PEA RIDGE Technical Report 03-09-2012

PRR M INING I NC . (MFC INDUSTRIAL LTD./ALBERICI GROUP INC.
T ECHNICAL R EPORT ON THE PRR M INING (P EA R IDGE ) P ROPERTY W ASHINGTON C OUNTY, M ISSOURI , USA
9 MARCH 2012
PREPARED BY: BETTY L. GIBBS, MMSA QP DEREK RANCE P.ENG
BEHRE DOLBEAR & COMPANY (USA), INC. 999 Eighteenth Street, Suite 1500 Denver, Colorado 80202 (303) 620-0020
Technical Report on the PRR Mining (Pea Ridge) Property March 2012
TABLE OF CONTENTS 1.0 SUMMARY ..................................................................................................................................... 1 1.1 GEOLOGY AND MINERALIZATION ............................................................................ 1 1.2 STATUS OF EXPLORATION, DEVELOPMENT, AND OPERATIONS ...................... 1 1.3 RESOURCES ..................................................................................................................... 2 1.4 OTHER CONSIDERATIONS............................................................................................ 3 1.5 CONCLUSIONS AND RECOMMENDATIONS ............................................................. 3 INTRODUCTION ........................................................................................................................... 5 2.1 PURPOSE AND OBJECTIVES OF THE STUDY............................................................ 5 2.2 UNITS OF MEASUREMENTS AND CURRENCY ......................................................... 6 RELIANCE ON OTHER EXPERTS .............................................................................................. 7 3.1 DISCLAIMERS .................................................................................................................. 7 PROPERTY DESCRIPTION AND LOCATION ........................................................................... 8 4.1 LOCATION OF THE PEA RIDGE PROPERTY .............................................................. 8 4.2 MINERAL TENURE ......................................................................................................... 9 4.3 PEA RIDGE PROPERTY BOUNDARIES...................................................................... 10 4.4 PERMITS.......................................................................................................................... 11 4.5 ENVIRONMENTAL ISSUES.......................................................................................... 12 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE, AND PHYSIOGRAPHY ............................................................................................................... 13 5.1 PROPERTY ACCESS ...................................................................................................... 13 5.2 CLIMATE AND TOPOGRAPHY AT THE MINE SITE................................................ 13 5.2.1 Climate ................................................................................................................. 13 5.2.2 Topography and Vegetation................................................................................. 13 5.2.3 Existing Mine Infrastructure and Services ........................................................... 14 5.2.4 Railroad Base ....................................................................................................... 15 5.2.5 Buildings .............................................................................................................. 15 5.2.6 Mine Infrastructure .............................................................................................. 15 5.2.7 Local Government and Mine Safety Services ..................................................... 15 HISTORY ...................................................................................................................................... 16 6.1 PEA RIDGE HISTORY ................................................................................................... 16 6.2 CURRENT OWNERSHIP ............................................................................................... 16 6.3 HISTORICAL RESOURCES/RESERVES...................................................................... 17 6.4 HISTORICAL PRODUCTION ........................................................................................ 19 GEOLOGICAL SETTING AND MINERALIZATION ............................................................... 21 7.1 REGIONAL GEOLOGY .................................................................................................. 21 7.2 OREBODY GEOLOGY (AFTER OVANIC, 2001) ........................................................ 21 7.3 MAP UNITS ..................................................................................................................... 22 7.3.1 Description of Map Units .................................................................................... 22 DEPOSIT TYPES .......................................................................................................................... 24 8.1 GEOLOGY ....................................................................................................................... 24 EXPLORATION ........................................................................................................................... 25 9.1 EXPLORATION POTENTIAL........................................................................................ 25 9.2 CURRENT EXPLORATION ACTIVITIES .................................................................... 25 DRILLING..................................................................................................................................... 26 10.1 DRILLING LOCATIONS ................................................................................................ 26 10.2 DRILL CORE STORAGE ................................................................................................ 27
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TABLE OF CONTENTS
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11.0 12.0 13.0 14.0
15.0 16.0 17.0 18.0 19.0 20.0
21.0 22.0 23.0 24.0
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SAMPLE PREPARATION, ANALYSES, AND SECURITY ..................................................... 28 DATA VERIFICATION ............................................................................................................... 30 12.1 DATABASE ..................................................................................................................... 30 12.2 DATA VERIFICATION .................................................................................................. 30 MINERAL PROCESSING AND METALLURGICAL TESTING .............................................. 32 13.1 HISTORICAL ................................................................................................................... 32 13.2 PROPOSED BENEFICIATION DESIGN ....................................................................... 32 MINERAL RESOURCE ESTIMATES......................................................................................... 33 14.1 MODEL CONSTRUCTION ............................................................................................ 33 14.2 SOLID MODELING AND MINERALIZATION DOMAINS ........................................ 33 14.3 BLOCK MODELING....................................................................................................... 35 14.4 RESOURCE INVENTORY ............................................................................................. 35 14.5 RESOURCE MODEL AUDIT ......................................................................................... 38 MINERAL RESERVE ESTIMATES............................................................................................ 39 MINING METHODS .................................................................................................................... 40 16.1 HISTORICAL MINING METHODS............................................................................... 40 16.2 PRE-FEASIBILITY STUDY ........................................................................................... 40 RECOVERY METHODS .............................................................................................................. 41 PROJECT INFRASTRUCTURE .................................................................................................. 42 MARKET STUDIES AND CONTRACTS ................................................................................... 43 ENVIRONMENTAL STUDIES, PERMITTING, AND SOCIAL OR COMMUNITY IMPACT ........................................................................................................................................ 44 20.1 MINE SAFETY AND HEALTH ADMINISTRATION (MSHA) MINE IDENTIFICATION NUMBER ........................................................................................ 44 20.2 ENVIRONMENTAL STUDIES AND ISSUES .............................................................. 44 20.2.1 Potential Environmental Liabilities ..................................................................... 44 20.3 PERMITTING .................................................................................................................. 45 20.4 SOCIAL/COMMUNITY IMPACT .................................................................................. 47 CAPITAL AND OPERATING COSTS ........................................................................................ 48 ECONOMIC ANALYSIS ............................................................................................................. 49 ADJACENT PROPERTIES .......................................................................................................... 50 23.1 INTERNET INFORMATION ABOUT PEA RIDGE MINE .......................................... 50 OTHER RELEVANT DATA AND INFORMATION ................................................................. 51 24.1 TAILINGS REPROCESSING PROPOSAL .................................................................... 51 24.2 REPROCESSING OF MAGNETITE ACCUMULATED IN SETTLING PONDS ............................................................................................................................. 51 INTERPRETATIONS AND CONCLUSIONS ............................................................................. 53 RECOMMENDATIONS ............................................................................................................... 54 REFERENCES .............................................................................................................................. 55 27.1 REFERENCES ................................................................................................................. 55 27.2 BIBLIOGRAPHY ............................................................................................................. 55
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LIST OF TABLES Table 1.1 ! Table 1.2 ! Table 5.1 ! Table 6.1 ! Table 6.2 ! Table 6.3 ! Table 14.1 ! Classified Expanded Total In Situ Mineral Resource Excluding Breccia Pipes .............. 2! Classified Expanded In Situ Mineral Resource in Magnetite Domain Excluding Breccia Pipes ..................................................................................................... 2! Local Climate.................................................................................................................... 13! Classified Expanded Total In Situ Mineral Resource Excluding Breccia Pipes ............ 18! Classified Expanded In Situ Mineral Resource in Magnetite Domain Excluding Breccia Pipe ..................................................................................................... 18! Historical Pea Ridge Ore Production ................................................................................ 19! Classified Expanded In Situ Mineral Resource in Magnetite Domain Excluding Breccia Pipes ................................................................................................... 36!
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LIST OF FIGURES Figure 4.1.! Figure 4.2.! Figure 5.1.! Figure 5.2.! Figure 10.1.! Figure 14.1.! Figure 14.2.! Figure 14.3.! Figure 14.4.! Local map ........................................................................................................................... 9! Geographic and geological contours and boundaries, including the mine area ................ 11! Pea Ridge Mine Google Earth Photo ............................................................................. 14! Plan view mine surface infrastructure............................................................................ 14! Underground drilling ........................................................................................................ 27! Plan view solids representing geology domains ............................................................ 34! Perspective view of geology domains to north ................................................................. 34! Mineral resource model (a) ............................................................................................... 37! Mineral resource model (b)............................................................................................... 37!
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1.0
SUMMARY
The technical report is prepared for PRR Mining Inc. (PRR 1), owner of the Pea Ridge iron ore property, located in Washington County, Missouri, approximately 68 miles southwest of St. Louis, Missouri; and each of MFC Industrial Ltd. (MFC) and Alberici Group Inc. (Alberici), who each indirectly own 50% of PRR. The Pea Ridge Mine was actively in production from 1964 through 2001, and an extensive library of reports, production records, and other information is available. This information has been used to compile this report. A small amount of pellet plant spillage material is currently being reprocessed at the nominal rate of 80,000 short tons per year, and a magnetite product is being produced. PRR, the current 100% owner of the property 2, intends to conduct further feasibility studies in order to determine whether the mine can be reopened and operated at a profit. PRR has requested that a National Instrument (NI) 43-101 compliant report be prepared on the iron ore property known as the Pea Ridge Mine. This technical report has been prepared in compliance with the requirements of NI 43-101 and Form 43-101F1. 1.1 GEOLOGY AND MINERALIZATION
The Pea Ridge deposit is hosted in felsic volcanic rocks of the Middle Proterozoic St. Francois terrain, a remnant core complex of volcanic structures. The St. Francois terrain is mostly siliceous igneous rocks, mainly rhyolitic ash flow tuffs and lava flows, and associated structures, such as granitic plutons and volcanic ring complexes. These features are fully described by Kisvarsanyi (1981). The Pea Ridge deposit is located within one of the ring complexes and is thought to be underlain by a granite pluton. The steep dip of the hosting volcanics indicates that they may be part of a collapse block created as a result of a caldera collapsing into one of these structures, referred to as the Pea Ridge pluton (Marikos, et al., 1989; Kisvarsanyi, 1981). The steeply dipping, discordant, iron oxide body is hosted by a suite of anorogenic, Middle Proterozoic, rhyolite porphyries. The volcanics are unconformably overlain by 1,100 to 1,400 feet of Cambrian and Ordovician sediments. The host porphyries are a series of rhyolitic flows and ash flow tuffs. Emery (1968) identifies five individual porphyry units that have been intercepted by mine workings. Previous mining has focused on the magnetite zone. 1.2 STATUS OF EXPLORATION, DEVELOPMENT, AND OPERATIONS
The Pea Ridge Mine is a developed underground iron property where active mining ceased in 2001. Original exploration consisted of surface drilling to identify a magnetic anomaly identified by airborne geophysical instruments in 1949 and 1951. Twenty-four holes were drilled from the surface to identify the location of the orebody. During the mining operation, over 600 underground core holes were drilled to define the limits of the orebody. As is currently known, the mineralized zone extends to unknown depths, and eventual exploration will be targeted at deepening the mine and defining the extent of the mineralization.
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PRR is 100% owned by Thayer Land Development Company, LLC and TTT Mining LLC, which are directly and indirectly owned 50% by MFC and 50% by Alberici. 2 This ownership is subject to a reserved royalty interest and a license agreement respecting non-ferrous minerals as described in Section 4.2. Project 12-006
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The mine has previously been in operation and has an established infrastructure including some remaining buildings, access to underground workings, two vertical shafts with hoists and headframes, a plant building, power, tailings and settling ponds. The mine is currently filled with water and the underground workings are not accessible at present to allow continuing exploration at depth. A pre-feasibility report prepared by Behre Dolbear in 2008 identified a proposed infill drilling project to further delineate the mineralization below the lowest mined level and so improve confidence in the current inferred mineral resource. Presently, no exploration is in progress. 1.3 RESOURCES
In November 2007, resource estimations were prepared by DataGeo, a subcontractor to Mining Plus, using the historic drill data and the detailed geology as developed by Seeger. The resulting tonnages were not adjusted for mined quantities. Only historical resource estimates are available for the property and the reader is warned that these resources have not been verified by the QP and should not be totally relied on. DataGeo prepared the following resource estimates. An expanded 3 assessment of the magnetite domain and a review of the mined areas resulted in the total in situ resource as shown in the following Table 1.1 and Table 1.2. TABLE 1.1 CLASSIFIED EXPANDED TOTAL IN SITU MINERAL RESOURCE EXCLUDING BRECCIA PIPES Short Tons Class % MFe % TFe (! 1,000) Measured 94,124 50.8 58.0 Indicated 94,116 51.9 58.9 Total 188,240 51.3 58.4
TABLE 1.2 CLASSIFIED EXPANDED IN SITU MINERAL RESOURCE IN MAGNETITE DOMAIN EXCLUDING BRECCIA PIPES Short Tons Class % MFe % TFe (! 1,000) Measured 85,902 52.7 59.0 Indicated 91,414 52.9 59.1 Total 177,316 52.8 59.0
The expanded area is along strike at depth below minus 2,475 feet and includes areas not previously mined, but containing exploration drilling. The area includes underground drill holes not included in the geological plan and section interpretation.
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Total inferred resources in the expanded zone (total in situ mineral resources) were estimated at approximately 54.9 million tons at 40.6% Magnetic Fe and 55.9% Total Fe. An additional amount of unclassified resource of 6.8 million tons was estimated with average grade of 51.6% Magnetic Fe and 58.2% Total Fe. Inferred resources in the expanded zone, magnetite domain only were estimated at approximately 31.1 million tons at 54.3% Magnetic Fe and 58.8% Total Fe. An additional amount of unclassified resource 4 of 6.6 million tons was estimated with average grade of 52.4% Magnetic Fe and 58.3% Total Fe. Pincock Allen and Holt (PAH) audited the DataGeo model and then rebuilt the block model. The resulting material resource was not classified. The PAH estimate of remaining tons and grade is stated as follows: 175,009,960 short tons at 48.26% magnetic iron and 57.62% total iron In 2001 when the mine was closed the company reported Proven Ore Reserves of 174,381,622 WST (Wet Short Tons) at 55.5% Mag Fe of which a remaining reserve of approximately 157 million short tons are in the magnetite zone. Because of uncertainties about the data accuracy and the DataGeo model available, insufficient work has been done by the Qualified Person to verify or classify these historical reserves as current resources. Accordingly, these historical estimates should not be fully relied on. However, they provide an indication of the potential of the Pea Ridge Mine and are relevant to future development plans. 1.4 OTHER CONSIDERATIONS
Note that studies done in 2007 and 2008 proposed a slurry pipeline between the mine and Crystal City to take advantage of the possibility of shipping iron products on the Mississippi River. The pipeline proposal has not been included in this Technical Report, because such is still being evaluated by the current owners. The company and its affiliates maintain a lease on a riverfront property in Crystal City which was originally planned to be the pellet plant at the end of the pipeline. The Crystal City lease has not yet been determined to be a material part of the current plan so has not been detailed in this report. Plans for re-opening the Pea Ridge Mine are in process, but due to the recent change of ownership of PRR, no definitive plan can be considered for disclosure at this time. 1.5 CONCLUSIONS AND RECOMMENDATIONS
Substantial mineralization is still available for production at the Pea Ridge mine site although the underground workings are presently in a flooded condition. Any production from the Pea Ridge mine will require dewatering of the mine. The economic viability of dewatering and bringing the mine back into production will depend on establishing what products will be produced, their value, the size of the markets for these products and the logistical requirements necessary to transport these products to market.
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The unclassified resource includes volumes within the domain model boundaries but too far from the drill data to be included as inferred resource.
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Recommendations are made about several areas noted during the compilation of this report. Some of the recommendations are based on comments from the Behre Dolbear and PAH pre-feasibility reports. Resources Further recommended work would be to determine why variograms did not show continuity. Review the model to ensure that the block model is representative of the data and geological interpretations. Data checking. Determine whether core remnants exist that can be sent for re-assaying. If cores are available for re-assay and the model is rechecked, the goal would be to convert the historic resource to a current resource. Environmental. A current environmental assessment would be needed to determine whether any of the conditions noted in the 2001 Environmental Operations report are still in effect or if they have been cleaned up since 2001. The estimated cost to implement these short term recommendations is $60,000.
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2.0
INTRODUCTION
The technical report is prepared for PRR Mining Inc. (PRR 5), owner of the Pea Ridge iron ore property, located in Washington County, Missouri, approximately 68 miles southwest of St. Louis, Missouri; and each of MFC Industrial Ltd. (MFC) and Alberici Group Inc. (Alberici), who each indirectly own 50% of PRR. The Pea Ridge Mine was actively in production from 1964 through 2001, and an extensive library of reports, production records, and other information is available. This information has been used to compile this report. A small amount of pellet plant spillage material is currently being reprocessed at the nominal rate of 80,000 short tons per year and a magnetite product is being produced. PRR Mining, the current 100% owner of the property, intends to conduct further feasibility studies to determine whether the mine can be reopened and operated at a profit. The Pea Ridge property is owned by PRR, which is an entity indirectly owned jointly by Alberici and MFC Industrial. The purpose of the Study is to compile information about the historical operation, report the geologic resource, and plans for future mining. This technical report has been prepared in compliance with the requirements of National Instrument 43-101 and Form 43-101F1 and is intended to be used as supporting documentation to be filed by MFC with the British Columbia Securities Commission, other Canadian Securities regulators and the U.S. Securities and Exchange Commission (SEC). 2.1 PURPOSE AND OBJECTIVES OF THE STUDY
PRR has requested that an NI 43-101 compliant report be prepared on the iron ore property known as the Pea Ridge Mine. This technical report has been prepared in compliance with the requirements of NI 43101 and Form 43-101F1. No technical reports have been filed previously on SEDAR or with the SEC. Behre Dolbear performed a pre-feasibility study in 2007-2008 that culminated in a Report dated May 2008. Company documents and other recent consulting reports are the main source of information for this technical report. Company records were examined for additional information and to verify the statements in the referenced reports. Reference to all reports and documents are included in Section 25.0 of this report. The following primary sources of information were used to compile this report: Pea Ridge Mine Company documents US Geological Survey Miscellaneous Field Studies Map MF2353, 2001 Behre Dolbear Pre-feasibility Study, May 2008 DataGeo Resource/Reserve Audit, 2007 Pincock, Allen and Holt (PAH) Reserve Audit and Valuation, 2008 Mining Plus Pty. Ltd., 2008 Other information sources such as technical publications are included in the reference section.
PRR is 100% owned by Thayer Land Development Company, LLC and TTT Mining, LLC, which are directly and indirectly owned 50% by MFC and 50% by Alberici.
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Mr. Derek Rance visited the property in September 2007. Ms. Betty Gibbs accompanied by Mr. Reinis Sipols visited the site on January 24, 2012. This was the first visit by Ms. Gibbs and the fifth visit by Mr. Sipols. The surface facilities were visited, including the current office buildings and the mill presently being used for processing settling pond material. The old office building was not inspected because of its condition. The main access shaft is still in place on the property but it was not closely inspected during this tour. Other areas visited included the tailings pond, settling ponds, and a water reservoir used to supply water for the milling process. All the historical records from previous owners and operators are stored in a temporary office facility and were briefly reviewed by Gibbs and Sipols. PRR is in the process of cataloging the records. An extensive audit of the on-site hard copy data was not done at this time. An enclosed core warehouse is on the property and some of cores were viewed. Samples from current settling pond reprocessing are also stored in the core warehouse. The cores are stored in special cases and those cores examined appear to be intact other than sections that were removed for analysis. The core was not split, because whole sections were assayed. Some of the cores are stored in metal cases and some are stored in cardboard core boxes. The cores are identified by drill hole number. Some cores have been moved to the facilities of the Missouri Department of Natural Resources. Based on reports as referenced, the author is of the opinion that the data has been gathered in a professional and ethical manner. Collection and storage of cores was done systematically and to a specific company standard at the time. 2.2 UNITS OF MEASUREMENTS AND CURRENCY
Measurement units used in this report are in the English system. All tons are reported as short tons (2,000 lbs/ton) unless otherwise specified. The currency is United States (US) dollars unless specifically stated otherwise.
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RELIANCE ON OTHER EXPERTS
Information from the following experts was relied on to compile this report: Ms. Cheryl Seeger, Missouri Department of Natural Resources, Geological Survey Behre Dolbear Pre-feasibility Report, 2008 DataGeo for Resource Estimation, 2008 PAH for Audit of the DataGeo Resource Estimation and Valuation, 2008 References are included in the text of this report where the source information is used. In addition, historical company records were examined to verify information contained in previous reports. Besides paper copies, PRR maintains an extensive digital file of documents, correspondence, reports, and data. Historical drill logs are primarily in paper copy although some have been scanned and are available as images. 3.1 DISCLAIMERS
All the historical resource estimates quoted in this report are based on historical prior data and reports prepared by Bethlehem Steel, a previous operator and subsequent operators up to mine closure in 2001. Recently, the historical data and a geological model from the Seeger geology investigation were used to estimate a resource. Although considered reliable and relevant with previous mine operators, estimates do not meet NI 43-101 Definition Standards and accordingly should not be relied upon. The recent resource estimates used the historical data and were prepared according to JORC standards. However, the author believes these historical results provide a good indication of the potential of the property and so are relevant to ongoing development of the property.
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4.0
PROPERTY DESCRIPTION AND LOCATION
Modern exploration on the Pea Ridge Mine property began in 1949 with a magnetic anomaly survey that identified a potential magnetite iron ore deposit. A drilling program was begun in 1953 and subsequently 24 vertical core holes were drilled from the surface. The mine was brought into production in 1963. During the on-going development of the underground mine, an additional 622 core holes were drilled from the underground workings. No holes have been drilled since the mine stopped producing. During mine operation, production from underground operations ranged between 400,000 tons per year (tpy) to 2.5 million tpy. The mine started at a depth of 1,375 feet from the surface and then continued down to the 2675 level. No surface mining has been done. The Pea Ridge Mine has been shut down since 2001. When the mine was closed, there was no opportunity to neither salvage any underground equipment or material nor mothball any mine equipment, including the surface mine hoist and the mine has since filled with water. Presently, some of the surface facilities are still existing, and some of the buildings and shaft(s) are still useable. A pebble mill originallyinstalled on the property was salvaged when the mine closed. A surface tailings pond now covers approximately 116 acres 6, with the water from the upper tailings flowing into three settling ponds. The water is of relatively good quality and the discharge goes directly into settling ponds with no additional treatment required. No environmental problems have been detected regarding the outflow into Marys Creek. 4.1 LOCATION OF THE PEA RIDGE PROPERTY
The property is located near the town of Sullivan, Missouri in Washington County and is adjacent to Crawford and Franklin counties. Sullivan is a community of some 7,000 people and has schools and clinics for doctors, dentists, and chiropractors. The area around the mine is also a recreational resort area, which could also provide opportunities for temporary accommodations, if needed. The property includes a total of 5,568 Acres, including approximately 4,330 acres for the underground mine, 1,967 acres of agricultural land, and 271 acres of commercial land. 7 The property is located in Township 39N, Range 1W of the 5th PM. The approximate location is at 3807' 43.41"N Latitude and 091 02' 22.74"W Longitude, NAD 27. 8 Figure 4.1 shows the location of the Pea Ridge Mine in relation to St. Louis and the town of Sullivan.
This acreage is an estimate of the tailings pond area made by Mr. Bo Arvidson in Report on Wings Iron Ore Tailings Pond Reprocessing Project. The estimate was made by outlining the tailings extent on a Google Earth map and determining the area. A land survey is needed to determine the actual extent. 7 2008 Tax Receipts. 8 Mine Legal Description, 2001 Project 12-006
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Figure 4.1. 4.2
Local map
MINERAL TENURE
PRR has fee simple ownership of the mine and tailings areas and has the underground mining rights to those areas. PRR also has underground mining rights to additional property adjacent to and in the vicinity of the mine area. The property including the underground mine, surface facilities, and surrounding property are fully owned by PRR. The property is not subject to any back-in rights, payments or other agreements, and encumbrances other than (i) a 2.6% net smelter returns royalty on ferrous materials to prior owners of PRR; and (ii) a mineral license respecting non-ferrous minerals held by an entity that is 70% owned by the prior owners of PRR and 30% owned indirectly, jointly by MFC and Alberici.
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4.3
PEA RIDGE PROPERTY BOUNDARIES
The property boundaries are described in detail in a Warranty Deed of Corporation dated 2001. The property is located in T39N, R1W of the 5th PM. Survey records that locate the property boundaries have not been reviewed. The property location information is contained in tax receipts and Deeds of Trust contained in the companys digital files. The extent of PRR Mining ownership is summarized by the following: a. The former Pea Ridge Iron Ore Mine is located in Township 39N, Range 1W of Washington County, Missouri. The surface of the mine property encompasses portions of Sections 3, 4, 5, 8 and 9, including the area where the settling ponds and tailing pond are located. This surface area is outlined on the attached Township Map. Upland Wings, Inc. has fee simple ownership of this surface area. b. Upland Wings, Inc. also has underground mining rights both underlying the surface mine property and underlying property in other Sections of Township 39N, Range 1W (i.e. 1, 6, 7, 17, 20, 21, 27, 28, and 33), as well as underlying the following additional locations: Township 39N, Range 2W, Section 1 Township 38N, Range 1W, Sections 2, 3, 6, 7, and 10 Township 40N, Range 1E, Sections 18, 19 and 31 Township 40N, Range 2W, Section 36.
(DataGeo Geological Consultants, 2007, p. 2)
The above land description ties the property to the well-established land grid system, but no State Plane or UTM coordinates are explicitly stated. The portion of the property that includes the iron deposit and the historical workings is shown in Figure 4.2. The mining limits are defined by a combination of boundaries, including: Property boundaries Geological limits Drill hole interpretation Mined areas
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Figure 4.2.
Geographic and geological contours and boundaries, including the mine area
In general, it can be noted that the majority of the surface area of the mine falls within an area bounded by the following points stated in local coordinates (metric). Easting Northing Minimum E94,000 N146,000 Maximum E104,000 N154,000
The majority of the orebody falls within an area bounded by: Easting Northing Relative Level Minimum E94,000 N147,000 7780rl Maximum E97,000 N149,000 10880rl
Figure 4.2 shows the area of the deposit model, and some of the underground workings. Figure 5.1 in Section 5.0 shows the location of surface facilities. The geological boundaries are described in detail in Section 7.0 of this study. Distinct structural boundaries on the hanging wall and footwall clearly define the ore body. 4.4 PERMITS
Several permits are currently in effect for the property. Detail is included in Section 20.0 and includes more detail about permitting requirements.
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4.5
ENVIRONMENTAL ISSUES
No testing of mine waste rock has been conducted to determine the potential for acid drainage; however, past operations have apparently been free of significant water pollution issues. Such testing should be carried out before moving beyond the pre-feasibility stage. No opposition to the restart of the mine has arisen, but opposition by local or outside environmental groups is always possible in the future and could serve to delay project approvals. Reported contacts with the regulatory agencies have been positive.
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5.0 5.1
ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE, AND PHYSIOGRAPHY
PROPERTY ACCESS
The Pea Ridge property, including the iron ore deposit, is 13 miles south of Sullivan, Missouri along Highway 185. Sullivan is about 55 miles southwest from the southwest edge of St. Louis, Missouri along Interstate 44. Property access is via paved state highway and on a maintained dirt road. The sealed road turns onto Wings Lake Drive and extends for 1 mile to the mine gate. 5.2 5.2.1 CLIMATE AND TOPOGRAPHY AT THE MINE SITE Climate
The average maximum temperature in the area ranges from 41F in January to 90.7F in July. The average minimum temperature ranges from -16.6F in January to 63.7F in July. The average rainfall ranges from 2.7 inches in January to 4.6 inches in May, with average annual total rainfall being 40.56 inches. The average annual total snowfall is 17.5 inches, with the highest monthly snowfall being 5.1 inches. TABLE 5.1 LOCAL CLIMATE Low High 41F 90.7F -16.6F 63.7F 2.7 inches 4.6 inches 0 5.1 inches
Average Maximum Temperature Average Minimum Temperature Average Rainfall Average Snowfall The property can be operated year-round. 5.2.2 Topography and Vegetation
Total N/A N/A 40.56 inches 17.5 inches
The head frame elevation is approximately 880 feet above sea level. The topography is undulating, with sloping ridges and valleys. There is ample space and gently sloping areas sufficient to support required lay down areas for mining operations. The land is much wooded, with second or third growth timber, and some clearing will be required for further installations. Figure 5.1 is a Google Earth extract based on the immediate mining boundaries.
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Figure 5.1. 5.2.3
Pea Ridge Mine Google Earth Photo
Existing Mine Infrastructure and Services
Figure 5.2 is a plan of the Pea Ridge mine site as of 2007, showing roads, infrastructure, the tailings dam, and the positions of surface diamond drill holes and subsidence monitoring holes.
Figure 5.2.
Plan view mine surface infrastructure
The mine has previously been in operation and has an established infrastructure including some remaining buildings, access to underground workings, two vertical shafts with hoists and headframes, a plant building, power, tailings and settling ponds.
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5.2.4
Railroad Base
An abandoned 48 km (30 mile) railway road bed runs from the mine to Cadet, where it connected to the main Union Pacific railway line. Also, a disused, short airstrip on the mine site was suitable for small, two-seater aircraft. The airstrip had a sealed surface, which has since weathered and disintegrated. 5.2.5 Buildings
The administration building is brick construction, and the service buildings are metal construction over two floors. The administration building is 202 feet long and 88 feet wide. The metal service buildings are in reasonable condition and provide a large open area for storage and servicing. A workshop building is 221 feet long and 95 feet wide. Contiguous to this building is a warehouse and boiler room building that is 181 feet long and 95 feet wide. About 1 km from the mine is the Tackle Box. This was the mine union meeting hall. It has been remodeled and now includes three bedrooms, two baths, and a small open-plan kitchen and lounge area. 5.2.6 Mine Infrastructure
The mine still has some major infrastructure in place. There are two head frames, the compressor house, a diamond drill core building, a large, two-floor office building, a large general services workshop, and stores buildings. Other infrastructure, such as the pellet plant, has been demolished and removed. The mine currently has a telephone landline installed equipped with ADSL internet connection. The local service provider has the capacity to provide additional communications requirements. The property is not served by public water or sewer services. Potable water was drawn from the mine. Sewage was treated in a single sewage lagoon. The mine operated from 1960 to 2001, and sewage, waste disposal, and storm water drainage were in place at that time. A tailings disposal system was in place for 40 years. It is designed with an emergency spillway that would discharge into the Marys Creek. 5.2.7 Local Government and Mine Safety Services
The Washington County Sheriffs office is based in Potosi about 32 km (20 miles) further south from the mine along Highway 185. St. Louis is on the Mississippi River and port facilities are available. The nearest Federal Mine Safety and Health Administration (MSHA) office is based in Rolla, Missouri, about 89 km (55 miles) away. The Missouri State Mine Inspectors office is based in Jefferson City, the state capital. The Sullivan Fire Protection Service Station Four is located 3 km (2 miles) from the mine. Two trained and equipped student mine rescue teams are at the Missouri Science and Technology University, about 89 km (55 miles) away.
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6.0 6.1 PEA RIDGE HISTORY
HISTORY
In the 1950s, St. Joe Lead Company drilled the Pea Ridge anomaly and developed an iron ore resource. In 1957, the St Joe Lead Company entered into an agreement with Bethlehem Steel Company to form a joint venture company called Meramec Mining Company. Bethlehem Steel operated underground iron ore mines to supply its own raw materials for making steel. The purpose of the joint venture was to develop and operate the Pea Ridge underground iron ore mine and produce iron ore pellets for blast furnace feed. Shaft sinking began late in 1957, and the first production stopes were mined on the east end of the 2275 level in 1963. The first pellets were shipped by rail on March 16, 1964. The initial capital cost of the project was $52 million. Key events in the ownership history of Pea Ridge are summarized below. In 1977, Bethlehem Steel exited from the joint venture. In 1977 to 1978, Pea Ridge shut down and was placed on care and maintenance. In 1979, Pea Ridge was reopened by St. Joe but with a non-union workforce. In 1981, Fluor purchased St. Joe Minerals Company and ore was produced for steel making companies. In 1987, Fluor sold all of the St. Joe Minerals Company worldwide assets except for Pea Ridge. The St. Joe Minerals Company lead mines are now known as the Doe Run Company. In June 1990, Big River Minerals Corporation bought Pea Ridge from Fluor. Big River Minerals Corporation became Woodridge Resources and operated the mine until 2001, producing special purpose oxide products. In 2001, Woodridge Resources sold Pea Ridge to Upland Wings Inc. (now known as PRR Mining Inc.), who initially developed the site as a private hunting and fishing reserve In 2011, MFC and Alberici acquired an indirect 100% interest in PRR, which holds the Pea Ridge property including the surface, all the surface facilities and the mineral rights. From 1964 to 1990, ore mined from Pea Ridge was used by steel making companies. From 1990 to 2001, Pea Ridge produced special purpose iron oxide products. 6.2 CURRENT OWNERSHIP
The Pea Ridge property is 100% owned by PRR, which is indirectly equally owned by MFC and Alberici. The parties acquired the Pea Ridge Mine and surrounding property by indirectly acquiring 100% of (formerly Upland Wings Inc.) and PRR Processing, Inc. (formerly Wings Enterprises Inc.). The land and all the mineral deposits are owned by PRR. The parties completed the acquisition of PRR and PRR Processing Inc. on December 22, 2011. PRR Processing also acquired a lease in Crystal City. The lease was originally acquired with expectation of a future location for a pipeline between the mine and Crystal City and an iron processing and bulk shipping facility on the leased property. Currently, PRR and PRR Processing evaluating the pipeline and no determination has yet been made with respect to construction of pipeline. the ore are the
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PRR Mining currently holds an Environmental Bond and has an active mining permit for the Pea Ridge property. In the United States, land ownership on the surface may be held separately from ownership of the mineral rights of the in situ mineral resources. PRR Mining has acquired 100% ownership of the surface land that Pea Ridge Mine is positioned on as well as owning 100% of the mineral rights. The property is subject to a 2.6% net smelter returns royalty on ferrous materials to prior owners of PRR and a license agreement respecting non-ferrous minerals as described in Section 4.2. A Missouri Department of Natural Resources letter to PRR dated June 2, 2006 states, in part, The department recognizes the value of returning what has been an under-utilized mining impacted site back to productive use and We should be able to work together to see the mine operating in an environmentally appropriate manner that ensures that these benefits do not come at the expense of the environment. The letter further says This letter will confirm that you are currently successfully maintaining an environmental metallic minerals permit. There is also a section that states The department recognizes that this project will require various air and water pollution control permits of varying complexity. The department is prepared to provide any information and assistance you may require as the various permits required by the state and federal statutes are developed. The Pea Ridge Mine has to date only mined the Pea Ridge-owned portion of the orebody. A portion of the orebody to the east and at depth, known as the Fisher Lease (privately owned minerals), also has potential for mining. The Fisher Lease is described as Legal Desc. 09-39-1W and is the western half of Section 9 underground mineral rights; PRR Mining has 75% ownership of the mineral rights with the remaining 25% in Fisher hands. Documentation and plans relating to the Fisher Lease are available. 6.3 HISTORICAL RESOURCES/RESERVES
Historical iron ore reserves were estimated originally by Bethlehem Steel and maintained by Big River Minerals Corporation who operated the property until 2001 when the operation closed. The historical reserves were estimated by the mine operator using a polygonal method. Underground drilling was plotted on maps and the calculated tons and grades were noted on maps and summed in tables. The maps have been scanned and are available as digital images. Paper copies of the maps are available at the mine site. In November 2007, resources were prepared by DataGeo, subcontractor to Mining Plus, using the historic drill data and the detailed geology developed by Seeger. The tonnages were not adjusted for mined quantities. DataGeo prepared the following resource estimates. An expanded 9 assessment of the magnetite domain and a review of the mined areas resulted in the total in situ resource as shown in the following Table 6.1 and Table 6.2.
The expanded area is along strike at depth below -2,475 feet and includes areas not previously mined, but containing exploration drilling. The area includes underground drill holes not included in the geological plan and section interpretation.
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TABLE 6.1 CLASSIFIED EXPANDED TOTAL IN SITU MINERAL RESOURCE EXCLUDING BRECCIA PIPES Short Tons Class % MFe % TFe (! 1,000) Measured 94,124 50.8 58.0 Indicated 94,116 51.9 58.9 Total 188,240 51.3 58.4
TABLE 6.2 CLASSIFIED EXPANDED IN SITU MINERAL RESOURCE IN MAGNETITE DOMAIN EXCLUDING BRECCIA PIPE Short Tons Class % MFe % TFe (! 1,000) Measured 85,902 52.7 59.0 Indicated 91,414 52.9 59.1 Total 177,316 52.8 59.0
Total inferred resources in the expanded zone (total in situ mineral resources) were determined to be approximately 54.9 million tons at 40.6% Magnetic Fe and 55.9% Total Fe. An additional amount of unclassified resource of 6.8 million tons was estimated with average grade of 51.6% Magnetic Fe and 58.2% Total Fe. Inferred resources in the expanded zone, magnetite domain only were determined at approximately 31.1 million tons at 54.3% Magnetic Fe and 58.8% Total Fe. An additional amount of unclassified10 resource of 6.6 million tons was estimated with average grade of 52.4% Magnetic Fe and 58.3% Total Fe. Pincock Allen and Holt (PAH) audited the DataGeo model and then rebuilt the block model. The resulting material resource was not classified. The PAH estimate of remaining tons and grade is stated as follows: 175,009,960 short tons at 48.26% magnetic iron and 57.62% total iron In 2001 when the mine was closed the company reported Proven Ore Reserves of 174,381,622 WST (Wet Short Tons) at 55.5% Mag Fe, which includes a remaining reserve of approximately 157 million short tons in the magnetite zone. These reserves estimated by the operators of the Pea Ridge Mine are not compliant with current CIM standards. Because of uncertainties about the data accuracy and the DataGeo model availablity, insufficient work has been done by the Qualified Person to verify or classify these historical reserves as current resources. Accordingly these historical estimates should
The unclassified resource includes volumes within the domain model boundaries but too far from the drill data to be included as inferred resource. Project 12-006
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not be fully relied on. However, they provide an indication of the potential of the Pea Ridge Mine and are relevant to future development plans. 6.4 HISTORICAL PRODUCTION
The Pea Ridge mine was originally designed and constructed on the basis of operating at 3.0 million tpa. During its 37-year operating life, this production rate was met or exceeded only once, in 1972. During most of these years, production was market limited. Between 1964 and 2001, approximately 58 million tons of ore were hoisted. Historical production records appear to be reliable and accurate. Table 6.3 illustrates the historical production profile. TABLE 6.3 HISTORICAL PEA RIDGE ORE PRODUCTION (SHORT T ONS)
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Note that Gross Tons includes underground waste that was removed from the workings. The estimation of Mag Fe% was not recorded for some years. SalvageCo 11 currently produces a cleaned, fine-grained magnetite product (presently roughly about 75% -325 mesh, as recovered into product) from the settling pond material. The product has some specialty magnetite uses.
11
See Section 24.2 for more information about the magnetite recovery project
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7.0
GEOLOGICAL SETTING AND MINERALIZATION
The U.S. Geological Survey through Ms. Cheryl Seeger at the Missouri Department of Natural Resources has performed geological work on site, had some of the cores sampled, and mapped the geological outlines of the deposit. Geological work and drill hole information prepared by the company were also used in the study. The geological study was published as a Miscellaneous Field Studies Map MF2353 in 2001. The geological worked performed by Ms. Seeger was used as the basis for the geological model subsequently prepared by DataGeo consultants in 2007 under contract with Mining Plus. PAH audited the model in 2008. The geological model and the resource estimation was prepared and categorized according to JORC standards in effect at the time. Historical data was used for the DataGeo/MiningPlus resource estimation and the data was believed to be reliable and properly obtained, even though most of the data was collected before 2001. 7.1 REGIONAL GEOLOGY
The Pea Ridge deposit is hosted in felsic volcanic rocks of the Middle Proterozoic St. Francois terrain, a remnant core complex of volcanic structures. The St. Francois terrain is mostly siliceous igneous rocks, mainly rhyolitic ash flow tuffs and lava flows, and associated structures such as granitic plutons and volcanic ring complexes. These features are fully described by Kisvarsanyi (1981). The Pea Ridge deposit is located within one of the ring complexes and is thought to be underlain by a granite pluton. The steep dip of the hosting volcanics indicates that they may be part of a collapse block created as a result of a caldera collapsing into one of these structures, referred to as the Pea Ridge pluton (Marikos, et al., 1989; Kisvarsanyi, 1981). Stress tests were undertaken in 1963. In 1977, another series of the stress field was determined using the over coring technique by the U.S. Bureau of Mines (USBM). The tests were undertaken at two sites. One test in magnetite at a depth of 2,405 feet showed the maximum principle stress to be nearly horizontal and parallel to the orebody, with a magnitude of minus 4,564 pounds per square inch (psi). The smallest principal stress was nearly vertical, with a magnitude of minus 2,047 psi. The second test was undertaken in porphyry, where the maximum principal stress was found to be minus 9,464 psi, and the minor principal stress was found to be minus 4,945 psi. The considerable difference in the magnitude of the principal stresses can most likely be attributed to the large contrast in stiffness and strength of the two rock types and the structure of the orebody. Minor seismic activities have occurred in both the porphyry and the magnetite. 7.2 OREBODY GEOLOGY (AFTER OVANIC, 2001)
The steeply dipping, discordant, iron oxide body is hosted by a suite of anorogenic, Middle Proterozoic, rhyolite porphyries. The volcanics are unconformably overlain by 1,100 to 1,400 feet of Cambrian and Ordovician sediments. The host porphyries are a series of rhyolitic flows and ash flow tuffs that strike N80W and dip 75 degrees to 90 degrees northeast. Emery (1968) identifies five individual porphyry units that have been intercepted by mine workings. For detailed descriptions of these units, see Emery (1968, page 361). The magnetite orebody is roughly tabular, striking N55-60E and dipping 75 degrees to 90 degrees southeast. Dips tend to flatten below the 2475 level; however, the lower extent of the orebody is yet to be determined. The dimensions of the known extent of the orebody are approximately 2,500 feet in strike
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length and 600 feet at its thickest point in cross section. It extends from the 1375 level to below the 2735 level (1,300 feet). Typically, magnetite grades run above 45% Mag Fe, with some grades above 65%, and grades appear to increase with depth. Pyrite also occurs in possibly economically recoverable quantities, from dispersed grains to large veins within the magnetite ore zone. The magnetite zone is the most economically important unit within the orebody; however, other zones of geologic and geotechnical interest include a specular hematite zone, a silicified zone, a porphyry breccia, and a quartz-amphibole zone, as well as mafic and aplite dikes. All of these geological zones have been exposed on the 2275 haulage level. In addition to these zones, Marikos, et al. (1989) and Nuelle, et al. (1991) have documented four major rare-earth breccia pipes. These pipes occur along the eastern footwall between the ore and the other lithologic zones. The pipes are generally egg shaped in plain view and are up to 200 feet wide and 50 feet thick. The vertical lengths of these pipes have yet to be determined, but some have been traced up to 400 feet. These pipes dip steeply with the orebody, with dips generally greater than 60 degrees. The main rare-earth minerals in the pipes are monazite, xenotime, and rarely bastnaesite. Gold also occurs in these pipes, generally in concentrations of less than 1 part per million (ppm). However, nugget-effect gold has been found in concentrations as high as 11.9 ounces per ton (Hussman, 1989). There was some interest in developing these pipes in the early 1990s (Tucker and Roberts, 1991). However, in concentrating the monazite, which contains thorium as a constituent, a low-level radioactive material would be produced. Difficulties in processing the monazite ore, as well as potential waste disposal costs, made the project unattractive. 7.3 MAP UNITS
Map units outlined in this report are based in part on those of Emery, 1968. A grade cutoff of 37% Mag Fe (L. Tucker, 2007, Personal Communication) is used to define ore and non-ore units. Individual unit descriptions are based primarily on the mineral assemblages and character of the rock or ore type. Brief genetic discussions are included as needed to clarify relations between units. Those interested in further discussions of genesis of the deposit are referred to Sidder, et al., 1993a and Nuelle, et al., 1991 and 1992. The following description of four of the 21 map units comes from Seeger, et al., 2001. 7.3.1 Description of Map Units i) bp Rare earth elements (REE) mineral-bearing breccia pipes. Rare earth elements mineral-bearing minerals include monazite, xenotime, and rare bastnaesite and britholite. Monazite and xenotime occur as radial crystal aggregates and granular crystals (0.02 to 0.08 inches). They also replace wall-rock microfragments and fill fractures in barite and potassium feldspar crystals in groundmass (Nuelle, et al., 1992). Total REE oxide concentrations of grab samples range from about 2.5 to 19 weight percent. USBM bulk samples range from 7 to 25 weight percent and average 12 weight percent (C.W. Vierrether, USBM, Oral Communication, 1990). Four pipes have been delineated along the footwall and eastern edge of orebody. They occur at or near contacts between major lithologic zones and may have been emplaced along zones of weakness created by faults. Contacts of pipes with wall rock and hematite are commonly irregular; some contacts are embayed. The pipes are steeply dipping (greater than 60 degrees) and elongate to ovoid in plain view. Horizontal length is as much as 197 feet; widths reach as much as 49 feet.
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Their maximum vertical extent is unknown, but one pipe extends a minimum of 394 feet modeling (Seeger, 1992). ii) h Specular hematite. Finely to coarsely crystalline, generally platy, massive specular hematite constitutes a major part of iron oxide body in the uppermost mined levels, eastern footwall, and eastern margin of orebody. Width varies from about 400 feet where it covers the top of orebody to less than 25 feet at deeper levels. Contacts between hematite and magnetite are commonly gradational; hematite commonly contains irregularly distributed patches and areas of magnetite. Hematite (as martite) is primarily an alteration product after magnetite. It formed in part along fault zones and is locally sheared and foliated parallel to post-ore faults. On the uppermost mined levels, martite may be the result of oxidation by meteoric water and groundwater. hu Hematite, undivided. Massive hematite and hematite-cemented breccias. Exposed only on several of the lower levels of the mine. m Magnetite. Dark-gray, fine-grained, massive to brecciated magnetite. Map unit characterized by containing 58% or more magnetic iron or less than 20% clasts. Gangue minerals form interstitial intergrowths, net-textured veinlets, and pods within the ore, and include apatite, quartz, and phlogopite with minor amphibole, chlorite, pyrite, fluorite, barite, calcite, chalcopyrite, and monazite, and traces of grunerite, talc, and other minerals. Texture varies from massive and shiny with subconchoidal fracture to finely crystalline and granular. Some ore has a porphyritic texture, consisting of magnetite (or martite) and hematite (specularite) megacrysts in a massive, fine-grained groundmass of magnetite. Magnetite is commonly brecciated and cemented by barite and calcite near REE mineral-bearing breccia pipes (unit bp). Magnetite is the only ore mineral recovered at Pea Ridge. Ore faces contain as much as 90 volume percent magnetite, and ore grade averages about 55% Mag Fe (Emery, 1968). Ore grade cutoff is about 37% Mag Fe.
iii) iv)
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8.0
DEPOSIT TYPES
Cheryl Seeger of the Missouri department of Natural Resources describes the Pea Ridge iron deposit as follows: 8.1 GEOLOGY
The Pea Ridge iron ore deposit near Sullivan, Missouri, in Washington County, is a dike-like body of magnetite hosted by Precambrian porphyries. The orebody forms the top of the Precambrian surface at 1,300 feet and extends to an unknown depth. It dips nearly vertically, intersecting the dip and strike of the enclosing porphyries at a sharp angle. Faulting, both pre- and post-injection, appears to be of minor consequence. The orebody is composed primarily of magnetite with specular hematite, quartz, apatite, and pyrite occurring as accessory minerals. Massive specular hematite is primarily present in the cap of the orebody that was exposed at the Precambrian surface, and is also present in the footwall of the orebody. Except for secondary hematite zones, ore contacts are exceedingly sharp. Relatively fresh porphyry is enclosed in the magnetite along the hanging wall and in the western portion of the orebody. Hanging wall quartz-amphibole and footwall quartz-hematite occur as replacement of porphyries on the margins of the magnetite ore. Further alteration has caused sericitization of parts of these zones. The ore deposit is interpreted as being an injection or intrusion of an iron-rich magmatic differentiate with hydrothermal end phases forming the quartz-amphibole and quartz-hematite, comparable to Kiruna or Olympic Dam.
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9.0
EXPLORATION
The Pea Ridge Mine is a developed underground iron property where active mining ceased in 2001. Original exploration consisted of surface drilling to identify a magnetic anomaly identified by airborne geophysical instruments in 1949 and 1951. Twenty-four holes were drilled from the surface to identify the location of the orebody. During the mining operation, over 600 underground core holes were drilled to define the limits of the orebody. As is currently known, the orebody extends to unknown depths, and eventual exploration will be targeted at deepening the mine and defining the extent of the orebody. The ore zones are readily identified in the core logs and some cores are available on site and in storage at the Missouri Department of Natural Resources as discussed previously. The ore zones were sampled on approximate 10-foot intervals and assayed. In some cases, adjacent rock was sampled and assayed to bracket the ore zone. Further discussion of sampling is included in the sampling section. The author believes selection of samples for assaying was properly conducted to standards at that time. The existing drill holes appear to provide a representative sample of the deposit. 9.1 EXPLORATION POTENTIAL
The mine is currently filled with water and the underground workings are not accessible at present for continuing exploration at depth. A pre-feasibility report prepared by Behre Dolbear in 2008 identifies a proposed infill drilling project to further identify the orebody below the lowest mined level and improve confidence in the mineral resource that has not been previously identified. The initial proposed future development region is between minus 2,520 feet and minus 2,860 feet in the magnetite domain. In order to improve confidence in the resource and to provide more accurate information in the development region, an underground infill drilling program was designed on approximately 100-foot centers both along strike and down dip. The infill drilling program defined 32 holes on eight sections along the strike of the magnetite domain. Other than extending the limits below previously mined levels, exploration outside the known extent of the orebody is not contemplated at this time. 9.2 CURRENT EXPLORATION ACTIVITIES
At the present time, no exploration is in progress.
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10.0
DRILLING
In 1948, a consortium of the U.S. Geological Survey (USGS), the Missouri Geological Survey, and industry financed an aeromagnetic survey of parts of southern Missouri that originally mapped the magnetic anomaly of the Pea Ridge iron deposit. The anomaly was later verified by ground magnetic surveys. The St. Joseph Lead Company drilled the anomaly and intercepted high-grade magnetite. Approximately 25 surface cores were drilled from 1953 to 1959 to explore and define the deposit. Most core drilling was done in the equivalent of a size (1.375 inch diameter core). Rotary drill holes were only used as checks and to indicate the edge of mineralization. Average core recovery appears from the original logs to be in the range of 85% to 90% and the results over 30 years have basically substantiated the grade estimates based on these recoveries. Drill core logging was done by Jack Emery, the long-time geologist at the Pea Ridge mine, and was completed primarily to identify ore versus waste rock and to determine where ore and mineralization grades changed. The core logging was in a short-hand form, due to the relatively simple mineralogy of the ore and nature of the ore and gangue contacts. Mafic dikes were noted with great consistency due to the potential related to ground problems. The two iron ore bearing zones are the predominantly magnetite (with small amounts of hematite) and hematite zones. The magnetite zones are relatively easy and competent ground to mine through. The hematite zones are extremely hard ground. It is relatively easy to separate out the less desirable hematite from the magnetite, with the resulting magnetite ready to process for steelmaking. The hematite requires further costly processing prior to being sent for steel production (C. Seeger, 2007, personal communication). The Pea Ridge Iron Ore Company granted access to the mine to staff of the Missouri Geological Survey for purposes of geologic mapping, for topical studies to determine ore genesis, and for investigations of the potential for mineral commodities other than iron, such as rare earth elements and gold. Logs examined by Seeger, Missouri Geological Survey 1990, during geologic mapping of the mine were interpreted in terms of map units and in general did not include re-examination of the core, as unit determinations were possible with the information available (Section 7.0 for details of the map units). The drill core logs were reinterpreted by Seeger for adaptation with developed map units, and 11 geology level plans were compiled in 1991. Geological plans were produced for the 1375 level, 1675 level, 1825 level, 1925 level, 2125 level, 2275 level, 2370 level, 2440 level, 2475 level, 2505 level, and 2675 level. 10.1 DRILLING LOCATIONS
The underground drilling data consisted of 622 holes with prefixes of either 9 or PRU. These holes were drilled from development drifts at various dips and orientations. They ranged in length from 32 feet to 1,033 feet with 3 holes having no length recorded (GeoData Report, 2008). The location of these holes is shown in Figure 10.1 together with the center line string of the underground development.
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Figure 10.1.
Underground drilling
In total, 6,510 sample intervals were recorded of which 5,834 contained %Fe assay values ranging between 1.0% and 77.1%. The database also includes intervals with no assay values where either no samples were taken in a drill hole or the interval is at the top or base of the hole. It is assumed that % Mag is a percent of the whole sample and not a percent of the Total Fe. The dip and orientation of the underground holes was recorded as dip and direction. No holes contained down-hole survey information. Ms. Seeger of the Missouri Department of Natural Resources, tabulated the diamond drill information in September 2007 into an electronic drill hole database for Pea Ridge Mine to represent the hole number, the coordinates of the collar (X, Y, Z), hole dip, hole direction, and assay information. The data were structured to be used to build a resource shape and block model with software. 10.2 DRILL CORE STORAGE
Ninety-five (95) drill cores are housed at the Missouri Geologic Survey McCracken Core Library, Missouri, Rolla, with appropriate information, including location, identification, and company, included in the core catalogue. Paper logs are housed in the Missouri Geologic Survey core files. Electronic information related to the logs is housed with the Geologic Resources section, Missouri Geologic Survey. The 95 drill cores include cores drilled for underground infill drilling locations, surface drilling during exploration, and drilling during evaluation for Olympic Dam type mineralization. All other cores are stored in the core storage facility on-site at Pea Ridge Mine.
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11.0
SAMPLE PREPARATION, ANALYSES, AND SECURITY
The cores from underground drilling were handled completely within the mine property and assayed at the mine laboratories. The following is text from a hand-written description of the sampling procedure: Handling of Diamond Drill Core Sample Selection The Mine Geologist logs the core and determines the sample intervals. For actual core sampling, depending upon the core size, the core is split or broken into 1-1 ! length. Ordinarily 50% of the core is sent in for assay. Alternate sections are taken from the drill core to make up this sample. Ordinary sample intervals are at 25 feet, and depending upon core size this may be one or two sample bags. Sample bags are labeled as to core number and sample interval. Samples are delivered to the lab for assay by the Yard Department. The geologist normally picks up the sample bags for reuse. From the remaining 50% of the core one half (25% of the original core) is placed in steel trays for more permanent reference. The same sample method is used (alternate Sections) and the wooden interval blocks from the drill trays are included. The steel trays are labeled as to drill hole number and hole interval contained. The completed steel trays are handled by the yard department and stored in the pellet plant blower room. The remaining 25% of the original core is discarded. Because most of the underground cores recovered are of a relatively small diameter, it was felt difficult or impractical to split the core lengthwise, and consequently the selection of alternate pieces of core for assay was established as a sampling protocol. Seeger and others have noted that the high-Fe mineralized zones visually seem homogeneous and uniform, but conversely it has also been observed that the zones do contain some variability due to presence or absence of apatite seams, breccia clots, etc. The following describes the sample preparation and analysis program used by the previous operators of the mine (PAH report, 2008): Analytical Procedures. The core holes and underground channel samples were all assayed at production laboratories at the Pea Ridge mine site. The use of replicate and duplicate samples was very minimal as a mining exploration procedure, but no referee or external assays were run as checks on the accuracy of in-house laboratories. Analytical Quality Assurance/Quality Control (QA/QC) Program. The primary QA/AC procedure was the comparison of reserve estimates with actual stope and blast hole sampled grades. Density Determination. Density measurements were made on dozens of samples taken from the various rock types represented in the several Pea Ridge alteration and mineralization types. Densities were determined using water immersion of a paraffin coated piece of drill core. Early on the Pea Ridge operations found a direct correlation of density with total iron content and by the late 1960s had switched to a reserve modeling density based on the total iron content with ranges and divisions based upon 5% increments of total iron.
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The author believes that sampling was done properly to the standards at the time. Since usually whole cores were sampled and analyzed, no split core segments are available to send to a laboratory for check assays. The possibility exists that the alternate core segments retained are still available. Because this was a producing property, there is ample evidence and support for accepting the grades of the sample assays as reasonable.
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12.0 12.1 DATABASE
DATA VERIFICATION
A digital drill hole database was compiled by Ms. Seeger of the Missouri Department of Natural Resource from original paper drill hole logs and assay sheets. The database included data for surface and underground drill. The data is stored in spreadsheets and includes the following: i) Surface Drilling The details of 24 holes, including elevation of collar, the core number, the collar coordinates in local grid, the pitch and bearing of the hole, the length of the hole, the top and base of samples taken down hole, percentage of Total Fe, and minor comments on the core. The holes were vertical and ranged in length from 1,313 feet to 3,273 feet. Of the 24 holes, 12 were outside the geological domains as laid out by Seeger. In total 447 sample intervals were recorded of which 414 contained %Fe assay values ranging between 5.2 and 70.3%. The 33 intervals are mostly at the top and base of the hole or if a hole was not sampled the entire hole were assigned a value of -99 12. ii) Underground Drilling The details of 622 holes, including levels drilled from, the core number, the collar coordinates in local grid, the pitch and bearing of the hole, the length of the hole, the top and base of samples taken down hole, percentage total of iron (% Fe) and percentage of magnetic iron (% Mag), and minor comments on the core. These holes were drilled from development drifts at various dips and orientations. No holes contained downhole survey information, so it is assumed that direction and dip were measured at the collar. The drill holes ranged in length from 32 feet to 1,033 feet with 3 holes having no length recorded. In total 6,510 sample intervals were recorded of which 5,834 contained %Fe assay values ranging between 1.0% and 77.1%. The 676 intervals with no assay values are mostly at the top and base of the hole or if a hole was not sampled the entire hole were assigned a value of minus 99. 5832 intervals contained % Mag values between 0.05 and 71.5% with the number containing no assay being 678. The location of the underground holes is shown in Figure 10.1 together with the centerline string of the underground development. 12.2 DATA VERIFICATION
The author has reviewed the DataGeo report and the report of the PAH audit of the database and the resource modeling. A small portion of the original paper drill hole records was also reviewed. The DataGeo report lists several known data errors that are most likely transcription errors from the time the data was converted to a digital format. The author viewed the original paper, handwritten data records, found most of these locations and corrected the data. Errors included a collar location error and several typos in the assay data. During this process, original data as well as the errors were checked and found to be accurate.
12
An arbitrary number selected to indicate no assay was made for the interval.
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The data was also imported into the Micromine software for additional validation and checking. Additional errors in the database were noted during the validation process and were corrected. An extensive audit of the drill hole data was not done for preparation of this report, but the author believes the data can be considered reasonably accurate.
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13.0 13.1
MINERAL PROCESSING AND METALLURGICAL TESTING
HISTORICAL
When the Pea Ridge Mine was in operation, magnetite was recovered with a standard magnetic separation process. A pellet plant was in operation to prepare the product for shipment to the steel mill. The pellet plant has since been dismantled and removed from the property. 13.2 PROPOSED BENEFICIATION DESIGN
Behre Dolbear, in its 2008 pre-feasibility study, proposed a beneficiation design. The proposal included treating the magnetite by flotation, then converting the concentrate to slurry for transport by pipeline to Crystal City on the Mississippi River. PRR has not yet made a decision about how the magnetite will be processed and may decide to handle the ore differently from the current proposals. Metallurgical testing will depend on the ultimate product. Processing could be done with a standard magnetic separation circuit or if a purer product is required, additional circuits could be added as needed. As a consequence, no recent metallurgical sampling or testing work has been done on the property and no decisions about how to process the ore have been made.
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14.0
MINERAL RESOURCE ESTIMATES
Data available for building the resource estimate include the following: Geological plans and sections prepared by Ms. Seeger for the USGS report about the Pea Ridge property. The digital database containing the collar, direction, and assay data. Strings 13 representing the five geological domains as digitized from the Seeger section and plans, and center lines of the existing underground workings. These strings are used to build the 3D geological solid model. The solid model is used to constrain the block model. 14.1 MODEL CONSTRUCTION
DataGeo constructed a solid model and estimated iron values in a block model. The following summarizes the process that DataGeo followed to build the model and the results of the analysis. The plans and sections provided as digital strings contained outlines of the five domains reflecting the magnetite ore, the hematite ore, and three breccia ore zones. The delineation of the domains is based on historical iron grade limits and was developed by Seeger. The plans represented levels between minus 1,375 feet elevation and minus 2,675 feet elevation at various spacings (taken from USGS information) as was the information on five sections along the strike of the deposit. DataGeo used the strings plus the drill hole information to build a geological solid model using the Vulcan software application. The solid model was built by connecting the geological outlines on a level to those above and below. The software then builds a solid by establishing a network of triangles that describe the surfaces. The solid is closed so a volume can be calculated within the solid and the boundaries of the solid can intersect the block model. The solid is also a boundary during the interpolation process so only data points within the boundary are used to influence the value estimated for each block inside the solid. A block model was built for grades, and the blocks were estimated using Inverse Distance Squared. Block values were estimated for the percentage of Total Fe (% Fe) and for the percentage of Magnetic Fe (% Mag) 14. 14.2 SOLID MODELING AND MINERALIZATION DOMAINS
The strings provided in plain view were solid modeled between levels when appropriate. This model was compared to the sectional interpretation and modification made to reflect variation in this orientation. Each geological domain was treated separately and terminated, if appropriate, at half the distance to the next level or section. The end plane projection was the same shape as on the level. The resultant solids are shown in Figure 14.1 and Figure 14.2.
13
Strings are simply a list of points with XYZ coordinates that can be joined to make lines, polylines, and enclosed boundaries. 14 It is assumed that the percentage of magnetic iron is a percentage of the whole sample and not a percentage of the total iron. The specific gravity applied was based on the iron content. Project 12-006
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Figure 14.1.
Plan view solids representing geology domains
Figure 14.2.
Perspective view of geology domains to north
In the figures, the color coding of the solids is as follows: Blue Orange Light Blue Red Pink Magnetite (m) Hematite (h) Magnetite cemented heterolithic breccia (mhbo) Magnetite cemented amphibole breccia (mabo) Magnetite cemented pseudobreccia (mpbo)
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14.3
BLOCK MODELING
DataGeo consultants (2007) set the block model size as stated: The underground extraction design and review of block size against variance was decoded to generate a block model using 30 meters East by 15 meters North by 24 meters relative level (RL) parent cells. Sub-celling within the parent cells to match mineralization boundaries was set to a size of 15 meters East by 8 meters North by 3 meters relative level (RL). The block sizes after sub-blocking were either 50 feet or 100 feet in the East direction, 25 feet or 50 feet in the North Direction, and between 10 feet and 80 feet in the vertical direction. The block size varies to fit as closely as possible to the solid model boundaries. The elevation range and block height were set to match the proposed level development in the mine plan. 14.4 RESOURCE INVENTORY
DataGeo provided an estimation of resources from the block model and classified the resources based on the JORC (Australian) code. The following describes the process and the classified resource as estimated. Magnetite was the only ore mineral recovered at Pea Ridge. Ore faces contain as much as 90 volume percent magnetite, and ore grade averages about 55% Mag Fe. Cutoff grade used is 37% Mag Fe. The resource is classified in terms of the Australian Joint Ore Reserves Committee (JORC) classification into the categories of Measured, Indicated, and Inferred. The classification was applied based on: Confidence in the mineralization interpretation Previous history of mining The input data spacing The grade continuity Overall, the location of the mineralization is well understood and appears consistent with the geology and styles of mineralization present. The drill hole information is fairly uniformly spaced in the central area of the deposit both along strike and down dip. The confidence in the continuity of the mineralization can be considered medium to high based on data density. The variograms gave inconclusive results in terms of grade continuity direction internal to the mineralization. A global Ordinary Kriged grade estimation was run using the same parameters as were used for the variography. Based on the magnetite domain, the total in situ mineral resource in the magnetite domain is summarized in Table 14.1 There is no allowance for volumes that were removed due to underground mining.
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TABLE 14.1 CLASSIFIED EXPANDED IN SITU MINERAL RESOURCE IN MAGNETITE DOMAIN EXCLUDING BRECCIA PIPES Short Tons Class % MFe % TFe (! 1,000) Measured 85,902 52.7 59.0 Indicated 91,414 52.9 59.1 Total 177,316 52.8 59.0
In addition to the classified Measured and Indicated Resource, DataGeo also determined that the resource that meets an Inferred standard was about 31 million tons with 54.3% MFe. A portion of the block model had additional areas that were unclassified because the blocks were too far from data points or did not have enough information to estimate a reliable grade. The tonnage contained in unclassified blocks was estimated at 6.6 million tons with a grade of 52.4% MFe. Given that the individual zones were tightly constrained and the variography poor, it was decided to use the grade distribution relationship of inverse distance to the power of two for this preliminary grade estimation. Also, since magnetite was the primary ore mineral of interest the amount of magnetic iron was measured directly. The percentage of iron (% Total Fe) was estimated using the same parameters. Previous mining has occurred to the minus 2475 level, thus the assumption can be made that the resource in this area was of high confidence and that resources planned to be mined immediately below the mined area are of similar high confidence, i.e., to a depth of minus 2,840 feet. The drill hole information is fairly uniformly spaced in the central area of the deposit, both along strike and down dip. In terms of data density, the confidence in the continuity of the mineralization can be considered medium to high. In order to mathematically quantify confidence, a global Ordinary Kriged Grade Estimation was run, using the same parameters as were used for the variography but without reference to the mineralization zones and with the search distance set to the secondary ranges. The estimation error was captured. This error was tuned graphically against the mineralization solids and the drill hole data. A scheme to determine resource classification was established as follows: Class = Measured if the block falls within the mined-out area projected to minus 2700 level, the maximum depth of existing development. Class = Measured if the block had a global estimation error less than 0.0085 and a block was estimated using more than 10 composites from three or more holes. Class = Indicated if the block had a global estimation error less than 0.0085 and a block was estimated using between 5 and 10 composites from two or more holes or if block was above minus 2,900 and within the magnetite domain. Class = Inferred if the block had an error of greater than and equal to 0.0085 and less than 0.001.
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Any block with an error of greater than and equal to 0.001 was not classified. Based on the expanded magnetite domain, the total in situ mineral resource (all domains) is shown in Figure 14.3 and Figure 14.4. There is no allowance for volumes that were removed due to underground mining.
Figure 14.3.
Mineral resource model (a)
Figure 14.4.
Mineral resource model (b)
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Color classification of Figure 14.3 and Figure 14.4 are: Red Pink Yellow Blue 14.5 Measured Indicated Inferred Unclassified
RESOURCE MODEL AUDIT
PAH audited the mineral resource estimated by DataGeo Geological Consultants. PAH used the criteria established by DataGeo to independently calculate the resource. PAH compared the results their audit of the DataGeo resource estimation model, and the PAH results are reported as follows: DataGeo Total: 228,010,000 short tons at 48.26 % magnetic iron, 57.62 % total iron PAH model: 221,031, 000 short tons at 52.65% magnetic iron, 58.77 % total iron The above DataGeo figures were computer generated without regard to the material removed by historic underground mining which data and records (according to DataGeo) indicate was approximately 53,000,000 tons of iron mineralized material. PAH subtracted the historic production using the above DataGeo tonnage to arrive at a balance remaining of: 175,009,960 short tons at 48.26% magnetic iron and 57.62% total iron, which includes a remaining reserve of approximately 157 million short tons only in the magnetite zone. The author used the drill hole data, the underground workings, geology outlines by level, and the block model as available and listed above to verify the data locations and the block model. The drill holes were plotted along with the centerlines of the underground workings. The resulting plot of drill hole locations and deviations is accepted as a true representation of the drill holes. The solid model generated by DataGeo was not available, but a check was made to determine whether the model blocks were properly within the geology outlines. The blocks fit very well within the geology outlines. Blocks within the model were summed, but the total deviated from the tonnages reported by DataGeo. The average grades were, however, very close. The author accepts the resources as estimated by DataGeo and audited by PAH as generally reasonable, but cautions that these estimates are based on historical unverified data and accordingly cannot be fully relied on. In addition, the author believes that the block model supplied is probably not the final block model as covered in the DataGeo report.
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15.0
MINERAL RESERVE ESTIMATES
A mineral reserve has not been determined because decisions have not yet been made about how the deposit will be mined, and the capital and operating costs required for planning a current operation in todays economy.
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16.0 16.1
MINING METHODS
HISTORICAL MINING METHODS
The Pea Ridge Mine is an underground mine with access by vertical shaft. When the mine was in operation, sub-level stoping was the primary mining method used. Early in the mine operation, modified shrink stopes were used. At one time, sub-level caving was tried experimentally. Several sub-level caving schemes were tried, but this method was eventually abandoned because of increasing stresses and ground failure in the sub-level stoping areas below. Panel stoping was another method that was used, which was a combination of sub-level caving and mechanized stoping. The mine had two 19-foot diameter concrete-lined shafts. The shafts were used for hoisting ore to the surface and also for moving men and materials. Fans on the shafts provided air to the underground workings. Mainline haulage, mine services, and facilities are all located in the footwall on the north side of the deposit. Crosscuts and underground ventilation raises were used for access and fresh air. The operation was planned for up to 3 million tons per year, but that level of production was only reached once during the years of operation. At present, the mine has filled with water to about 300 feet below the shaft collar (Bullock, in Underground Mining Methods Engineering Fundamentals and International Case Studies). 16.2 PRE-FEASIBILITY STUDY
Behre Dolbear performed a pre-feasibility study on the Pea Ridge Mine in 2007-2008 that focused on a mining method and processing scenario that was being considered at that time. At the present time, the economic factors used in that study are no longer applicable and PRR has not determined a production scenario for future mining.
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17.0
RECOVERY METHODS
When the Pea Ridge Mine was operating, a standard magnetic separation process was used to recover magnetite and convert to pellets. At this time, the Company has not made decisions about how ore will be processed.
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18.0
PROJECT INFRASTRUCTURE
The following description of the project infrastructure is from Techniques in Underground Mining, Editors: Richard E. Gertsch, Richard L. Bullock, and Society for Mining, Metallurgy, and Exploration 1998; and from personal communication by Richard L. Bullock. Part of the description is about the underground infrastructure, which is currently under water. The mine still has some major infrastructure in place. There are two head frames: No. 1 head frame with two, double-drum, ground-mounted hoists and No. 2 head frame, topped with three Koepe friction hoists. No. 1 shaft (service shaft) has a single large cage compartment and two skip compartments. No. 2 shaft has two identical Koepe skip/counterweight hoists, with the skips guided by rubber wheels running on triangular steel guides supported by steel sets. The counterweights are guided by rope guides. A third Koepe hoist has a small cage and counter-weight. All hoists are still in place. The head frames sit over two, concrete-lined, 5.8 meters (19 feet) shafts, each approximately 762 meters (2,500 feet) deep. On the 2475 level, there is a crusher station, fed by a primary ore pass. The 1 meter (42 inch) gyratory crusher was fed by a 1.8 meter (72 inch) reciprocating plate feeder. This equipment is still in place, but it was considered ready for replacement when the mine was closed. The same is true of the ore pass; it is in need of rehabilitation. From the crusher, the ore was conveyed up to the 2275 level loading station, where there is a skip loading arrangement. The conveyor system and the skip loading equipment will likely need to be replaced. There is a mine drainage pump station that has ample storage capacity at 1375 feet below shaft collar off shaft No. 1. Water was pumped in stages from the lowest point in the mine (2750 level) and the No. 1 shaft bottom (2505 level) to the 2275 level pump station and on to the 1375 level pump station and from there to the surface. While the pumps and piping are all still in place, the pumps are assumed to be non-salvageable (since the water is saline). Some of the vertical discharge piping may be useable. While some related power equipment may still be in place underground, it is assumed that it will have to be replaced. Seven stoping-haulage levels were developed between the 1375 and the 2475 levels during previous operations; however, most of the ore has been removed from these levels. Most of the remaining ore will be removed in the early period of the new operation. The 2675 level was partially developed and will be utilized in future stope development. On the surface, there is a compressor house, a diamond drill core building, a two-floor large office building, and large general services, workshop, and stores buildings. Other infrastructure such as the concentrator and pellet plant has been demolished and removed. Section 4.0 has more information about the infrastructure.
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19.0
MARKET STUDIES AND CONTRACTS
At this time, no market studies have been done, because decisions have not been made about the types of products the mine will produce. The Behre Dolbear and PAH pre-feasibility studies estimated economics of the project, but no market studies were done at the time.
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20.0 20.1
ENVIRONMENTAL STUDIES, PERMITTING, AND SOCIAL OR COMMUNITY IMPACT
MINE SAFETY AND HEALTH ADMINISTRATION (MSHA) MINE IDENTIFICATION NUMBER
The Pea Ridge Mine has been assigned the MSHA Mine Identification number 23-02356. The application to change the ownership name from Wings Enterprises has been submitted to MSHA; however, the information has not yet been updated in the MSHA on-line system. 20.2 ENVIRONMENTAL STUDIES AND ISSUES
20.2.1 Potential Environmental Liabilities Environmental Operations, Inc. of Saint Louis, Missouri conducted a Phase I Environmental Site Assessment of the property in 2001. A product of the study was a summary of the environmental conditions at that time as listed in the Conclusion section from the report: Several environmental concerns were discovered during the Phase I Environmental Assessment on Pea Ridge Iron Ore Companys manufacturing area, located south of the intersection of Highway 185 and County Road EE in Washington County, south of Sullivan, Missouri. The potential environmental problems determined to require further investigation, response, and/or remediation include: Concrete floor staining in several buildings may have reached the subsurface through floor joint and wide cracks. A 30,000-gallon fuel oil underground storage tank (UST) is located on the subject site. It is not unusual for USTs greater than twenty years old to have leaked. Significant soil staining was noted next to a fuel oil dispenser. Some of this staining may be related to a 1979 release. However, it also appears that some of the staining is newer and may be the result of overfilling at the pump dispenser, and leaks and drips from the dispenser nozzle. There is significant surface soil staining within and outside of the earthen berm surrounding a 420,000-gallon above-ground storage tank containing #6 fuel oil. There is also considerable staining in the vicinity of this tank. Minor PCB contamination was noted in soils in the Bone Yard. Approximately two gallons of transformer oil was once spilled in the general vicinity of the two mine entrances. The exact date and location of this spill is not known. A stained area of soil (approximately 15-feet square) was noted near the Lower Tailings Pond. This is an area where explosives were burned.
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Damaged thermal system insulation was noted, along with spray-on surfacing insulation. Other potential asbestos-containing materials were noted in various subject site building. In 1979, a release occurred on the subject site as a result of a faulty hose connected to the former tank cars. The fuel oil entered a storm water inlet and proceeded southward underground and downhill until it entered Marys Creek. From there, the spilled materials moved eastward into the lower settling pond. No other significant environmental liabilities or offsite concerns affecting the subject property were detected. However, it must be noted that the intent of our environmental assessment and this report is to assist in understanding environmental concern which were able to be identified with the constraints of our proposal. This assessment was not designed to disclose the existence of potential environmental liabilities detectable only by more sophisticated means. Although, if such liabilities exist, the assessment may have brought them to light as the Scope of Work performed be considered appropriate for evaluating the subject site. A current environmental assessment would be needed to determine whether any of these conditions are still in effect or if the conditions have been mitigated since 2001. 20.3 PERMITTING
The mine site and future operations will require maintaining existing permits and obtaining a number of new permits. Information about the 2012 status of permitting is provided below by PRR management. The permits currently in effect include the following: Mining Operations. PRR holds Missouri permit MM-007T from the Missouri Department of Natural Resources, which allows mining operations, including waste rock and tailings storage. Metallic Mineral Waste Management Act (MMWMA). An MMWMA requires permits for metallic mineral processing facilities and specifically addresses the disposal of waste from mining and beneficiation/processing. This permit covers processing the existing settling pond material. It has an open expiration date and renewed each January as long as the $7,500 annual fee is paid. PRR is current on the payment. Missouri State Operating Permit National Pollutant Discharge Elimination System (NPDES). NPDES permits are renewed every 3-years by the Missouri Department of Natural Resources (MoDNR). PRR completed the permit renewal process between June 2011 and December 2011, and are awaiting the physical permit to arrive by mail (as of end February, 2012). The same Outfall-001 (the point source and storm water discharge point) will remain the discharge location. Alberici, on behalf of PRR, has discussed with Missouri Department of Natural Resources that water from the underground mine would be pumped into the Tailings Lake after a portion is used to supply the current reclamation operation instead of pumping from the Meramec River. Water pumped from the mine will all eventually flow
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through the same Outfall-001 discharge location. PRR is in the processing of completing a dewatering plan and water samples from various elevations of the underground mine to formally request amending the current NPDES permit to include the increased flow from dewatering. NPDES outfalls and groundwater monitoring analyses were performed on March 9, 2007. Samples were variously analyzed for pH, total dissolved solids, total cadmium, total iron, total lead, total zinc, fluoride, chloride, sulfate, phosphorus, ammonia (Outfall #2 only) and oil/grease (Outfall #1 only). Tailings Dam Registration Permit. Missouri requires that non-federal, non-agricultural dams 35-feet high or more must have registration and safety permits. This permit is issued for 2-year durations following an inspection by the Missouri Department of Natural Resources once every 2 years. The current permit expires October 14, 2013 and was last inspected by Missouri Department of Natural Resources on July 28, 2011. Water Supply Use Permit. PRR registers each year to use water from the Meramec River, and pays a fee based upon volume. PRR has registered and paid all of the current fees since constructing and operating the SalvageCo business of cleansing / selling the magnetite concentrate reclaimed from the former sediment ponds. Miscellaneous Permits/Plans. Various permits have been issued by the Missouri Department of Natural Resources and the U.S. Amy Corps of Engineers (USACE) during the process of remediating the former sediment ponds / closing the former sewage lagoon, constructing the new processing facility, and operating the SalvageCo business of cleansing/selling the magnetite concentrate reclaimed from the former sediment ponds. The Spill Prevention, Control and Countermeasures (SPCC) and a Storm Water Pollution Prevention Plan (SWPPP) plans approved during this process are in the process of being amended as the restoration activities have been inspected as complete.
The following permits are expected to be needed at some time in the future when additional work on the property proceeds.
Industrial Mineral Mining Permit Certificate. PRR must obtain an Industrial Mineral Mining Permit Certificate to develop the proposed mine decline and sell the excess limestone and rhyolite excavated during the decline construction. The permit will only be needed if a decision is made to access the underground mine with a decline. Air Permit. The Missouri Department of Natural Resources issued a Determination Letter that an Air Permit was not required for (i) the construction work previously performed to remediate the former settlement pond, (ii) build the new (SalvageCo) processing facility, and/or (iii) operate the SalvageCo business of cleansing and selling the magnetite concentrate reclaimed from the former sediment ponds. Additional review and/or potential permitting may be required whenever additional operations beyond what is described above are considered. Hazardous Waste Management (RCRA). Because no hazardous waste is being produced or stored on the property, this permit is not required. A permit may be required if any proposed operations generate hazardous waste.
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Additional permits for wastewater disposal, drinking water system, land disturbance, explosives storage, building, etc. are not currently needed, but would be pursued at the appropriate time ownership elects to further develop the property. 20.4 SOCIAL/COMMUNITY IMPACT
Sullivan is a community of some 7,000 people and has schools and clinics for doctors, dentists, and chiropractors. The area around the mine is also a recreational resort area, which could also provide opportunities for temporary accommodations if needed. Unemployment in the area is high and PRR believes that former employees would be willing and able to again work at the mine. At the present time, several former employees are being employed to catalogue historical documents.
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21.0
CAPITAL AND OPERATING COSTS
Decisions have not been made about how to proceed with mining and processing, so no capital and operating costs are available at this time.
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22.0
ECONOMIC ANALYSIS
Because decisions have not been made about how to proceed with mining and processing, no economic analyses have been done.
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23.0
ADJACENT PROPERTIES
Historic lead and zinc mining in Old Lead Belt covered about 110 square miles in southeastern Missouri. The first recorded mining occurred in the Old Lead Belt in about 1742. The production of lead increased significantly in the Old Lead Belt during the mid-19th century and lasted up to 1970. At the time of its closure in 2001, the Pea Ridge Mine was the only operating underground iron ore mine in the United States. Several deeply buried iron ore deposits may exist in southeast Missouri, but no iron ore mines are presently operating in the area. 23.1 INTERNET INFORMATION ABOUT PEA RIDGE MINE
The following Internet sites have interesting information about the Pea Ridge Mine and other properties in the area. Pea Ridge Mine, Sullivan, Washington County, Missouri. History of the Pea Ridge property as well as history of mining in the eastern part of Missouri. http://www.mindat.org/loc-3868.html RockWare made an animated video from the Seeger geological report and sections. http://www.youtube.com/watch?v=OZR2dEJmcgo Summary of the Pea Ridge Mine from Kevin Conroy Minerals. Included are a summary of the operation and a series of pictures taken while the mine was in operation. One of the pictures shows an evergreen tree in a rail car containing the first load of pellets produced from the mine. Information about the tree includes the following: First carload of iron ore pellets leaving Meramec Mining Company's new Pea Ridge Mine with the traditional evergreen tree. The placing of a tree on the first carload of ore shipped from a new mine stems from an old Teutonic custom introduced around 700 AD. It symbolizes fruitfulness, health, long life and good luck. http://www.kcminerals.com/pearidge2.htm.
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24.0 24.1
OTHER RELEVANT DATA AND INFORMATION
TAILINGS REPROCESSING PROPOSAL
In 2009, Dr. Bo Arvidson investigated the potential mineral resource in the tailings pond, devised and supervised a sampling program, and produced samples for assaying. Also, a preliminary limited separation scoping test was conducted. The subsequent report described the drilling and sampling program with resulting assaying and resource estimate, the separation test and the conceptual flowsheets based on the test, historical information and mineralogical evaluation. Additionally, preliminary projections of possible production yield and revenue in the form of a spreadsheet was included as well as preliminary CAPEX estimates. The report was written by Dr. Bo Arvidson, Registered Member, SME. The drilling program, drilling supervision and handling of the raw samples was managed by Mr. Joe Wojcik, Professional Geologist. 24.2 REPROCESSING OF MAGNETITE ACCUMULATED IN SETTLING PONDS
At the present time, SalvageCo was contracted by PRR to reprocess fine-grained magnetite accumulated in settling ponds. The company is reclaiming magnetite concentrate that accumulated in the storm water sediment detention/retention ponds at the Pea Ridge mine site. This program was initiated by the previous owners and was upgraded by the current owners. In order to address some previous NPDES compliance concerns, the company established an upgraded system for control of water discharged from the site, and implemented a more efficient / year round processing facility for cleansing/sorting the reclaimed material. A summary of the magnetite recovery project is provided by the company as follows: 1) All of the runoff material in the storm water sediment detention/retention ponds was removed and stock-piled in paved area on-site that has a 65 embankment on 3-sides and is adjacent to an existing/unused building. Processing equipment suitable for reuse was refurbished and installed inside of building along all material handling systems. a) Power was restored to the site to eliminate generator dependency b) Processing now year round instead of seasonal c) Fresh water used from Meramec River versus recycled waste water d) Direct labor reduced by 75% e) Production capacity increased by 15% to 15 tons per hour f) Indoor finished goods storage After approximately 10,000 tons have been processed, production costs are below $20.00 per ton. 70,000 short tons per year (90% of annual capacity) has been committed to 2-customers at an average of $161.00/ ton. A delivery program has been established where shipments are daily/weekly consistent with production quantities. SalvageCo expects to sell an additional 10,000 short tons per year to other customers.
2)
3) 4)
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5)
At current recovery rates, there appears to be between 320,000 tons and 350,000 tons of finished products that will be sold from the current stockpile.
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25.0
INTERPRETATIONS AND CONCLUSIONS
Substantial mineralization is still available for production at the Pea Ridge Mine site although presently these are now in a flooded condition. The economic viability of dewatering and bringing the mine back into production will depend on establishing the products that will be produced, their value, the size of the markets for these products and the logistical requirements necessary to transport these products to market.
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26.0
RECOMMENDATIONS
Recommendations are made about several areas noted during the compilation of this report. Some of the recommendations are based on comments from the Behre Dolbear and PAH pre-feasibility reports. Resources. Further recommended work would be to determine why variograms did not show continuity. Review the model to ensure that the block model is representative of the data and geological interpretations. Data checking. Determine whether core remnants exist that can be sent for re-assaying. If cores are available for re-assay and the model is rechecked, the goal would be to convert the historic resource to a current resource. Environmental. A current environmental assessment would be needed to determine whether any of the conditions noted in the 2001 Environmental Operations report are still in effect or if they have been cleaned up since 2001. The estimated cost to implement these short term recommendations is $60,000.
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27.0
REFERENCES
All reference documents are available for viewing, on request. 27.1 REFERENCES
Pre-Feasibility Study Of The Re-Opening Of The Pea Ridge Iron Ore Mine, Behre Dolbear, May 2008. Miscellaneous Field Studies Map MF2353 in 2001, by Carol Seeger, et al Pea Ridge Project, Mineral Resource Estimation, DataGeo, November 2007. Reserve Audit and Valuation of Pea Ridge Deposit, Washington County, Missouri Prepared For Wings Enterprises, Pincock Allen & Holt (PAH) June 6, 2008. Phase I Environmental Site Assessment, report prepared for Upland Wings, Environmental Operations, Inc., December 2001. Mine Legal Description (2001) in Warranty Deed of Corporation between Pea Ridge Iron Ore Company, Inc. and Upland Wings, Inc. and MineLegalDiscriptionl_Hwy_EE_&_Hwy_185].pdf Report on Wings Iron Ore Tailings Pond Reprocessing Project. Internal Report prepared by Bo Arvidson Consulting LLC, April 14, 2009. Bullock, R, 2008. Personal communication, 10 January, 2008. Byrnecut Mining, 2007, Pea Ridge Mining Costs, Western Australia. Ovanic, J, 2001. Mining Operations at Pea Ridge Iron Ore Company A Case Study, Underground Mining Methods, eds. Hustrulid, WA, and Bullock, RL (Society for Mining, Metallurgy and Exploration, SME), pp 229-234. Pea Ridge, circa 1970. Calculation, Evaluation and Tonnage Estimation of Pea Ridge Ore Reserve, Internal document, pp 1-30. Seeger, C., 2007. Missouri Department of Natural Resources, Personal communication. Seeger, CM, Nuelle, LM, Day, WC, Sidder, GB, Marikos, MA, and Smith, DC, 2001. Geologic Maps and Cross Sections of Mine Levels at the Pea Ridge Iron Mine, Washington County, Missouri, U.S. Geological Survey, Field Studies Map MF-2353, pp 1-6. 27.2 BIBLIOGRAPHY
Betts, M, and Ross, I, 2005. The Design, Installation and Commissioning of the Northparkes Mines Lift 2 Ground Handling System, in Proceedings Hoist and Haul Conference, pp 29-38 (The Australasian Institute of Mining and Metallurgy: Melbourne). Hustrulid, WA, Bullock, RL, 2001. Underground Mining Methods - Engineering Fundamentals and International Case Studies, (Society for Mining, Metallurgy and Exploration, SME), pp 359, 385.
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DATE AND SIGNATURE PAGE The undersigned prepared this Technical Report, titled Technical Report on the PRR Mining (Pea Ridge) property, dated 9 March 2012. The format and content of the report are intended to conform to Form 43-101F1 of National Instrument (NI) 43-101 of the Canadian Securities Administrators. Signed and Sealed 9 March 2012 Derek Rance P.Eng Betty Gibbs MMSA QP
Project 12-006
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BEHRE DOLBEAR
CERTIFICATE OF QUALIFICATIONS Betty L. Gibbs

I, Betty L. Gibbs do hereby certify that: 1) 2) 3) 4) 5) I am a Senior Associate of Behre Dolbear & Company (USA), Inc. with a business address of 999 Eighteenth Street, Suite 1500, Denver, Colorado 80202 U.S.A. I have been a Senior Associate since 2007. I am a graduate of Colorado School of Mines with an Engineer of Mines degree in 1969, and a Master of Science degree (Mining Engineering) in 1972. I am registered as a Qualified Person with the Mining and Metallurgical Society of America (MMSA #01164QP). I have been a member of the Society for Mining, Metallurgy, and Exploration for 50 years, and a member of MMSA for 19 years. Since graduation, I have continuously worked as a mining engineer and for over 7 years as an ore reserves specialist. I have read the definition of qualified person as set out in National Instrument 43-101 (NI 43-101) and certify that by reason of my education, affiliation with a professional association (as defined in NI 43-101) and past relevant work experience, I fulfill the requirements to be a qualified person for the purposes of NI 43-1016. I am responsible the preparation of Sections 7-15 of the Technical Report on the PPR Mining (Pea Ridge) property, Washington County, Missouri dated 9 March 2012, and have compiled information from sources. I have visited the property on January 24, 2012. I worked on the 2008 Behre Dolbear pre-feasibility study that was done on the property that is the subject of the Technical Report. I am independent of PRR Mining Inc., MFC Industrial Ltd., and Alberici Group Inc., as set out in Section 1.4 of National Instrument 43-101 other than funds paid for work performed. As of the date of this report: to the best of my knowledge, information, and belief, my contribution to the Report contains all scientific and technical information that is required to be disclosed to make the report not misleading. I have read National Instrument 43-101, and the Technical Report has been prepared in compliance with National Instrument 43-101 and Form 43-101F1. I consent to the filing of this Technical Report with any stock exchange and other regulatory authority and any publication by them, including electronic publication in the public company files on their websites accessible by the public.
6) 7) 8) 9) 10) 11) 12)
Dated: 9 March 2012 Signed and sealed Betty L. Gibbs, MMSA QP #1164
Project 12-006
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BEHRE DOLBEAR
CERTIFICATE OF QUALIFICATIONS Derek Rance

I, Derek Rance, P.Eng do hereby certify that: 1. 2. 3. 4. I am Chairman and Senior Associate Behre Dolbear and Company Ltd. 67 Yonge Street, Toronto, ON, M5E 1J8 I am a graduate of The University of the Witwatersrand. B.Sc (Min Eng.) 1959 University of Western Ontario, MBA 1963 I am registered as a Professional Engineer with Professional Engineers Ontario #38087011 I have worked as a Mining Engineer for a total of 45 years since my graduation. My relevant experience for the purpose of the Technical Report is: General Manager, Carol Lake Nfld. 7 years Chief Engineer, Brynnor Mines, BC 2 years I have read the definition of "qualified person" as set out in National Instrument 43 101 ("NI 43-101") and certify that by reason of my education, affiliation with a professional association (as defined in NI 43-101) and past relevant work experience, I fulfill the requirements to be a "qualified person" for the purposes of NI 43101. I am responsible for the preparation of Sections 1-6, 16-26. of the Technical Report on the Technical Report on the PRR Mining (Pea Ridge) property Washington County, Missouri, U.S.A. (the Technical Report). Dated March 9, 2012 I visited the Property on November 16-18, 2006 I was previously engaged as a consultant to the previous owner with the property that is the subject of the Technical Report. To the best of my knowledge, information and belief, my section of Technical Report contains all scientific and technical information that is required to be disclosed to make the report not misleading.
5.
6.
7. 8. 9.
10. I am independent of PRR Mining, Inc., MFC Industrial Ltd., and Alberici Group Inc. as set out in section 1.4 of National Instrument 43 101. 11. I have read National Instrument 43-101, and the Technical Report has been prepared in compliance with National Instrument 43-101 and Form 43-101F1. 12. I consent to the filing of this Technical Report with any stock exchange and other regulatory authority and any publication by them, including electronic publication in the public company files on their websites accessible by the public. Dated: 9 March 2012
Signed and sealed Derek Rance P.Eng
Project 12-006
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BEHRE DOLBEAR

PEA RIDGE Technical Report 03-09-2012

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PRR M INING I NC . (MFC INDUSTRIAL LTD./ALBERICI GROUP INC.

PREPARED BY: BETTY L. GIBBS, MMSA QP DEREK RANCE P.ENG

2.0 3.0 4.0

8.0 9.0 10.0

11.0 12.0 13.0 14.0

15.0 16.0 17.0 18.0 19.0 20.0

21.0 22.0 23.0 24.0

25.0 26.0 27.0

RELIANCE ON OTHER EXPERTS

PROPERTY DESCRIPTION AND LOCATION

Figure 4.1. 4.2

PEA RIDGE PROPERTY BOUNDARIES

ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE, AND PHYSIOGRAPHY

Total N/A N/A 40.56 inches 17.5 inches

Figure 5.1. 5.2.3

Pea Ridge Mine Google Earth Photo

Existing Mine Infrastructure and Services

Plan view mine surface infrastructure

6.0 6.1 PEA RIDGE HISTORY

GEOLOGICAL SETTING AND MINERALIZATION

At the present time, no exploration is in progress.

SAMPLE PREPARATION, ANALYSES, AND SECURITY

12.0 12.1 DATABASE

MINERAL PROCESSING AND METALLURGICAL TESTING

MINERAL RESOURCE ESTIMATES

Plan view solids representing geology domains

Perspective view of geology domains to north

Mineral resource model (a)

Mineral resource model (b)

RESOURCE MODEL AUDIT

MINERAL RESERVE ESTIMATES

HISTORICAL MINING METHODS

MARKET STUDIES AND CONTRACTS

ENVIRONMENTAL STUDIES, PERMITTING, AND SOCIAL OR COMMUNITY IMPACT

MINE SAFETY AND HEALTH ADMINISTRATION (MSHA) MINE IDENTIFICATION NUMBER

CAPITAL AND OPERATING COSTS

OTHER RELEVANT DATA AND INFORMATION

TAILINGS REPROCESSING PROPOSAL

INTERPRETATIONS AND CONCLUSIONS

CERTIFICATE OF QUALIFICATIONS Betty L. Gibbs

6) 7) 8) 9) 10) 11) 12)

CERTIFICATE OF QUALIFICATIONS Derek Rance

Signed and sealed Derek Rance P.Eng

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