 2.64 2.63 2.71 2.62 2.74
16.1.3
In-situ Stress
No measurements of in-situ rock stress have been conducted at Merlin. AMC has used stress measurement data from mine sites within the Mt Isa Inlier to estimate in-situ stress at Merlin. This data incorporated measurements of stress by CSIRO HI cells from thirty-one sites at Mt Isa, Ernest Henry, Cannington, Hilton, McArthur River and Osborne mines. Magnitudes of major, intermediate and minor principal stresses, for each of the 38 site measurements, were plotted against depth below surface. From this plot, using lines of best fit, an estimate of the stress versus depth relationship was made for the principal stresses. It is noted that the Mt Isa stress field is considered low stress for Australian conditions. Estimating the orientation of the in-situ stress field at Merlin, based on this data set is not possible due to the great variation in measured orientations across the region, and even significant differences in measured orientations within individual mines. AMC has assumed the major principal stresses to be oriented approximately perpendicular to the orebody, and minor principal stress to be sub-vertical in a similar manner to Osborne mine. Osborne mine is the closest mine with available stress measurements, and is hosted in a similar stratigraphic position to the Starra line mines, which lie approximately 2 km from the Merlin mine. The Osborne results indicate that Sigma 2 and Sigma 3 are similar in magnitude, and therefore tend to swap between being N-S and vertical.
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Table 16.1.2 summarises AMCs estimate of the in-situ stress field for the purpose of this study. AMC recommends confirmation or otherwise the pre-mining in-situ stresses by a programme of field stress measurements prior to commencement of underground stoping operations. However, in-situ stress measurements at Merlin are essential to determine actual stress conditions. The major principal stresses are expected to be in the order of 24 MPa, 16 MPa and 10 MPa at a depth of 500 m below surface. Locally, some variation in the direction of principal stresses can be expected, in particular around regional geological structures such as the Mount Dore Fault and the Thrust Zone. Table 16.1.2
Principal Stress Major (Sigma 1) Intermediate (Sigma 2) Minor (Sigma 3)
Estimated In-situ Principal Stress Field

Plunge 00 00 90 Bearing 270 180 090 Magnitude (MPa) 6.0 + 0.036 * Depth (m) 3.0 + 0.025 * Depth (m) 0.0 + 0.020 * Depth (m)
16.1.4
Weathering
Merlin mineralisation has been categorised into two weathering profile surfaces, defining the bottom of complete oxidation (BOCO) and the bottom of partial oxidation (BOPO). This updates previous assumptions made during the pre-feasibility study, where the weathered zone was assumed to be at a specific level for the geotechnical assessment. The weathering profile is variable, both along strike and across strike of the orebody. Both surfaces indicate a significantly increased depth of weathering over the mineralised zones. Complete oxidation ranges from 5 m to 20 m deep, with the deepest sections being present towards the southern sections of the deposits. The partial oxidation surface shows a significant depression over the mineralised horizons, reaching depths of 250 m below surface. Again, the deepest interpreted parts of the surface are towards the southern end of the mineralisation. Weathering to significantly greater depths is likely down sheared or faulted zones that intersect the surface, dependant on the nature of these zones. This is particularly likely along the contact between geological units. The weathering profile will have impact on the local stability and influence of water ingress. It will also play an important role in crown pillar assessments. It is possible that weathering could continue further at depth, especially with the Mt Dore aquifer present and the high permeability and recharge rates known to exist.
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Page 16.5
Figure 16.1.2 16.1.5 Defect Summary
Weathering Profiles (BOCO and BOPO) at Merlin (7600 mE)
Regional Defects The regional-scale structures of Starra, Selwyn and Mt Dore are the shear and thrust zones which run through the centre of the district. These north-south structures host the mineralisation in the region. The structural setting of the Project is quite complex. Part of the structural setting has been assessed by Davis (2010) to gain a better understanding of the deformation events that have occurred, summarised here:
D1: Early N-S horizontal shortening, forming E-W folds with sub-vertical axial planes and axial planar cleavage S1. D2: Horizontal E-W shortening, forming folds with N-S striking and steep dipping axial planes and axial planar high strain zones and crenulation cleavage. D3: Vertical shortening, forming folds with subhorizontal axial planes and axial planar cleavages. Both top to the west and east shear senses. D4: NE-SW horizontal shortening, forming NW striking folds with subvertical axial planes and axial planar crenulation cleavage.
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Page 16.6
D5: NW-SE horizontal shortening, forming NE striking folds with subvertical axial planes and axial planar crenulation cleavage.
These deformation events have been graphically displayed in a stereonet plot, based on structural interpretation from oriented drill core.
Figure 16.1.3 Local Defects
Stereographic Projection of Defects (Davis, 2010)
Seven geotechnical diamond drill holes were orientated using the ACT Reflex II RD core orientation tool. Structural logging, including alpha and beta measurements, of intersected defects was taken on this core. Throughout this process the confidence in the orientated core was also recorded. The resultant structural database has approximately 3,300 structural readings covering the Mt Dore Granite and the Kuridala Formation (phylite, black shale, siltstone, quartzite and resource zones). A minor number of structural measurements were taken of the Staveley Formation during decline mapping. The structural database and survey data were imported into DIPS to convert the alpha and beta measurements into dip angles and dip directions. This data was then presented stereographically to determine structural orientation sets as shown in Figure 16.1.4. The structural setting is quite complex and part of the structural setting has been assessed by Impel Geoscience (Davis, 2010) to gain a better understanding of the deformation events that have occurred. The structural database supports the findings of this report and conforms with observations from decline development.
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Page 16.7
DefectType
Foliation Fault Joint Vein
DefectOrientationSummary 85/157 41/052 52/326 28/250
Figure 16.1.4
Stereographical Projection of Defects in Mount Dore Granite
DefectType
Foliation Fault Joint Vein
DefectOrientationSummary 90/247 23/201 37/068 82/161
Figure 16.1.5
Stereographical Projection of Defects in Kuridala Formation
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Page 16.8
DefectOrientationSummary 68/081 75/347 43/249
Figure 16.1.6
Stereographic Projection of Defects in the Stavely Formation
For the purposes of the study, the following discontinuity data is used in all subsequent analysis for the Kuridala Formation and the Stavely Formation. Table 16.1.3
Set Foliation Joint Joint Joint Dip and Variance 37 90 23 82 18 11 12 24
Discontinuity Summary for Kuridala Formation

Azimuth and Variance 068 247 201 161 33 13 30 20 Typical Joint Condition Smooth Undulating Rough Planar Rough Planar Rough Undulating Joint Infill Clean, Chlorite Clean, Iron Oxide Clean, Iron Oxide Clean, Iron Oxide Dominance Major Intermediate Intermediate Minor
Table 16.1.4
Dip and Variance 68 75 45 15 10 18
Discontinuity Summary for Stavely Formation

Azimuth and Variance 081 347 249 19 12 22 Typical Joint Condition Smooth Undulating Rough Undulating Rough Undulating Joint Infill Clean, Chlorite Clean, Iron Oxide Clean, Iron Oxide Dominance Major Intermediate Intermediate
Set Foliation Joint Joint
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Page 16.9
16.1.6
Geotechnical Domains
Geotechnical domains have, initially, been based on geological units and mineralised zones that will be intersected, or impinge on mining and are further subdivided, or zoned, after this primary domain development. Further subdivision has been undertaken, based on weathering of the rock mass and has honoured the BOPO surface provided, producing weathered and unweathered zones. The rock mass surrounding the resource was divided into multiple domains; these domains represent the hangingwall, resource and footwall units of each lens, and are also zoned into north and south domains. Cross sections through the host stratigraphy and mineralised lenses, displaying Recovery, RQD, Lithology and Q values and statistics of all domains are presented in Appendix B and C of the Geotechnical Report. 16.1.7 Rock Mass Classification
Median results of RQD and Q are summarised in and Table 16.1.6 weathered and unweathered rock mass conditions respectively. There is a distinct difference in rock mass conditions between weathered and unweathered zones for each domain (hangingwall, footwall, resource). In general, the rock mass is considered Poor in the weathered zone. This includes all of Lens 4 (Little Wizard) and the upper regions of the Lens 5 and 6. In the unweathered zone, rock mass conditions improve, however they are still considered Poor to Fair for Lens 5. There is an improvement in rock mass conditions in the south domains especially in the minor footwall lenses (Lens 6 and 7) with rock mass conditions ranging from Fair to Good.
Table 16.1.5
Zone Lens 4 South Dip 40-50
Mean Rock Mass Conditions - Weathered

Domain RQD% 50.0 81.0 57.0 41.0 56 68 42 52 68 88 81 91 Q 2.6 2.5 3.5 3.6 3.8 7.5 14.4 4.7 7.5 13.1 6.7 17.8 Description Poor Poor Poor Poor Poor Fair Good Fair Fair Good Fair Good
Lens 5 North
50-58
Lens 5 South
31-50
Lens 6 South
43-60
Hangingwall Resource Footwall Hangingwall Resource Footwall Hangingwall Resource Footwall Hangingwall Resource Footwall
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Page 16.10
Table 16.1.6
Zone Lens 5 North Dip 50-58
Mean Rock Mass Conditions - Unweathered

Domain Hangingwall Resource Footwall Hangingwall RQD% 72 64 89 63 62 92 83 88 90 78 80 90 91 87 90 Q 7.8 5.5 27.4 9.8 6.00 20.0 10.0 6.7 10.0 16.0 15.1 18.0 25.8 15.6 18.0 Description Fair Fair Good Fair Fair Good Fair Fair Fair Good Good Good Good Good Good
Lens 5 South
31-50
Resource Footwall Hangingwall
Lens 6 North
43-60
Lens 6 South
43-60
Lens 7 South
50-60
Resource Footwall
16.1.8
Stability Assessment
Decline, Access, and Footwall Development For waste development (declines, access and footwall drives), the drive sizes assessed are considered appropriate. There are no specific drive size recommendations for limiting drive profile size, although any departure from the assessed geometries should be assessed geotechnically before implementation. Where practical, 4-way intersections should be avoided in siltstone, phyllite and black shales. Intersection sizes should be limited to 9.0 m inscribed diameter. Vertical Development All return air, fresh air, and egress rises should be limited to a maximum of 5.0 m in size. Any raise bored rise should consider having an investigation hole completed before excavation, but this may be limited to rise diameters in excess of 2.5 m diameter where site experience is gained. All rises should be excavated vertically, except egress rises which by their nature need to be inclined. Ore Drives Weathered ore drives should be limited to a maximum of 5.0 m wide and unweathered ore drives limited to 6.0 m wide. The assessments have considered the drives to be mined with a flat back, and a shanty profile for the walls. All intersections in ore should be 3-way intersections only. Intersection sizes should be limited to 8.0 m inscribed diameter.
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Page 16.11
Stoping Stoping is not considered feasible in the weathered zones, and it is recommended that an underhand drift and fill method be adopted. In the unweathered sections, stoping is considered feasible for the steeper dipping footwall lenses (Lens 6 and 7), and has been assessed on 20 m level spacing. It is recommended that an underhand sequence is adopted in Lenses 6 and 7. Lens 5 could consider either an overhand or underhand sequence, as stoping widths are relatively narrow, and cable bolting of the crowns is expected to be effective in widths up to 6 m to 8 m. Stope stability for bench stopes were assessed using industry standard Mathews modified stability graph method. Summary of stable stope spans are listed in Table 16.1.7. Table 16.1.7 Zone Domain
Hangingwall (unsupported) Hangingwall (supported span) Footwall (host) Lens 5 Footwall (resource) Crown Crown (supported) End Wall Hangingwall (unsupported) Hangingwall (supported span) Footwall (host) Lens 6 Footwall (resource) Crown Crown (supported) End Wall Hangingwall (unsupported) Hangingwall (supported span) Lens 7 Footwall (host) Crown Crown (supported) End Wall 3 8* 6.0 2.5 8* 5.0
Mine Design Stoping Spans for 20 m Level Spacing North Domain (m) Median 20%
15 20 50 30 3 8* 5.0 20 30 20 10 12 20 20 2 8* 3.5 15 19 15
South Domain (m) Median 20%

12 14 35 50 3 8* 5.0 25 40 30 35 4.5 8* 9 40 50 35 4.5 8* 9 8 9 20 20 2 8* 4 11 13 9 13 2.9 8* 5.0 13 16 9 2.4 8* 4.5
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Hangingwall and Footwall Spans AMC expects that as a result of the variability of rock mass conditions and dip of the orebody, in some areas it may be possible to mine stopes of strike length greater than those stated, without experiencing significant instability. Conversely, in other areas where poor ground conditions are present, or poor blasting practices exist, stope hangingwalls and footwalls may experience significant instability at strike lengths less than those stated. The modified stability graph method is not a precise method for predicting stope stability and effective working stope strike lengths can only be determined once some mining experience is gained at the Merlin. However, based on the analysis, AMC considers that the standard stope strike lengths recommended, with hangingwall cable bolt support installed where dictated by local rock mass conditions, will be stable for a large proportion of rock mass conditions. In addition, consideration must be given to specific rock mass conditions expected to impact stability, such as those associated with faults and shear zones where present. Consideration should also be given to walls that have black shale at the contact, or very near the contact, due to its potential to displace and affect molybdenum recovery during processing. Smaller stope strike lengths or enhanced ground support may be included in these areas. Crown Spans Stope crown widths are pre-determined based on the width of the orebody. The results of the modified stability graph analyses indicate that unsupported stope crowns will not be stable at normal ore drive widths. As a result, underhand mining recommended, effectively replacing the poor resource rock mass with an engineered fill material. In the northern zone of Lens 5, due to the relatively narrow orebody width (up to 8 m wide) it may be possible to undertake an overhand mining sequence with sufficient cable bolting of the crown. Whilst the analysis indicates that stable spans of >15 m can be achieved by cable bolting, the data plots is at the limits of the empirical assessment chart. It is unlikely that the rock mass, as interpreted, could be supported in a crown to 15 m spans. AMC expects that all overhand stopes may require installation of cable bolt support. In an underhand mining method, cable bolting of the stope crowns will not be required, as it is replaced with an engineered fill material. End-wall Spans The results of the modified stability graph analyses indicate that stope end-walls will be critical to stability, and may experience some instability at widths indicated in Table 16.1.7. Stope end-walls are temporary in design (they are mined as part of subsequent stopes) and occur within the orebody; thus, AMC does not recommend attempting to install cable bolt support, except at the stope brow where personnel may be exposed. AMC considers that instability from stope end-walls can be minimised by the use of good practice production drilling and blasting.
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Sequencing The following comments are based on typical sequencing on sites where stacked resource lenses exist, considering the numerical modelling results. The Merlin resource is relatively shallow, and is not expected to attract high, in-situ stress levels. It is important that the mining sequence not only considers the impact of stress concentration and relaxation, but the possibility of unwanted dilution. For the proposed underhand cut and fill sections of the mine, the sequence is relatively straight forward. One consideration is that the sequencing should ensure that the final drive of any mining block be extracted whilst the mining block below has a solid rock pillar in place. Whilst the hazards of paste fill failure may be low, it can be effectively eliminated if operations maintain this standard. For stoping, it is based on a continuous retreat from the north and south abutments, back towards a central closure pillar, and creating an inverted chevron front. Modelling indicates that retreating a front towards the north-south transition line will result in potentially unmanageable conditions. Similarly, the sequence has assumed that the hangingwall resource is mined before the footwall resource. 16.1.9 Support Requirements
The underground mine access development was assessed using both empirical and analytical techniques. This included the use of the Q-System (Barton et al, 1974) and wedge assessment in Unwedge (Hoek et al, 1995) of blocks that form around the excavation, based on structural data. Predominantly, data from diamond drilling have been used in this analysis, plus minor underground exposure mapping from the decline. The same domains and results outlined in Section 16.1.6 have been used here to generate ground support requirements throughout the mine for expected and poor conditions. All support assessments have used a minimum design factor of safety of 1.5, which is considered appropriate for this level of study. It is also supported by the uncertainty surrounding some of the input values and the variability of geotechnical data available. Mine Access Development The assessment covered the following development types, covering decline, level access, and orebody development. Assessment of standard intersections for these profiles were generated for good ground conditions only, as intersections in poor ground should be avoided, and would typically require a site specific design. A summary of the profiles is outlined below:
Decline Development 5.5 m wide by 5.8 m high, arched profile. Life of mine infrastructure required for permanent access to underground workings.
Level Development 5.5 m wide by 5.5 m high, arched profile. Long-term infrastructure required for semi-permanent access. Includes access and footwall drives.
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Orebody Development 4.5 m wide by 5.0 m high, shanty profile. Typically, this is a short to medium term life excavation for extraction of the orebody. A wide orebody profile (6.0 m wide) is also assessed, and forms the maximum drive width for unweathered domains. Drives should not exceed 4.5 m wide in weathered zones until additional data is collected, and experience is gained.
Waste Intersection Intersections created by 5.5 m wide drive with another 5.5 m wide drive (e.g. Decline and Access), using 2.0 m fillets, creating an 8.5 m diameter inscribed circle, required for permanent access to the underground workings and operating areas.
Ore Intersection Intersection created by 5.5 m wide access with a standard 4.5 m wide ore drive, using 2.0 m fillets, creating an 8.0 m diameter inscribed circle, required for semi-permanent and temporary access to active ore drives.
The empirical Q-system provided a generic ground support system, based on tunnelling case histories. These charts are reproduced in this report, with the range of Q data. This recommended support system was then assessed with the required support capacity from the empirical systems and potential maximum wedge weight. These assessments are summarised in Table 16.1.8.Error! Reference source not found.. Table 16.1.8
Drive Name Decline Good Ground Dimensions 5.5 m(W) by 5.8 m(H)
Ground Support Summary Drives and Intersections
Standard Requirements Rings of 6 by 2.4 m long full column resin rebar at 1.6 m ring spacing with 50 mm fibrecrete to 3.0 m above floor level, plated. Rings of 8 by 2.4 m long full column resin rebar at 1.4 m ring spacing with 75 mm fibrecrete to 1.5 m above floor level. plated Rings of 6 by 2.4 m long full column resin rebar at 1.6 m ring spacing with 50 mm fibrecrete to 3.0 m above floor level, plated. Rings of 8 by 2.4 m long full column resin rebar at 1.6 m ring spacing with 75 mm fibrecrete to 1.5 m above floor level, plated. Rings of 9 by 2.4 m long full column resin rebar at 1.3 m ring spacing with 50 mm fibrecrete to 1.5 m above floor level, plated. Rings of 9 by 2.4 m long full column resin rebar at 1.1 m ring spacing with 75 mm fibrecrete to 1.5 m above floor level, plated. Rings of 10 by 2.4 m long full column resin rebar at 1.3 m ring spacing with 50 mm fibrecrete to 1.5 m above floor level, plated.
Decline Poor Ground
5.5 m(W) by 5.8 m(H)
Access Good Ground
5.5 m(W) by 5.5 m(H)
Access Poor Ground
5.5 m(W) by 5.5 m(H)
Ore Drive Good Ground
4.5 m(W) by 5.0 m(H)
Ore Drive Poor Ground
4.5 m(W) by 5.0 m(H)
Ore Drive (Wide) Good Ground
6.0 m(W) by 5.0 m(H)
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Ore Drive (Wide) Poor Ground Waste Intersection Ore Intersection
6.0 m(W) by 5.0 m(H)
Rings of 10 by 2.4m long full column resin rebar at 1.1 m ring spacing with 75 mm fibrecrete to 1.5 m above floor level, plated. Standard drive patterns as above, plus 6 by 6 m twin strand, plated cable bolts. Standard drive patterns as above, plus 6 by 6 m twin strand, plated cable bolts.
8.5 m diameter inscribed circle 8.0 m diameter inscribed circle
Production Development Production is undertaken by DAF or combination of DAF and LHOS. Initial ore drives are required for both options, and are assessed above. These orebody support requirements are built on for LHOS support requirements only, since DAF mining is planned to be underhand mining and, as such, will have a paste fill back to the excavation. Underhand Drift and Fill The underhand drift and fill method cannot be assessed by empirical rock mass methods, based on ground conditions; rather, it relies on the paste fill design strength to be stable for a proposed span. Ground support in this situation is designed to prevent minor falls of ground from the paste fill. Two potential support options are provided for consideration, based on 4.5 m wide and 6.0 m wide ore drives. The drive geometries are as follows:
4.5 m wide by 5.0 m high, shanty profile. 6.0 m wide by 5.0 m high, shanty profile.
These assessments and ground support designs are summarised in Table 16.1.9. Table 16.1.9
Drive Name Dimensions
Ground Support Summary DAF Levels
Standard Requirements Rings at 1.3 m spacing, comprising 5 off, 2.4 m long, full column resin rebar and 3 off by 2.4m long friction bolts, with 50 mm fibrecrete on walls to 1.5 m above floor level and weld mesh across backs (over paste fill) Rings at 1.1 m spacing, comprising 7 off by 2.4 m long, full column resin rebar and 3 off by 2.4 m long friction bolts, with 75 mm fibrecrete on walls to floor level, and weld mesh across backs (over paste fill) Rings at 1.3 m spacing, comprising 5 off, 2.4 m long, full column resin rebar and 4 off by 2.4m long friction bolts, with 50 mm fibrecrete on walls to 1.5m above floor level, and weld mesh across backs (over paste fill) Rings at 1.1 m spacing, comprising 7 off by 2.4 m long, full column resin rebar and 4 off by 2.4 m long friction bolts, with 75 mm fibrecrete on walls to floor level, and weld mesh across backs (over paste fill)
DAF Good Ground
4.5 m(W) by 5.0 m(H)
DAF Poor Ground
4.5 m(W) by 5.0 m(H)
DAF (Wide) Good Ground
6.0 m(W) by 5.0 m(H)
DAF (Wide) Poor Ground
6.0 m(W) by 5.0 m(H)
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Long Hole Open Stoping By accepting the limitations of the modified stability chart assessments and designing the stopes to have median wall conditions plotting on the stable/transition line in the stability analysis, essentially results in a design factor of safety of 1. Therefore, 50% of walls will be stable and 50% will experience instability. This assessment does not take into account the effects of stress change over the life of the mine, meaning what is stable today, may not be stable in the future, with changes in the stress field (i.e. stress concentration or reduced confinement). Ground support designs have considered the effects of reduced confinement, especially where stacked lenses exist. The following ground support assessments are based on charts contained in Hutchison and Diedrichs, (1996) to determine the ground support requirements of LHOS walls, based on the distribution between the median and 10th percentile values for hangingwall and crown walls, for each respective lens. This is done to determine the ground support requirements to allow stoping to occur and control dilution. Stopes should be routinely surveyed (by CMS or similar) to allow reconciliation of actual voids against the design, to develop a calibrated site stability chart and allow improved understanding of failure modes for each rock type and domain. Where black shales are identified on the hangingwall contact or within 3 m of the hangingwall contact, cable bolting is strongly recommended, to reduce the probability of instability and shale dilution. Alternatively, the strike lengths of the stopes can be reduced to achieve a similar result. It will be critical to identify areas within stacked lenses that will become de-stressed by adjacent mining and provide timely reinforcement to the walls. Cable Bolt Design It is expected that cable bolts will be required for both hangingwall and crown walls, to ensure stability for production. Ideally, the design approach is to reinforce the hangingwall to enable beams to support themselves. In poorer rock mass conditions, the aim would be to support the unconfined rock mass, or retain an unravelling rock mass, with the use of a suitable surface support. The support requirements for Lens 5 are primarily to retain an unravelling rock mass (Table 16.1.10), while Lenses 6 and 7 require retianing support for the crow, but reinforcement and support elements for the hanging walls (Table 16.1.11). Typically, sub level mining methods do not lend themselves to pattern cable bolting, but require intensive arrays (or ribs) of reinforcement to be installed. This does not comply with the requirements of a supported wall, but does effectively reduce the unsupported span of the wall.
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Table 16.1.10
Lens 5 Summary of Cable Bolting Requirements

Hangingwall Lens 5 Single 4 3.0 1.3 6 Double 3 4.0 1.5 4 1.7 1.3 6 Crown Lens 5 Single Double 3 4 1.5
Cable Type Number of cables per ring Ring spacing (m) Spacing in ring (m) Length (m)
Table 16.1.11
Lens 6 and 7 Summary of Cable Bolting Requirements

Hangingwall Lens 6 and 7 Single 4 3.0 1.3 6 Double 3 4.0 1.5 Crown Lens 6 and 7 Single 4 1.7 1.3 6 Double 3 3.5 1.5
Cable Type Number of cables per ring Ring spacing (m) Spacing in ring (m) Length (m)
Impact of Faults and Shear Zones on Stope Stability The modified stability graph analysis does not take into account stope instability resulting from the influence of fault zones or shear zones. The stability assessment, as discussed, is only valid in the absence of these zones, or where they are far enough removed from the stope so as not to impact stability of the stope surfaces. It is expected that small fault zones will exist throughout each geotechnical domain, but are only expected to impact stability on a local stope scale. Footwall Spans The footwall is indicated as stable for all lenses for the proposed strike lengths, as the rock mass is typically better and gravity will assist stability, minimising potential failure. No routine cable bolting is anticipated. End Wall Spans The result of the modified stability graph analyses indicates that the stope end walls may experience some instability at widths of greater than 5.5 m in Lens 5 and 10 m in Lens 6 and 7. They are generally temporary exposures (mined as part of subsequent stopes, or stabilised with backfill, if they remain as pillars) and occur within the orebody. AMC does not recommend supporting them, except at the stope brow where personnel may be exposed and access required for subsequent stope firings. Instability from stope end walls can be minimised by the use of good practice production drilling and blasting.
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16.1.10 Stability Pillars Rib Pillars The proposed underhand DAF and LHOS mining methods do not require provision for rib pillars between stopping panels. Regional Pillars Cemented paste backfill will be employed to maximise ore extraction by serving as local and regional ground support to maintain mine stability. Due to progressive backfilling of all stope voids, no regional pillars are planned other than in uneconomic areas where either grade or thickness does not meet the economic COV. One regional pillar is currently planned to be left in the lower sections of the Lens 5 northern domain. From a stress management point of view, this does provide some relief from stress concentrations on levels in the vicinity. As this pillar is formed, it effectively becomes confined by the placement of paste fill in the UDAF mining sequence. As the ore is progressively extracted, backfilling of all voids is undertaken to allow progression of the mining fronts. Crown Pillar The Crown Pillar is unlikely to result in any instability, due to the large thickness of the unmineralised but weathered horizon above the resource units (>75 m), the relatively thin nature of the ore lenses, and the mining method utilising progressive backfilling of all voids. The top resource below the crown pillar will be mined by underhand DAF stopes that will be stabilised during development and progressively filled with paste in short panels to enable tight filling. It is considered prudent that no civil infrastructure is placed directly above the weathered resource footprint inside a break angle. The break angle assumed is 75, commonly associated with caving projects, and should form a surface exclusion zone. This is especially important for any water pond or storage facilities (i.e. sumps, dams, etc.) that may have the potential to re-introduce water into the weathered zone and aquifer and infiltrate the active mining areas.
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Potentialbreakzone
Figure 16.1.7
Crown Pillar Surface Exclusion Zone - Section 5350mN looking North
16.1.11 Hydrological Assessment RPS Aquaterra (RPS) developed a conceptual hydrological model for Merlin based on previous Rockwater studies and subsequent RPS reviews. The proposed Merlin hydrological model comprises the following:
While the overall Kuridala Formation (termed the Mt Dore Aquifer in previous reports) is fractured and contains highly sheared and brecciated zones, it would appear that the bulk of the formation (shales, phyllites, siltstones, etc.) may only have moderate permeability due to the infilling of most fractures / shears with clays, chlorite and malleable molybdenum mineralisation. However, there are some major shear/fault zones which are open. The main aquifer zone appears to be the footwall quartzite (referred to as the SQT), which displays extensive brittle open fracture and vuggy zones. There is at least one major thrust fault zone sub-parallel to the dip of the SQT, which may significantly displace the SQT and which has resulted in a zone of even higher permeability. There is also a complicated structural setting to the south of the Merlin mine area where several faults converge and there may be some significant displacement (vertical and lateral) of the main aquifer units along these faults.
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Available monitoring data confirms that there is good hydraulic connection along strike within the SQT (at least in the Merlin orebody area) and across strike into the rest of the Kuridala Formation and the orebodies (the orezone aquifer). However, the degree of along strike hydraulic connection has yet to be demonstrated and might be limited if some fault displacement has resulted in compartmentalisation (partial or full) of the aquifer system.
16.1.12 Drainage / Flood Control There are several small creeks and drainage paths across the site with the road culverts being used to allow surface water drainage. Surface infrastructure facilities are designed to prevent inundation of the facilities and the underhand mine. Site surface infrastructures are mainly located south of the main site access road. The portal box cut is located at high elevation near the quartzite ridgeline with a positive gradient that enable self-drainage. The collars of ventilation rises are located along the foothills of the ridge line at high elevation to prevent flooding. There is risk of inundation surface facilities if the surface stream flow path is blocked or diverted by Mt Dore open pit operations. Any flood control and water drainage planning prior to Mt Dore open pit mining will have to be balanced with the requirement for Merlin site surface drainage control measures. 16.1.13 Water Balance A simple water balance model was developed by RPS Aquaterra in order to estimate time required to dewater the mine area ahead of mine production (development of cross-cuts, ore drives and stopes). The water balance model assumes a finite aquifer system some 2.5 km long and 750 m wide with no recharge and no groundwater throughflow (i.e. bath-tub or storage depletion model) and subdivides the aquifer system into four vertical zones, with decreasing specific yield (drainable porosity) applied to each zone. In such a model, the key aquifer parameter is specific yield. RPS adopted a specific yield for the upper zone (4,125 m to 4,250 mRL) of 2.5%. RPS study indicates a significant reduction in porosity and contained water with depth. An estimate of water contained in this aquifer is 2.0 Giga litres. (RPS, December 2011).
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The proposed dewatering plan includes the following:
Continue to operate the surface bores (MDWB 29 and 30) for as long as they are operational (i.e. until groundwater levels are drawn down to near the base of the bores and pumping water levels in the production bores are drawn down to near pump inlets). Progressively install underground drain holes into the SQT and orezone aquifer as the decline develops. The trial drain holes from the 4220 Access clearly demonstrate that drain holes intersecting the main aquifer can produce as much, if not more water than pumping from surface bores. The one drain hole that is currently plumbed into the underground dewatering system, produced similar water (estimated free flow in excess of 25 L/s) as has been pumped from bores MDWB29 and MDWB30. Increase total underground pumping capacity (i.e. from the pump stations to surface) to 60 L/s.
Based on the current model and assumed future pumping rates, the predicted drawdowns over the period to October 2012 are listed in Table 16.1.12. The model predicts that groundwater levels within the Merlin mine area should draw down by around 110 m to around 4,140 mRL assuming that pumping is maintained at the rates assumed and that the average specific yield for the upper aquifer is 2.5%. Table 16.1.12 Predicted Dewatering Dec 2011 to October 2012
Predicted EOM Groundwater Level (m RL) 4,245 4,235 4,225 4,210 4,195 4,190 4,180 4,170 4,160 4,150 4,140 Assumes that drains at 4,125 and 4,140 mRL continue to yield 60 L/s total when water levels approach drain collars. All bores cease pumping due to excess drawdowns
Month
Total Bore Pumping (L/s) 15 30 30 30 30
Total Underground Pumping (L/s) 20 40 40 60 60 60 60 60 60 60 60
Comments/Assumptions
Dec 11 Jan 12 Feb 12 Mar 12 Apr 12 May 12 Jun 12 Jul 12 Aug 12 Sep 12 Oct 12
Bores MDWB4,10 & 29 and one UG mono pumping Bore MDWB30 and second UG mono also pumping New drain holes installed below 4,220 mRL (4,125 and 4,140 mRL) Third UG mono also pumping.
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16.1.14 Groundwater Chemistry The ground water chemistry for Mt Dore aquifer is listed in Table 16.1.13: Based on these values, there is potential for accelerated corrosion of ground support elements, indicating that fully encapsulated and/or galvanised support elements will be required. Future tests should also include dissolved oxygen analysis, as this is critical to the effect the ground water may have on installed (and stored) ground support corrosion rates. AMC recommends that the Mt Dore aquifer will need to be dewatered down to an appropriate level to keep ahead of advancing mining fronts. Table 16.1.13 Mt Dore Aquifer Groundwater Chemistry Summary (Rockwater, 2010)
Units S/cm mg/L CaCO3 mg/L CaCO3 mg/L mg/L mg/L mg/L mg/L mg/L Value Range 7.59 8.32 1059 1801 284.0 494.6 220.1 793.1 791 1378 Not Reported 35.2 117.4 171.3 298.6 34.2 69.3 128.8 599.0
Chemistry Analysis pH Conductivity Alkalinity Hardness Total Dissolved Solids Dissolved Oxygen Calcium Bicarbonate Chloride Sulphate
16.2
16.2.1
Mining Methods
Geological Setting and Orebody Characteristics
Merlin deposit is a zone of molybdenum-rhenium mineralisation that occurs as molybdenite, hosted in an east-dipping shear and breccia zone, with extremely high-grade portions occurring as a molybdenite-supported breccia. The host rock sequence is highly variable and is weathered in the upper levels, and contains rocks with very poor to good rock strengths. The footwall rock sequence of Stavely Formation is mostly competent. The mine access including the twin decline system and ventilation networks are planned to be constructed within the competent footwall rock sequence. The Merlin high grade molybdenum mineralisation comprises of east dipping (30 to 60 degrees) narrow tabular lenses (Figure 16.2.1). The true thickness of lenses varies from a few metres up to 20m with an average thickness of 5m. The Main Lens (5) is largest and has approximately 850 m strike length (accounts for approximately 60% of the total mining inventory), and is moderate dipping (30 to 50 degrees).
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The two minor Footwall Lenses (6 and 7) located predominantly to the south of Main Lens are relatively steeper dipping (55 to 60 degrees) and have limited strike length of 300 m to 400 m. There also exists a minor Little Wizard (LW) lens (4) that is a very high grade, up-plunge pod sitting above the south part of the Main Lens.
Figure 16.2.1 16.2.2
Merlin Orebody Dimensions Long Section Looking West
Mining Method Selection
A range of mining options were considered as part of the PFS completed in Q4 2011. The mining methods selection was based on a review of all potentially applicable surface and underground mining methods. Mine strategy optimisation (SO) work carried out during the PFS indicated better project value is achieved by underground mining methods compared to open pit mining. In choosing a suitable underground mining method for Merlin the following factors were considered:
Orebody geometry and continuity. Resource grade and value. Geotechnical characteristics of ore and host rocks. Ore recovery and dilution factors.
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From a mining perspective, the Merlin deposit can be described as:
Very high grade Moderate to steep dipping - 30 to 60 degrees Extending up to 890 m on strike with an explored depth of 550 metres Variable width (2.5 m to 12.0 m) Tabular structure with vein splays separating at depth Minor fault zones in ore and host rock parallel to mineralised structure Weak ore and host rocks
The preferred mining methods identified for Merlin in the PFS were:
DAF for mining in very poor ground (weathered areas) and in flatter sections of the orebody (Figure 16.2.2). These conditions are a feature of Lenses 4 and 5 and to the limited upper parts of the Lens 6 and 7. LHOS with paste fill in un-weathered moderate to steep dipping areas of Lens 6 and 7, with stopes retreating longitudinally along strike (Figure 16.2.4: Underhand LHOS Mining Method).
The DAF method is especially suited to the recovery of Merlins high value ore material in variable ground conditions. The method involves the excavation of ore by jumbo development techniques and requires the filling of the completed drift prior to excavating an adjacent drift. The DAF method creates open spans that are only as wide as a single ore drift, up to 6m wide, and leaves no permanent ore pillars, except where the ground is unmineable. The use of cemented paste fill with the DAF method allows the full recovery of the mining block without the need to leave regional pillars. The LHOS is a high recovery mining system that is especially suited to the recovery of medium to high value ore material in fair to good ground conditions. The method involves the extraction of ore blocks by long hole stoping and requires the progressive filling of the completed stope voids before commencing the adjacent stope. Due to the poor conditions of the resource rock units, the underhand mining sequence (top-down) has been chosen as the preferred extraction sequence for Merlin.
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UDAF
Lens M5
FWD
SLOS
Decline
Lens M6
Lens M7
Figure 16.3.3
Mine Design and Stoping Blocks Section 28550N
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Level Development From decline level accesses 5.5 m wide and 5.5 m high are developed every 20 m vertical distance floor to floor. Sumps, ore and waste stockpiles and ventilation accesses are typically located in the level access drives. Footwall drives 5.0 m wide 5.0 m high are driven, from the level accesses, along orebody strike and are located a minimum 30 m away from the orebody contacts. Cross-cuts 5.0 m wide 5.0 m high are driven from footwall drives to access ore at positions that will limit bogging distances to a maximum 100 m in ore with total bogging distance to stockpile in the level access being limited to a maximum of 300m. Stope Designs Based on the objective of targeting the maximum recovery of economic ore for the Project, a breakeven COV was applied in preparing the FS mine designs and schedules. The stope designs are based on COV envelopes using the resource model and orebody wireframes. The COVs used are A$150/t for LHOS and A$200/t for DAF stopes. DAF mining is applied in the Main Lens 5 and the upper parts of the lens 6 and 7 and each 20 m high sublevel consists of a 5 m high sill level and three 5 m high undercut lifts, with strike lengths limited to 100 m either side of the cross-cut (north and south). Each set of lifts is accessed via a crosscut ramp developed off the footwall drive. The first sill cut will be accessed by a stope access drift driven from the footwall drift. Successive cuts are accessed by stripping down the floor of the crosscut. South and north mining zones each have two DAF stoping blocks providing a total of eight working faces for each 20 m sub levels. Longitudinal LHOS stopes are applied to un-weathered sections of footwall Lenses 6 and 7. LHOS stopes are nominally 20 m along strike and 10 m wide. For wider areas multi panel stopes are required for full extraction. As the initial production in the early years of mine life relies on DAF stopping only multiple sublevel blocks are developed and mined concurrently in order to meet the production demand. Figure 16.3.4 shows a longitudinal projection of the mine layout showing the mine design and mining methods, whilst Figure 16.3.5 and Figure 16.3.6 show typical level development layouts for DAF and LHOS stoping, respectively.
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Figure 16.3.4
Merlin Mine Design Long Projection Looking West
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N x-cut decline RAR FAR egress FWD x-cut 7 le ns level access sump x-cut stockpile
l en s6
ore drive
blind uphole stopes
Figure 16.3.5
Typical LHOS Level Development (Lens 6 and 7)
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decline
FAR egress
x-cut
level access stockpile FWD

l sil t cu
x-cut
1 ut rc e t2 d un erc u t 3 d u rc un de n u
DAF drives
Figure 16.3.6
Typical DAF Level Development (Main Lens 5)
16.4
16.4.1
Mining Schedule
Overview
The development and stope designs have been prepared using Datamine and Mine2-4D (M24D) software and the schedule prepared using Earthworks Production Scheduler (EPS) software. The production schedule has been constructed to reflect the progressive development of production blocks as they are developed (top-down), i.e. to reflect a falling-through underhand sequence. With this sequence, the stoping blocks are mined progressively top-down as the upper blocks are depleted. The development and production schedule is targeted at producing approximately 500 ktpa of ore at full production.
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16.4.2
Schedule Productivity Rates
Productivity rate estimates have been prepared for use in the FS as described in the following sections. Development Activities Mine-wide lateral and vertical development rates have generally been adopted for all the mining methods as listed in Table 16.4.1 and Table 16.4.2. Table 16.4.1
DESC Decline CAP/OP CAP
Lateral Development Mining Rates

Rate m/month 140 Comments Assume developed as critical path activity with dedicated resources. Scheduled rate is average of decline and ancillary development. Non critical path decline development. Assume developed as critical path activity with dedicated resources. Scheduled rate is average of decline and ancillary development. Individual heading development rate. Assume developed as secondary heading to the decline. Assume developed as a multiple heading activity, assuming two headings are available on a level. Assume developed as a multiple heading activity, assuming two headings are available on a level. Productivity rates applied to Sill, undercuts 2 and 3 only. Assume developed as a multiple heading activity. Scheduled rate is combined average of drifting and filling, assuming between 2 and 4 headings are available within a DAF stoping block, depending upon the number of lenses and orebody geometry. Productivity rates applied to final undercut only. Assume developed as a multiple heading activity. Scheduled rate is combined average of drifting and filling, assuming between 2 and 4 headings are available within a DAF stoping block, depending upon the number of lenses and orebody geometry.
Decline
CAP
60
Ancillary development Waste Drives Ore Drives DAF drifting
CAP OP OP OP
60 60 60 40
DAF drifting
OP
30
Table 16.4.2
CAP/OP CAP
Vertical Development Mining Rates

Rate m/day 3 Comments Assume developed as critical path activity with dedicated resources. Scheduled rate includes site mobilisation and demobilisation and excludes collar construction and pilot hole drilling. Assume developed as critical and non-critical path activity with dedicated resources. Scheduled rate includes site mobilisation & demobilisation. Directional drilling of surface and internal service holes. Includes mobilisation, demobilisation, survey pickup and services installation.
DESC Surface Fresh and Return Air Rises
Internal Fresh and Return Air Rises Service Holes
CAP
CAP
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Stoping and Derived Activity Productivity Rates Derived activities have been generated within M24D and sequenced within EPS, which are associated with LHOS and DAF activities, are listed in Table 16.4.3. Table 16.4.3
M24D / EPS Derived Activities Slot Raise
M2-4D / EPS Derived Activity Information

Rates 2 m/d Comments LHOS only. Includes mobilisation, demobilisation, markup and survey pickup. Metres based on stope height and orebody dip. LHOS only. Calculated using 8 t/m drill factor using 89 mm dia holes. Metres calculated on depleted LHOS inventory, i.e excluding slot and ore development tonnes. LHOS only. Assumes 75% remote mucking using RH1700 LHDs, average 250m haul. 60% HS Pastefill, 40% MS Pastefill, 0% Rockfill. Volume calculated using diluted design inventory. 100% HS Pastefill.
Production Drilling
220 dm/d
LHOS Production Paste Fill LHOS Paste Fill DAF
1,360 t/d 1,000 m3/d 1,000 m3/d
Note: HS = 5% cement, MS = 2% cement content
Ancillary Physicals Activities physicals calculated within EPS include:
DAF Barricades: One barricade construction event is allocated to the each individual DAF pastefill event. The DAF headings have been separated into nominal lengths for pastefilling, typically 30 m to 35 m for DAF headings with adjacent DAF drives, or up to 50 m for non adjacent DAF drives. LHOS Barricades: One barricade construction event is allocated to each LHOS pastefill activity. Intersections: The number of intersections requiring secondary support is calculated as individual events to each lateral development activity that is developed off either the decline, access, FAR, RAR or footwall drive, and includes all minor ancillary development activities, but excludes DAF . Pastfill digout metres: Length of lateral pastefill digout has been applied as follows: LHOS. 10.0 metres per LHOS and represents mining back through barricade, cured pastefill and preparing for slot activity. DAF. 5.0 metres of lateral pastefill digout has been allocated to each access ramp undercut activity prior to opening up the DAF undercuts.
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Haulage tkm: All material is assumed to be hauled to the surface and delivered to either the surface ROM pad, marginal stockpile or waste dump.
Capital / Operating Definitions Capital and operating activities definitions within EPS are:
Capital lateral development activities includes decline, vent and egress access, underground magazine, main level access, sump and pump station, stockpiles, footwall drive, remote cuddy and sump development. Operating lateral development activities include cross cuts and DAF ramps, DAF drives and LHOS ore drives. Capital vertical development activities include all surface and internal ventilation rises, and egress rises. Schedule Constraints
16.4.3
The following assumptions apply to the schedule:
Schedule commencement date of October 2012. The schedules have been prepared on a monthly interval and reported on a quarterly (3 month) or annual basis. The schedule assumes planned nine months hiatus from Q1 to Q3 2012. Scheduled lateral and vertical development excludes exploration decline development completed as part of Merlin Stage 1 development programme during Q4 2011 to Q2 2012. External constraints have been applied within the schedule and include: Paste plant commissioning at 1 January 2014. The limited DAF hangingwall sill drives mined during the pre-production period will remain open until turn-key production commences. The mill commissioning date excluding planned the nine month development hiatus is 1 April 2013. Mill commissioning at 1 June 2014, the small quantity of ore mined prior to the mill commissioning is to be stockpiled on the surface and will be used to supplement mine inventory shortfalls. The mill commissioning date excluding planned the 9 month development hiatus is 1 September 2013. Dewatering horizons by milestone date are as supplied by Ivanhoe, and extrapolated to depth. The estimated dewatering horizons (depth and date) have been applied within the mine schedule. Commencement of ore production within a block cannot commence until the dewatering milestone has been achieved. Extension of the decline and in advance of the dewatering horizon is allowed.
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All non critical path schedule activities apart from ore production and pastefill are constrained as ALAP (as late as possible) and are able to start when available to do so. Within DAF production blocks, where multiple lenses occur on a level, DAF mining is assumed to be able to operate concurrently within adjacent lenses if sufficient lateral separation (minimum of one drive width) occurs. A maximum of four headings can occur within an individual production block, irrespective of the availability of additional headings on the level, particularly in wide areas. A maximum of 24 independent activities can occur on a daily basis, excluding pastefill curing. This is required to restrict the mine development to the expected ventilation quantity available. A fixed 30 day delay has been incorporated in the schedule between completion of associated ventilation and egress system and ore production within each block. A fixed 60 day delay has been incorporated in the schedule between completion of the level footwall drive and ramp commencement to simulate an infill drill program, for all production blocks. Additional stoping curing delays applied within the schedule include: 28 day delay between adjacent (lateral or vertical) stopes upon pastefill completion and adjacent stoping activity commencing (slot raise). A minimum one stope separation (lateral or vertical) between active stopes.
Additional DAF drive exposure curing delays applied within the schedule include: 2 day delay between in series backfill activities to simulate services extraction and barricade construction. 4 day delay between adjacent backfill and drift and fill ore production activities to simulate required delay for adjacent vertical wall curing prior to exposure. 7 day delay between ramp strip and undercut exposure.
The production schedule has been constructed using the EPS Blending module, with schedule targets and priority applied to:
Number of daily active headings - limited to a maximum 24 individual activities. Monthly lateral metres - limited to a maximum of 1,200 m/month, with a minimum target of 900 m/month. Monthly ore production - limited to a maximum of 44 kt/month with a minimum target of 42 kt/month, to achieve the 500 ktpa ore production target.
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Contained Mo metal - unconstrained. No of daily active heading per production block - limited to a maximum of four individual activities, to simulate the production block ventilation quantity allowable. Base Case Schedule
16.4.4
In the base case schedule, target production rate of 0.5 Mt is sustained during 2015 to 2026 after an initial pre-production period of approximately 2 years. The mine schedule is development intensive in the early years during the period 2014 to 2020 when capital development is underway. Average lateral development is approximately 11.000m, over Year 3 to Year 9 (2014 to 2020) period dropping to 6,000m thereafter (Figure 16.4.3). The first ore production commences during Q3 2013 in the south zone from underhand DAF stopes. Underhand DAF is the predominant mining method curing the early mine life. The LHOS stoping starts in Year 5 (2017) with gradual change from DAF to a combination of DAF and LHOS for the rest of mine life. Over the mine life approximately 60% of ore will be produced from DAF and 40% from LHOS stopes. The annual Mo/Re grade distribution is shown in Figure 16.4.1 ad Figure 16.4.2. The Mo/Re grades are higher in the earlier years because the priority is given to develop the higher grade south zone early in the mine schedule. The total Mineral Reserve is estimated, effective 5 December 2011, at 7.11 Mt @ 1.09% Mo and 18.12 ppm Re at COV of $200/t for DAF and $150/t for LHOS stopes. Marginal ore mined and stockpiled on the surface is estimated to be approximately 340 kt @0.44% Mo and 8.14 ppm Re. Marginal ore is not included in the Mineral reserve estimate.
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Figure 16.4.1
Total Ore Tonnes and Mo % by year
Figure 16.4.2
Total Ore Tonnes and Re ppm by Year
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Figure 16.4.3
Lateral Metres (Year 2011 already completed)
16.5
Backfill
The proposed DAF and LHOS mining methods and underhand mining sequence will require cemented backfill from the commencement of ore mining operations. As such, timely delivery of high quality backfill will be required as an integral part of ongoing underground mining operations at Merlin. Among the backfill methods considered during PFS, paste backfill was selected as the most appropriate backfill option meeting mining, operational, economic, safety and environmental requirements of the Project. Major conclusions and comments regarding backfill include:
At a nominal 500,000 tonne per year production rate, the total annual backfill demand is estimated at 190,000 m3 (assuming 100% void fill factor and average ore density of 2.63 t/m3). Due to lack of fresh mill tailings on site, a dry paste backfill system is proposed for Merlin with sufficient dry tailings being available at Osborne (TSF1 and TSF2) and Starra tailings dams (East and South TSF). Harvested dry tailings will be fed to a dry paste backfill plant similar to the one at Osborne mine using a front-end loader. Tailings will be repulped and mixed with cement.
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The proposed dry system paste backfill plant will have a rated capacity of 150 m3/h, nominally operating at 110 to 130 m3/h. Average daily and monthly filling rate will be 1,750 m3 and 40,000 m3, respectively. The paste plant infrastructure will consist of a tailings stockpile, tailings hopper and feeder, tailings conveyor, three 120 tonne binder storage silos, binder transfer system and a twin shaft continuous paste mixer, paste hopper, an 80 bar PD delivery pump and surface and underground reticulation system. Laboratory test work indicates that both Osborne and Starra old tailings are suitable for making economic paste fill mixes. Osborne tailings have consistent material properties in term of SG, moisture and PSD. As well, Osborne paste fill is characterized by a high mix density achieved at lower yield stress that has rapid strength development, which can be varied from 250 to 4,000 kPa to suit any mining method and scheduling requirements. Use of Osborne tailings are the preferred option for Merlin. The proposed plant location is in the flat area south of the existing concrete batch plant west of the quartz ridge line. This ensures that the plant is integrated with the rest of the surface infrastructure, which has better access to road, water and power facilities. Due to relatively long orebody strike length and shallow mining depth, gravity delivery will not be sufficient to deliver paste fill to all mining areas, therefore paste delivery using a positive displacement (PD) pump is recommended. Paste fill would be delivered underground through one of the two inclined 175 m long steel cased 200 mm NB Schedule 80 surface boreholes connected to the egress raise access drive and a series of internal boreholes and level distribution pipelines for delivering paste to south and north mining areas. For Starra tailings paste fill, tested during the PFS, the estimated target design UCS varies from 700 to 800 kPa which is achieved with an average 5.5% (72 kg/m3) to 7.0% (91 kg/m3) cement rate at 21 to 28 days cure age for 6 to 7 m undercut spans. For the proposed combination of DAF and LHOS mining methods, the average cement consumption will be 6.25% (82 kg/m3). For Osborne tailings paste fill, the estimated target design UCS varies from 1,000 to 1,300 kPa achieved with average 5.0% (104 kg/m3) for DAF to 3.5% (73 kg/m3) for LHOS at 7 days cure age for 6 to 7 m undercut spans. Assuming equal split between production from DAF and LHOS, the average cement consumption will be 4.25% (88 kg/m3) for Osborne tailings. Target UCS is higher for Osborne tailings due to higher bulk density of paste fill (25 kN/m3 compared 18 kN/m3). The capital cost of a new dry system paste fill plant complete with an 80 bar PD delivery pump, surface boreholes and initial underground backbone reticulation system excluding contingency is $8.0 M. Assuming 50/50 split between DAF and LHOS stoping the average backfill operating costs are $59 /m3 for Starra and $64 /m3 for Osborne tailings. The proposed paste system can be delivered, installed and commissioned in approximately 10 months; with the paste plant itself being delivered in 7 to 8 months (typical delivery time for PD pumps is 9 months).
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16.7
Mining Mobile Fleet
The major items of mobile equipment and their maximum number required are listed in Table 16.6.1. The listed equipment types are indicative of the size of the machine only. Table 16.7.1
Type Development jumbo Longhole drill Loader - 12 t capacity Loader - 17 t capacity Truck - 55 t capacity Explosives charge-up Shotcreter Agitator truck Integrated tool carrier Scissor lift Grader Backhoe DD421-60C Simba M6C Cat R1700 Cat R2900G Cat AD55B Charmec 1610B Spraymec 6050W Unimix 1600 Cat IT28 Utilift 6330X Cat 12H Cat 428E
Mining Mobile Fleet Requirements

Type Max Number 5 2 3 2 4 2 2 3 4 1 1 1
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MERLIN MOLYBDENUM RHENIUM PROJECT NI 43-101 REPORT - RECOVERY METHODS
Page 17.1
17.0 17.1
17.1.1
RECOVERY METHODS
Process Plant Design Criteria

Process Design Criteria Molybdenum Concentrator
The process design for the concentrator has been based on the following approach:
The feed rate and ore grades were supplied by IAL. Key ore characteristics provided in the design criteria have been determined by testwork (Metcon 2011 a,b,c & 2012) or, where absent, taken from similar ore types. The target grind size of 80% passing (P80) of 180 m was provided by IAL based on batch scale flotation testwork, conducted at Metcon Research (Metcon 2011 a,b,c & 2012). However upon concluding the feasibility study work, new locked cycle testwork has indicated that a target primary grind size P80 of 110m supports the concentrate grades and molybdenum recovery used in the process design. The effect is a larger ball mill (OMC 2012) and a capital cost allowance has been included in the Project cost estimate. Orway Mineral Consultants (OMC) provided the ball mill sizing based on the ore characteristics and ore blends from IAL (OMC 2011). Due to concerns about sliming of molybdendite, a grate discharge mill has been adopted. The basic flotation circuit configuration, including number of stages of cleaning and reagent regime, was determined in batch testwork conducted at Metcon (Metcon 2011 a,b,c), which was supervised by IALs metallurgical consultant. In a departure from previous studies, the flash flotation cleaning stage has been removed, as this stage required an extremely small flotation cell. Instead, flash flotation concentrate will now be directed to regrind and then onto molybdenum cleaner 2 flotation. The mass balance for determination of mass pulls, recirculating loads and prediction of molybdenum concentrate grades has been developed by IALs metallurgical consultant Orchard Material Technology (OMT) based on the batch testwork (Metcon 2011 a,b,c). Kinetic test results were used to predict the upgrade to each concentrate, and subsequent recovery, as a result of recycling the internal tailings streams. It was realised that these predictions would have to be validated by locked cycle testing of the final flowsheet. As indicated above, recent locked cycle testwork has indicated that grind sizes will need to decrease in order to achieve the predicted metallurgical performance. This testwork is on going. An engineering balance (Lycopodium 2012b) that included all reagent and water requirements was then developed by Lycopodium based on the metallurgical balance.
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Flotation reagent additions have been based on the batch testwork conducted at Metcon Research and advice from OMT. Selection of flotation times have been based on the batch testwork conducted at Metcon Research and advice from OMT. A scale-up factor of 3.0 was applied for all mechanical flotation stages due to the slow floating nature of molybdenite. The exception was flash flotation which used a scale-up factor of 1.0. Additional residence time has been added to the rougher / scavenger train, and the Cu cleaner scavenger cells compared to previous studies to allow flexibility for higher molybdenum grades. In a change from previous studies, column flotation cells were selected for the last two cleaning stages only, after discussions between IAL, OMT and Lycopodium. This modification simplifies the circuit and reduces raw water usage. Tailings thickener sizing and flocculant dose rates have been based on the testwork conducted by Pocock Industrial (Pocock 2010) on samples generated by Metcon Research. As no filtration testwork was conduced on the molybdenum concentrate, filter selection has been based on vendor experience with similar applications. Dryer sizing has been based on vendor experience with molybdenum concentrates at other sites.
A summary of the key design criteria (Lycopodium 2012a) for the concentrator is presented in Table 17.1.1.
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Page 17.3
Table 17.1.1
Parameter Throughput Ore grade (dry basis)
Summary Design Criteria Molybdenum Concentrator

Value 500,000 1.2 0.2 18 30 11 Units t/y % Mo % Cu g/t Re % Mo in Molybdenum Concentrate % Cu in Copper Concentrate % Mo % Cu kWh/t kWh/t kWh/t h mm P100, mm % m % Source IAL IAL IAL IAL Testwork / OMT Testwork / OMT Testwork / OMT Testwork / OMT IAL Assumed Testwork / OMC Testwork / OMC Lycopodium OMC IAL OMC Agreed OMC Agreed Testwork / OMT OMT Lycopodium Testwork % Lycopodium OMT Vendor kwh/t m t/m /h % w/w % w/w t/m /h % solids w/w
2 2
Target concentrate grade
Target flotation recovery Ore specific gravity CWI RWI BWI Operating hours Comminution ROM top size Crushing circuit type Crushing circuit product Ball mill Recirculating load Flash flotation Cyclone overflow (P80) Flotation Flotation feed density Rougher / scavenger stages Cleaner stages Air hold-up Scale-up (mechanical cells) Scale-up (columns) Regrind Specific energy Cyclone overflow (P80) Concentrate dewatering Filter specific throughput Filter cake moisture Target dryer product moisture Tailings dewatering Tailings thickener flux Tailings thickener U/F density
88 80 2.65 15.0 21.6 20.7 8000 600 Three stage 10 Grate discharge 250 Included 110 30 6 6 15 3.0 3.0 4.0 17.8 44 0.15 10 3 0.70 68
Vendor OMT Vendor Vendor OMT Testwork Testwork / Agreed
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17.1.2
Process Design Criteria Concentrate Treatment Plant
The process design for the concentrate treatment has been based on the following approach:
Throughput based on 35,000 lb/day (16 t/d) molybdenum per day and supplied by OMT. The process technology and process route to recover molybdenum and rhenium from the molybdenum concentrates was selected by OMT and based on their operational experience (OMT 2012). Metal recovery is based on 98% molybdenum and 85% rhenium recovery from concentrate and supplied by OMT based on their operational experience (OMT 2012). A conceptual and partial mass balance was provided by OMT based on their operational experience and limited testwork (OMT 2012). An engineering balance (Lycopodium 2012b) that included all reagent and water requirements was then developed by Lycopodium with assumptions. A molybdenum purification process to produce pure chemical molybdenum oxide from calcined concentrate from a multiple heath roaster was developed based on OMTs operational experience. It is planned to complete testwork to develop the process design criteria.
A summary of the key design criteria (Lycopodium 2012a) for the concentrate treatment plant is presented in Table 17.1.2.
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Page 17.5
Table 17.1.2
Parameter Throughput
Summary Design Criteria Concentrate Treatment Plant

Value 35,000 30 450 98 85 8000 49% 66.6% 99.9% 94-98 Multiple hearth Indrect Gas Cooler Dust Cyclones/ESPs Rotary drum Sulphuric Acid Plant Technology 94-98 230-250 65-70 2 35 Solvent Extraction (SX), Ion Exchange (IX), Crystallisation 3 1.40 2 4 columns x 1 train Re selective weak basic gel 2 stages, vacuum type Water leaching with IX, ammonia leaching, adjustment, crystallisation and calcining. %H2SO4 C C C Units Mo lbs/day % Mo ppm Re % % H % Mo % Mo % NH4ReO4 %H2SO4 Source OMT OMT OMT OMT OMT Lycopodium OMT OMT OMT OMT OMT OMT OMT OMT IAL IAL OMT OMT OMT OMT OMT
Concentrate grade (dry basis) Target metal recovery Mo Target metal recovery Re Operating Hours Products Low Grade Molybdenum Oxide (ex Roaster) Pure Chemical Molybdenum Oxide Ammonium Perrhenate Sulphuric Acid Roaster/Off Gas Handling Roaster Type Gas Cooling Dust Collection Product Cooling type Sulphur Dioxide Removal Method Sulphuric Acid Wet Gas Cleaning Inlet gas temperature to scrubber Outlet gas temperature from scrubber No of Wet Electrostatic Precipitator (WESP) Units Inlet temperature to WESP Rhenium Recovery Method
SX extraction stages SX extraction loading capacity SX strip stages IX Configuration IX Resin type Re crystallisation type Molybdenum Purification Method
g/l Re per % extractant -
Assumed Assumed Assumed Assumed OMT OMT OMT
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Page 17.6
Parameter Water Leach Demineralised water addition Nitric acid addition Filter selection Mo-Ion Exchange (IX) IX Configuration IX Resin type Ammonia Leach Configuration Ammonia concentration Net NH3 consumption Filter Type Adjustment Configuration Reducing agent Crystallisation type
Value 3.0 0.02 Vacuum Filter 4 columns x 1 train Weak Basic Gel 4 agitated tanks plus 1 buffer 7-8% 0.187 kg/kg Mo Batch belt filter 4 tanks in parallel Diammonium sulphide Single stage atmospheric evapourative crystalliser Turbo Heat Treater
Units l/kg Calcine l/kg Calcine -
Source OMT OMT OMT Assumed OMT OMT OMT OMT OMT OMT OMT OMT
Calciner type
OMT
17.2
17.2.1
Process Description
Process Description Molybdenum Concentrator
The molybdenum concentrator will treat 500,000 dry tpa of ore to produce a molybdenum-rhenium concentrate of approximately 30% Mo and a copper concentrate by-product. The overall flowsheet includes the following steps (refer to Figure 17.7.1): Error! Reference source not found.): Primary, secondary and tertiary crushing and screening

Fine ore reclaim Grinding, classification and flash flotation Rougher and scavenger flotation Two stages of molybdenum cleaner flotation Regrind of flash flotation and molybdenum cleaner 1 concentrates Three stages of copper depression using NaHS Molybdenum filtration Molybdenum concentrate drying and bagging Tailings thickening and disposal
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The copper concentrate produced from the molybdenum concentrator will be pumped to the existing Osborne copper concentrator for thickening, filtration, concentrate storage and load-out. Primary, Secondary and Tertiary Crushing Run-of-mine (ROM) ore will be crushed and sized at the Merlin mine by a conventional crushing plant consisting of primary, secondary and tertiary crushers. Crushing is based on contract crushing. The crushed ore will be transported in haul trucks from the Merlin mine to the Osborne plant site and stockpiled at the existing ROM pad. Fine Ore Reclaim Ore from the stockpiles will be reclaimed by front-end loader (FEL) and fed into the fine ore bin. A water spray system will be installed at the fine ore bin for dust suppression purposes. A 200 mm static grizzly positioned over the fine ore bin will prevent rocks or trash from entering the bin. The fine ore bin will have a surge capacity of approximately 100 t or 1.5 hours. Ore will be reclaimed from the fine ore bin using a variable speed belt feeder. A weightometer installed on the mill feed conveyor will control the speed of the belt feeder to achieve the desired mill feed rate as set by the operator. A pulse insertable dust collection system will be installed at the transfer point between the feeder and the conveyor to reduce airborne dust around the fine ore reclaim area. A clean-up hopper will be provided to allow scats and other spillage to be returned to the mill feed conveyor using a skid-steer loader. A drive-in style sump pump will service the fine ore reclaim area to facilitate area cleanup. The sump pump will deliver spillage hosed into the sump to the cyclone feed hopper located in the grinding area. Grinding, Classification and Flash Flotation The grinding circuit will receive ore at a nominal top size of 10 mm with an 80% passing size of 8 mm. The circuit will consist of a single-stage ball mill in closed circuit with a cyclone cluster and a single flash flotation cell. The ball mill will be a 4.00 m diameter x 5.35 m EGL grate discharge mill, with a 1.5 MW fixed speed motor. The mill will operate with between 30 and 38% ball charge. Ore will be fed to the ball mill at a controlled rate, nominally 63 dry tph, and water added to the feed chute to achieve the desired mill discharge density. Kerosene and A3302 collectors will also be added to the mill feed to ensure adequate mixing and contact with the ore surfaces. Product from the ball mill will discharge over a trommel with 20mm apertures. Oversize will report to the scats bunker, where it will be removed by skid-steer loader and returned to the circuit via the clean-up hopper. Trommel undersize will gravitate to the cyclone feed hopper where it will be further diluted to achieve the required cyclone feed density. Cyclone feed pumps, in a duty / standby configuration, will transfer slurry to the cyclone cluster. The cyclones will be fully manual operation with manual isolation valves and local pressure indication. A portion of the cyclone underflow, nominally 50%, will return to the mill feed chute, while the remainder will be directed to the flash flotation cell along with frother. The flash flotation cell will be an SK240 cell. Flash flotation tailings will gravitate back to the ball mill feed. Flash flotation concentrate will gravitate to the regrind cyclone feed hopper.
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The cyclone overflow will pass over a linear screen to remove foreign material prior to rougher flotation. Trash will report to the trash bunker where it will be periodically removed by skid-steer loader. Slurry will gravitate from the linear screen underpan through a linear sampler, which will take a continuous sample to feed the On-Stream Analyser (OSA). The remainder of the stream will flow to the rougher flotation cells. Two vertical spindle sump pumps, one located at the feed end of the mill and another at the discharge end of the mill will service the area. The concrete floor under the mill area will slope to the sumps to facilitate cleanup. Grinding media for the ball mill will be introduced by use of a ball charging hoist located on the cyclone tower. Balls will be charged using a kibble. Rougher and Scavenger Flotation Slurry from the sampling unit will gravitate into the rougher flotation cells. Kerosene and A3302 collectors will be added to the rougher feed box along with frother. Process water will also be added to dilute the feed to the appropriate slurry density. The rougher flotation cells will consist of two 70 m3 forced air tank cells in series. Rougher concentrate will gravitate into the rougher concentrate pumps. These pumps will be fixed speed vertical type froth pumps with integral hoppers. The pumps will be individually plumbed such that they can be run in a duty / duty configuration in times of high grade or high mass pull. As the volume of concentrate will be relatively small, the entire rougher concentrate stream will be pumped to the OSA and returned to Molybdenum cleaner 1 via a dedicated OSA return pump. Rougher tailings will gravitate to the scavenger flotation cells. Further reagent additions will be made, namely kerosene, A3302 and frother, prior to scavenger flotation. Scavenger flotation will be carried out in four 70 m3 forced air tank cells. The cells will be set up in pairs for combined level control. Scavenger concentrate will gravitate to the scavenger concentrate pumps. These pumps will also be fixed speed vertical type froth pumps with integral hoppers. The pumps will be individually plumbed such that they can be run in a duty / duty configuration in times of high grade or high mass pull. Scavenger concentrate will recirculate back to the head of the roughers. Scavenger tailings will gravitate through a primary cross cut sampler which will take a sample for metallurgical accounting purposes. The sample will report to a secondary vezin sampler to reduce the sample volume to a more manageable quantity. Slurry discharging the primary sampler will gravitate to the scavenger tails hopper. Variable speed scavenger tails pumps in a duty / standby configuration will pump tailings slurry to the tailings thickener. A pressure pipe sampler on the pump discharge line will take a continuous sample to the OSA for process control purposes. A vertical spindle sump pump will service this area for spillage cleanup. Molybdenum Cleaner and Regrind Molybdenum cleaner flotation will consist of two stages of cleaning, with regrind of molybdenum cleaner 1 concentrate in a closed circuit tower mill.
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Rougher concentrate and molybdenum cleaner 2 tails will be pumped to the cleaner conditioner tank, where kerosene, sodium silicate dispersant and frother will be added. Process water will also be added to achieve a slurry density of 12% solids by weight. Slurry from the cleaner conditioner tank will overflow to the molybdenum cleaner 1 flotation cells. The molybdenum cleaner 1 cells will consist of three 8 m3 trough cells in series. Molybdenum cleaner 1 tailings will gravitate to the head of the roughers, while the concentrate will gravitate to the regrind cyclone feed hopper. Flash flotation and molybdenum cleaner 1 concentrates will combine in the regrind cyclone feed hopper along with dilution water in the form of raw water. Slurry will be pumped to the regrind cyclones by a variable speed horizontal slurry pump. Kerosene will be added to the cyclone underflow launder to ensure adequate mixing and surface contact. Cyclone underflow will report to the tower mill with product from the tower mill returning to the regrind cyclone feed hopper. Media for the tower mill will be added using the cyclone davit and dedicated ball charging kibble. Regrind cyclone overflow will gravitate to molybdenum cleaner 2 flotation. Sodium silicate dispersant and frother will be added into the feed box. Molybdenum cleaner 2 flotation will be carried out in four 1.9 m3 trough cells in series. Molybdenum cleaner 2 concentrate will gravitate into the molybdenum cleaner 2 concentrate pumps. These pumps will be fixed speed vertical type froth pumps with integral hoppers. The pumps will be individually plumbed such that they can be run in a duty / duty configuration in times of high grade or high mass pull. As the volume of concentrate will be relatively small, the entire concentrate stream will be pumped to the OSA and returned to the Cu depression stage via a dedicated OSA return pump. Molybdenum cleaner 2 tails will be recycled to molybdenum cleaner 1 by a variable speed horizontal slurry pump. A vertical spindle sump pump will service this area for spillage cleanup. Copper Depression Three stages of copper depression under nitrogen and using NaHS will be used to reject chalcopyrite from the molybdenum concentrate. Raw water will be used for dilution, launder spray water and column bias water throughout the copper depression stages. Molybdenum cleaner 2 concentrate, Cu cleaner scavenger concentrate and Cu depression cleaner 2 tail will combine in the Cu depression conditioner tank. NaHS will be added to achieve a slurry potential of -520 mV. Facility to add caustic to the conditioner tank will be provided, to ensure that H2S gas is not generated if the pH drops to the acidic range. Slurry from the conditioner tank will overflow into the Cu depression cleaner 1 flotation cells. Frother will be added at the head of these cells. Cu depression cleaner 1 flotation will be carried out using a bank of four 1.9 m3 trough cells in series. Nitrogen will be introduced down the agitator shafts in place of low pressure air. Concentrate will gravitate into the Cu depression cleaner 1 concentrate hopper, while tailings will gravitate to the Cu cleaner scavenger cells. The Cu cleaner scavenger cells will consist of four banks of four 1.9 m3 trough cells in series. Nitrogen will be introduced down the agitator shafts in place of low pressure air. Kerosene and frother will be added to the feed box of the first bank of cells. The first bank will be fitted with a dual launder configuration such that concentrate can be directed either to the Cu depression cleaner 1 concentrate hopper or to the copper cleaner scavenger concentrate pumps ensuring maximum flexibility for high grade copper ores.
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Cu cleaner scavenger concentrate will gravitate to the copper cleaner scavenger concentrate pumps. These pumps will be fixed speed vertical type froth pumps with integral hoppers. The pumps will be individually plumbed such that they can be run in a duty / duty configuration in times of high copper grade or high mass pull. Slurry from the Cu cleaner scavenger concentrate pumps will be returned to the Cu depression conditioner tank. Tailings from the Cu cleaner scavenger cells will gravitate to the copper concentrate hopper. A variable speed horizontal froth pump will direct this material to the Osborne copper concentrator. A pressure pipe sampler on the pump discharge line will take a continuous sample to the OSA for process control purposes. Cu depression cleaner 1 concentrate and Cu depression cleaner 3 tail are combined with NaHS in the Cu depression cleaner 1 concentrate hopper to achieve a slurry potential of -520 mV. A variable speed horizontal froth pump will transfer this material to Cu depression cleaner 2. The second and third stages of copper depression will be carried out using flotation columns. Slurry from the Cu depression cleaner 1 concentrate hopper will be pumped to the Cu depression cleaner 2 column. Raw water will be used to provide bias water for the column. Bubble generation will be carried out using a recirculation pump and nitrogen in place of high pressure air. Level control will be by vendor supplied level indicator and pinch valve on the column tailings. Concentrate will gravitate to the Cu depression cleaner 2 feed hopper, while tailings will return to the Cu depression conditioning tank by gravity. Slurry from the Cu depression cleaner 3 feed hopper will be combined with NaHS to achieve a slurry potential of -520 mV. A variable speed horizontal froth pump will transfer this material to the Cu depression cleaner 3 column. Raw water will be used to provide bias water for the column. Bubble generation will be carried out using a recirculation pump and nitrogen in place of high pressure air. Level control will be by vendor supplied level indicator and pinch valve on the column tailings. Concentrate will gravitate to the molybdenum concentrate hopper, while tailings will return to the Cu depression cleaner 1 concentrate hopper by gravity. As the volume of molybdenum concentrate will be relatively small, the entire concentrate stream will be pumped to the OSA and returned via a dedicated OSA return pump. Two vertical spindle sump pumps will service the Cu depression area for spillage cleanup. Molybdenum Filtration Molybdenum concentrate and dryer scrubber discharge will be pumped to the agitated molybdenum filter feed tank and then pumped to an automatic pressure filter. The molybdenum concentrate filter will separate the water and the solids to produce a final filter cake, containing nominally 7 - 10% moisture by weight, and a filtrate solution. The filtrate solution will be collected in the filtrate tank and pumped to process water tank. The concentrate filter cake will discharge onto a belt feeder prior to discharge into the concentrate dryer feed chute. The belt feeder will be equipped with a weightometer for metallurgical accounting purposes. The concentrate dewatering area will be serviced by one vertical spindle sump pump in the filter area.
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Molybdenum Concentrate and Bagging Filter cake from the molybdenum concentrate filter will be conveyed to the molybdenum concentrate dryer. The concentrate dryer feed chute will provide a small volume of surge capacity between the molybdenum concentrate filter and the dryer. No intermediate screw feeder or conveyor will be required based on information provided by the vendor about other similar installations. The molybdenum concentrate dryer will be an indirect screw type dryer using thermal oil to heat the screws. Natural gas will used as the fuel source for the thermal oil heater. The dryer will operate at a temperature of approximately 110C. Nitrogen will be used as a sweep gas across the dryer, in emergency shutdown or loss of feed situation, to ensure that any residual kerosene from the flotation stage does not ignite in the dryer. A wet scrubbing system will be installed on the dryer off-gases to capture any concentrate dust which may be generated. The dryer product with maximum moisture of 4% by weight will discharge to a water cooled screw feeder. The discharge screw feeder will deliver the dry molybdenum concentrate to reversing screw feeder which will enable the concentrate to be directed either to the bagging plant or straight to the roaster plant via the roaster feed conveyor. A vertical spindle sump pump will be provided to return the scrubber discharge and any clean-up in the drying and bagging area to the molybdenum filter feed tank. Tailings Disposal Scavenger tailings will be pumped to the feed box of the 12m diameter high rate tailings thickener where it will be mixed with dilute flocculant. Thickener underflow at 68 to 69% solids by weight will be pumped to the tailings storage facility by piston diaphragm pumps in a duty / standby arrangement. Thickener overflow will gravitate to the process water tank for re-use in the process. A single vertical spindle sump pump will service this area for spillage cleanup. On-Stream Analysis (OSA) System A six-stream On-Stream Analysis (OSA) system will be supplied for plant control. This system will provide on-line assays for control of plant performance. It will also provide cumulative shift samples for assay. The system will have a stand-alone control, calibration and reporting system but will have the capacity to provide assay data to the plant control system if required.
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17.2.2
Process Description Concentrate Treatment Plant
The concentrate treatment plant will produce on average 4,700 tpa of molybdenum and 7 t per annum of rhenium. This facility will produce molybdenum as pure chemical molybdenum oxide and rhenium as ammonium perrhenate as products and sulphuric acid as a by-product. The overall flowsheet (refer to Figure 17.7.2), includes the following steps:
Concentrate roasting Molybdenum roaster product handling Molybdenum purification (water leach, ammonia leach, ion exchange, crystallisation) Roaster off gas handling Rhenium recovery (wet gas cleaning, solvent extraction, ion exchange, crystallisation) Sulphuric Acid Plant Effluent treatment Reagents and Utilities Final product handling
Molybdenum products will be recovered by the processing of the roasted calcines, while rhenium will be recovered from the off-gases resulting from the roasting of the concentrate. Molybdenite concentrate will be roasted in a multiple hearth furnace to convert MoS2 to MoO3, and volatilize the rhenium as Re2O7 vapour. The SO2 bearing roaster off-gas will be first treated in a dry dust collection system by indirectly cooling with air in a heat exchanger, before recovery of calcine fines in a cyclone system followed by dry electrostatic precipitators. The partially cooled and de-dusted roaster gases from the electrostatic precipitators will then be subjected to wet purification to recover volatile Re2O7 in the weak acid scrubbing liquor, and to prepare a clean, cool gas, suitable for sulphuric acid production. The dry dust collection system will be designed for a high collection efficiency, to ensure the maximum recovery of rhenium and efficient removal of SO2 in the downstream wet gas cleaning processes.
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Roaster Feed System The roaster feed system comprises:
Roaster Plant Feed Conveyor Roaster Feed Hopper Elevator Roaster Feed Hoppers (2 off) Roaster Feed Hopper Discharge Screw Feeder (2 off) Roaster Feed Elevator Roaster Screw Feeders (4 off)
Concentrate from the concentrator will be transferred via the roaster plant feed conveyor to the roaster feed hopper elevator and then to one of two roaster feed hoppers. In normal operation one feed hopper will be filling whilst the other is feeding the roaster. Bagged concentrate will be able to be dumped into a hopper located over the roaster plant feed conveyor if direct feed from the concentrator is not available. Each roaster feed hopper will discharge via a screw feeder to the roaster feed elevator, which in turn will discharge into a distribution box from where the concentrate will be fed to the roaster by two pairs of in series screw feeders. Each pair of screw feeders will direct feed to opposite sides of the top hearth of the roaster. An emergency feed system comprising a hoist and screw feeder will be installed for use in the event of a breakdown of the roaster feed system. Roaster The multiple hearth roaster will have natural gas burners on each of the 12 hearths to provide auxiliary heat input as required. The roaster diameter will be nominally 6.55m OD and will operate at -0.5mm H2O pressure and will have a 600-675C temperature profile. Concentrate feed will enter the roaster at two points on opposite sides of the top hearth, and rotating rabble arms, raking alternately inward and outward to the central and peripheral drop holes will transport the solids from hearth to hearth. Roasted solids will exit from the bottom of the roaster via a double flap valve, while the roaster off-gases will exit at two points on opposite sides of the roaster on each of hearths 4 through 9, connecting through short flues to the vertical collecting manifolds, for ducting to the gas cleaning stage. Blowers located under the roaster will supply air for the shaft cooling and combustion air to the burners. A diesel powered backup will also be installed for the shaft cooling service.
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Roasted Product Handling Solids exiting the roaster will pass through the roaster product cooler, a water cooled rotary drum, with the cooled product discharging via a trommel screen. Screen undersize will discharge to roaster product elevator #1 which will feed the roaster product discharge screen. Oversize from the product cooler trommel will have any magnetic material removed by an overhead magnet before being crushed in the roaster product oversize crusher #1. The crusher product is fed via the Roaster Product Recycle Elevator and the Roaster Recycle Screw Feeder to Hearth 7 of the roaster. Oversize from the roaster product discharge screen will fed to roaster product oversize crusher #2 which will then discharge into roaster product elevator #1. Undersize from roaster product discharge screen will be sampled before discharging on to roaster product elevator #2 which will in turn feed the roaster product bins screw feeder which will direct the roaster product into one of four roaster product bins. Roaster Off Gas Handling The roaster will be maintained under a slight negative pressure, and off-gases will pass through an indirect gas cooler and cooled from 600C to approximately 350C by atmospheric air. The cooled off gas will then pass through a cluster of dust collection cyclones to remove the coarser particulate matter, before further treatment in parallel electrostatic precipitators where most of the remaining particulate will be removed ahead of the wet gas purification and rhenium recovery area. The gases exiting the electrostatic precipitators will pass to the wet gas cleaning plant, while the solids collected by the cyclones and electrostatic precipitator will be recycled to roaster feed elevator #1 by dust return chain conveyors #1 and #2. Molybdenum Purification Water Leaching Calcine from the roaster will be transported via screw feeders to the water leach loss in weight bin from where it will be fed to the first of four agitated, in series, cascading water leach tanks. Nitric acid will be added to the 1st tank to control the pH and depress the amount of molybdenum going into solution. Tanks 1 to 3 will be heated by steam and tank 4 being provided with cooling capability. Slurry exiting tank 4 will be fed to a horizontal belt filter vacuum where the slurry will be washed with hot water. The filtrate and wash water will be pumped to the molybdenum ion exchange stage with the washed filter cake going to the ammonia leach circuit. Water leaching will occur at a slurry temperature of 80C to 90C and will require a residence time of up to 7 hours depending on the feed grade and quality of the calcine.
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Ammonia Leaching Washed filter cake from the water leaching stage will be slurried in the first of five agitated ammonia leach tanks where NH3 and NH4OH will be added to dissolve the contained molybdenum. Tanks 2 to 5 will be arranged in a cascade series with the contents of tank 1 pumped to tank 2. All tanks will be fitted with steam heating and cooling capability. Leaching residence time will be 1 to 2 hours at 55C to 70C in alkaline conditions of pH 9.4 to 10.2 and with 5 to 15 g/L free NH3. The agitators will be fitted with variable speed drives to enable the degree of agitation to be varied. Slurry exiting tank 5 will be filtered using a pressure filter with the filtrate going to the ageing (adjustment) stage and the washed filter cake being transported to the residue storage area. Ageing (or Adjustment) Stage The ageing stage will be a batch process utilising four steam heated agitated tanks where impurities are precipitated prior to crystallisation. The slurry will be heated to 55-60 C and filter aid, NH4OH and (NH4)2S will be added to the process with residence time varying to meet the required process conditions. The resultant slurry will be filtered through a Sparkler type plate filter. The filtrate will be further filtered in polishing filters to remove particulate matter down to 3 microns. The washed solids will be discarded. Molybdenum Ion Exchange (IX) Filtrate and wash water from the water leach belt filter filtrate tank will be pumped to the molybdenum IX unit to separate dissolved molybdenum from other dissolved impurities (principally Fe, Cu, Ca and Mg) by loading the molybdenum onto an ion exchange resin. The IX plant design will be based on the use of Purolite A170/4675 weak base anion resin which has proven capability for the recovery of molybdenum from acidic solutions. The IX plant will require four 1.3 m ID by 8 m high ion exchange columns, each containing 7,500 L of ion exchange resin. The columns will be configured to enable one column to operate in lead mode with a second operating in trail mode. The third column will undergo regeneration while the fourth will be in standby / regeneration mode. On breakthrough of molybdenum from the lead column this column will be taken offline for regeneration; the trail column will switch to lead duty and the standby column will become the trail column. During operation the trail column effluent will flow to the effluent treatment plant. During regeneration the molybdenum will be stripped from the resin using a solution of aqueous ammonia. The eluate produced will be directed to the second ammonia leach tank. The regeneration sequence will involve draining, resin washing, strip/elution and resin rinsing and will take approximately 10 hours.
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Molybdenum Crystalliser The molybdenum crystallizing stage will consist of an Oslo type atmospheric classifying crystallizer with heat exchanger in the circulating liquid. Evaporation of H2O and NH3 will take place in the top of the crystallizer. The off gas from the crystallizer will go to the condenser for recovery and recycles, producing a condensate of NH4OH (6-8% NH3). The ammonium dimolybdate (ADM) crystals that will be formed will grow in the conical part of the crystallizer. The resulting crystal slurry will be sent to the centrifuge. Mother liquor recovered from the centrifuge will be sent to the mother liquor holding tank, from where it will be sent either to the ammonia dissolution tank or recycled back to the crystalliser. The crystals produced in the centrifuge will be sent to the calciner. Molybdenum Calcination and Off-gas Handling A turbo heat treater will be used to heat the ADM crystals to drive off ammonia and water through thermolysis resulting in dry MoO3 crystals. The calciner will have a nominal diameter of 3.7 m and height of 5.2 m. The calciner will consist of rotating trays supported by vertical posts which will be braced at the top and have welded radial arms that support the shelves. Wiper and sweeper blades will be provided to transfer the calcine and will be attached to the rotating structure. Ammonia Recovery Ammonia vapours will be recovered from leaching and crystallisation processes (prior to the calciner) using an ammonia scrubber consisting of a packed tower with demineralised water absorbing the ammonia gases. Cooled water will trickle through the lower portion of the tower with some recirculation; whilst a smaller stream of chilled demineralised water will perform provide a final scrubbing stage in the upper portion of the packed tower. A stripper/reboiler will be used to manage the water inventory in the plant by separating and recovering ammonia in conjunction with the ammonia scrubber, from surplus water inventory. Stripped water will be recycled for washing of filter residue from the ammonia leaching filter and reticulated for gland seal water requirements. Due the small amount of residual ammonia, stripped water will not be used for washing the calcine filter cake in the water leaching filter as this would solubilise more molybdenum put additional load on the molybdenum IX. Rhenium Recovery Wet Gas Cleaning Plant Gases exiting the electrostatic precipitators will flow to a quench tower where they are contacted with recycled scrubbing liquor and cooled by evaporation of water to the adiabatic saturation temperature, approximately 55-65C absorbed. Scrubbing liquor from the quench tower discharge will flow to the quench recycle tank, with a small bleed to the selenium settler. In the selenium settler particulate matter gravitates to the bottom of the settler and will periodically drain to the settler solids hopper.
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Settler overflow will be collected in both the selenium settler overflow tank and the quench recycle tank. Clear solution from the selenium settler overflow tank will be pumped to the SO2 stripper where it is contacted by atmospheric air before discharging into one of two SO2 stripper discharge Tanks. The air stream venting from the SO2 stripper will be directed to the gas scrubber. The contents of the SO2 stripper discharge tanks will have filter aid added and will be pumped to wet gas cleaning cartridge filter where residual solids will be removed. Filtrate will be directed to the solvent extraction feed tank, while the residual solids will be periodically removed and disposed of. Gases from the quench tower and SO2 stripper will pass to a packed bed gas scrubber where they will be further cleaned and cooled by an aqueous stream, recirculating through an external water-cooled heat exchanger. The cooled and dehumidified gas stream exiting the gas scrubber will pass to a pair of wet electrostatic precipitators where acid mist and final traces of particulate solids will be removed, prior to treatment for SO2 removal in the sulphuric acid plant. The water condensed in the gas scrubber and any flushing water added to the precipitators will be recycled to the quench tower to make up the evaporation losses, and where additional raw water will be added to control the quantity and acid concentration of the net acid bleed to the selenium settler. This bleed will contain essentially all the particulate and condensable impurities reporting to the quench tower inlet. Sodium silicate solution may be added to the gas scrubber to capture fluorides from the roasting gases, to avoid problems with corrosion and catalyst degradation in the downstream sulphuric acid plant. Solvent Extraction (SX) Filtrate from the wet gas cleaning cartridge filter will be processed by solvent extraction to produce a rhenium rich liquor which will be further processed by ion exchange. The solvent extraction plant will comprise of three extraction mixer settlers, two strip mixer settlers and an acidification mixer settler together with a raffinate after settler and a loaded strip settler, both of which will be fitted with a coalescing medium. In the extraction stages, counterflowing aqueous and organic will be mixed and then allowed to separate into distinct phases. Aqueous flow will be from the SX feed tank to E1 to E2 to E3 to raffinate after settler and organic flow will be from the barren organic tank to E3 to E2 to E1 to the loaded organic tank. The organic phase will be a blend of a diluent, a modifier and extractant (Alamine 336) which will selectively extract rhenium from the aqueous phase. The net result will be a rhenium depleted aqueous solution (raffinate) exiting E3 and a rhenium rich organic phase (loaded organic) exiting E1. Raffinate will flow through the raffinate after settler where coalescing medium will recover any of the organic phase entrained in the raffinate. This recovered organic will be returned to the barren organic tank while raffinate will be pumped to the effluent treatment stage.
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In the strip stages counterflowing aqueous and organic will be mixed and then allowed to separate into distinct phases. Aqueous flow will be from the fresh strip solution tank to S2 to S1 to loaded strip settler to the loaded strip tank with the organic flow will be from the loaded organic tank to S1 to S2 to the acidification settler to the barren organic tank. The aqueous phase will be a 10% solution of sodium carbonate which will selectively strip the rhenium from the organic phase. The net result will be a rhenium rich aqueous solution (loaded strip) exiting S1 and a rhenium depleted organic phase (barren organic) exiting S2. Entrained organic in the loaded strip solution will be recovered by the coalescing medium in the loaded strip settler. This recovered organic will be returned to the loaded organic tank while the loaded strip solution will flow to the loaded strip tank from where it will be pumped through a polishing filter to the rhenium ion exchange plant feed tanks. In the acidification mixer settler the stripped organic from S2 will be scrubbed with an acidic solution to remove impurities. The aqueous solution from this stage will flow to E1 while the scrubbed organic will flow to the barren organic tank. Ion Extraction Plant Aqueous will be pumped from one of two IX feed tanks through three of four fixed bed resin columns operating in series in a Lead / Scavenger 1 / Scavenger 2 configuration where rhenium nd will be transferred by absorption to the resin. Effluent from the 2 scavenger stage will be collected in the IX effluent tank from where it will be pumped to the effluent treatment stage. The 4th column will either be undergoing elution or be in standby mode. Piping and valving will be arranged so that the columns can all be operated in the different modes. Rhenium will be absorbed (loaded) on the resin in the lead column until all the resin is loaded at which point breakthrough occurs and rhenium loading will be transferred to scavenger 1 which then reverts to lead mode. The loaded column will be ready for elution. The loaded resin will first be washed with eight bed volumes of demineralised water (from the demineralised water tank) to displace residual feed solution. The first 30% of the resultant solution will report to the next IX column and 70% will be collected in the primary strip wash tank from where it will be recycled to the IX feed tanks. Elution by ammonium thiocyanate (NH4CNS) solution will be in three stages with the initial stage using 8 bed volumes of recycled NH4CNS, containing rhenium eluate recycled from the second and third stage of elution. This use of recycled solution will ensure the loaded rhenium eluate solution that will be advanced to crystallisation will be of high grade, giving a lower volume to evaporate. The first 30% of the resultant solution will report to the primary strip wash tank from where it will be recycled to the IX feed tanks and 70% will report to crystallisation. The second elution stage will be undertaken with four bed volumes of recycled NH4CNS. The eluant will recover rhenium from the resin, with 67% of the product solution reporting to crystallisation and 33% reporting to the recycled NH4CNS tank for use in first and second stage of the next strip cycle as described above.
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The third elution stage will be undertaken with four bed volumes of fresh eluant (0.5N ammonium thiocyanate). The eluant will recover the remaining rhenium from the resin, with the product solution reporting to the recycled NH4CNS tank for use in first and second stage of the next strip cycle as described above. The eluted resin will finally be washed with eight bed volumes of demineralised water to remove any residual ammonium thiocyanate solution. 30% of this product wash solution will be collected in the recycled NH4CNS tank and 70% will be collected in the tertiary strip wash tank from where it will be recycled to the fresh eluant tank to produce 0.5 N NH4CNS. It is expected that 25% of the resin inventory will be lost per year. This will be replaced by adding fresh resin directly to the columns to maintain a consistent volume. Rhenium Crystallisation The rhenium rich eluate (loaded rhenium eluate) from IX will be fed to the rhenium evaporator from one of two crystallisation feed tanks. The evaporator will run under vacuum, at 60C to avoid the decomposition of thiocyanate. The solution will be concentrated from 15 g/L to 80 g/L Re in the evaporator, in approximately 20 hours. The concentrated rhenium solution will be pumped to the first stage crystallisation vessel. Here the temperature will be lowered to 5C, with the rhenium precipitating as ammonium perrhenate (APR). The crystals will be separated from the barren mother solution by filtration. The recovered solution will be combined with the recovered condensate from the first stage evaporator and recycled to ion exchange to recover the thiocyanate. Excess liquor will be bled to process water. The APR crystals recovered from the first stage of crystallisation will be further refined in an additional two stages of dissolution and crystallisation, undertaken in separate vessels from the first stage crystalliser. Demineralised water will be added to the crystals, with the solution heated to 93C to dissolve the crystals, producing a 200 g/L Re solution. The concentrated solution will be cooled to 5C in 2 hours, precipitating APR, which will again be filtered to recover the crystals. This process will be repeated until the crystals achieve the required purity. The final recovered APR crystals will be dried in an oven at 85C, before being manually packaged to the customers requirements. Approximately 25 kg of APR will be produced per day.
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S02 Removal Wet Sulphuric Acid Plant A Wet Sulphuric Acid (WSA) plant will utilise several stages of catalysis to convert SO2 in the cleaned wet roaster gases to SO3, followed by condensation of concentrated sulphuric acid in an air cooled glass tube condenser. The WSA will produce 31t/d of concentrated sulphuric acid (98%) and 25,390 Nm3/h clean gas to the atmosphere. The process comprises four main steps: Heating the wet feed gases with hot air from the acid condenser and molten salt coolant from the SO2 converter Oxidation of SO2 to SO3 in the converter and subsequent cooling Acid condensation and concentration in the condenser and subsequent cooling Tail gas treatment. Feed gas heating The incoming SO2 gas will be heated to 150C in the feed gas preheater, using hot air above 200C from the WSA Condenser. The pressure required to overcome the pressure drop in the WSA plant will be supplied by the process gas blower, and is downstream the feed gas preheater. Before entering the suction side of the process gas blower, the gas will be mixed with hot recycle gas from the downstream burner in order to obtain a mixing temperature of 180C. The recycle will provide heating of the plant prior to start-up and during operation to eliminate any risk of corrosion of the process gas blower. The process gas will be further heated in the process gas heater by heat exchange with molten salt to make a maximum use of the heat removed from the downstream interbed coolers and the process gas cooler. After heating, the process gas will pass through the burner, which will supply the necessary heat to make up the heat balance in the event the SO2 concentration in the process gas falls below the auto thermal concentration. Oxidation of SO2 and subsequent cooling The process gas will be introduced to the SO2 converter at approximately 410C. The converter will have three catalytic conversion stages. SO2 is oxidized to SO3 according to the reaction: SO2 + O2 SO3 + 24 kcal/mole.
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The process is exothermic and the heat of reaction will be used for steam production and superheating through the coolers installed inside the SO2 converter. In the process gas cooler, the gas will be cooled to 280C, before it enters the WSA condenser. During this step, the SO3 will be partly hydrated to sulphuric acid vapour according to the reaction: SO3 + H2O H2SO4 (g) + 25 kcal/mole The will make the energy from the hydration available at a high temperature level. The remaining SO3 will be hydrated in the WSA condenser. Acid condensation and cooling In the WSA condenser the gas will be further cooled with ambient air. During the cooling all SO3 will be hydrated to H2SO4, and the acid will condense inside the vertical glass tubes of the WSA condenser. The acid will be collected at approximately 260C in the bottom of the WSA condenser as concentrated sulphuric acid. By recirculation, the acid will be cooled to 70C before final cooling to about 40C in a water-cooled plate type heat exchanger. If no special precautions are taken, part of the H2SO4 vapour will condense as a fine mist of liquid acid and are too small to be separated from the process gas in the WSA condenser. In order to minimize the formation of the fine mist in the outlet gas, a mist control unit will be installed. By combusting silicon oil in the mist control unit, a small hot flue gas stream containing very small silicone oxide particles will be generated. These particles act as nuclei on which the acid mist can agglomerate to form larger droplets. The acid droplets will grow to a size large enough to enable proper separation from the process gas in the WSA condenser, thus reducing the amount of acid mist. The cooling air will leave the WSA condenser at a temperature of above 200C and will be used for:
Preheating of the incoming process gas Mixing with cooling air during periods of low ambient temperature Molten salt system
The reaction heat from the conversion of SO2 and the reaction heat from the gas-phase hydration will be used for process gas heating and production of steam. The heat will be exchanged by molten salt in the interbed coolers, and in the process gas cooler. The hot molten salt will be cooled in the process gas heater, and the temperature will be then be adjusted in the salt cooler. The salt used will be a commercial standard product consisting of sodium, potassium nitrate and nitrite. The salt will be easily circulated between the heat exchangers, which will ensure an efficient temperature control and also minimise the space requirements.
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Mist filter The clean gas will enter the mist filter, where the acid mist level will be reduced. After mist filter, the clean gas will enter the clean gas blower, which compensates for the pressure drop of mist filter. Finally, the clean gas will be mixed with hot surplus air from WSA condenser and will be sent to a 3 stack (maximum 100ppm SO2 emission and 25mg/Nm acid mist). The dilute acid (minimum 96% H2SO4) separated in the mist filter will be cooled to a maximum 40C before delivery to a tank with 14 days storage capacity.
Effluent Treatment Effluents from solvent extraction and ion exchange plants will be treated by lime precipitation. The effluents will be combined and treated in a mix tank with hydrated lime and then pumped to filters to produce a gypsum waste for disposal. The recovered solution will be reused as process water in the plant.
17.3
Reagents and Consumables
Reagent storage, mixing and pumping facilities will be provided for all reagents for the process plant. Table 17.3.1 provides a summary of reagents and consumables that will be used at the process plant. Table 17.3.1 Process Reagents and Consumables
Consumption 401.2 m3/y 17.5 t/y 65.0 t/y 2,085.0 t/y 270.3 t/y 19.1 t/y 451.8 t/y 66.6 t/y 4,320 GJ/y 253,280 GJ/y 990.0 t/y 17.4 t/y 23.8 t/y 0.1 t/y 456.0 t/y 21.0 t/y 158 kL/y 0.2-0.8 t/y
Reagent/Consumable
Kerosene
Liquid Xanthate (A3302)
Frother (MIBC) NaHS (Sodium Hydrosulphide) Sodium Silicate Flocculant Grinding Balls Tower Mill Balls Natural Gas (Concentrator) Natural Gas (Concentrate Treatment) Anhydrous Ammonia Di-Ammonium Sulphide Ammonium Thiocyanate Sodium Hydroxide Hydrated Lime Sodium Carbonate Nitric Acid Solvent Extraction Reagents
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17.4
Water Requirements
A water balance for the process plant was completed. Approximately 80 m3/h of raw water will be required for the process plant and will be supplied from nearby boreholes. Additional pumps will be installed and the existing raw water pipeline will supply water to a new raw/fire water tank located adjacent to the new process plant. Raw water will be distributed to various users in the plant via pumps. The new raw/fire water tank will have a storage capacity of eight hours raw water usage, plus the required fire water storage.
17.5
Power Consumption
The maximum demand for the new process plant is summarised in Table 17.5.1. The power will be supplied from the existing onsite power plant. Table 17.5.1
Installed Load, kW 4,549 5,031 9,580 Peak 1/2hr Demand, kW 3,770 3,348 7,118
Process Power Demand

Peak 1/2hr Demand, kVA 4,330 4,021 8,351 Average 24hr Demand, kW 3,616 3,151 6,767 Average 24hr Demand, kVA 4,147 3,784 7,931 MWh per annum 29,773 25,946 55,719
Facility Concentrator Concentrate Treatment Plant Total
As part of the Project, the high voltage switchboard located in the existing power station will be extended to provide power to the new concentrator and concentrate treatment plants.
17.6
Control Philosophy
The instrumentation and control system will be designed with the following objectives in mind:
Ease of operation - Operator intervention and remedial action will be easily accomplished. Interlocking - The control system will provide process interlocking between individual drives and plant areas. Reliability - All field equipment will be selected on its ability to operate in an environment where extreme temperatures and dusty conditions are encountered. Ease of maintenance - Instrumentation and control systems will be designed and installed such that maintenance requirements are minimised.
The plant control system will be designed around a low to moderate level of automation and monitoring.
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The starting and stopping of most electrical drives and actuated valves will be performed from the SCADA Operator Interface Terminals (OITs). There will be no Remote / Local selector switches in the field. However, field operators may start equipment local to the drive if the control room has selected Local at the OIT. Local mushroom head style Lock-Off-Stop stations will be installed which will be hard-wired to the drive starter circuit to enable local stop / emergency stop regardless of drive mode selection. In general, the use of actuated isolation or control valves will be minimised around the plant unless they are required for automatic control loops or sequencing as part of a vendor package (e.g. concentrate filter). All actuated valves and control valves will be operated from the OITs with remote position indication available. Automatic control valves will be controlled by PID loops within the PLC system. Manual operation of the on/off valves, if required, will be via local open / close pushbuttons. Equipment in the plant will be interfaced to the PCS via the Input / Output (I/O) modules of Programmable Logic Controller (PLC) located in the plant switchroom. Conventional MCCs will be used such that control and monitoring signals from each motor starter are wired individually to each PLC. Vendor equipment packages throughout the plant will utilise their own standalone vendor provided PLCs. The overlying Supervisory Control and Data Acquisition (SCADA) system will be used to monitor, and in some instances, provide set-points for these vendor PLCs. The plant PLCs will be located in dedicated cabinets in each substation or in a tier of the MCC. All PLCs used in the process plant will conform to a common standard and where practical all PLCs will be from a single manufacturer. Exceptions may be PLCs supplied as part of vendor equipment packages. The PLCs will perform all digital and analogue control functions, including PID control. Faceplates on the SCADA displays will facilitate the entry of setpoints, readout of process variables (PVs) and controlled variables (CVs) and entry of the three PID parameters (Proportional, Integral and Derivative). The majority of equipment interlocks will be software configurable. However, selected drives will be hard wired to provide the required level of personal safety protection e.g. the emergency stop buttons associated with each and every motor and the pull wire switches associated with conveyors. All alarm and trip circuits from field or local panel mounted contacts will be based on fail-safe activation. Alarm and trip contacts will open on abnormal or fault condition. If equipment shutdown occurs due to loss of mains power supply, the equipment will return to a de-energised state and will not automatically restart upon restoration of power. Sequential group starts and sequential group stops will not be incorporated with non-packaged plant equipment. However, in any sequential process, critical safety and equipment protection interlocks will cause a cascade stop in the event of interlocked downstream equipment stopping (e.g. trip of mill feed conveyor will result in stop of fine ore feeder).
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Standard vendor packages may include automatic sequence start / stop controls within the vendor package only. The plant will be provided with a one main control room for the concentrator and concentrate treatment plants. Operator Interface Terminals (OIT) will be provided in the following areas:
Main control room (2 OIT) plus stand-alone OSA computer Satellite flotation control room (1 OIT) Satellite roaster control room (1 OIT) Maintenance Department (1 engineering OIT)
17.7
17.7.1
Plant Services
Mobile Equipment
Table 17.7.1 summarises the mobile equipment requirements for the new process plant. Table 17.7.1 Mobile Equipment for Process Plant
No. of Units 1 1 1 2 1 1 1 8
Equipment All Terrain Forklift Concentrator Plant All Terrain Forklift Concentrate Treatment Plant All Terrain Forklift Reagents Skid-steer Loader 20t Mobile Crane Loader (FOB) 4WD Single Cab Truck Total Items
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17.7.2
Buildings
The following existing buildings at the Osborne site will be used by the new process plant:
Administration Building First Aid Laboratory Plant Workshop Maintenance Warehousing Security Buildings Plant Ablutions Plant Mess
The Project will install the following new buildings adjacent to the new process plant:
Reagent storage shed Electrical buildings (one each for the molybdenum concentrator and the concentrate treatment plants) Plant control rooms (a small control room near the grinding area, small control room near at the roaster, and a main control room adjacent to the roaster plant) Electrical substation buildings Molybdenum product storage shed Concentrate filter/bagging building Roaster building Other Services
17.7.3
No additional security will be provided at the mine and process. Although additional ablutions are provided at the new process plant, no additional sewage treatment will be required by the Project Diesel for mobile fleet will be supplied by existing Osborne infrastructure. No additional storage or distribution will be provided as part of the Project.
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Natural gas will be supplied to various users and a tie-in with a pressure reducing station to the existing line will be made at the power station. Process water, reverse osmosis (RO) water, cooling water, demineralised water, fire water, nitrogen, low and high pressure air, and low pressure steam will be provided by new equipment and processes within the new process plant.
Figure 17.7.1
Concentrator Plant Flowsheet
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Figure 17.7.2
Concentrate Treatment Plant Flowsheet
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MERLIN MOLYBDENUM RHENIUM PROJECT NI 43-101 REPORT - PROJECT INFRASTRUCTURE
Page 18.1
18.0 18.1 Mine Services
INFRASTRUCTURE
The Project is located at the brownfield Merlin site. The existing facilities that were constructed as part of the Merlin Stage 1 development program will be utilised where possible to support the underground project. Additional and/or expansion of some of the pre-constructed facilities will be required to satisfy the Life of Mine requirements. Power supply to the Merlin underground facilities will come from an overhead feeder which will terminate adjacent to the surface portal. The power will be provided from a gas fired power plant installed nearby the mine as part of the Project. The gas for this power plant will be trucked from Osborne along the access / haul road. The maximum demand for the underground operation will be 6.2 MVA and the supply voltage will be 11 kV. The service water supply for the mine will be provided by the re-established Burke River bore field adjacent to the Merlin site. The mine demand for service water is approximately 15 L/s (65 m3/h). An additional average 3 L/s (11 m3/h) will be required for paste backfill. The Merlin orebody is hosted within Mt Dore aquifer hence ongoing dewatering will be required during mine development to provide dry mining conditions ahead of stoping operations. The mine dewatering system is designed to handle a total of 60 L/s (216 m3/h) of water from underground mine. Water pumped from the mine will be treated in surface settling ponds and be available for re-use or transfer to evaporation ponds at southern tailings dam for disposal. Shotcrete will be an integral part of the surface support for mine development. The concrete batch plant constructed during Stage 1 development programme will be used to supply concrete and shotcrete. A dry paste backfill plant will be constructed at Merlin to deliver paste fill underground using tailings reclaimed from the TSF2 at Osborne. The paste plant will be located west of the ridge line near the concrete batch and south of the boxcut portal. Other surface and underground services will include:
Surface infrastructure and facilities: Extension of offices and change room facilities Extension of existing maintenance workshop New hydrocarbon storage facility Expansion of existing refuelling bay
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New light vehicle workshop Expansion of existing box-cut services pad
Underground infrastructure and facilities include: Crib room and office Electrical distribution Primary dewatering system Primary ventilation system Refuelling and service bay Magazine
18.2
Process Plant Infrastructure
The new process plant, i.e. molybdenum concentrator and concentrate treatment plants will be located north of the existing Osborne copper concentrator and largely use existing infrastructure. All utilities for the new process plant will originate from existing services at Osborne. New reagent storage and preparation facilities will be provided north of the new process plant and are independent of existing reagent facilities. The maximum demand for the new process plant will be 8.4 MVA and the power will be supplied from the existing onsite power plant. The average raw water requirement for the new process plant will be 80 m3/h and the water will be provided from existing bore fields. This is also based on recycling waste streams generated at the concentrate treatment plant. Natural gas will be provided to the Project from the existing natural gas supply at the onsite power plant. Diesel will be supplied from existing infrastructure at the Osborne site. Process water, reverse osmosis (RO) water, cooling water, demineralised water, fire water, nitrogen, low and high pressure air, and low pressure steam will be provided by new equipment and processes within the new process plant. Existing administration, offices and maintenance buildings will be used for the new process plant.
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The existing Osborne mine site is accessed by chartered aircraft via an all-weather aerodrome from Mount Isa, Brisbane and Townsville, or by road from Cloncurry, 140 km north of the site. The aerodrome is used for fly-in fly-out (FIFO) commuter services and for medical evacuation. Supplies are transported by road haulage from Mount Isa. Services are sourced from Mount Isa or Townsville. The new process plant will be accessed using existing in plant roads at the Osborne plant. The ROM ore will crushed and sized at the mine, and transported in haul trucks via a 53 km upgraded haul road from Mount Dore to the Merlin process plant at Osborne. The haul road upgrade will be managed by IAL. Accommodation for operations and maintenance personnel is provided by an existing 320 room permanent village approximately 4 km south of the Osborne mine. Additional rooms will be added as part of the Project. An existing, unused 132 man construction camp located adjacent the permanent village will be ungraded and used during construction activities.
18.3
Tailings Facility Design
The new process plant will produce tailings at a rate of 0.5 Mtpa over a period of 14 years. At a placed dry density of 1.5 t/m3 this will result in the volumetric production of tailings at a rate of 333,000 m3/year. As result the Project will include a new tailings storage facility (TSF3) with a 3 potential tailings capacity of 4.66 Mm . The design of TSF3 is based on a high density (HD) tailings containment storage facility as a result of the success at the existing Osborne facilities. The facility has been designed in stages to facilitate tailings embankment construction, reduce the initial construction costs and minimise the exposure of deposited tailings to the elements before reclamation. Seepage and stability assessments have been conducted to assess the seepage regimes and slope stability for the TSF3 reclaim ponds and typical tailings containment embankments. Modelling was completed using SEEP/W and SLOPE/W software. No specific investigation of materials and their parameters has been carried out at the time of the seepage and slope stability analyses. However, available geotechnical data from an investigation conducted by Knight Pisold and prior experience accumulated by SRL personnel over the past 12 years at Osborne Mine, have been used to estimate embankment and foundation material parameters for the seepage and stability analyses. Beach slopes have been estimated using rheological data from tests carried out on samples used for metallurgical testing of the ore. The actual beach slope of the molybdenum tailings, and therefore the capacity of TSF3, will be dependent on the molybdenum tailings grind, particle size distribution (PSD), specific gravity and slurry consistency encountered once the mine is under operation and these parameters may vary from those measured to date. Therefore, tailings storage capacity results will be verified once processing of the ore has commenced and the ore mineralogy has stabilised.
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MERLIN MOLYBDENUM RHENIUM PROJECT NI 43-101 REPORT - MARKET STUDIES AND CONTRACTS
Page 19.1
19.0 19.1
MARKET STUDIES AND CONTRACTS
Marketing Studies
The Project is unique with respect to the grades of molybdenum and rhenium and has a number of attributes which make it unusual in a geological sense. This will strongly impact on the marketing strategy that is to be adopted. These attributes are:
The Projects average mine grade is 1.09 % molybdenum and 18.1 g/t rhenium compared to the Henderson Mine (USA) grade of 0.2% molybdenum, which has been considered, to date, the worlds highest grade molybdenum mine. The rhenium in the Merlin deposit represents the first direct source of rhenium in the world and is not a typical by-product rhenium produced by convoluted molybdenum byproduct streams via primary copper flotation. The Project production represents approximately 2% and 15% of the world production of molybdenum and rhenium respectively The Project rhenium can be marketed as secure supply.
19.2
Molybdenum
As part of this economic evaluation, IVA commissioned a report on the outlook for molybdenum and rhenium markets from Roskill (2012) and Orchard Materials Technologies OMT (2011). The following discussion regarding the molybdenum market has been sourced from these reports. While the market for molybdenum is transparent and well understood, the rhenium market is opaque, shadowy and small. These factors will affect how the products are marketed. Roskill forecasts that although existing molybdenum mine capacity is probably adequate to satisfy global demand within the forecast period to 2016, mine production surplus to demand will decline towards the end of the forecast period. 19.2.1 Supply
In 2009, global production fell by 6.4% to 202kt, with by-product molybdenum falling by 13%. In 2010, mine output recovered strongly to 226kt, and continued to rise in 2011 reaching 250kt. The annual rates of growth were 12% in 2010 and 10.6% in 2011. Molybdenum production is reported in only fifteen countries, with China, the USA, Chile and Peru accounting for almost 85% of total world production in 2011. .
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Chinese molybdenum production was the largest in the world from 2002 to 2004, but fell sharply in 2005 because of government-enforced mine closures. It then more than doubled between 2005 and 2008, to regain its leading position. In 2010 Chinese output rose by 7.4% and 10.8% in 2011. World molybdenum mine capacity is about 324ktpa, almost half of which is at molybdenum-only mines mainly in China, and the remainder as by-product from copper mines, mainly in the Americas. Freeport McMoran in the USA has the largest molybdenum mine capacity with about 15% of the global total. Codelco in Chile with 10% and Southern Copper in Peru and Mexico with 8% have the next largest capacities. The medium term mine supply of molybdenum will continue to rely on existing mine capacity, which has demonstrated its ability to raise output rapidly and by large volumes, increasing by almost 25% between 2009 and 2011. This flexibility of global molybdenum mine supply is a feature of both Chinese and American molybdenum-only production. By-product output is dependent to some extent on head grades of ore, but recovery can be optimised in response to market conditions. 19.2.2 New projects and future supply
Despite an array of new mine projects with a combined capacity in excess of 200ktpa of molybdenum, some at advanced levels of development, few appear likely to commence production in the near term, to supply this declining surplus in mining production. The Chinese molybdenum mining industry appears to be the most likely to expand with some 24ktpa at six projects planned. Jinduichengs 11.5ktpa mine at Donggou in Henan is the largest project. Outside China, the Toromocho (Minera Chinalco Peru: 5.4ktpa) and Galeno (Jiangxi Copper: 2.3ktpa) projects in Peru, and the Caserones (Pan Pacific Copper: 3ktpa and Sierra Gorda) projects in Chile appear to be the most likely to start molybdenum output in the near term. Also, the Project (Ivanhoe Australia: 5.2ktpa) is anticipated to be delivered in the near term. The two large molybdenum mining projects in the USA: Eureka Molys Mount Hope (15.4ktpa) and Northern Dynastys Pebble (14.5ktpa) projects are unlikely to come into production before 2020. Also in the USA, the reopening of Freeport McMoRans Climax mine (9ktpa) is now scheduled for 2013 but with flexible output responding to market conditions. 19.2.3 Consumption
In the four years between 2003 and 2007, global molybdenum consumption grew at an unprecedented rate of 8.5%py. This compares with 2.6% per annum growth for the period 19952002. In 2008, demand flattened out and then fell by 13% to 186kt in 2009, the lowest level since 2005, as a result of the global financial crisis. It is estimated that global demand grew by 11.2% in 2010 to 208kt, and by a further 8.2% in 2011 to record high of 225kt.
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Chinese consumption of molybdenum is the worlds largest and continues to grow at a faster rate than in other regions. In 2011, we estimate that consumption in China rose by 7kt to 67kt or about 30% of world consumption. The EU is the next largest consuming region, accounting for 24% in 2011, followed by the USA with 15%. Molybdenum use as an alloying element in steel accounts for about 70% of its market. Constructional engineering steel, which comprises full alloy steel, high strength low alloy steel (HSLA) and carbon steel, accounts for 34% of consumption. This can be roughly broken down into 15% for full alloy, 10% for HSLA and 9% for carbon steel. Stainless steel is the next largest use with about 26% of consumption. Estimated worldwide demand for molybdenum by application in 2010 is shown in Table 19.2.1. Table 19.2.1 Estimated world molybdenum by demand by application, 2010
Commodity Stainless steel Full alloy steel Tool and high speed steel High strength low alloy (HSLA) steel Carbon steel Catalysts Molybdenum metal and alloys HPA / Super alloys Cast iron Lubricants Pigments / corrosion inhibitors Other chemical Total Source: IMOA, Roskill kt 59 33 23 21 19 17 11 11 16 4 4 2 220 % 24 16 11 10 9 8 6 5 6 2 2 1 100
Steels containing molybdenum are used in a wide range of industries, but oil and gas production and refining, and chemical and petrochemical process industries are probably the main sources of demand. Catalysts, used mainly in oil refining, are the main chemical use of molybdenum. 19.2.4 Prices
Between August 2008 and March 2009, the price of molybdenum oxide fell from US$76/kg Mo to a low of US$18/kg Mo, levels not seen since early 2002. Cutbacks by major producers, and demand in China remaining strong, resulted in tightening of supplies and a weak rally of molybdenum prices, which had doubled by July 2009 to peak at US$40/kg Mo. During 2010 and 2011, molybdenum prices remained stable, ranging between US$29 and US$39/kg Mo and averaging US$35/kg Mo in 2010 and US$34/kg Mo in 2011.
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In the first two months of 2012 prices strengthened slightly from below US$30/kg Mo in the last quarter of 2011, and were about US$32/kg Mo at the end of February 2012. In March and April 2012, prices weakened slightly to a little above US $31/kg Mo. 19.2.5 Market outlook
With the requirement for high-grade steel alloys continuing to rise in a number of industries, demand for molybdenum appears set to increase steadily, particularly in the industrialising and emerging economies of Asia and South America. Roskill forecast a 5% annual market growth, somewhat higher than forecast global GDP growth, resulting in molybdenum demand rising from 225kt in 2011 to about 290kt in 2016. Although the volume of production from new projects will be small, existing producers in the major producing countries will be able to meet rising demand and the market should show surpluses throughout the forecast period. The combination of stable and adequate supply and steadily rising demand should be reflected in equally stable prices rising slowly, more in response to production costs than market forces. This presupposes that concentrate roasting capacity remains adequate for mine output, which appears likely. The price of molybdenum in technical molybdenum oxide is forecast to average $42/kg Mo in 2016 (Table 19.2.2). Table 19.2.2
Year 2011 2012 2013 2014 2015 2016
Forecast Molybdenum Oxide Price

Nominal Price (US$ /kgMo) 34.18 35.00 36.50 38.00 39.50 42.00 Real Price (2012 US /kgMo) 34.18 34.25 34.88 35.42 35.96 37.30
Source: Roskill forecasts
19.3
Rhenium
The following discussion regarding the rhenium market has been sourced from the Roskill report (Roskill, 2012) on the outlook for the molybdenum and rhenium markets. Rhenium has the unique property that, when alloyed, it improves mechanical strength and reduces plastic deformation at elevated temperatures and as such is used in a number of high temperature applications including:
Aerospace applications such as turbine blades and other static parts. Rocket thrusters elements. Reforming catalysts for the petroleum industry.
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Small high temperature applications such as crucibles, electrical contacts, electromagnets, electron tubes, heating elements, ionization gauges, mass spectrographs, semiconductors, temperature controls, thermocouples and vacuum tubes. Medical applications.
The rhenium market is driven by the demand for aero and land based turbines, making up 74% of worldwide rhenium consumption (29% for GE, 29% Rolls-Royce and 12% Pratt & Whitney), while use for catalysts only accounts for 14% and remaining applications use 12%. Rhenium addition to the alloys allows turbines to be operated at higher temperatures without creeping. It has been, therefore, a major contributor to improved fuel efficiencies of jet engines over the past ten years and the use of rhenium in jet turbines is expected to increase substantially in future. Rhenium is sold in the form of ammonium perrhenate (APR), which has the chemical formula NH4ReO4. Rhenium prices have settled down after volatility and high prices in 2008. The credit crisis and associated recession in the major economies (with the exception of China) burst the rhenium bubble and prices plummeted. Prices fell back to their correct level of US$4,000/kg after averaging just over US$6,000/kg in 2009, and peaking at US $11,000/kg in 2008. Roskill (2012) report states that rhenium is mainly recovered as a by-product from the gases and dusts generated in roasting of molybdenum concentrates, although not all molybdenum roasters capture or recover rhenium.
Supply
Primary production of rhenium fell slightly between 1999 and 2002 before increasing by 8.6%py to 2008. Primary production fell sharply in 2009 to just under 40,000kg Re. In 2011, over half of primary rhenium production (i.e. that produced as a by-product of molybdenum or copper processing) is estimated to have been carried out in Chile. Other important primary producing countries were the USA, Kazakhstan, Poland, China and Russia. There are very few producers of primary rhenium. Molymet in Chile is by far the largest producer of rhenium in the world, accounting for almost 60% of global capacity. Zhezkazganredmet (Red Met) in Kazakhstan is thought to have a capacity of over 8,000kgpa of rhenium. Freeport McMoRan (through its Climax Molybdenum subsidiary) is the next largest producer with a capacity of around 8,000kgpa, followed by KGHM Ecoren in Poland with 6,000kgpa.
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The scarcity and high value of rhenium are an incentive to recycle used material. Secondary rhenium production was estimated at 8,500kgpa Re in 2011. The majority of secondary production is carried out in Germany and the USA; small amounts of secondary rhenium are also recovered in France, Estonia, China and the Czech Republic. Sales of stockpiled material from Kazakhstan have augmented supply of rhenium since the early 2000s by 5-6% of total supply annually during the 2000s. Primary rhenium capacity is forecast to increase by almost 10,000kgpa Re to 2016. Codelco in Chile refurbished its rhenium recovery circuit during 2010 and this plant is thought to have come on-stream in 2011, although it hasnt been confirmed. Kennecott Utah Copper (Rio Tinto) is constructing a rhenium-producing plant at the Bingham Canyon mine, first product from which is expected towards the end of 2012. KGHM in Poland could add a further 2,000kgpa Re to capacity should demand warrant it. Molymet in Chile has also added 3,000kgpa Re to its Nos smelter recently. The Project in Queensland, Australia, owned by Ivanhoe Australia, could provide an additional 6-7,000kgpa Re contained in molybdenum concentrates from 2012. The only other potential new source of rhenium concentrates is Freeport McMoRans Climax molybdenum mine in the USA, which is scheduled to be on-stream in 2013. The main problem for primary production of rhenium, however, is not a lack of rhenium refining capacity, but whether there are sufficient rhenium units in concentrates and other source of feedstock to enable primary producers to produce at close to full capacity. Assuming that the current level (45,000kg Re) of primary rhenium production is maintained in the future, the rhenium market will still need a significant contribution of secondary material (24,000kg Re in the base-case scenario).
Demand
Consumption of rhenium in 2011 was estimated at 57,000kg Re, of which 74% (42,000kg) was consumed in superalloys. A further 10,000kg Re, 18% of total consumption, was used in catalysts and 5,000kg in other end-uses including space, alloy mill products, petrochemicals and medical targets. Roskills forecasts a base-case of average 3.9%py growth rate for rhenium between 2011 and 2016, meaning that total rhenium consumption could reach almost 69,000kg by 2016.
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Prices
The disconnect between spot and contract prices for rhenium and the lack of firm supply and demand is problematical for a specific price forecast for rhenium. However, the very high spot prices for rhenium metal and APR in 2008 of >US$10,000/kg have been described as a bubble and could not be maintained at such a premium to the contract price. This proved to be the case as spot prices dropped by almost US$7,000/kg in 2009. Over the same period, the average value of Chilean exports of rhenium metal remained almost constant. Roskill has forecast future rhenium metal price to 2016 on both a spot and contract basis (Table 19.3.1). Spot and contract prices are expected to continue to rise steadily over the forecast period to reach averages of around US$6,500/kg and US$3,050/kg respectively in 2016. The price of rhenium in APR is forecast to be US$6,000/kg (nominal) and US$5,329/kg (real) in 2016 (Table 19.2.2 and Table 19.3.2). Catalyst-grade APR is likely to be priced at a similar level to metal. Historical and forecast nominal rhenium metal prices, 2007-2016 (US$/kg) Nominal
Table 19.3.1
Spot High Historical: 2007 2008 2009 2010 2011 Forecast: 2012 2013 2014 2015 2016 4,500 4,750 5,000 5,500 6,000 5,000 5,500 6,000 6,500 7,000 4,750 5,125 5,500 6,000 6,500 8,080 9,920 5,675 4,050 4,000 8,430 10,600 6,340 4,560 4,450 8,255 10,260 6,008 4,305 4,225 Low Avg.
Source: Historical Metal Pages, Global Trade Atlas; Forecast - Roskill
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Table 19.3.2
Historical and forecast real rhenium metal prices, 2007-2016 (US$/kg) Real (adjusted using historical US inflation and forecast US GDP growth)
Spot High Historical: 2007 2008 2009 2010 2011 Forecast: 2012 2013 2014 2015 2016 Source: Note: 4,403 4,539 4,661 5,007 5,329 4,892 5,255 5,593 5,918 6,217 4,648 4,897 5,127 5,462 5,773 7,911 9,901 5,664 3,936 4,000 8,253 10,580 6,328 4,431 4,450 8,082 10,240 5,996 4,184 4,225 Low Avg.
Historical Metal Pages, Global Trade Atlas; Forecast Roskill Adjusted for inflation of US dollar
19.4
Marketing Strategy
The marketing strategy is to sell the molybdenum trioxide (MoO3) in long term supply contracts and on the spot market, while the bulk of the APR would be sold in a long term supply agreement with aerospace engine manufacturers. Production peaks in APR will be sold on the spot market. The base case for the FS is to build a roaster and rhenium recovery plant at Osborne site. The base case for the FS is to produce all of the molybdenum rhenium concentrate at 30% Mo grade.
19.5
Contracts
Lycopodium is aware of the following contracts and understands that they have been awarded or will be awarded on normal commercial terms. 19.5.1 Mining
The box cut and exploration decline was started under contract in the fourth quarter of 2010. Development to the orebody and extraction of ore will then recommence around the third quarter of 2012. This timetable sets the time to implement construction of the process plant by the third quarter of 2012.
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The decline was adjacent to the Little Wizard orebody in late June 2011 and permitted an access to be driven to start trial mining of Little Wizard, which was subsequently completed. Ore recovered from this orebody will be stockpiled until the concentrator is available to process the ore. Work is being undertaken by an experienced mining contractor, managed by the IAL Operations staff. 19.5.2 Haul Road Access to Osborne
A 53 km long haul road is planned to join the Merlin mine site with the Osborne process plant. A contract was awarded to Lucas Earthmovers in March 2012. Construction time is approximately nine months managed by IAL Construction Superintendent team reporting to the IAL Project Group. 19.5.3 Process Plants
Lycopodium prepared a preliminary project execution plan for the process plant and outlines the overall management methodology for the delivery of the project, including engineering, procurement, construction, commissioning and handover. The construction strategy is based on an EPCM approach where Lycopodium, as principals representative, would be responsible for managing all aspects of the construction activities within its control. Construction of the plant will be completed using horizontal packages. Bulk Earthworks for the plant will be undertaken by an earthworks contractor under Lycopodiums management. The contractor will initially focus on areas required for temporary facilities and priority buildings to allow these facilities to be established prior to the major plant packages commencing. Temporary facilities include Lycopodiums construction offices and lay-down areas over and above the workshop / warehouse and compound. Concrete works will commence in the grinding and flotation area. Completion of the concrete in these areas will allow the earliest access to install major structural steel. The same approach will be used for the Structural Mechanical Piping (SMP) and electrical and instrumentation (E&I) packages whereby the maximum overlap is provided for each preceding discipline, but without causing excessive interface issues. The scheduled 'power on' or energise date will trigger the start of pre-commissioning activities for the plant which will then lead into dry commissioning as the operable systems become available. Wet commissioning will commence once all operable systems have been dry commissioned. The Project comprises of mostly greenfield works at an existing site. However, some tie-in work with existing infrastructure and process plant is required.
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The Project strategy is to first install the concentrator plant. The concentrate treatment plant will be installed in parallel, however will lag the concentrator plant construction due to the timing of long lead items, Roaster and Sulphuric Acid Plant being the two significantly long lead items. Power and communications will be provided by IAL. Lycopodium will use IALs mobile equipment fleet during the construction and commissioning phases. Shared facilities will be required during commissioning.
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MERLIN MOLYBDENUM RHENIUM PROJECT NI 43-101 REPORT - ENVIRONMENTAL STUDIES, PERMITTING AND SOCIAL OR COMMUNITY IMPACT
Page 20.1
20.0
ENVIRONMENTAL STUDIES, PERMITTING AND SOCIAL OR COMMUNITY IMPACT
20.1
20.1.1
Environmental Licensing Framework

Environmental Authorities
Project environmental approvals, in the form of an Environmental Authority (EA), are issued under the Environmental Protection Act 1994 (Qld) (the EP Act) by the Department of Resource and Environmental Management (DERM) for activities on IALs mining leases. EA applications must be supported by studies and documentation that identify potential impacts and details the measures put in place to avoid or minimise these impacts. The scale of investigation and documentation vary based on the nature, extent and location of the activity and may range from an Environmental Management Plan (EM Plan) through to a full Environmental Impact Statement (EIS), which takes many months to prepare and is subject to extensive public and government agency consultation. The triggers for a project to require an Environmental Impact Statement include:
Location of the Project near environmentally sensitive areas Mining in marine areas Mining < 500 m landward of the highest astronomical tide Construction of more than 150 new dwelling units Mining more than 2 Mtpa of mineral Abstraction of > 2 Mm3 of water per year Result in >25 ha of non-beneficial land capability where there is an alternative Mining < 2 km from a town Contain a dam that requires a dam failure assessment under the Water Act 2000 (Qld) Mining for uranium or asbestos.
With the introduction of the Wild Rivers Act 2005 (Qld) DERM is also required to take into account the location of the Project in relation to any declared wild rivers areas. In this case both the Osborne and Projects are located within the Daimontina Georgina Wild Rivers Area as discussed below.
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IAL holds an Environmental Authority (MIN 100894709) for the Merlin site. A revision to this EA was approved in December 2011 to account for the mining of molybdenum/rhenium ore from the Merlin deposit and the associated ore processing and other activities at the Merlin site. IAL currently holds an Environmental Authority (MIN 100459006) for operations at the Osborne site. A revision to this Environmental Authority to account for new activities at that site, including the construction and operation of the processing facilities for the molybdenum/rhenium ore from Merlin and for the construction of the tailings storage facilities to accommodate the Merlin tailings was approved in February 2012 and is currently out for public review. This EA does not include the construction or operation of the Roaster or disposal of the Merlin tailings and a further application for amendment will need to be submitted to DERM for these activities. To date IAL and predecessor companies at the Osborne and Merlin sites have not been required to complete an Environmental Impact Statement for the activities at these sites, although in recent years DERM have expressed some concern about the expansion and linked nature of operations at Osborne and other sites. As a result the degree of scrutiny of the Project environmental approvals has increased and can be expected to be applied to any further applications for amendment to the EAs for these operations. The requirement for an EIS to be completed for future amendments to the EA would be expected to result in a minimum of a 12 to 18 month delay in the approvals process and significantly increase the cost of the approvals process. 20.1.2 Environmental Management Plans
A revised EM Plan for Osborne was submitted in 2011 and approved by DERM in February 2012. This plan includes the additional activities that were the subject of the revised EA application. The revised EM Plan does not include the construction or operation of the Roaster or discharge of tailings into TSF3 and will need further revision and approval as part of the application for a revised EA to permit these activities. There is currently an approved EM Plan for the operations at Merlin. This plan includes the Osborne access road, dewatering of the Mount Dore aquifer and other sources for tailings disposal and management, development and mining of the Merlin molybdenum/rhenium deposit and the Starra 276 copper and gold resource, environmental management and rehabilitation and exploration activity on the Project leases. 20.1.3 Rehabilitation Plans
A further requirement is the establishment of a rehabilitation plan for the sites. There is an existing rehabilitation plan (the Barrick (Osborne) Mine Sustainability Plan (Mine Closure Plan) for the Osborne site. This plan will require review to incorporate the additional tailings storage facilities and infrastructure at the site. Rehabilitation at the Merlin site will take account of the experience from rehabilitation of legacy sites in that area with respect to waste dump profiles, revegetation and management strategies for acid producing materials. A Closure Plan will need to be developed for Merlin that takes account of safety, pollution control, landform stability, final land use and limiting impacts on natural systems.
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20.1.4
Groundwater Extraction Licences
IAL holds a Groundwater Extraction Licence for the Osborne site (No. 93017J), which allows for extraction of up to 947 million litres per annum from the Osborne Bore Field. IAL holds a water licence (No. 604203) allowing for dewatering of the Mount Dore aquifer from up to 11 bores to develop the Merlin ore-body. 20.1.5 Environmentally Relevant Activities and Annual Fees
IAL must also report on the environmentally relevant activities (e.g. chemical manufacturing and storage, electricity generation, extractive and processing activities, transport, waste and water) undertaken on their mining leases. These activities are prescribed under Chapter 4 of the Environmental Protection Regulations 2008 (Qld) and are taken into consideration by DERM when making determinations on Environmental Authority applications. Each activity is given a score based on the environmental risk associated with that activity, the aggregate environmental score (AES). The AES is used to determine the annual fee payable by IAL to DERM, with the annual fee based on the single highest annual fee for any of the activities conducted under the EA. In the case of the current Osborne EA, the fee is currently based on the AES for mineral processing (AES = 280). The operation of the Roaster at the Osborne site may trigger an additional environmentally relevant activity (Processing metalloids or metals), however the AES for this activity is lower than that for mineral processing unless the amount processed is in excess of 10,000 tonnes per year. Therefore, there should be no change in the AES that forms the basis of the annual fee for the Osborne site. The highest AES for environmentally relevant activities at the Merlin site is for mining copper ore (AES = 217). Mining of the molybdenum/rhenium ore at the Merlin site (AES = 158) is taken into account in the existing EA and does not increase the annual fee above that for mining copper ore.
20.2
Addressing Environmental Concerns
The mining and ore processing operations associated with this Project have potential to impact on a range of environmental values including air quality, water and land resources, and social and amenity values. The specific potential for impacts, along with a brief discussion of existing or required measures to mitigate these risks, is detailed in the following sections.
Reductions in air quality Dust and fine particulate matter emissions blasting, excavation, stockpiles, vehicle movements Combustion emissions blasting, machinery and vehicles CO2 emissions land clearance, electricity use, blasting, vehicles and machinery
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Noise and vibration Noise blasting, excavation, heavy vehicles and machinery Vibration blasting, heavy vehicle movements
Degradation of land resources Reduced options for future land use final voids, loss of soil structure in spoil dumps, subsidence, contamination Contaminated sites spills of fuel or chemicals, waste rock.
Degradation of water resources Reduced water quality discharges to waterways may include contaminated runoff from waste rock dumps and exposed sulphide bearing materials and sediments from land clearing Drawdown of groundwater reserves mine dewatering
Damage to nature conservation values including vegetation, wildlife and ecological systems Removal of vegetation clearing sites for access and construction Wildlife impacts vehicle traffic, noise and vibration, impeded access to water sources Fragmenting habitat vegetation clearing, road construction Impacts on aquatic habitat values contaminated discharges, water abstraction
Impacts on community and cultural heritage values Community structure increased population, fly-in-fly-out (FIFO) workforce Safety and amenity additional vehicle movements, FIFO workforce Risk of damage to cultural heritage places excavation and clearing
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In the context of the Merlin mine site some of the risks of environmental harm are minimised by the nature of the Project and the natural characteristics and geography of the site:
The nearest sensitive receptors for noise and dust are homesteads located a minimum of 20 km from Merlin and the access road. Historically IAL has not received any community complaints about noise or air quality relating to their existing operations in the area; As a consequence of the very low average annual rainfall, land in the area is considered to have limited agricultural, recreational or aesthetic value; The underground nature of the mining operations minimises the need for land clearing; Underground operations will limit the need for surface blasting and dust generation; Flora and fauna in the area is already somewhat modified as a result of historic mining and farming activities in the area; Watercourses in the area are ephemeral and the species in the area are adapted to harsh and variable conditions; and No endangered, vulnerable or near-threatened aquatic flora or fauna as listed in the EPBC Act or the Nature Conservation Act 1992 (Qld) have been recorded in the area or are considered likely to occur locally. Air Quality
20.2.1
In general the EA requires the use of best practice environmental management dust control procedures and continuous improvement to avoid air quality impacts from the mine and ore transport. Any exceedence of the air quality triggers defined in the EA will require an investigation by IAL with results reported to DERM. 20.2.2 Noise
The EA for Merlin contains requirements for development of a noise monitoring and recording program and for investigation and remedial action in the event of any noise complaints where the noise is found to be unreasonable. 20.2.3 Land Resources
Facilities that pose a risk of surface soil contamination or discharges, such as the vehicle workshops, hydrocarbon storage and refuelling bays and magazine will require design and construction to minimise the risk. The potential for residual contamination of soil, potentially requiring removal and offsite disposal, will also need to be considered in developing site closure and rehabilitation strategies. Rehabilitation of the site following closure will also require removal of all structures and appropriate ground works and revegetation, which should be planned from the outset of the Project.
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20.2.4
Water Resources
Dewatering of the Merlin mine will be managed to minimise the risk for leaks resulting in discharges to water. The tailings dam capacity is to be increased and managed to minimise the risk of discharges. 20.2.5 Nature Conservation Values
One Regional Ecosystem with a state classification of Endangered is present within the Project area. The RE1.3.7 Red Gum (Eucalyptus camaldulensis) woodland on channels and levees (south). Disturbance to this RE will be limited in relation to the extent of these areas throughout the region. A small number of animal species of conservation significance as listed in the EPBC Act and the Nature Conservation Act have been identified as present or likely to be present within the wider Project area. A Bat Management Plan has been developed in regard to the endangered Troughtons sheathtail bat, which has previously been found inhabiting disused workings and will need to be relocated in some cases. The EA for Merlin requires a number of controls to protect nature conservation values. These controls include a permit to disturb system for small areas, assessment of larger areas (>10 ha) prior to disturbance, nature conservation strategies to be included in the Plan of Operations, and protection and recovery plans for any identified endangered or threatened ecological species or communities in the area. A weed management plan is also required to be included in the Plan of Operations. 20.2.6 Social and Community Values
The impacts of heavy vehicle use will be partially mitigated by the proposed construction of the sealed Mount Dore/Osborne Haul Road between Merlin and Osborne. Further measures will need to include operating procedures for vehicles to ensure that speed limits and safe practices are being adhered to in order to minimise the risk to other road users. Although the overall numbers of Project personnel are not large, reliance on services (e.g. medical, provisions) of smaller towns surrounding the mine site including Dajarra, Boulia and Cloncurry has potential to impact on the availability of services for local residents and impacts should be monitored. Additionally, if these towns become options for accommodation of personnel or are visited for recreation by Project personnel there is potential for disruption of existing community structures and values. Under the present plan for operations the risks to community values are minimised with staff housed at the existing IAL accommodation village and camps and operating on a FIFO basis.
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Page 20.7
20.2.7
Cultural Heritage Values
IAL has an existing process for recording and managing cultural heritage finds and sites and a number of cultural heritage surveys have been completed at both the Merlin and Osborne sites and IAL has a Cultural Heritage Management Agreement in place with the Yulluna People. Artefacts, knapping areas, quarries, ceremonial and grave sites are common in the Merlin area. IAL has a policy of avoiding disturbance of significant cultural sites as far as possible. Cultural heritage values are protected through EA conditions including the need for cultural heritage surveys and consultation with indigenous and other relevant stakeholders prior to new disturbance of areas greater than 10 ha. In the event that new sites of high cultural heritage significance are discovered all work must cease in the area and DERM must be notified. Work will not be allowed to recommence in that area until clearance is given by DERM. 20.2.8 Ore Processing Operations
Ore processing operations (not including tailings management, which is discussed separately below) may have a range of environmental impacts including:
Reductions in air quality Dust stockpiles, ore crushing and conveying, vehicle movements Particulate emissions vehicles and machinery CO2 emissions roaster, vehicles and machinery Air emissions acid plant, calciner and steam boiler
Noise and vibration Noise construction works, ore crushing Vibration heavy vehicle movements
Degradation of land resources Contaminated sites spills of fuel or chemicals, waste rock.
Degradation of water resources Reduced water quality discharges to water courses containing contaminated runoff from ore stockpiles or process areas
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Page 20.8
Damage to natural conservation values including vegetation, wildlife and ecological systems Removal of vegetation clearing sites for access and construction Wildlife impacts vehicle traffic, noise and vibration, impeded access to water sources Fragmenting habitat vegetation clearing, road construction Impacts on aquatic habitat values contaminated discharges
As with the Merlin site, the geographical remoteness and natural characteristics at Osborne significantly reduce the likelihood of environmental impacts resulting from reductions in air quality, noise and vibration or land degradation. Additionally, the historic use of the site for mining and ore processing has already resulted in clearing of vegetation, with the additional proposed infrastructure being located on already disturbed sites.
The nearest sensitive receptors for noise and dust other than the Osborne accommodation village are homesteads located a minimum of 30 km from Osborne. Historically IAL has not received any community complaints about noise or air quality relating to their existing operations in the area. As a consequence of the very low average annual rainfall land in the area is considered to have limited agricultural, recreational or aesthetic value. Flora and fauna in the areas is already modified as a result of historic mining and farming activities in the area. Watercourses in the area are ephemeral and the species in the area are adapted to harsh and variable conditions. No endangered, vulnerable or near-threatened aquatic flora or fauna have been recorded in the area or are considered likely. Air
20.2.9
Emissions to air associated with ore processing are expected to include:
Wet Gas Acid Plant sulphur dioxide, sulphuric acid, nitrogen oxides and ammonia; ADM Calciner CATOX nitrogen oxides and ammonia; and Steam boiler nitrogen oxides, carbon monoxide.
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Page 20.9
In general the existing EA requires the use of best practice environmental management dust control procedures and continuous improvement to avoid air quality impacts from the ore processing facilities. There are specific requirements relating to mineral concentrate management, including the requirement for the interior of all concentrate storage and handling facilities to be maintained under negative air pressure. Any exceedence of the air quality triggers defined in the EA will require an investigation by IAL with results reported to DERM. It is considered likely that emission limits will be set by DERM to ensure ground level concentrations of pollutants meet relevant standards (e.g. the Environmental Protection (Air) Policy 2008). 20.2.10 Noise The EA for Merlin contains requirements for development of a noise monitoring and recording program and for investigation and remedial action in the event of any noise complaints where the noise is found to be unreasonable. The addition of the Roaster at this site is not expected to alter the conditions with respect to noise or vibration at this site. 20.2.11 Land Resources Facilities that pose a risk of surface soil contamination or discharges will require design and construction to minimise the risk. The potential for residual contamination of soil, potentially requiring removal and offsite disposal, will also need to be considered in developing site closure and rehabilitation strategies. Rehabilitation of the site following closure will also require removal of all structures and appropriate ground works and revegetation, which should be planned from the outset of the Project. Additionally, the molybdenum/rhenium tailings storage facility will require rehabilitation to standards prescribed by DERM. 20.2.12 Water Osborne has established environmental protection measures for surface water, and these are directly applicable to the expanded operations at the site. The site management systems will cater for the new ore processing and roasting facilities at the site, and has existing water monitoring regimes in place, although additional monitoring will be required based on the potential for aerial discharges of specific pollutants from the roaster. The EA requires a Water Management Plan for the site to be implemented by 1 October 2012. This plan is to be reviewed twice each year, before and after the wet season. An Erosion and Sediment Control Plan is also required for the site, and will be included in the Plan of Operations. There is potential for additional risk of sediment discharges from the site or spills of hydrocarbons, cement and other waste during construction activities. Appropriate controls including management of contractors will need to be established to manage this risk and incorporated into the Water Management and Erosion and Sediment Control Plans.
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Page 20.10
The molybdenum/rhenium tailings storage facility is classified as a Regulated Dam, and is subject to specific controls with respect to design and construction, operational plans and inspection and reporting regime. The Regulated Dams provisions also affect the requirements for decommissioning, including ensuring landform stability, approval for future uses and the rehabilitation requirements established by DERM. Where the Regulated Dam is not decommissioned prior to surrender of the mining lease there must be a site management plan for continued operation and maintenance of the dam. 20.2.13 Nature Conservation Values Due to the already disturbed nature of the Osborne site and lack of identified species of conservation significance, no additional conditions relating to biodiversity are anticipated as a result of expansion of the activities at this site to include the roaster and tailings disposal. 20.2.14 Social and Community Values It is not anticipated that the expanded operations at the Osborne site relating to the Project will result in any concerns relating to impacts on social and community values in the area although, as for mining operations, additional reliance on services of local towns should be monitored, particularly during the construction phase for the new concentrator and Roaster. 20.2.15 Cultural Heritage Values There is an existing process for recording and managing cultural heritage finds and sites and a number of cultural heritage surveys have been completed at both the Merlin and Osborne sites and IAL has a Cultural Heritage Management Agreement in place with the Yulluna People. No specific conditions relating to cultural heritage values have been established in the Osborne EA and the proposed operations for the Project are not anticipated to require any additional requirements with respect to cultural heritage.
20.3
Tailings Disposal
Disposal of the molybdenum/rhenium tailings will be to a newly constructed tailings storage facility (TSF3) at Osborne. The construction of TSF3 has been included in the current version of the EM Plan for Osborne and is approved under the existing EA. However, this approval does not include the disposal of tailings into this facility, which will require amendment to the EM Plan and to the EA.
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Page 20.11
A desktop assessment of the acid mine draining (AMD) potential of the molybdenum/rhenium process tailings was completed in 2011. The study concluded that the tailings can be classified as non acid forming (NAF) with excess and available acid neutralising capacity (ANC). The tailings are therefore expected to have negligible risk of acid generation. The total metal concentrations, with the exception of molybdenum, are within the Queensland Government hazardous waste criteria for a non-hazardous dam and the dissolved metal concentrations in seepage are within Australian livestock drinking water guidelines and Queensland hazardous waste criteria. Overall the potential to cause significant water quality impacts from the tailings solids is considered to be low. A monitoring regime to assess the geochemical characteristics of tailings will be required to track the geochemical characteristics of the tailings resulting from variations in the ore mineralogy, processing methods and potential reactions upon exposure to oxygen and water.
20.4
Site Water Management
Both the Merlin and the Osborne sites are within the Wild Rivers Diamantina Georgina Basins wild rivers preservations area. Any renewal by the regulator of the Environmental Authority for activities in these tenements will take potential impacts on wild rivers values into account. However, a review of the interactive mapping tool for the wild rivers area shows that the sites of the proposed new activities at Merlin or Osborne are not located within high preservation areas or nominated waterways within the declared wild river area. Mining and mineral processing activities at these sites are therefore not restricted by the Wild Rivers Declaration with the exception that authorised surface mining activities under the EA for the site may not be carried out within 100 lateral meters of any nominated waterway in the preservation area. The interactive mapping tool does not identify any nominated watercourses in the vicinity of the Merlin tenement that would be affected by this condition. The ML that contains the Osborne borefield is located within a special floodplain management area in the wild rivers area. While the existing groundwater extraction permit should be unaffected, activities that interact with this management area should be reviewed in any update of the Plan of Operations and Environmental Management Plan for this site to ensure they are not impacting on the wild rivers values. Water requirements for the Merlin mining operations will be adequately met from mine dewatering as approved under the existing water extraction licence. Surplus water from the dewatering will be used at the Starra 276 site. Environmental dams will be established to service sediment laden runoff from the ROM, temporary PAF storage, crusher and crushed oil stockpile areas. Two dam catchments have been identified with dam volumes of 7,629 m3 and 21,660 m3. The existing groundwater extraction licence for Osborne allows for 947 million litres per year to be taken from the Osborne borefield, which is located 25 km to the south of the Osborne mine. For existing operations at Osborne the estimated water requirement is between 600 and 900 ML per annum. The additional ore concentrating facilities and the Roaster will increase the requirement for water by up to 440 ML Water conservation and management strategies will be required to ensure that adequate water for the Project is available under the groundwater extraction licence.
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Page 20.12
The existing Osborne Water Management Plan assumed that the process plant at Osborne will shut down in 2010, the plan was substantially revised to account for the recommencement of activities at the site and the additional activities relating to processing and roasting the Merlin ore at this location. The existing site water balance is currently being modelled to reflect the new site conditions. During the operational phase water is required for mining (drilling, dust suppression and washing down), mineral processing, potable water, irrigation and dust suppression. Wherever possible, waste water and rainfall runoff is captured for reuse in the process water circuit. Waste water at Osborne is captured and recycled to the process water circuit. The main source of waste water is from the existing tailings disposal stream via the surface decant system and underdrains. The increased water consumption requirements at the site with the Merlin ore processing will require that water recovery measures are implemented for the molybdenum/rhenium tailings disposal stream. Existing environmental dams at Osborne have a combined design storage capacity of 700,858 m3 and are anticipated to be sufficient to the needs of the new site activities, which will be located within the footprint of the existing operational areas serviced by these dams. Construction works on the site may result in additional sedimentation during rainfall events, necessitating sediment control measures on the site during construction works. An additional sump (sediment trap) may be required to service the crushing operations for the Merlin ore depending on the location of these operations relative to the position of the existing sump.
20.5
General Site Waste
Wastes generated by the Project will include construction wastes and ongoing general operating wastes at Merlin and Osborne. Waste rock and tailings have been addressed separately under mining and tailings disposal sections of this report respectively. Construction wastes should generally be the responsibility of the construction contractors for each of the facilities. It will be necessary to confirm that any costs for required off-site disposal will be included in the construction costs. If any existing infrastructure is to be demolished in the process of constructing new facilities there will be costs associated with removal of this material from site. If any of this material is contaminated, for example it is likely that foundation materials will have high concentrations of copper and other metals, disposal of these will need to be arranged on site or they will require disposal in an approved off-site hazardous waste facility. Operating wastes at each site will include a range of everyday waste, for example:

consumable domestic items such as food and plastics equipment related wastes such as waste oil, tyres, mechanical wastes and steel process related wastes such as drums, timber pallets and cable reels sludge wastes from sewage treatment or oil or wash bay sumps
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Page 20.13
Disposal options for operating wastes include disposal on the tenement in the open-pit, underground, landfills, or waste pits or waste may be removed from the sites by a registered waste contractor. Osborne has an existing waste water treatment plant with capacity for 100 people located at the Osborne site and waste water treatment facilities for up to 400 people at the accommodation village. It is anticipated that these facilities will be sufficient to cover the normal operational requirements of the site. Consideration may need to be given to the need for additional temporary toilet facilities at Osborne during the construction phase of the Project depending on the anticipated workforce numbers during this period. The existing Mount Dore Camp is serviced by a secondary sewage treatment plant with effluent irrigated onto the oval adjoining the camp, which is expected to meet most of the needs of the mine workforce. Additional toilet blocks at the Merlin Site will report to biocycle units sized at 50EP and effluent irrigated onto a lawn area. The existing arrangements for waste management at Osborne are detailed in the current waste management strategy for the site. The Osborne Waste Management Strategy will require review and revision to ensure that the additional wastes that will be generated by the new processing and roasting activities are covered. A detailed waste management strategy will need to be developed for the Merlin site.
20.6
Rehabilitation
A mine closure plan was established for the Osborne and associate satellite mining sites in 2009, prior to purchase of the site and infrastructure by IAL. Key issues for closure have been identified in that plan as including:
Rehabilitation of tailings storage facilities Rehabilitation of sulphide waste rock Removal of concentrate spills from handling areas Management of regulated waste during closure Removal of surface soil contamination associated with the processing circuit Management of open void water quality Assessment of open void impacts on groundwater cones of depression
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Page 20.14
The low annual rainfall and poor soil development at the site (principally shallow rocky or gravelly clay loams with a predominantly rocky matrix) are limiting to revegetation. Continuing surface water and groundwater monitoring will be required during the rehabilitation stages of the Project and active management of Environment Dam No. 3 may be required for an extended period until surface contamination sources are fully removed and water quality in the catchment is acceptable for discharge. The existing plan will require update to include a current description of the activities at the site and the detailed Closure Action Plan will require amendment to address the new infrastructure and activities at the site. While the basic closure issues at Osborne are not anticipated to change as a result of the proposed additional operations related to the Project, the extent of the areas to be rehabilitated will be extended and monitoring parameters may be increased. Infrastructure including the ore processing and roasting facilities will require complete removal and any residual land contamination will need to be remediated. A rehabilitation plan relating to TSF 3 will need to be developed. A closure plan for the Project is to be developed in 2012. It is anticipated that key issues will include any sulphide waste rock and removal of surface soil contamination.
20.7
20.7.1
Site Environmental Monitoring

Air
The EAs require the implementation of a monthly ambient air quality and dust deposition monitoring program at 6 sites in the Project area and 3 sites in the Osborne project area and sets trigger values and limits for arsenic, cadmium, lead and dust deposition. Monitoring requirements are expected to be set in the EA for the Project and are likely to include acid plant emissions of SO2 and HN3. Additional monitoring requirements may include steam boiler, calciner and lime scrubber emissions and ambient SO2 monitoring. 20.7.2 Noise
Noise monitoring is only required where there have been complaints of noise in excess of the established acceptable levels in the EA. Historically there have been no noise complaints at either site. 20.7.3 Land
No ongoing monitoring measures relating to land resources are identified in the EAs or EM Plans for either the Project or Osborne. However, during closure and rehabilitation of these sites, measurement of soil contamination levels will be required to ensure that completion criteria are fulfilled. Monitoring of final landform stability will also be required.
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Page 20.15
20.7.4
Water
The Merlin and Osborne EAs require monitoring at all contaminant release points during release events and specifies trigger levels that will require downstream water quality testing. Stream flow gauging at one location has also been specified as a condition of the EA. Any release of water must be notified to DERM within 6 hours of commencement. In addition to water quality monitoring, the EA for Merlin requires the implementation of a Receiving Environment Monitoring Program (REMP) to assess any impacts to local environmental values. The REMP is to be commenced within 3 years of the date of issue of the EA with reporting to DERM annually thereafter. Groundwater quality (physical characteristics and chemical concentrations) and levels are to be monitored quarterly at both sites. The EAs specify monitoring locations and parameters for groundwater. A review of the existing surface water and groundwater monitoring regimes at Osborne will be required to take account of the changed nature of tailings disposed of at the site and the location of TSF 3. This monitoring regime will be subject to approval by DERM, and conditions relating to the monitoring and reporting are likely to be included in the EA conditions. 20.7.5 Nature Conservation
No ongoing requirements for ecological surveys have been identified in the EAs or the EM Plans for either the Project or Osborne. It is not anticipated that the expansion of activities at Osborne will result in additional requirements for ecological monitoring during the life of the Project. During the closure and rehabilitation of both sites it is expected that there will be a requirement to monitor vegetation re-establishment.
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MERLIN MOLYBDENUM RHENIUM PROJECT NI 43-101 REPORT - CAPITAL AND OPERATING COSTS
Page 21.1
21.0 21.1 Capital Costs
CAPITAL AND OPERATING COSTS
The overall capital cost estimate was compiled by IAL and is presented here in summary format. The capital cost estimate is a collation of a number of specialist consultants data for mining, process plants, associated infrastructure and owners costs. IALs compilation of costs was reviewed by Lycopodium for the purpose of this report. 21.1.1 Summary Capital Costs
The initial Project cost to first production is estimated at A$345M. An additional A$52M of capital in year 1 is scheduled for an optimised molybdenum trioxide purification plant. The life of mine capital cost is estimated at A$492.4M as shown in Table 21.1.1. Table 21.1.1 Capital Cost Estimate Summary
Capital Upgrade to Concentrate Treatment Plant (A$M) 39.7 3.3 8.6 51.6
Main Area
Initial Capital (A$M) 90.9 72.4 83.6 32.7 32.2 33.3 345.0
Life of Mine Capital (A$M) 168.2 72.4 123.3 48.0 35.6 44.9 492.4
21.1.2
Scope
The overall capital cost estimate includes the following scope:
Mining capital includes all development work, ventilation and dewatering. Three stage crushing plant. 500,000 tpa ore throughput molybdenum concentrator including grinding, flotation, regrind circuit, copper depression circuit, molybdenum filtration and drying, and tailings thickening and disposal. Concentrate treatment facility including multiple hearth roaster, roaster off gas handling system, wet gas plant, rhenium recovery plant, molybdenum purification plant, sulphuric acid plant and product handling. Reagents and services for the process plant.
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Page 21.2
Installation costs, EPCM costs and contractor indirect costs. Tailings storage facility. Information technology. Process plant office. Site roads. Mobile equipment. Tie-ins to existing facilities such as natural gas, water supply, copper concentrate. Reestablishment of the Burke River Borefield. Expansion to Mount Dore and Osborne Accommodation Camps Other Specialist Consultants Exclusions
21.1.3
The following items are excluded from the overall capital cost estimate:
Haul roads Working capital Project insurances Duties / taxes / fees Project Sunk Costs Project Escalation Mining Capital Costs
21.1.4
AMC has estimated mining capital costs from first principles, applied a contractor margin of 10% to direct costs, contractor labour and equipment ownership and included an allowance for contractor mobilisation / demobilisation (Table 21.1.3). Pre-production Project capital includes contractor mobilisation, surface and underground mine infrastructure costs (paste plant, primary fans, mine dewatering, air and power reticulation, surface and underground service and refuelling bays, underground magazine and refuge chambers), all of the capitalised lateral access development costs such as decline, passing bays, stockpiles, level and vent raise accesses prior to production (direct costs, contractor labour, equipment lease costs and contractor margin), ventilation and escape rises, surface and underground pastefill reticulation system and owner costs from commencement of site works (owner labour and power).
3092\16.04\3092-STY-002_0 April 2012 Lycopodium Minerals QLD Pty Ltd
Page 21.3
The pre-production mining capital (i.e. capital expenditure to first steady state production rate of 0.5 Mtpa in 2015) is estimated at A$90.9M. The pre-production capital estimate does not include any costs related to the establishment of boxcut, portal, decline and associated lateral development, and southern surface vent intake and exhaust shafts completed as part of Merlin Stage 1 Development during Q1 2012, establishment of surface ore and waste dumps, ROM crusher, surface roads, surface diamond drilling, consultants, FIFO and camp costs, haul road to Osborne or any off site costs. Ongoing mining capital expenditure includes some post-production capitalised mine development, escape raise ladderway installation, sustaining capital allowance for infrastructure (costed at 2% of the infrastructure costs per annum), and contractor demobilisation. Ongoing mining capital is estimated at A$77.3M and total life of mine mining capital is estimated at $168.2M. Table 21.1.2 Mining Capital Cost Estimate Summary
Total FS Mining Capital Costs A$M Mine Infrastructure including paste plant Capital Development* Mine Equipment+ Total Pre-production Capital Sustaining Capital Development Sustaining Capital - Equip & Infrastructure Contingency ~ Total Ongoing Mining Capital Total Mining Capital 33.3 57.6 90.9 70.2 7.1 77.3 168.2
* FS excludes Merlin Stage 1 decline development and associated infrastructure costs + FS mobile equipment costs are included in the operating costs ~ FS costs excludes contingency
21.1.5
Process Plant Capital Costs
The purpose of the capital cost estimate was to provide substantiated costs for the process plant which could be utilised to assess the economics of the Project and to provide a basis for the Project control budget during project execution. The capital cost estimate was undertaken utilising Lycopodium's estimating procedures and systems. IAL has been actively involved in the review process for the estimates. The capital costs are presented in Australian dollars as at the forth quarter 2011 (4Q11) to an accuracy of +/-15%.
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Page 21.4
Table 21.1.3 summarises the capital cost estimate for the process plant, excluding the crushing plant. Table 21.1.3 Capital Cost Estimate Summary for Process Plant (excl Crushing)
Concentrator Total A$ 10,628,960 29,272,543 12,233,517 1,220,469 53,355,489 4,905,877 12,676,960 70,938,326 8,455,511 79,393,837 Concentrate Treatment Total A$ 12,376,580 76,600,097 14,283,233 84,006 103,343,916 9,565,077 19,905,033 132,814,026 19,363,671 152,177,697 Total Process Plant Total A$ 23,005,540 105,872,640 26,516,750 1,304,475 156,699,405 14,470,954 32,581,993 203,752,352 27,819,182 231,571,534
Main Area Construction Indirects Process Plant Costs Reagents and Plant Services Infrastructure Sub Total Owners Project Costs EPCM Costs Sub Total Contingency Total
A preliminary 3D Model was produced during the feasibility study with sufficient detail to permit the assessment of the engineering quantities for earthworks, concrete, steelwork, mechanical and electrical for the processing plant. Unit rates that reflect the current market conditions at time of estimate have been established for bulk materials, capital equipment and labour via an extensive budget quotation request (BQR) process. General piping was factored off mechanical costs and benchmarked against projects of comparable scale. Labour rates from the market have been benchmarked against in-house labour gang rates and indirect cost modelling to ensure adherence suitability to the current projects market. Table 21.1.4 summaries the labour gang rates, equipment and contractors indirects estimated for each major trade commodity used in the estimate. Table 21.1.4 Standard Labour Rates, Equipment and Contractor Indirects
Direct Labour $ 93.87 89.66 160.00 Equipment $ 27.71 63.33 20.00 Contractor * Indirects $ 128.00 109.32 100.42 Total Hourly Rate $ 249.58 262.31 280.42
Item Earthworks & Concrete Installation SMP & Tankage Electrical & Instrumentation
* Contractor Indirects includes Meals, Accommodation, Flights and Heavy Cranage for SMP
Budget pricing for mechanical and electrical equipment and infrastructure facilities were obtained from suitable suppliers and contractors. The rates used in the estimate have been reviewed and deemed to reflect the market conditions at time of estimate.
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Page 21.5
The engineering, procurement and construction management (EPCM) estimate was based on manhours per EPCM discipline. Engineering and drafting hours were based on an assessment of the work content using the drawing and equipment lists prepared for the study. Hours for process design were estimated on a deliverable basis and Lycopodiums experience on comparable scale projects. Synergies were evaluated and applied per discipline and task. Duration based costs such as Project and Construction Management were estimated using the project implementation schedule prepared for the study. EPCM expenses include:
Flights, medicals for Engineers site personnel. Phone, fax and stationery costs for Engineers home office and site
Expenses such as catering and accommodation for the Engineers site personnel, as well as site telecommunications costs, were included in the estimate. The estimate is qualified by the following assumptions:
All labour rates, materials and equipment supply costs are current at 4Q11 and are subject to change. Contingency has been allowed to cover part increases but there is no allowance for escalation in the estimate. Prices of materials and equipment with an imported content that have been offered in AUD. The base estimate assumes that labour will be provided on a 12 hour, 13-day fortnight with a three-week-on, one-week-off work cycle. Project construction offices, facilities, computer hardware, software, phones, printers, IT support, and office consumables will be provided by IAL. These costs have been included in the Owners Costs. Accommodation, meals and flights of subcontractor personnel during the construction have been included in the contractor indirect labour rates. EPCM Meals and accommodation is included. Flights allowance is $400 per return flight per person. Meals and Accommodation allowance is $100 per man day. Subcontractor fuel is included in the direct hourly rate. Fuel is provided by the client at $0.78/L.
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Page 21.6
Construction and site fuel storage, refill and distribution facilities and services are by client and excluded from the estimate. SMP contractor rates include for a 250t crane for part of the construction period. Subcontractor rates include for mobile equipment, vehicles, construction power and consumables for the duration of construction. Potable water and raw water supply is by the client and available at site for the use by contractors. In country freight of all supply materials will be provided by the clients preferred freight forwarding contractor. Project spares are a percentage allowance of the mechanical supply cost based on similar size projects. The allowance for insurance spares is 8%. The allowance for consumable spares is 2%. A commissioning assistance crew of 6 men for 2 weeks is allowed for in the estimate. EPCM construction vehicles are included as part of Owners costs. The estimate includes for the installation of the Adbri Masonry Segmental ROM Pad Retaining Wall. The estimate includes for structural backfill and compaction to the material 3 meters adjacent to the wall only. Remaining backfill is excluded and by others. The estimate allows for the supply of wet concrete to the work front and concrete installer at the rate of $500/m3. This rate is based on supply from a site 60km away. The concrete contractors have allowed for this rate in there concrete supply rate with rebar and formwork additional. The estimate includes for bulk earthworks costs to prepare the site for detailed earthworks and concrete works. These works include for bulk excavation to the existing ROM pad in preparation for installation of the ROM retaining wall, bin and grizzly as well as general site preparation and drainage channel. There is no allowance for clear & grub or topsoil removal in the estimate. Battery limit for electrical is HV connection point at Power Station 6.6kV switchboard. PLC programming for the process plant has been allowed for in the EPCM estimate. Upgrades or expansion of the existing Mount Dore and Osborne accommodation camps, mine workshops, warehouses, roads and any other existing facilities are included in the infrastructure costs. Updating the existing plant control (SCADA) software or hardware including additional monitors in the existing plant is included in the infrastructure costs.
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Page 21.7
Site supply of power, supply of raw water (for operations and construction), sewage removal and treatment, communications network for construction facilities are included in the infrastructure costs. Crushing plant costs were provided by IAL and are added as a separate item to the process plant costs. Crushing Plant
21.1.6
The crushing plant costs of $6.4M were provided and added to the process plant costs by IAL and were based on a vendor budget quote. 21.1.7 Infrastructure Capital Costs
Infrastructure costs were provided by IAL and SRL and were estimated at $33M and include:
Tailings storage facility. Information technology. Process plant office. Site roads. Reestablishment of the Burke River bore field. Upgrades or expansion of the existing Mount Dore and Osborne accommodation camps, mine workshops, warehouses, roads and any other existing facilities. Site supply of power, supply of raw water, sewage removal and treatment, communications network for construction facilities. Sourcing and supply of construction (raw) water. Owners Costs
21.1.8
The owners costs for the Project is estimated at $36M. The following items are included in the owners costs. Bulk Plant Site Earthworks The estimate includes for bulk earthworks costs to prepare the site for detailed earthworks and concrete works. These works include for bulk excavation to the existing ROM pad in preparation for installation of the ROM retaining wall, bin and grizzly as well as general site preparation and drainage channel. There is no allowance for site clear and grub or top soil removal at this time.
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Page 21.8
Construction Facilities The estimate includes costs for construction offices. The allowance is for facility hire at this time but would equally cover the purchase costs if this option is preferred. Pre-production costs Pre-production costs for the process plant operations have been estimated based on a progressive ramp up of personnel. The estimate reflects anticipated costs. Vendor Commissioning Equipment requiring vendor representation for commissioning was identified. The estimate was worked up by estimating the man days required by the vendor representative to complete their works, a man day rate and expenses. Spares Spares have been taken as an allowance of the capital costs and benchmarked against the spares expenditure on projects of a comparable scale. A minimalist approach has been assumed, with spares stocks progressively expanded during operations. First Fill Consumables Quantities for opening stocks and first fill consumables have been assembled from basic principles and using the Project design criteria. Unit rates are based on budget quotations solicited from suitable suppliers. Mobile Equipment Operational mobile equipment has been allowed. Refer to section 17 for mobile equipment list. 21.1.9 Contingency
The purpose of contingency is to make specific provision for uncertain elements of cost within the Project scope. Contingencies do not include allowances for scope changes, escalation or exchange rate fluctuations. Contingency is an integral part of an estimate and has been applied (after careful analysis) to all parts of the estimate, i.e. direct costs, indirect costs, services costs, etc. A contingency analysis was undertaken and an overall contingency of 12% was applied to the estimate.
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Page 21.9
21.2
Operating Costs
The overall operating cost estimate was compiled by IAL and is presented here in summary format. The operating cost estimate is a collation of a number of specialist consultants data for mining, process plants and associated infrastructure. IALs compilation of costs was reviewed by Lycopodium for the purpose of this report. 21.2.1 Summary Operating Costs
The average operating costs over the life of the Project are summarised below in Table 21.2.1. Table 21.2.1 Average Operating Costs
A$/t Ore 147.22 33.43 48.72 10.60 19.37 259.34
Cost Centre Mining Processing (Concentrator + Crushing) Processing (Concentrate Treatment) Haulage General & Administration Total
21.2.2
Operating Cost Basis The operating philosophy for mining was based on a contract mining operation with the use of contractors for specialist activities such as raise boring and diamond drilling. The site will be operated as a FIFO site, with all fulltime technical and supervision personnel on 8 days on / 6 days off or similar roster and all fulltime operating personnel on an intensive work roster, e.g. 2 weeks on / 1 week off to provide the operation with coverage for a 24 hours per 7 days per week. Wages and salaries used for the process plant were provided by IAL based on the current Osborne copper concentrator rates. These salaries were provided inclusive of superannuation and bonuses. The cost of consumables, including reagents, fuel, grinding media and mill wear parts for the process plant were estimated from quotations provided by suppliers or IAL supplied data. Reagent consumption rates have been estimated based on laboratory testwork, metallurgical consultant advice or vendor recommendation where no laboratory testwork was available (refer to section 17). Power was calculated based on the installed power from the mechanical equipment list, with drive efficiency factors and equipment utilisation applied as appropriate. The unit cost of power, $0.12/kWh, was supplied by IAL based on utilisation of the current gas fired power station at Osborne.
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Page 21.10
General and Administration costs were provided by IAL and include for site management, health and safety, human resources, materials, IT, finance, environment, FIFO and insurance costs. Preproduction costs are operating costs associated with the period prior to plant commissioning and are included as part of the capital estimate. Project costs incurred earlier than this date are considered Owners costs. Preproduction costs have been developed using the data described above and relate to early employment of production staff, first fill and stock of reagents, and general and administration costs during this period.
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MERLIN MOLYBDENUM RHENIUM PROJECT NI 43-101 REPORT - ECONOMIC ANALYSIS
Page 22.1
22.0 22.1 Introduction
ECONOMIC ANALYSIS
A financial model for evaluating the Project was developed in-house by IAL. Lycopodium reviewed the model logic, consistency of input assumptions and integrity of the calculations. All costs are constant in 2011 Australian dollars with no provision for inflation escalation. The annual cash flow projections were estimated over the Projects production life based on production schedule, sales revenue, production costs, capital expenditures and corporate costs (taxation, royalties, etc.). The financial indicators examined included after-tax cash flow (ATCF), net present value (NPV) at 8% discount rate, internal rate of return (IRR) and payback period. 22.1.1 Principal Assumptions
The principal assumptions are:
Proposed mining inventory based on the Mineral Reserves and mine schedule described in Sections 15 and 16 of this report. Valuation date based on year of first capital spend (1 January 2012). Metal Sale Prices
22.1.2
IAL appointed Roskill Consulting Group Limited (Roskill) in early 2012 as independent consultants to provide an updated expert opinion on the outlook for the molybdenum and rhenium markets including pricing forecasts. A summary of the conclusions of Roskills study are provided in Section 19 of this report. Sale prices of metals other than molybdenum and rhenium are based on analysis of price predictions as well as a review of current and historical prices. All metal prices used are non-escalated real prices. Sensitivity analysis demonstrates financial returns for the Project at a range of metal prices. 22.1.3 Product Sales
It is intended that pure chemical molybdenum oxide (MoO3) and ammonium perrhenate (APR) will be produced and transported from the Osborne site to Brisbane and shipped to overseas customers. Payable metal terms consistent with typical sales contract terms for the MoO3 and APR have been adopted in the financial model.
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Page 22.2
It is intended that copper, gold and silver metal in copper concentrate with be blended with other copper concentrates produced at Osborne, transported from Osborne to Townsville and shipped to overseas customers from Townsville. Payable metal terms consistent with typical sales contract terms for copper, gold and silver grades and quality of the concentrate produced have been adopted in the financial model. For the purposes of the financial model, it is assumed that all gold and silver metal recovered reports to the copper concentrate, i.e. no production of gold dor from Merlin mill feed sources. 22.1.4 Exchange Rates
The financial model for the Project uses an A$/US$ exchange rate of 1.00 in 2012 and 2013 and 0.83 thereafter (2014 onwards). 22.1.5 Taxes
IAL is consolidated for Australian corporate tax purposes. As such, Australian corporate tax is payable by IAL at the company level, rather than the Project level. The assumption is that IAL and any new legal entities created for the purpose of the Project will be consolidated for taxation purposes. The following assumptions have been applied when calculating corporate tax payable:
30% corporate tax rate (for the purpose of the financial model, this is applied to the Project cash flows only, i.e. the impact of other Ivanhoe Australia Group cash flows has been ignored). Tax payable periodically (assumed quarterly). Project assets are depreciated over their useful life, according to Australian Taxation legislation.
A number of other factors will impact the quantum and actual timing of tax payable within the Ivanhoe Australia Group:
As at 31 December 2011, the Ivanhoe Australia Group has carried forward tax losses of approximately A$325M. (Ivanhoe Australia Groups tax losses were not included in the financial analysis of the Project and as such represent potential upside to the economic evaluation of the Project.) The Ivanhoe Australia Group will generate further tax losses pre-production from the Project and other continued development and exploration activities. (Project pre-production tax losses have been factored into the calculation of tax payable in the financial model. No forecast of future tax losses relating to other project or corporate activities is made in the financial model.)
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Page 22.3
22.1.6
Goods and Services Tax
A Goods and Services Tax (GST) at a rate of 10% is levied by the Australian Federal Government on purchases by individuals and corporations on non-exempt goods and services. Businesses can claim back GST on most business inputs. It is assumed that most, if not all, of the product sales will be to overseas customers, so GST is not applicable. For any sales to customers in Australia, GST will be applicable, however is expected to have minimal impact on the Project cash flows. 22.1.7 Carbon Trading Scheme
The impact of a carbon tax has not been factored into the financial model or the Feasibility Study. IAL will incorporate the implications of this new policy into future work on the Project. 22.1.8 Royalties
Queensland State Royalties apply to the Project. Queensland State Mineral legislation imposes a royalty on the sale of minerals. The royalty rate applicable to molybdenum sales is 2.7%, attracting a 20% discount for refined molybdenum products containing more than 56% Mo. The royalty rate applicable to rhenium sales is assumed to be 2.5%. Effective from 1 January 2011, the royalty rate applicable to copper, gold and silver sales is variable between 2.5% and 5.0%, varying in 0.02% increments, and depending on average quarterly metal prices. The financial analysis of the Project has applied the royalty rates above, which are based on the calculations provided in Schedule 4 of the Mineral Resources Regulation 2003. 22.1.9 Native Title Compensation
IAL currently pays compensation on a yearly basis to local communities. For exploration tenements and mineral leases, the claimants are paid a fixed amount, which is indexed to CPI for subsequent years. These amounts have been included in the Project financial model. If IAL changes the size or shape of the mineral lease or applies for more surface rights than originally granted, there is a need to negotiate new agreements. If this were the case, the current compensation calculation may change. 22.1.10 Other Royalties / Agreements No royalties or payments other than those described have been included within the financial analysis. 22.1.11 Revenue Deductions The cost of shipping and insurance is a revenue deduction for the purpose of determining Queensland State Royalties payable.
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Page 22.4
22.1.12 Reclamation No assumptions about the salvage value on plant and equipment have been made in the financial model. 22.1.13 Project Financing No assumptions have been made about the Project financing in the financial model.
22.2
Financial Model
Table 22.2.1 provides the key economic assumptions used in the financial model. Table 22.2.1
Assumption Commodity Prices Molybdenum price US$/lb Variable (see Section 14 of this report) plus premium / discount for relevant product Variable (see Section 14 of this report) 3.50 1,600 25.00 150 1.00 0.83 N/A N/A N/A 30.0 8.0 (real)
Key Economic Assumptions Used in the Financial Model

Units Rate
Rhenium price Copper price Gold price Silver price Sulphuric acid price Exchange Rates A$ US$ exchange rate (2012 2013) A$ US$ exchange rate (2014+) Inflation Price inflation A$ cost inflation US$ cost inflation Other Corporate tax rate Discount rate
US$/kg US$/lb US$/oz US$/oz A$/t A$:US$ A$:US$ % pa % pa % pa % pa %
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Page 22.5
22.3
Model Inputs
Table 22.3.1 summarises the common assumptions utilised as part of the financial modelling. Table 22.3.1
Item Royalty Payments Queensland State Royalty QSG royaltyMo QSG royaltyRe QSG royaltyCu QSG royaltyAu QSG royaltyAg Common Cost Assumptions Shipping costs Transport from Osborne to Brisbane port/storage Shipping (sea freight) Brisbane to Singapore Shipping (sea freight) Brisbane to Asia Transport from Osborne to Townsville port/storage Shipping (sea freight) Townsville to Asia Other Refining chargeCu Treatment chargeCu Other Assumptions Concentrate grade Concentrate gradeMo Concentrate gradeCu Gold reporting to Cu concentrate Silver reporting to Cu concentrate Roasted product grades Low grade MoO3 Pure MoO3 APR Payable metal in roasted product Payable metalMo Payable metalRe Payable metal in Cu concentrate Payable metalCu Payable metalAu Payable metalAg
Notes: 1.
Common Assumptions
Value Source/comments
Units
% pa % pa % pa % pa % pa
2.70/2.161 2.50 2 5.00 2 5.00 5.002
MRR 2003, Schedule 4, Part 1, 2 MRR 2003, Schedule 4, Part 1, 2 MRR 2003, Schedule 4, Part 1, 2 MRR 2003, Schedule 4, Part 1, 2 MRR 2003, Schedule 4, Part 1, 2
US$/dmt US$/dmt US$/dmt A$/dmt (conc) US$/dmt (conc) US$/lb US$/t (conc)
160.0 93.0 6,000.0 119.9 43.6
Applicable to MoO3 and APR Applicable to MoO3 Applicable to APR Applicable to copper concentrate Applicable to copper concentrate
0.055 55.0
% Mo % Cu % Au % Ag
30.0 20.0 100.0 100.0
% Mo % Mo % Re % % % % %
35.0 67.0 69.4 100.0 100.0 N/A N/A N/A Consistent with typical contract terms Consistent with typical contract terms Consistent with typical contract terms
2.
Calculated in accordance with MRR 2003, Schedule 4, Part 1, 2 (2.70% royalty applicable to product sales containing <56%Mo; 2.16% (2.70% less 20% discount) royalty applicable to product sales containing 56.0% Mo). Calculated in accordance with MRR 2003, Schedule 4, Part 1, 2.
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Page 22.6
22.4
22.4.1
Analysis
Production summaries
The production schedule for the Project is described in Section 16. 22.4.2 Capital Cost Summary
The capital costs for the Project are as described in Section 21. 22.4.3 Operation Cost Summary
The operating costs for the Project are as described in Section 21. 22.4.4 Economic Results
Figure 22.4.1 shows the production of molybdenum metal and unit operating costs for the Merlin Project.
Productionvs.unitoperatingcost*
6.0 5.0 Production(kt) 4.0 3.0 6.00 2.0 1.0 0.0 4.00 2.00 0.00 14.00 12.00 10.00 8.00 Unitoperatingcost(US$/lbMo)
Molybdenumproduction Unitproductioncost(C1cost plusroyalties) Averageproductioncost(C1 costplusroyalties)

*operatingcostsare netofbyproduct credits &royalties
Figure 22.4.1
Metal Production (in MoO3) and Unit Operating Costs
Figure 22.4.2 shows sales revenue by product for the Project under the economic assumptions outlined earlier.
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Page 22.7
SalesRevenuebyproduct
400.0 350.0 Salesrevenue(A$M) 300.0 250.0 200.0 150.0 100.0 50.0 0.0 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 SulphuricAcid Silver Gold Copper Rhenium Molybdenum
Figure 22.4.2
Sales Revenue by Product
Figure 22.4.3 shows the annual and cumulative after-tax cash flow for the Project under the economic assumptions outlined earlier.
AfterTaxCashFlow*
1,200.0 1,000.0 Aftertaxcashflow(A$M) 800.0 600.0 400.0 200.0 0.0 2012 2014 2016 2018 2020 2022 2024 2026 200.0 400.0 600.0
*prefinancing
Aftertaxcashflow Cumulativeaftertaxcashflow 2028

Figure 22.4.3
Annual and Cumulative After-Tax Cash Flow
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Page 22.8
The Projects economics are most sensitive to:
Commodity pricing assumptions, particularly molybdenum metal prices. Metallurgical recovery / head grade assumptions, particularly molybdenum metallurgical recovery/molybdenum head grade. Foreign exchange rate assumptions. Operating costs.
The after-tax cash flow (ATCF) and NPV for the Project under the economic assumptions outlined earlier are:
ATCF: approximately A$1,091M. NPV: approximately A$397M.
The ATCF sensitivity for the Project under the economic assumptions outlined in Table 22.2.1 is shown in Figure 22.4.4.
Aftertaxcashflowsensitivitiesat+/ 10%*
AUDUSDexchangerate(10%) Molybdenumprice(10%) Molybdenumrecovery(10%) Molybdenumgrade(10%) Operatingcosts(10%) Rheniumprice(10%) Rheniumrecovery(10%) Rheniumgrade(10%) Capitalcosts(10%) 350.0 250.0 150.0 50.0 10% Figure 22.4.4 50.0 +10% 150.0 250.0 350.0
ChangeinATCF
*Basedonaftertaxcashflow ofA$1,091M
ATCF Sensitivity Analysis
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Page 22.9
The NPV sensitivity for the Project under the economic assumptions outlined in Table 22.3.1 is shown in Figure 22.4.5.
NPVsensitivitiesat+/ 10%*
AUDUSDexchangerate(10%) Molybdenumprice(10%) Molybdenumrecovery(10%) Molybdenumgrade(10%) Operatingcosts(10%) Rheniumprice(10%) Rheniumrecovery(10%) Rheniumgrade(10%) Capitalcosts(10%) 200.0 150.0 100.0 50.0 0.0 10% Figure 22.4.5 +10% 50.0 100.0 150.0 200.0
ChangeinNPV(A$M)
*BasedonNPVofA$397M
NPV Sensitivity Analysis
The IRR for the Project under the economic assumptions earlier is approximately 22.9%. The IRR has been calculated from the year of first capital spend (1 January 2012). The Project payback period is approximately six years from first capital spend (assumed to be 1 January 2012).
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MERLIN MOLYBDENUM RHENIUM PROJECT NI 43-101 REPORT ADJACENT PROPERTIES
Page 23.1
23.0
ADJACENT PROPERTIES
Merlin high grade Mo-Re zone lies within the lower mineralisation package at Mount Dore North, which includes Cu and Zn sulphide mineralisation as well as lower grade Mo. The upper Mount Dore package is weathered and is dominated by Cu oxide and sulphide and Zn mineralisation with only small Mo anomalies. This is part of a separate study. The two zones at Mount Dore are spatially separated by between 20 m to 50 m but are the focus for separate development studies for:
Mount Dore Cu oxide heap leach development. Merlin Mo-Re sulphide underground mine development.
There are no immediately adjacent properties or tenement boundaries that influence or terminate the Mount Dore and Merlin resources. The Mount Dore - Merlin deposit is located in the Kuridala formation and is overlain uncomfortably by largely barren granite. The deposits lie below the southernmost contact with this granite body. Exploration has identified anomalous Cu mineralisation to the North of Mount Dore extending along the margin of the thrusted granite for over 8 km. Lady Ella is a Cu deposit previously mined by Selwyn in 1990s. It lies in the same structural and stratigraphic position as Mount Dore but resides on the northernmost contact of the same granite body. Further to the north lies Mount Elliott which was previously mined and is a focus for IALs exploration and definition work. Other nearby deposits mined by Selwyn in the 1990s reside on the Starra line of mineralisation 1 km to the West. These bear no direct relationship to the Mount Dore - Merlin mineralisation but their close proximity was the cause of the remnant infrastructure including the existing ex-mine camp, mill footings and tailings facilities.
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MERLIN MOLYBDENUM RHENIUM PROJECT NI 43-101 REPORT - OTHER RELEVANT DATA AND INFORMATION
Page 24.1
24.0
None to report.
OTHER RELEVANT DATA AND INFORMATION
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MERLIN MOLYBDENUM RHENIUM PROJECT NI 43-101 REPORT - INTERPRETATIONS AND CONCLUSIONS
Page 25.1
25.0 25.1
25.1.1
INTERPRETATION AND CONCLUSIONS
Geology
Merlin Little Wizard Mo-Re Deposit
The Merlin Zone Mo-Re deposit lies within the northern half of the Mount Dore Merlin Project areas, Cloncurry district, Queensland, Australia. The high-grade hydrothermal Mo-Re mineralisation is a recent discovery that has been subject to a substantial exploration program by Ivanhoe Australia Limited. To November 2011, 160 holes intersect the Merlin and Little Wizard domains, up from 143 used in the last Merlin estimate Golder (2010). Molybdenum-rhenium (Mo-Re) and copper (Cu) mineralisation at Mount Dore - Merlin is hosted within a tectonised sequence of metashale, metasiltstone, schist and phyllites belonging to the Proterozoic Kuridala Formation in the Eastern Fold Belt of the Mount Isa Inlier. Fracture-controlled and breccia-matrix molybdenite mineralisation is hosted within K-feldspar-altered and albitised black metashales and siltstones, which lie above and below the foliated schist and phyllite. The footwall structure at the base of the foliated phyllite and schist appears to have the strongest Mo and is inferred to have developed good open structures due to competency contrast. This basal contact also appears to have acted as a significant barrier for the Mo-rich fluids, resulting in concentration of the metals in favourable structures just below the contact. The mineralised matrix-breccias contain sub-rounded clasts of K-feldspar and clay-altered siltstone with very minor clay, with molybdenite partially to completely replacing the breccia matrix. Exploration of the Merlin deposit has primarily been Diamond Drilling with only one Reverse Circulation drill hole. IAL has implemented a rigorous set of protocols for logging, sampling, assaying and quality control. These protocols have been effective in ensuring data quality is not compromised throughout the exploration programs. The spatial distribution of Mo-Re grades in the Merlin zone displays an abrupt boundary often marked by the occurrence of massive molybdenite over short intervals. Such sharp boundaries require hard domain boundaries to control grade estimation and smoothing of high and low grades. The high grade domain boundary was wireframed to constrain the high grade Mo mineralisation as a continuous narrow planar body with some lower splay structures. The broad orientation of the mineralised domains is parallel with the lithological units and structures. The available drilling remains relatively wide requiring significant interpretation that the modelled vein is continuous without small scale disruption. Infill drilling completed in 2011 has resulted in similar grade and structural location as expected.
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Page 25.2
25.1.2
Mount Dore Cu Deposit
Cu accumulations occur in two mineralisation packages. Above the Mo-Re mineralisation and extending south in the same Kuridala Formation rocks is the Mount Dore Cu deposit. Cu mineralisation is essentially separate from the Mo-Re mineralisation with the exception of a small number of lower grade Cu and Mo-Re zones. Within and surrounding the Merlin Mo-Re mineralisation Cu also occurs in significant accumulations. The bulk of the currently known Cu mineralisation in the Project area consists of secondary Cu oxides and carbonates (chrysocolla, cuprite, chalcotrichite, pseudomalachite, minor to trace azurite and malachite) and native Cu after chalcocite. The boundary with the transition zone is not sharp but exists as a patchy graduation of these oxide minerals into a transition zone dominated by chalcocite (replacing pyrite, chalcopyrite, and sphalerite) and trace covellite. The oxides and native Cu penetrate deeper into the transition zone within major shears and fault zones. Primary Cu mineralisation was emplaced in breccias and fractures that were best developed in the metasiltstones and black shales and are only weakly developed in the schists and phyllites. Chalcocite persists at depth into the fresh material indicating some primary development and remains amenable to heap leach extraction. Weathering of the upper Cu systems is deeper towards the south and the Cu outcrops to the south but is covered by a depletion zone in the north. Consequently the Southern zone (south of Merlin) presents a larger more encouraging target for open pit mining and heap leach extraction. Exploration activities for the Mount Dore Cu mineralisation have concentrated on the definition of the Merlin deposit and as a consequence the Mount Dore North upper and lower Cu packages. This is dominated by recent diamond drilling completed to a high technical standard. The southern area consists of a mix of diamond and RC drilling much of which was completed by previous workers or early IAL exploration. 25.1.3 Mount Dore Zn and Polymetallic Deposit
Significant Zn accumulations occur in the Mount Dore North both within the Cu zone and surrounding it. Zn displays some evidence for depletion towards the surface though this could also be related to primary zonation or from weathering and leaching. The occurrence of significant Cu in some Mo zones and Zn in many Cu zones (in Mount Dore North) indicate polymetallic zoning. For modelling the primary economic minerals Mo and Cu are used to drive principal domaining. Outside this the potential for Zn and other potentially economic elements such as Pb, Au, Ag, Co and low grade Mo-Re have been used to define an outer polymetallic domain suitable to constrain these estimates without trying to over domain the mineral resource by considering each separately. The recovery of Zn and Pb is currently uncertain and is not considered a material aspect of the current resource estimate.
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Page 25.3
25.1.4
Resource Estimate
A block model was constructed to estimate grade and for mine planning purposes. The principal block size used for the ordinary kriged estimates was varied from 10 x 25 x 10 m block size for the upper Mount Dore Cu zones deemed suitable for open pit assessment and a smaller 5 x 12.5 x 5 m block size for lower and Merlin underground mining assessment. Classification of resources was based on the target drill spacing of 50 m for Indicated Mineral Resource, which is now largely complete for the Merlin deposit. The Merlin and Little Wizard total Identified Mineral Resource estimate, effective 5 December 2011 at a 0.3% Mo cut-off is: 6.7 Mt at 1.4% Mo and 23 ppm Re Indicated Mineral Resource 0.2 Mt at 0.8% Mo and 13 ppm Re Inferred Mineral Resource Significant additional Zn and Cu mineralisation exists outside of the quoted Mo-Re Merlin resource. Potential underground targets for Cu are feasible as extensions to the Merlin resource and are yet to be evaluated for economic viability. At this stage underground target Cu resources for the Mount Dore North lower package are not presented though a larger low grade resource is defined. Viable recovery of Zn is not yet demonstrated and stand alone Zn resources are not included in this resource statement.
25.2
Mining Methods
The Merlin Mo/Re mineralisation occurs as relatively narrow tabular lenses within sheared siltstone and black shale of the Kuridala Formation. The siltstone host formation is overlain by phyllite and underlain by quartzite and calc silicate rocks of the Stavely Formation. The Merlin resource is located at relatively shallow depth of 75 to 550 m below surface. The mineralisation comprises stacks of multiple narrow lenses that dips 30 to 60 degrees east with north-south strike length of 300 m to 900 m. The deposit is expected to be extracted by underground mining. An exploration decline, splitting into north and south decline, has been developed to a depth of 250m below surface in the footwall Stavely Formation as part of Stage 1 decline development programme. Two ventilation shafts, 3.0m and 5.0m diameter have been constructed by raisebore reaming in the Stavely Formation. The total Mineral Reserves estimate, effective 5 December 2011, is 7.11 Mt @ 1.09%Mo,18.12 ppm Re at cut-off-value of A$150/t for DAF and A$200/t for SLOS stopes. Mine plan recovers 76% of indicated mineral resource tonnes and 86% of indicated mineral resource metal. The overall mining dilution is estimated 31%. The projected mine life is 15 years and can sustain a steady state production rate of 0.5 Mt per year to the process plant after a pre-production period of approximately 2 years.
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Page 25.4
The orebody will be developed using two separate decline systems connected to the existing exploration decline and access ramp for transporting labour, equipment and supplies underground. The separate decline and ventilation system provides increased stope availability, robust ventilation network and optimal labour and equipment productivity. The deposit will be developed as two separate mines (South and North Zones), with the South Zone leading because it contains the bulk of the metal resource. All underground infrastructures will be located in the footwall with the decline located in the competent Staley Formation with a minimum standoff distance of 30 m from the footwall of the SQT sequence which is indicated as fractured and weak rock unit. To minimise development and to allow flexibility between mining methods, sub levels are designed at 20 m spacing, floor to floor. Due to the generally narrow ore widths, indicated weak ground conditions, often flat dips and very high ore grade, underhand drift and fill (UDAF) has been selected as the method of extracting the whole of the Main lens (lens 5) including the Little Wizard (lens 4) and the upper weathered parts of footwall lenses (lens 6 and 7). Underhand longitudinal SLOS is assumed for the extraction of unweathered parts of the footwall lenses 6 and 7, because of their steeper dip and better indicated ground conditions. The stope extraction sequence will progress downwards, with the South Zone leading the North Zone. In the UDAF areas, undercut ore drives have a nominal width of 5m. Where horizontal ore width is greater than 6m, multiple drifts will be mined on each level. Nominal drive height is 5m and there are three undercut drives below each sill level. During the first three years of mine life, the production will be sourced from DAF stopes only. In the later years the production target is easily achieved using a combination of DAF and LHOS. Over the mine life approximately 60% production will be from DAF and 40% from LHOS stopes. Broken ore will be mucked to stockpiles located in the level access drives. Due to shallow to moderate depth and low production rate decline, truck haulage will be used to haul ore and waste to the surface. All mining methods will require progressive filling of stope voids with cemented paste backfill. Paste backfill will be used to maximise ore extraction, to maintain stability of walls, control dilution and safety of DAF and LHOS stopes. A paste backfill plant will be constructed at Merlin to deliver paste fill underground using tailings reclaimed from the TSF#2 tails dam at Osborne mine. The paste plant will be located west of the ridge line near the concrete batch and south of the boxcut. Contract mining operation will be adopted for mine development and production with a possible future transition to Owner operation. Merlin is expected to have a complex mining environment and contractor mining will remove learning period risks by leveraging off the contractors experience with the mining methods. Contract mining also offsets capital expenditure albeit at an operating cost premium. The total mining workforce will peak at 190 (including contractors and owners labour) before settling to around 150 personnel. This was based on FIFO rosters to provide 24 hours per day, 7 days per week coverage.
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Page 25.5
The initial mining capital cost to first production is estimated at $87.8M (excluding capital already spent for Stage 1 Decline development) with an additional $77.3M capital development and sustaining capital required for the mine development over the mine life. Merlin operating costs are higher than benchmark costs for similar scale operations but this is expected due to higher costs for supervision and control (duplication of supervision due to contractor mining), paste fill (due to higher cement and dry tailings costs), and higher ground support costs (due to poor ground conditions). However, higher mining costs can be readily justified by the high average in-situ ore value of around $1,000/t of ore. For the Merlin ore there is a major incentive to achieve a high extraction of the high grade ore and to minimise the amount of ore left in pillars.
25.3
Metallurgical Testing
The grade-recoveries summarised in Table 25.3.1 and overall recoveries in Table 25.3.2 were used as the basis for the Project economics. Table 25.3.1
Metal Mo Cu
Concentrator Grade-Recovery
Recovery from new process plant 88% 80% Grade 30% 11%
Table 25.3.2
Overall Recoveries for Concentrate Treatment Plant

Metal Mo Re Recovery 96.5% 85%
The locked cycle testwork has so far not demonstrated that the molybdenum grades and recoveries predicted from the batch testwork can be achieved, due to unanticipated molybdenum losses to the copper concentrate. This has some implications for the selected and costed flowsheet, as described in Section 17, Recovery Methods, as follows:
A finer primary grind size may be required. The ball mill originally selected has been resized to accommodate a change from a primary grind size P80 of 180 m to 110 m and a cost allowance included in the capital cost estimate. At present the relative benefits of a finer primary grind versus a finer regrind have not been quantified and it may be possible to revert to a coarser primary grind but regrind finer. A finer regrind size may be required. At present the regrind size selected for the plant flowsheet remains unchanged at a P80 of 44 m.
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Page 25.6
Extended flotation times may be required in the copper depression stages. This may affect the size of the flotation columns selected and has not been quantified. There are opportunities to optimise reagent usage affecting the design of the reagent systems. This would be relatively minor and would be accommodated in the next phase of the Project.
25.4
Process Plant
The process plant will be located north of the existing Osborne copper concentrator plant and utilise part of the existing ROM pad. The process plant will consist of the molybdenum concentrator and concentrate treatment plant. The molybdenum concentrator will treat 500,000 dry tpa of ore to produce a molybdenum-rhenium concentrate of approximately 30% Mo and a copper concentrate by-product and will include the following processes:
Primary, secondary and tertiary crushing and screening. Fine ore reclaim. Grinding, classification and flash flotation. Rougher and scavenger flotation. Two stages of molybdenum cleaner flotation. Regrind of flash flotation and molybdenum cleaner 1 concentrates. Three stages of copper depression using NaHS. Molybdenum filtration. Reagents and Utilities. Molybdenum concentrate drying and bagging. Tailings thickening and disposal.
The copper concentrate produced from the molybdenum concentrator will be pumped to the existing Osborne copper concentrator for thickening, filtration, concentrate storage and load-out.
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Page 25.7
The concentrate treatment plant will produce on average 4,700 tpa of molybdenum and 7 tpa rhenium. This facility will produce molybdenum as pure chemical grade molybdenum oxide, rhenium as ammonium perrhenate as saleable products. 10,100 tpa concentrated sulphuric acid will also be produced as a by-product and will be sold and will include the following processes:
Concentrate roasting. Molybdenum roaster product handling. Molybdenum purification (water leach, ammonia leach, ion exchange, crystallisation). Roaster off gas handling. Rhenium recovery (wet gas cleaning, solvent extraction, ion exchange, crystallisation). Sulphuric Acid Plant. Effluent treatment. Reagents and Utilities. Final product handling.
25.5
Infrastructure
The existing mine infrastructure that was constructed as part of the Merlin stage 1 development program will be utilised where possible to support the underground mine. Existing offices, change room facilities, maintenance workshop, refuelling bay and box-cut services pad will be extended. A new hydrocarbon facility, light vehicle workshop and underground facilities (crib room, offices, electrical distribution, dewatering system, ventilation, refuelling and service bay, magazine) will be provided. Shotcrete will be an integral part of the surface support for mine development. The concrete plant constructed during stage 1 development programme will be used to supply concrete and shotcrete. A dry paste backfill plant will be constructed at Merlin to deliver paste fill underground using tailings reclaimed from the existing tailings storage facility at Osborne. The new process plant will largely use existing infrastructure at Osborne. All utilities for the new process plant will originate from existing services at Osborne. New reagent storage and preparation facilities will be provided north of the new process plant and is independent of existing reagent facilities. Existing administration, offices and maintenance buildings will be used for the new process plant. The maximum demand for the mine will be 6.2 MVA and will be supplied by a new gas fired power station located near the mine. The maximum demand for the new process plant will be 8.4 MVA and the power will be supplied from the existing power plant at Osborne.
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Page 25.8
Water supply for the mine will be provided by the Burke River bore field adjacent to the Merlin site. The mine demand for service water and paste backfill is approximately 65 m3/h and 11 m3/h respectively. The average raw water requirement for the new process plant will be 80 m3/h and the water will be provided from existing bore fields. The existing Osborne mine site is accessed by chartered aircraft via an all-weather aerodrome or by road. The aerodrome is used for FIFO commuter services and for medical evacuation. Supplies are transported by road haulage from Mount Isa. Services are sourced from Mount Isa or Townsville. The new process plant will be accessed using existing in plant roads at the Osborne plant. A new haul road will be constructed between the mine and the process plant. Accommodation is provided by existing permanent villages at Mount Dore and Osborne facilities. These camps will be ungraded as part of the Project. An existing, unused construction camp located adjacent to the Osborne village will be ungraded and used during construction activities. A tailings storage facility will be constructed to hold 4.66 Mm3 of tailings and is based on a high density (HD) tailings containment storage facility as a result of the success at the existing Osborne facilities. The facility has been designed in stages to facilitate tailings embankment construction and to reduce the initial construction costs.
25.6
Risks
The Project risks were identified through a workshop and reviewed the Project as a whole, i.e. from the points of view of health and safety, environment, geology, mining, metallurgy, processing, project management and financial risks. The high risks include:
Accurate modelling of the mineral grade during the drilling program is important as it affects the Project economics. To manage the risk, infill drilling will be conducted from underground independent audits. The Project water demand was identified as a high risk. Raw water will be supplied to the Project from a combination of the Burke River bore field and Kulthor underground mine dewatering. Water conservation and management strategies for both the existing Osborne facility and the new process plant will need to be put into place to ensure the current groundwater extraction licence can supply both the existing and new operations. Insufficient testwork for the roaster was identified as a high risk. IAL is managing this risk predominantly through the engagement of a specialist technical consultant, OMT, with significant experience in molybdenum-rhenium process plants. As molybdenum and rhenium are traded in US dollars, adverse movements in foreign exchange rates have the potential to affect the Project economics. Robust forecasting and sensitivity analyses have been adopted. Failure to secure sufficient Project funding to meet critical milestones has the potential to delay or halt the Project. IAL is currently investigating various project funding options, such as considering joint venture structures.
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Page 25.9
25.7
Capital and Operating Costs
The initial Project cost to first production is estimated at A$345M. An additional A$52M of capital in year 1 is scheduled for an optimised molybdenum trioxide purification plant. The life of mine capital cost is estimated at A$492.4M as shown in Table 25.7.1. Table 25.7.1 Capital Cost Estimate Summary
Capital Upgrade to Concentrate Treatment Plant ($AM) 39.7 3.3 8.6 51.6
Main Area
Initial Capital (A$M) 90.9 72.4 83.6 32.7 32.2 33.3 345.0
Life of Mine Capital ($AM) 168.2 72.4 123.3 48.0 35.6 44.9 492.4
The average operating costs over the life of the Project are summarised below in Table 25.7.2. Table 25.7.2 Average Operating Costs
A$/t Ore 147.22 33.43 48.72 10.60 19.37 259.34
Cost Centre Mining Processing (Concentrator + Crushing) Processing (Concentrate Treatment) Haulage General & Administration Total
25.8
Financial Analysis
Annual cash flow projections for the Project were estimated by IAL over the Projects production life based on the production schedule, sales revenue, production costs, capital expenditures and corporate costs (taxation, royalties, etc.). The financial indicators examined included after-tax cash flow (ATCF), net present value (NPV) at 8% discount rate, internal rate of return (IRR) and payback period and are summarised in Table 25.8.1. The Project payback period is approximately six years from first capital spend (assumed to be 1 January 2012). Table 25.8.1 Financial Analysis Results
Value $1,091M $397M 22.9
Indicator ATCF NPV IRR
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MERLIN MOLYBDENUM RHENIUM PROJECT NI 43-101 REPORT - RECOMMENDATIONS
Page 26.1
26.0 26.1 Geological
RECOMMENDATIONS
Resource definition work is a process of building upon existing knowledge and at the same time rebuilding from a new starting position. This is a progressive process and there usually remains some area where more work is required. Excluding the next logical step of infilling the current resource drilling to bring the resource to a higher level of confidence, for exploration and resource definition the following areas are identified as requiring further work:
Continue the drill hole relogging process such that the lithological model can be more tightly defined. Statistical analysis of the geochemistry.
Additional exploration program drilling should target the Merlin resource which is the focus of the current development plan. At this stage no Measured Mineral Resources are defined and the current 50 m spaced drilling is at the lower end of the Indicated Mineral Resource confidence range. Additional drilling is required to define:
The close range variability and continuity of the Merlin veins both for grade estimation and for mine planning purposes. This should be initiated with a small program of targeted surface drill holes followed by both exploration development and sampling and close spaced underground drilling in a few key areas. The general drill spacing should be closed down to 25 m. Given that underground development has been commenced, infill drilling would be most effective from underground both in terms of cost and possibly intersection angle.
The potential to drill from underground development will significantly reduce the required drilling meterage and exploration costs at Merlin. Hence, Golder has not attempted to estimate the exploration costs but refer to the current planned budget in Section 22.3.
26.2
Geotechnical
There are a number of recommendations that will assist in improving the understanding of the geotechnical environment and reduce uncertainties in some of the current inputs:
Geotechnical logging should be carried out on selected drill holes from the planned program of resource definition and grade estimation diamond drilling, to assist in increasing geotechnical understanding and, ultimately, lead to the development of a geotechnical model. Structural interpretations of key faults and shears should be attempted, to identify areas of the mine that may create geotechnical hazard zones.
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Page 26.2
Material property testing of all domains should be ongoing, with a particular focus on collecting information from the weathered zone and mineralised resource. This should be undertaken as part of the resource infill drilling program. Complete the ground water modelling and determine if mining will be affected by water ingress. This should include potential flow rates and water chemistry to identify potentially adverse affects to ground support. Highlight zones where the black shale is within the resource, or within 3 m of the hangingwall or footwall contacts. This will allow procedures to be effectively managed to minimise potential dilution from the shale units. Undertake a stress measurement program to establish the actual stress conditions at the mine. Continue geotechnical mapping of underground exposures to continually review the structural regime of the mine and confirm that current ground support standards are adequate for the exposed conditions.
There are a number of ongoing monitoring requirements recommended to ensure risks associated with geotechnical hazards are reduced to as low levels as reasonably practicable and excavation stability is maintained:
Monitoring of box cut excavation to ensure stability, especially during changing seasons. The performance of ground support in ore drives and stopes. This should cover corrosion rates, visual performance, rehabilitation requirements and damage mapping. Accurate surveying of underground excavations. Stopes are of particular importance to completing an understanding of the rock mass behaviour. Monitoring of ground water levels and chemistry to ensure water is below active mining fronts and, if in the event water is intersected in development, that no detrimental effects will result to the ground support installed. Installation of geotechnical instrumentation in some areas of the mine to evaluate actual rock mass behaviour, to improve ground support designs and to enhance mine planning and sequencing.
Continued development and updating of key documentation and operational procedures will be required during the implementation stage of the Project.
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Page 26.3
26.3
Mining
Further key areas of work to be completed during implementation and project execution stage include:
Geotechnical work as described above. Completion of detailed paste fill plant and system engineering and further test work for paste fill optimisation. Revision of metallurgical recovery parameters and associated cost and financial assumptions affecting the mining value model. Revision of optimisation studies using latest economic mining and metallurgical information to determine the appropriate cut-offs to apply to the mine design and schedules. Further optimisation of mine deisgn, production rate, cut-off-value, mining methods, production schedule based on the underground infill and stope definition drilling results. Detailed ventilations system design, heat modelling and development of a Ventilation Control Plan for the operation (a requirement under the new National Code of Practice).
26.4
Metallurgical Testing
The following tests are recommended to improve molybdenum rejection from the copper concentrate:
Mineralogical evaluation of the copper depression circuit tailings streams to identify whether locking is indeed the major issue. Further investigation of the effects of grind size, in particular regrind size, on molybdenum recovery. Further optimisation of flotation times in the copper depression stages. Further optimisation of ORP / NaHS additions in the copper depression circuit.
As only limited amounts of Composite 1 are available for testwork, Composites 2 and 3 may need to be used for these tests. Once these parameters have been investigated and optimised then a confirmatory locked cycle test using Composite 1 should be run. If this is not successful then further quantities of ore will need to be sourced for additional flotation testwork.
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Page 26.4
The following tests are recommended to support the process design of the concentrate treatment plant:
Roasting, water leaching and ammonia leaching of molybdenum concentrates. Three samples were initially tested at Litz and Associates in Golden Colorado USA. Further testwork is required to verify that the molybdenum oxide produced in the roaster can produce pure chemical molybdenum oxide. Ion exchange (IX) and solvent extraction (SX) testwork. The purpose of these tests is to verify that the reagents specified by the OMT will perform as expected. The following processes will be tested: ion exchange for the recovery of molybdenum from the water leach filtrate; solvent extraction for the recovery of the rhenium from the rhenium containing weak acid from the wet gas cleaning plant using a synthetic sample; ion exchange for the purification of the rhenium containing liquid from the solvent extraction step using synthetic sample.
26.5
Process Plant
The following is recommended for further study for the process plant:
Investigate installing the crushing plant at the new process plant and determine the optimal comminution circuit for the concentrator. Review the nitrogen requirements for the concentrator to install an optimum size nitrogen plant and revisit existing location. Investigate the implementation of self aspirating flotation cells. Complete a value engineering assessment to improve the process design and layout of the concentrate treatment plant. Incorporate any process changes as a result of on-going testwork.
26.6
Tailings Storage Facility
It is recommended that consideration be given to the following actions that arise from the design report:
Construct the TSF3 works in accordance with the designs described in this report; Carry out a geotechnical site investigation if foundation conditions or construction materials are found, during construction, to vary from those documented in the design report; Ensure that the high density (HD) tailings are thickened to a percent solids of 68% and that provision is made to discharge into two spigots during periods of lower percent solids;
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Page 26.5
Control the discharge of the HD tailings to ensure that the deposited tailings surface slopes towards the spillways; Carry out routine inspections of the downstream embankment faces to check for any signs of seepage. Where seepage is observed follow the procedures set out in the Operations Manual.
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MERLIN MOLYBDENUM RHENIUM PROJECT NI 43-101 REPORT - REFERENCES
Page 27.1
27.0
REFERENCES
ANCOLD (1999), Guidelines on tailings dam construction and operation. Table 6.5: Acceptable Factors of Safety. ANCOLD (2003), Guidelines on dam safety management.AMC 2001, Selwyn Mines Limited 276 Area Mining Study. Draft report number 301021 by AMC consultants dated August 2001 AMC 2011a, NI43-101 Technical Report, Mount Dore Copper Heap Leach Project Preliminary Economic Assessment, North West Queensland, Australia, AMC Consultants, Golder Associates & Miller Mineralogical Services report prepared by AMC Consultant Pty Ltd report number 111075, effective date 30/9/2011 and available on wwww.sedar.com AMC 2011b, NI43-101 Technical Report, Merlin Project Pre-feasibility Study, NW Queensland, Australia, AMC Consultants, Golder Associates & Jacobs report prepared by AMC Consultant Pty Ltd report number 111041, effective date 10/10/2011 and available on wwww.sedar.com AMC Consultants Pty Ltd, 2010. Merlin PFS Geotechnical Assessment, Ivanhoe Australia Ltd, Project Number 110031, September 2010. AMC Consultants Pty Ltd, 2010. Merlin FS Geotechnical Assessment, Ivanhoe Australia Ltd, Project Number 110031, December 2011. AMC Consultants Pty Ltd, 2010. Merlin PFS Backfill Assessment, Ivanhoe Australia Ltd, Project Number 110031, September 2010. AMC Consultants Pty Ltd, 2010. Merlin FS Backfill Assessment, Ivanhoe Australia Ltd, Project Number 110031, September 2011. AMC Consultants Pty Ltd, 2010. Merlin Underground Mine Pre-feasibility Mining Study. Ivanhoe Australia Ltd. Project Number 110031, November 2010. AMC Consultants Pty Ltd, 2010. Merlin Underground Mine Feasibility Mining Study. Ivanhoe Australia Ltd. Project Number 110031, March 2012. Australian Standard Part 4: Earthquake actions in Australia 1991 Earthquake Hazard Map of Australia; Commonwealth of Australia; 1991. BRL 2009, Flotation Testing of Merlin Molybdenite Ores for Ivanhoe Resources Ltd, Report number T0457-1 by J.R. Glen of Burnie Research Laboratory dated August 2009Golder 2010, NI43-101 Technical Report, Mount Dore - Merlin Deposit, NWQld, Australia. Technical Report Compiled Under Ni43-101 by John Horton of Golder Associates Pty Ltd, dated 19th October 2010. Hillier, K., 2009. Preliminary Assessment of Bulk Density Measurements. IAL Internal File Note Dated Dec. 2009
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Page 27.2
IAL, 2008. Australian Stock Exchange Market Release 9 September 2008 by Ivanhoe Australia Limited. Available at www.asx.com.au. IAL, 2009a. Australian Stock Exchange Market Release 9 November 2009 by Ivanhoe Australia Limited. Available at www.asx.com.au. IAL, 2009b. Australian Stock Exchange Market Release 10 December 2009 by Ivanhoe Australia Limited. Available at www.asx.com.au. Ivanhoe (2011) Environmental Management Plan, Ivanhoe Cloncurry Project Merlin and Starra Development. JORC Code 2004. Australasian Code for Reporting of Identified Mineral Resources and Ore Reserves. Report of the Joint Committee of the Australasian Institute of Mining and Metallurgy, Australian Institute of Geoscientists and Minerals Council of Australia (JORC), issued December 2004. Knight Pisold, Osborne Project - Tailings Storage Facility Design Report. 429/4prepared for Placer Pacific Limited dated June1994. Report ref.
Land Reclamation Services, Infiltration Tests Carried Out on the Proposed Tailings Dam Area, Osborne Project. Report dated October 1993Lazo, F. and Pal, T., 2009. The Merlin Mo-Re Zone, a New Discovery in the Cloncurry District, Australia. Ivanhoe Australia Limited, AIG conference Northern Queensland Exploration and Mining 2009 held in June 2009. Lodewyk 2009, Location of Exploration Drill Holes for Ivanhoe Cloncurry Mines at Mount Dore, Starra and Mount Elliot, M.H. Lodewyk Pty Ltd report by D Atkinson, dated 16 July 2009 Lodewyk, 2010. Report to the Mining Registrar, Mount Isa, S.274. Mineral Resources Act, Maintenance of Posts, Mining Leases 2566, 2688 to 2694, 2733, 2745 and 2746. M H Lodewyk Pty Ltd, registered surveyor report. Lycopodium 2012a, Lycopodium Process Design Criteria for Concentrator (3092-DC-001) and Concentrate Treatment (3092-DC-002) Lycopodium 2012b, Lycopodium Mass Balance for Concentrator (3092-MB-001) and Concentrate Treatment (3092-MB-002) Lycopodium 2012c, Merlin Molybdenum Rhenium Project Feasibility Report, 3092-STY-001, April 2012 McPhail, G. (1995), Prediction of the beaching characteristics of hydraulically placed tailings, PhD Dissertation submitted to the University of the Witwatersrand, Johannesburg, South Africa. McPhail, G. Noble, A., Papageorgiou, G. and Wilkinson, D. (2004), Development and implementation of thickened tailings discharge at Osborne Mine, Queensland, Australia, Proceedings of the 7th International Seminar on Paste and Thickened Tailings (Paste04), Cape Town, 2004.
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Page 27.3
McPhail, G. (2008), Prediction of the Beach Profile of High Density Thickened Tailings from Rheological and Small Scale Trial Deposition Data, Proceedings 11th International Seminar on Paste and Thickened Tailings (Paste08), A.B. Fourie, R.J. Jewell, P. Slatter and A. Paterson (eds), 5 9 May 2008, Kasane, Botswana, Australian Centre for Geomechanics, Perth, pp. 179188 Metago, Design Report for TSF3 Stage 1. Draft report 349-001-1/12 by SLR Consulting Australia Pty Ltd trading as Metago Environmental Engineers (Australia) Pty Ltd, dated March 2012. Metago, Borrow Search and Geotechnical Investigation for Construction Materials. Report by Metago Environmental Engineers (Australia) Pty Ltd dated September 2001. Metago, Detailed Design of a New Tailings Dam Facility at Osborne Mine. Report reference 124/011 No. 6 by Metago Environmental Engineers (Australia) Pty Ltd, dated August 2001. Metago, Motivation to Proceed with High Density Discharge on TSF2 at Osborne Mine. Report No 1/05 by Metago Environmental Engineers (Australia) Pty Ltd, dated October 2005. Metago, Proposed Tailings Storage Facilities for the Ivanhoe Osborne Project. Report No 2/11 by Metago Environmental Engineers (Australia) Pty Ltd, dated October 2011. Metago, Long Term Deposition Planning for TSF2. Report No.1/07 by Metago Environmental Engineers (Australia) Pty Ltd dated April 2007. Metcon 2011a, Ivanhoe Merlin Feasibility Phase I (Flotation Tests on Composite No 1), Q757-01028 by Metcon Research, Tucson, AZ, USA, February 2011 Metcon 2011b, Ivanhoe Merlin Feasibility Phase II (Flotation Tests on Composite Nos 1, 2 and 3), Q757-01-028 by Metcon Research, Tucson, AZ, USA, February 2011 Metcon 2011c, Ivanhoe Merlin Feasibility Phase III (Flotation Tests on Variable Composites), Q757-01-028 by Metcon Research, Tucson, AZ, USA, February 2011 Metcon 2012, Ivanhoe Merlin Feasibility Phase IV, Q757-01-028 by Metcon Research, Tucson, AZ, USA, March 2012 Moye, R. J., 2011, Summary of observations on structure, stratigraphy and mineralisation in the Eastern Hematites - Ballarae - south Mount Dore area, Cloncurry District, QLD, IAL report by consulting geologist, dated 13 Dec 2011. OMC 2011, Merlin Re-Mo Project, Comminution Circuit Study, Lycopodium Minerals QLD Pty Ltd by Orway Mineral Consultants (OMC), Perth, Australia, October 2011 OMC 2012, Email regarding Ball Mill Evaluation - 110m Grind by Orway Minerals Consulants (OMC), Perth Australia, 22 March 2012 OMT 2012, Merlin Deposit Concentrate Treatment Plant Report prepared for Ivanhoe Australia by Orchard Material Technology, dated 29 March 2012
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Page 27.4
Pocock 2010, Sample Characterisation & PSA, Flocculant Screening, Gravity Sedimentation and Rheology Studies conducted for KD Engineering & Metcon Research, Aker Solutions Project #11402, by Pocock Industrial, UT, USA, January 2010. QG, 2008. Mount Dore Resource Estimate June 2008, Qualitative Group (QG) report for Ivanhoe Mines Ltd, dated 11 Aug 2010. QG, 2009. Mineral Resource Estimate Mount Dore (including Merlin Zone), Cloncurry District, Queensland, Australia, Qualitative Group (QG) report for Ivanhoe Mines Ltd, dated 7 Oct 2009. QG, 2010. Mineral Resource Estimate Mount Dore (including Merlin Zone), Cloncurry District, Queensland, Australia, Qualitative Group (QG) report for Ivanhoe Mines Ltd, dated 25 Feb 2010. Pratt A, 2005, 'Application of conveyors for underground haulage' Proceedings 9th AusIMM Underground Operator's Conference 2005. Rob Lait & Associates Pty,Ltd, Hydrological Assessment of the Osborne and Kulthor Operations Prior to Closure. Report project reference: 137 Barrick Osborne 2010 Close Down, prepared for Barrick Osborne Pty Ltd, dated 1 September 2010. Robin Fell, Patrick MacGregor, David Stapledon & Graeme Bell, Geotechnical Engineering of Dams. AA. Balkema Publishers 2005, Taylor & Francis Group plc, London UK Sketchley, D., 2008. QAQC Review of SGS Geochem, Townsville, Queensland, Australia for Ivanhoe Cloncurry Mines Pty. Ltd. Cloncurry, Queensland, Australia, Ivanhoe Mines report, dated 7 Feb 2008. Sketchley, D., 2009. Technical Report on Assay QAQC work at Merlin Zone, Cloncurry District, Queensland, Australia for Ivanhoe Australia Limited, dated 18 May 2009. Sketchley, D., 2010. Cloncurry QAQC Site Review, Internal Ivanhoe Australia Limited memorandum, dated 13 February 2010. Sketchley D. 2011 QAQC Review of Cloncurry Projects for Ivanhoe Cloncurry Mines Pty. Ltd. Ivanhoe Australia report, dated 14 March 2011. SRK, 2010. Independent technical report on the Merlin project, Qld, SRK consulting (SRK) report for Ivanhoe Australia Ltd, reference IAL001 NI43-303 report on Merlin Rev4, dated 5 March 2010. Available at www.ivanhoeaustralia.com/i/pdf/NI43-101_Merlin_Scoping_Study_Final.pdf URS (2011) Ivanhoe Australian, Osborne Project Environmental Management Plan. URS Australia Pty Ltd, 2011. Geochemical Characterisation of Molybdenum-Rhenium Process Tailings - Ivanhoe Osborne Mine, Final Report Rev 1, 15 June 2011.
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Certificate of Qualified Person

I, Neil Lincoln, of Brisbane, Australia, do hereby certify that as the author of NI 43-101 Technical Report, Merlin Molybdenum Rhenium Project Feasibility Study, Northwest Queensland, Australia dated 16 April 2012 that: 1. I am employed as a Study Manager with Lycopodium Minerals QLD Pty Ltd, 163 Leichhardt Street, Spring Hill, Queensland, 4000, Australia. 2. I graduated from the University of the Witwatersrand, South Africa, in 1994 with a Bachelor of Science in Metallurgy and Materials Engineering degree. 3. I am a professional engineer in good standing with the Professional Engineers Ontario (PEO) in Canada (no. 100039153). 4. I have practised my profession continuously as a metallurgist for 17 years and with Lycopodium Minerals since 2011. 5. I am responsible for compiling the overall technical report and responsible for sections 1, 2, 3, 17, 18.2, 19, 20, 21, 22, 24, 25.3 (part), 25.4, 25.5 (part), 25.6, 25.7, 25.8, 26.5 and 27. 6. I have read the definition of qualified person set out in National Instrument 43-101 (NI 43-101) and certify that, by reason of my education, affiliation with a professional association (as defined in NI 43-101) and past relevant work experience, I fulfil the requirements to be a qualified person for the purpose of NI 43-101. 7. I visited the site on 24 August 2011 and 1 March 2012, and inspected facilities at Osborne and the Merlin exploration decline. 8. I am independent of Ivanhoe Australia Ltd. in accordance with the application of Section 1.5 of National Instrument 43-101. 9. I have not had any prior involvement with the Property. 10. I have read National Instrument 43-101 and Form 43-101F1 and the Technical Report has been prepared in compliance with same. 11. At the effective date of the Technical Report, to the best of my knowledge, information and belief, the Technical Report contains all scientific and technical information that is required to be disclosed to make the Technical Report not misleading. Dated at Brisbane, Australia, this 23rd day of May, 2012.
Neil Lincoln, P.Eng Study Manager
Lycopodium Minerals QLD Pty Ltd
ABN: 37 124 757 384 163 Leichhardt Street, Spring Hill, Queensland 4000
Q:\JOBS\3092 - Merlin Mo Re FS Project\24.0 FINAL STUDY REPORTS\24.02 NI 43-101 REPORT\Final\Superseded\Certificate_Lincoln.docx
Neil Lincoln Study Manager
Lycopodium Minerals QLD Pty Ltd 163 Leichhardt Street Spring Hill Queensland, 4000 Australia
Consent of Qualified Person
TO: Ontario Securities Commission l, Neil Lincoln, consent to the public filing of the technical report titled "Nl 43-101 Technical Report, Merlin Molybdenum Rhenium Project, Feasibility Study, Northwest Queensland, Australia" and dated effective 16 April, 2012 (the "Technical Report") by lvanhoe Australia Limited ("lAL). I also consent to any extracts from or a summary of the Technical Report in the press release of IAL dated 16 April 2012, entitled "Merlin Feasibility Study Completed" (the "News Release"). I certify that I have read the News Release filed by IAL and that it fairly and accurately represents the information in the sections of the technical report for which I am responsible. Dated at Brisbane, Australia, this 23rd day of May, 2012.
Neil Lincoln, P.Eng Study Manager
Lycopodium Minerals QLD Pty Ltd
ABN: 37 124 757 384 163 Leichhardt Street, Spring Hill, Queensland 4000
Q:\JOBS\3092 - Merlin Mo Re FS Project\24.0 FINAL STUDY REPORTS\24.02 NI 43-101 REPORT\Final\Superseded\Consent_Lincoln.docx
AMC Consultants Pty Ltd

ABN 58 008 129 164
Level 19, 114 William Street MELBOURNE VIC 3000 T F E +61 3 8601 3300 +61 3 8601 3399 amcmelb@amcconsultants.com.au
CERTIFICATE OF AUTHOR Mehmet Yumlu
I, Mehmet Yumlu, BSc (Eng) (Min), MSc (Eng) (Min), MAusIMM (CP), RPEQ do hereby certify that: 1. 2. 3. I am Principal Mining Engineer of AMC Consultants Pty Ltd., Level 19, 114 William Street, Melbourne, Victoria, 3000, Australia. I am one of the authors of NI 43-101 Technical Report, Merlin Molybdenum Rhenium Project, Feasibility Study, Northwest Queensland, Australia (The Technical Report), dated, 16 April, 2012. I graduated with a Bachelor of Science (Engineering) in Mining Engineering from the Middle East Technical University, Ankara, Turkey, in 1991 and a Master of Science (Rock Mechanics) from the University of Witwatersrand, Johannesburg, South Africa, in 1995. I am a Member and Chartered Professional in good standing of The Australasian Institute of Mining and Metallurgy (AusIMM # 224489) and Registered Professional Engineer Queensland (RPEQ # 10607). I have practised my profession continuously since 1991 and have worked at gold, copper, zinc, lead and coal mines in Turkey and South Africa in various capacities covering production, mine planning and design, rock mechanics and management of mine technical services. I have also consulted to mining companies for copper, zinc, lead, gold, platinum. Uranium, and molybdenum, nickel projects in Australia, Turkey, India, Indonesia, Spain, Portugal, and South Africa. I have read the definition of Qualified Person set out in National Instrument 43-101 (NI 43-101) and certify that, by reason of my education, affiliation with a professional association (as defined in NI 43-101) and past relevant work experience, I fulfil the requirements to be a Qualified Person for the purpose of NI 43-101. I am responsible for the preparation of Sections 15, 16, 18.1, 21 (part), 25.2, 25.5 (part), 25.6 (part), 25.7 (part), 26.2, and 26.3 of The Technical Report. I visited the site on 9 and 10 June 2010. I have not had any prior involvement with the property that is the subject of The Technical Report. I am independent of the issuer applying all of the tests in section 1.5 of National Instrument 43-101. I have read National Instrument 43-101 and Form 43-101F1, and the Technical Report has been prepared in compliance with that instrument and form. As of the effective date of the Technical Report of this certificate, to the best of my information, knowledge and belief, the Technical Report contains all scientific and technical information that is required to be disclosed to make the Technical Report not misleading.
4. 5.
6.
7. 8. 9. 10. 11. 12.
Dated at Melbourne, Australia, this 23rd Day of May, 2012.
Mehmet Yumlu Principal Mining Engineer, MSc (Eng) (Min), MSc (Eng) (Min), MAusIMM (CP), RPEQ
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AMC Consultants Pty Ltd

ABN 58 008 129 164
Level 19, 114 William Street MELBOURNE VIC 3000 T F E +61 3 8601 3300 +61 3 8601 3399 amcmelb@amcconsultants.com.au
Mehmet Yumlu Principal Mining Engineer
AMC Consultants Pty Ltd Level 19, 114 William Street Melbourne Victoria, 3000 Australia
Consent of Qualified Person TO: Ontario Securities Commission I, Mehmet Yumlu, consent to the public filing of the technical report titled NI 43 -101 Technical Report, Merlin Molybdenum Rhenium Project, Feasibility Study, Northwest Queensland, Australia and dated effective 16 April, 2012 (the Technical Report) by Ivanhoe Australia Limited (IAL). I also consent to any extracts from or a summary of the Technical Report in the press release of IAL dated 16 April 2012, entitled Merlin Feasibility Study Completed (the News Release). I certify that I have read the News Release filed by IAL and that it fairly and accurately represents the information in the sections of the technical report for which I am responsible. Dated at Melbourne, Australia, this 23rd day of May, 2012.
Mehmet Yumlu Principal Mining Engineer, MSc (Eng) (Min), MSc (Eng) (Min), MAusIMM (CP), RPEQ
ADELAIDE BRISBANE +61 8 8201 1800 +61 7 3839 0099
MELBOURNE +61 3 8601 3300
PERTH +61 8 6330 1100
TORONTO +1 416 640 1212
VANCOUVER +1 604 669 0044
MAIDENHEAD +44 1628 778 256
FGolder
Associates
John Horton, Principal Geologist, Golder Associates Pty. Ltd. 147 Coonation Drive PO BOX 1734 Milton BC, Qld 4064 Australia Consent of Qualified Person
TO:
Ontario Securities Commission
l, John Horton, consent to the public filing of the technical report titled "Nl 43-101Technical Report, Merlin Molybdenum Rhenium Project, Feasibility Study, Northwest Queensland, Australia" and dated effective 16 April,2012 (the "Technical Report") by lvanhoe Australia Limited ("lAL').
I also consent to any extracts from or a summary of the Technical Report in the press release of lvanhoe, dated April 16, 2012, entitled "Merlin Feasibility Study Completed" (the "News Release").
I certify that I have read the News Release filed by lvanhoe Australia and that it fairly and accurately represents the information in the sections of the technical report for which I am responsible.
Dated this 23'd day of May,2012.
0t^^I.*,
n Horton Principal Geologist
w:\min\201 0\oes\1 07631 002-mt-dore\correspondence-oul\007-lyco-merlin\drafl4\consenLhorlon
docx
Goldr Assocates Pty Ltd

147 Coronaton Drive, Mlton, Quoensland 4064,, Austrla (PO Box 1734, Miton BC, QLO 4064) fel: +61 7 3721 5400 Fax: +61 7 3721 5401 www,golder.com
Goldr Associates: Operations In Africa, Asia, Australasla, Europe, North America and South America A B N 64 006 107 857 Goldr, Golder Associatss and th GA globe design are tradmarks of Golder Assocales Corporalon
Golder Associates
CERTIFICATE of AUTHOR
- John Horton
l, John Horton, of Brisbane, Australia, do hereby certify that as the author of the Technical Report "Nl 43-101 Technical Report, Merlin Molybdenum Rhenium Project, Feasibility Study, Northwest Queensland, Australia" and dated effective 16 April, 2012 make the following statements.
1. 2. 3. 4. 5. 6. 7. 8. 9.
I am employed as a Principal Geologist with Golder Associates Pty. Ltd. 147 Coronation Drive, Milton, Brisbane, Queensland, 4064, Australia. I graduated with a degree in B Sc (Hons) in geology from the University of Queensland in 1986. ln
addition, I have obtained postgraduate diploma degrees in computing from the University of Queensland in 1987 and a postgraduate certificate in geostatistics from Edith Cowan University in 2006.
I am a Fellow in good standing of the Australian lnstitute and Mining and Metallurgy (AuslMM #107320)
and a Member of the Australin lnstitute of Geoscientists (AlG #1844).

I have practiced my profession continuously since graduation. I am responsible for Sections 4 to 12, 14, 23, 25.1 and 26.1 of Technical Report. I have read the definition of "Qualified Person" set out in National lnstrument 43-101 (Nl 43-101) and
certify that, by reason of my education, affiliation with a professional association (as defined in Nl 43101) and past relevant work experience, I fulfill the requirements to be a "qualified person for the purpose of Nl 43-101. My relevant experience with respect to Mount Dore and Merlin Deposits includes over 25 years in exploration, mining geology and grade estimation of copper in Australia and Asia. This includes associated molybdenum mineralisation as well as molybdenum dominant work in Mexico and a number of copper deposits within the same province as Mount Dore and Medin with similar geological settings.
I visited the Merlin and Mount Dore properties on several occasions during 2011 with the last
visit from
3 November 2011 or 6 days.

I have not had prior involvement with the property that is the subject of the Technical Report other than the previous related technical reports dated 19 October 2010, 30 September 2011 and 10 October 2011.
of the lssuer as defined by Section 1 .4 of the lnstrument. I have read National lnstrument 43-101 and the sections for which I am responsible in this Technical Report have been prepared in compliance with National lnstrument 43-101 and Form 43101F1.
10. I am independent
11. As of the date of this Certificate, to my knowledge, information and belief, the sections
of this Technical Report for which I am responsible contains all scientific and technical information that is required to be disclosed to make the technical report not misleading.
Dated this Day of 23'd May, 2012 at Brisbane, Australia
l-1.,",u
JohFl'orton Principal Geologist
wlminU0
l
0\oes\1 07631 002_mLdore\corrcspondence_out\007_lyco_mrlin\draft4\consent_horton docx
Golder Assocates Pty Ltd

147 Coronation Drive, Milton, Oueensland 4064,, Austrslia (PO Box 1734, Milton BC, QLD 4064) Tel. +61 7 3721 5400 Fax: +61 7 3721 5401 ww golder,com
Goldcr Associatos: Operations in Africa, Asia, Austrlasa, Europo, North Amrica and South Amerce A B N 64 006 107 857 Golder, Golder Assoctes and the GA globe desgn are trdemrks of Goldr Associates Corporetion.

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NI 43-101 TECHNICAL REPORT MERLIN MOLYBDENUM RHENIUM PROJECT FEASIBILITY STUDY NORTHWEST QUEENSLAND, AUSTRALIA

FINAL ISSUE REVIEW

MERLIN MOLYBDENUM RHENIUM PROJECT NI 43-101 REPORT

April 2012 Lycopodium Minerals QLD Pty Ltd

MERLIN MOLYBDENUM RHENIUM PROJECT NI 43-101 REPORT

April 2012 Lycopodium Minerals QLD Pty Ltd

MERLIN MOLYBDENUM RHENIUM PROJECT NI 43-101 REPORT

April 2012 Lycopodium Minerals QLD Pty Ltd

MERLIN MOLYBDENUM RHENIUM PROJECT NI 43-101 REPORT

April 2012 Lycopodium Minerals QLD Pty Ltd

MERLIN MOLYBDENUM RHENIUM PROJECT NI 43-101 REPORT

20.3 20.4 20.5 20.6 20.7

April 2012 Lycopodium Minerals QLD Pty Ltd

MERLIN MOLYBDENUM RHENIUM PROJECT NI 43-101 REPORT

April 2012 Lycopodium Minerals QLD Pty Ltd

MERLIN MOLYBDENUM RHENIUM PROJECT NI 43-101 REPORT

April 2012 Lycopodium Minerals QLD Pty Ltd

MERLIN MOLYBDENUM RHENIUM PROJECT NI 43-101 REPORT

April 2012 Lycopodium Minerals QLD Pty Ltd

MERLIN MOLYBDENUM RHENIUM PROJECT NI 43-101 REPORT - SUMMARY

1.0 1.1 Overview

April 2012 Lycopodium Minerals QLD Pty Ltd

MERLIN MOLYBDENUM RHENIUM PROJECT NI 43-101 REPORT - SUMMARY

Geology and Mineral Resources

April 2012 Lycopodium Minerals QLD Pty Ltd

MERLIN MOLYBDENUM RHENIUM PROJECT NI 43-101 REPORT - SUMMARY

April 2012 Lycopodium Minerals QLD Pty Ltd

MERLIN MOLYBDENUM RHENIUM PROJECT NI 43-101 REPORT - SUMMARY

Merlin Mineral Reserves

Operating and Cost Data

April 2012 Lycopodium Minerals QLD Pty Ltd

MERLIN MOLYBDENUM RHENIUM PROJECT NI 43-101 REPORT - SUMMARY

Indicator ATCF NPV IRR

April 2012 Lycopodium Minerals QLD Pty Ltd

MERLIN MOLYBDENUM RHENIUM PROJECT NI 43-101 REPORT - SUMMARY

April 2012 Lycopodium Minerals QLD Pty Ltd

MERLIN MOLYBDENUM RHENIUM PROJECT NI 43-101 REPORT - INTRODUCTION

Terms of Reference and Purpose of this Report

April 2012 Lycopodium Minerals QLD Pty Ltd

MERLIN MOLYBDENUM RHENIUM PROJECT NI 43-101 REPORT - INTRODUCTION

April 2012 Lycopodium Minerals QLD Pty Ltd

MERLIN MOLYBDENUM RHENIUM PROJECT NI 43-101 REPORT - INTRODUCTION

Persons Who Prepared this Technical Report

Principal Geologist Principal Mining Engineer

3-9 Nov 2011 9-10 June 2010

FAusIMM (CP), MAIG MAusIMM (CP), RPEQ

Technical Discipline Executive Metallurgist and Project Manager

SLR Consulting Australia Pty Ltd M3 Engineering and Technology Corporation

24-25 October 2011 No Visit

Qualified Professional Member, MMSA

Expert S. McEwen C. Taylor K. Bolden R. Coe L. McHugh

Employer IAL URS IAL IAL OMT

Report sections 18, 19 20 21, 22 20 13, 25.3 (part), 26.4

April 2012 Lycopodium Minerals QLD Pty Ltd

MERLIN MOLYBDENUM RHENIUM PROJECT NI 43-101 REPORT - INTRODUCTION

April 2012 Lycopodium Minerals QLD Pty Ltd

MERLIN MOLYBDENUM RHENIUM PROJECT NI 43-101 REPORT - RELIANCE ON OTHER EXPERTS

RELIANCE ON OTHER EXPERTS

April 2012 Lycopodium Minerals QLD Pty Ltd

PROPERTY DESCRIPTION AND LOCATION

Project Location (near Selwyn)

April 2012 Golder Associates