alecto minerals plc competent person's report on the mineral assets held

ALECTO MINERALS PLC

COMPETENT PERSON’S REPORT ON THE MINERAL ASSETS

HELD BY ALECTO IN AFRICA

August 2017

Wardell Armstrong International Baldhu House, Wheal Jane Earth Science Park, Baldhu, Truro, Cornwall, TR3 6EH, United Kingdom Telephone: +44 (0)1872 560738 Fax: +44 (0)1872 561079 www.wardell-armstrong.com

Wardell Armstrong is the trading name of Wardell Armstrong International Ltd, Registered in England No. 3813172.

Registered office: Sir Henry Doulton House, Forge Lane, Etruria, Stoke-on-Trent, ST1 5BD, United Kingdom

UK Offices: Stoke-on-Trent, Cardiff, Carlisle, Edinburgh, Greater Manchester, London, Newcastle upon Tyne, Sheffield, Taunton, Truro, West Bromwich. International Offices: Almaty, Moscow

ENERGY AND CLIMATE CHANGE

ENVIRONMENT AND SUSTAINABILITY

INFRASTRUCTURE AND UTILITIES

LAND AND PROPERTY

MINING AND MINERAL PROCESSING

MINERAL ESTATES

WASTE RESOURCE MANAGEMENT

DATE ISSUED: 10 August 2017

JOB NUMBER: ZT61-1601

VERSION:

REPORT NUMBER:

STATUS:

V6.0

MM1131

Final

ALECTO MINERALS PLC

COMPETENT PERSON’S REPORT ON THE MINERAL ASSETS HELD BY ALECTO IN AFRICA

AUGUST 2017

PREPARED BY:

Phil Newall Managing Director, Mining Geologist-Competent Person

Nick Szebor Principal Resource Geologist

Mark Mounde Technical Director, Mining Engineer

Philip King Technical Director, Mineral Processing Engineer

Alison Allen

Mark Kenwright

Associate Director, Environmental Specialist

Associate Director Geologist

Veronika Luneva Senior Financial Analyst

APPROVED BY:

Phil Newall Managing Director

This report has been prepared by Wardell Armstrong International with all reasonable skill, care and diligence, within the terms of the

Contract with the Client. The report is confidential to the Client and Wardell Armstrong International accepts no responsibility of whatever nature to third parties to whom this report may be made known.

No part of this document may be reproduced without the prior written approval of Wardell Armstrong International.


Wardell Armstrong is the trading name of Wardell Armstrong International Ltd, Registered in England No. 3813172.

Registered office: Sir Henry Doulton House, Forge Lane, Etruria, Stoke-on-Trent, ST1 5BD, United Kingdom

UK Offices: Stoke-on-Trent, Cardiff, Carlisle, Edinburgh, Greater Manchester, London, Newcastle upon Tyne, Sheffield, Taunton, Truro, West Bromwich. International Offices: Almaty, Moscow

ENERGY AND CLIMATE CHANGE

ENVIRONMENT AND SUSTAINABILITY

INFRASTRUCTURE AND UTILITIES

LAND AND PROPERTY

MINING AND MINERAL PROCESSING

MINERAL ESTATES

WASTE RESOURCE MANAGEMENT

The Directors The Directors

Alecto Minerals Plc African Alliance

47 Charles Street, illovo Edge Office Block,

London, Building 4,

W1J 5EL Cnr Harries and Fricker roads,

illovo, 2196

RSA

10 August 2017

Competent Person’s Report on the Mineral Assets Held by Alecto in Africa

Scope and purpose of the CPR

Wardell Armstrong International (“WAI”) of Baldhu House, Wheal Jane Earth Science Park, Baldhu,

Truro, Cornwall, TR3 6EH, has been commissioned by Alecto Minerals Plc (“Alecto”, the

“Company”, or the “Client”), to complete a Competent Person's Report (the “CPR”) on the assets

held by the Company in Africa.

This process has been triggered by the conditional acquisition of Cradle Arc Investments

(Proprietary) Limited (“Cradle”) by Alecto, a company incorporated in Botswana, which owns the

Mowana Copper Mine (“Mowana” or the “Mine”) in north eastern Botswana.

The Company is intending to list by placement on the Botswana Stock Exchange Main Board

(“BSE”). Therefore, in terms of Section 12 of the BSE Listings requirements, the CPR is provided for

the BSE Listings Committee’s review, as well as any other potentially affected parties (such as

potential investors in the pre-ceding private placement etc.).

A copy of the CPR will be made available on Alecto’s website.

The CPR has been prepared by WAI as of 19 June 2017 based on information and data supplied by

the Company.

The CPR has been prepared under the requirements of the Australasian Code for Reporting of

Exploration Results, Mineral Resources and Ore Reserves, as published by the Joint Ore Reserves

Committee of the Australian Institute of Mining & Metallurgy, Australian Institute of Geoscientists

and Minerals Council of Australia.


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Consultants and interests

WAI is an internationally recognised, independent minerals industry consultancy. All consultants

used in the preparation of this report are employed directly by WAI and have relevant professional

experience.

Details of the principal consultants involved in the preparation of this CPR are as follows:

Dr Newall is Managing Director at WAI.

Dr Phil Newall, BSc (ARSM), PhD (ACSM), CEng, FIMMM,

Phil is a mining geologist with over 30 years’ experience of providing consultancy services to

minerals companies throughout the world, with particular specialisation in CIS, Europe, and Africa.

He has a Mining Geology degree from Royal School of Mines in London, and a PhD in Exploration

Geochemistry from Camborne School of Mines in Cornwall, UK. During his long career as a

consulting geologist, Phil has undertaken a large variety of exploration and mining-related

contracts, from project management through to technical audits of both metalliferous (specifically

gold and base metals) and industrial mineral deposits. He has also acted as an Expert Witness in a

number of high profile mining related legal cases. From a corporate standpoint, Phil is a Partner in

the Wardell Armstrong Group as well Managing Director of WAI where he has responsibility for the

Company’s Mining Division and international offices in Moscow and Almaty.

Phil is a fellow of the IMMM

The Institute of Materials, Minerals and Mining

297 Euston Road

London NW1 3AD

Tel: +44 (0)20 7451 7300 (main switchboard)

Fax: +44 (0)20 7839 1702

Independence

WAI is independent of the Company and Cradle Arc, its directors, senior management and its

advisers.

Neither WAI, its directors, employees or company associates (the “WAI Parties”) have any

commercial interest, either direct, indirect or contingent in the Group nor in any of the assets

reviewed in this report nor hold any securities in the Company, its subsidiaries or affiliates nor have

the WAI Parties:

i. received, directly or indirectly, any securities from the Company within the twelve months

preceding the application for admission to BSE;

ii. entered into contractual arrangements (not otherwise disclosed in the Appendix) to receive,

directly or indirectly, from it on or after admission and of the following:


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• fees totalling £10,000 or more;

• securities in the Company where these have a value of £10,000 or more calculated

by reference to the issue price or, in the case of an introduction, the expected

opening price; or

• any other benefit with a value of £10,000 or more at the date of admission.

WAI Remuneration

The only commercial interest WAI has in relation to the Company is the right to charge professional

fees to the Company at normal commercial rates, plus normal overhead costs, for work carried out

in connection with the preparation of the CPR. The payment of fees to WAI is in no way contingent

upon conclusions contained in the CPR, the success of the Company’s Admission, the value of the

Company at Admission, or on the success or otherwise of the Company’s own business dealings.

Disclaimer/Reliance on Experts

WAI has critically examined the information provided by the Company and made its own enquiries

and applied its general geological competence. WAI has not independently checked title interests

with Government or licence authorities.

The evaluation presented in the CPR reflects our informed judgement based on accepted standards

of professional investigation, but is subject to generally recognised uncertainties associated with

the interpretation of geological, geophysical and subsurface data. It should be understood that any

evaluation, particularly one involving exploration and future minerals developments, may be

subject to significant variations over short periods of time as new information becomes available.

Consent and Confirmations

The CPR has been prepared in accordance with, and satisfied the content requirements of, the

Section 12 of the BSE Listings requirements, as issued by the Botswana Stock Exchange.

WAI accepts responsibility for the CPR and has taken all reasonable care to ensure that the

information contained in this letter and the CPR is in accordance with the facts and there is no

omission likely to affect its import.

Based on the information provided to WAI and to the best of its knowledge, WAI has not become

aware of any material change or matter affecting the validity of the CPR.

Yours faithfully,


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Final V6.0 Page 4

Dr Phil Newall

Managing Director

WAI

ALECTO MINERALS PLC


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CONTENTS

EXECUTIVE SUMMARY ................................................................................................................. 1

Botswana............................................................................................................................................. 1

Zambia ............................................................................................................................................... 11

Mali ................................................................................................................................................... 18

1 TERMS OF REFERENCE ........................................................................................................ 21

1.1 Introduction ............................................................................................................................. 21

1.2 Project Description .................................................................................................................. 21

1.3 Independent Consultants......................................................................................................... 28

1.4 Data Reviewed ......................................................................................................................... 29

1.5 Personal Inspections ................................................................................................................ 29

1.6 Units and Currency .................................................................................................................. 30

1.7 Curriculum Vitae of the Directors ............................................................................................ 30

2 RELIANCE ON OTHER EXPERTS ............................................................................................ 33

2.1 Introduction ............................................................................................................................. 33

3 BOTSWANA - THE MOWANA PROJECT ................................................................................ 34

3.1 Location, Access and Infrastructure......................................................................................... 34

3.2 Topography & Climate ............................................................................................................. 35

3.3 Botswana Summary Information ............................................................................................. 36

3.4 Regulatory Environment & Mineral Tenure ............................................................................ 37

3.5 Project History ......................................................................................................................... 40

3.6 Geology & Mineralisation ........................................................................................................ 43

3.7 Mineral Resource Estimation ................................................................................................... 50

3.8 Mining ...................................................................................................................................... 63

3.9 Mineral Processing ................................................................................................................... 78

3.10 Environment, Social, Health & Safety ................................................................................... 93

3.11 Economic Appraisal ............................................................................................................... 98

4 ZAMBIA ASSETS ............................................................................................................... 109

4.1 Location, Access and Infrastructure....................................................................................... 109

4.2 Topography & Climate ........................................................................................................... 110

4.3 Zambia Summary Information ............................................................................................... 111

4.4 Regulatory Environment & Mineral Tenure .......................................................................... 112

4.5 Project History ....................................................................................................................... 114

4.6 Geology & Mineralisation ...................................................................................................... 117

4.7 Exploration ............................................................................................................................. 125

4.8 Mineral Resource Estimation ................................................................................................. 128

4.9 Mining .................................................................................................................................... 143

4.10 Mineral Processing .............................................................................................................. 153

4.11 Environment, Social, Health & Safety ................................................................................. 165

5 MALI ASSETS .................................................................................................................... 173

5.1 Introduction ........................................................................................................................... 173

5.2 Location, Access and Infrastructure....................................................................................... 173

5.3 Topography & Climate ........................................................................................................... 176

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5.4 Mali Summary Information .................................................................................................... 176

5.5 Regulatory Environment & Mineral Tenure .......................................................................... 178

5.6 Exploration History ................................................................................................................ 180

5.7 Geology and Mineralisation ................................................................................................... 181

5.8 Exploration and Drilling ......................................................................................................... 191

5.9 Mineral Resource Estimation ................................................................................................. 200

5.10 Environment, Social, Health & Safety ................................................................................. 202

5.11 Summary ............................................................................................................................. 204

6 GLOSSARY ....................................................................................................................... 205

TABLES

Table 1.1: Alecto’s Botswana Mineral Assets ....................................................................................... 23

Table 1.2: Alecto Mineral Resource ...................................................................................................... 24

Table 3.1: Botswana GDP Forecast (2016-2020) .................................................................................. 37

Table 3.2: Alecto’s Botswana Mineral Assets ....................................................................................... 40

Table 3.3: Extracts from African Copper Plc’s Published Financial Statements ................................... 42

Table 3.4: Mowana Mine (South) Mineral Resources (after Golder Associates, 2015) ........................ 61

Table 3.5: Mowana Mine (North) Mineral Resources (after Golder Associates, 2014)........................ 61

Table 3.6: Mowana Slope Angles .......................................................................................................... 65

Table 3.7: Mowana Equipment Recently Added .................................................................................. 68

Table 3.8: Mowana Projected Equipment by December 2018 ............................................................. 69

Table 3.9: Makala Operating Costs ....................................................................................................... 75

Table 3.10: Makala Capital Costs .......................................................................................................... 75

Table 3.11: Heavy Liquid Pre-Concentration Test Results .................................................................... 80

Table 3.12: Supergene Heavy Liquid Test Results at 6mm ................................................................... 80

Table 3.13: Grade and Recovery of Rougher Concentrates .................................................................. 82

Table 3.14: Project Mining Operating Costs (LOM, Real Values) .......................................................... 99

Table 3.15: Open Pit Mining Cost (Bell & CAT Quotations) .................................................................. 99

Table 3.16: Project Operating Processing Costs (LOM, Real Values) .................................................. 100

Table 3.17: Plant Operating Cost (Monthly, Real Values) ................................................................... 101

Table 3.18: Project G&A Costs (US$’000 LOM, Real Values) .............................................................. 101

Table 3.19: Initial Capital Costs ........................................................................................................... 102

Table 3.20: Processing Inputs and Concentrate Production Summary .............................................. 102

Table 3.21: Nominal Conversion Factors and Project Cu Price ........................................................... 103

Table 3.22: Project Realisation Costs .................................................................................................. 103

Table 3.23: Project Net Revenue Calculation (LOM) .......................................................................... 103

Table 3.24: Real vs. Nominal Cash Flows Summary ............................................................................ 105

Table 3.25: Nominal Cash Flow Model Results (US$) ......................................................................... 106

Table 4.1: Zambia Economic Forecast (2016-2020) ............................................................................ 112

Table 4.2: Concession Area Coordinates ............................................................................................ 113

Table 4.3: Ownership and Exploration Summary ............................................................................... 116

Table 4.4: Domain Composite Statistics (Au g/t) ................................................................................ 130

Table 4.5: Block Model Parameters .................................................................................................... 132

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Table 4.6: Dry Bulk Density ................................................................................................................. 132

Table 4.7: Matala Gold Deposit Mineral Resource Summary ............................................................. 135

Table 4.8: Block Model Construction Parameters (UTM Grid Coordinates) ....................................... 139

Table 4.9: Dunrobin Block Model Bulk Densities ................................................................................ 139

Table 4.10: Dunrobin Mineral Resource Statement (Coffey Mining, 2012) ....................................... 143

Table 4.11: Summary Optimisation Parameters (after PenMin, 2016) .............................................. 144

Table 4.12: Matala Pit Design Parameters .......................................................................................... 144

Table 4.13: Dunrobin Pit Design Parameters ...................................................................................... 145

Table 4.14: Summary Mine Production Schedule ............................................................................... 148

Table 4.15: Equipment Capital Cost (after PenMin, 2016) ................................................................. 149

Table 4.16: Matala Underground Equipment ..................................................................................... 152

Table 4.17: Matala Composite Head Sample Analyses ....................................................................... 154

Table 4.18: Matala Composite Detailed Chemical Analyses ............................................................... 154

Table 4.19: Gravity and Gravity Tailings Leach Test Results ............................................................... 155

Table 4.20: Gravity-Leach Grind Optimisation Testwork .................................................................... 155

Table 4.21: Bond Rod and Ball Mill Work Index Results ..................................................................... 156

Table 4.22: Dunrobin Composite Testwork Head Analyses ................................................................ 157

Table 4.23: Dunrobin Composite A Gravity/Gravity Tails Leach Testwork ......................................... 158

Table 4.24: Bond Rod and Ball Mill Work Index Results ..................................................................... 158

Table 4.25 : Dunrobin Gravity Separation/Cyanidation Time Leach Testwork ................................... 159

Table 4.26: Dunrobin Flotation Testwork ........................................................................................... 159

Table 4.27: Process Plant Capital Cost Estimate Summary ................................................................. 164

Table 5.1: Mali Economic Forecast ..................................................................................................... 178

Table 5.2: Summary of Sample Data ................................................................................................... 191

Table 5.3: Gourbassi Mineral Resource Estimate (Unconstrained) .................................................... 201

Table 5.4: Gourbassi Mineral Resource Estimate (Constrained) ........................................................ 201

FIGURES

Figure 1.1: Location Map of Mowana ................................................................................................... 22

Figure 1.2: Zambia Map ........................................................................................................................ 25

Figure 1.3: Kossanto East (Farikounda) Permit Area ............................................................................ 26

Figure 1.4: Kossanto West Permit Area ................................................................................................ 28

Figure 3.1: Location Map of Mowana Project, Northeastern Botswana .............................................. 34

Figure 3.2: Regional Geology and Mineral Deposits of Botswana ........................................................ 43

Figure 3.3: Local Geology and Cross Section of the Mowana Deposit ................................................. 45

Figure 3.4: Resource Potential Within the License Areas ..................................................................... 50

Figure 3.5: Mowana Deposit Plan ......................................................................................................... 51

Figure 3.6: Mowana North Mineral Resource Classification (Golder Associates, 2015) ...................... 59

Figure 3.7: Pit Shape @ US$1.85/lb Cu ................................................................................................. 66

Figure 3.8: Cross Section @ US$1.85/lb Cu .......................................................................................... 67

Figure 3.9: Pit Shape @ US$2.15/lb Cu ................................................................................................. 67

Figure 3.10: Cross Section @ US$2.15/lb Cu ........................................................................................ 67

Figure 3.11: Proposed 22 Month Production Schedule ........................................................................ 71

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Figure 3.12: Production by Ore Type for the 22 Month Schedule ........................................................ 72

Figure 3.13: Thakadu / Makala with Indicated Decline Development.................................................. 73

Figure 3.14: Makala/ Thakadu with Indicated Cu Grades ..................................................................... 74

Figure 3.15: Makala/ Thakadu with Indicated Ag Grades ..................................................................... 74

Figure 3.16: Mowana Plant Modified Flowsheet .................................................................................. 91

Figure 3.17: Sensitivity Report for NPV ............................................................................................... 108

Figure 4.1: Location of Project Area, Zambia ...................................................................................... 109

Figure 4.2: Locality Map of Project ..................................................................................................... 110

Figure 4.3: Concession Area, Showing the Historic Matala and Dunrobin Mines .............................. 114

Figure 4.4: Regional Geological Map of Zambia Showing the Luiri Hill Tenement Area .................... 117

Figure 4.5: Map Showing Gold and Gold/Copper Occurrences .......................................................... 119

Figure 4.6: Geological Map of the Matala Dome and Surrounding Area ........................................... 121

Figure 4.7: Plan View of Mineralised Domains (Coffey Mining, 2012) ............................................... 129

Figure 4.8: Matala Resource Model above 850mRL (Coffey Mining, 2012) ....................................... 134

Figure 4.9: Dunrobin Mineralisation Interpretation ........................................................................... 137

Figure 4.10: Dunrobin Cross Section Outlining Zonal and Domain Coding ........................................ 137

Figure 4.11: Oblique View of Dunrobin Mineral Resource Classification ........................................... 142

Figure 4.12: Matala Pit ........................................................................................................................ 147

Figure 4.13: Dunrobin Pit .................................................................................................................... 148

Figure 4.14: Dunrobin Plant Flowsheet .............................................................................................. 161

Figure 5.1: Location Map of the Kossanto Project .............................................................................. 173

Figure 5.2: Kossanto East Project ........................................................................................................ 174

Figure 5.3: Kossanto West Project ...................................................................................................... 175

Figure 5.4: Map of Mali ....................................................................................................................... 177

Figure 5.5: Kossanto East and West Licence Areas ............................................................................. 180

Figure 5.6: Geology of Mali ................................................................................................................. 182

Figure 5.7: Regional Geological Map of the Kenieba Inlier ................................................................. 183

Figure 5.8: Minerals Occurrences in Mali ........................................................................................... 184

Figure 5.9: Geological Map of Gourbassi East .................................................................................... 186

Figure 5.10: Geological Map of Gourbassi West ................................................................................. 187

Figure 5.11: Kossanto West, comprising the Kobokoto East and Koussikoto .................................... 190

Figure 5.12: Gourbassi East Drilling Highlights ................................................................................... 192

Figure 5.13: Gourbassi East Drilling Highlights ................................................................................... 193

Figure 5.14: RC drilling at Massakama Central ................................................................................... 195

Figure 5.15: Drill Hole Location Plan Map of the “Big Pit” Prospect .................................................. 196

Figure 5.16: Drill Hole Location Plan Map of the Goreba Prospect .................................................... 197

Figure 5.17: RC Drilling at Rhyolite Hill ............................................................................................... 198

Figure 5.18: RAB Drilling and Channel Sampling at Toukwatou ......................................................... 199

PHOTOS

Photo 3.1: Topography Around the Mowana Pit .................................................................................. 35

Photo 3.2: Typical Brecciated, Carbonate-rich Oxidised Ore ................................................................ 46

Photo 3.3: Looking South from North Pit Showing Large Graphitic Mass in Centre ............................ 47

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Photo 3.4: Mining Previously Blasted Material, South end of North Pit .............................................. 63

Photo 3.5: Drilled Bench and ADT, North Pit ........................................................................................ 64

Photo 3.6: Dewatering the South Pit .................................................................................................... 65

Photo 3.7: Mowana South, Looking North with Waste Dumps on Western Pit Rim ........................... 69

Photo 3.8: RC Rig on the Saddle Between North and South Pits .......................................................... 72

Photo 3.9: ADT Tipping into Primary Jaw Crusher ................................................................................ 83

Photo 3.10: Crushing Plant ................................................................................................................... 84

Photo 3.11: Fine Ore Stockpile ............................................................................................................. 85

Photo 3.12: Mowana Flotation Plant .................................................................................................... 86

Photo 3.13: Mowana Tailings Impoundment Area ............................................................................... 87

Photo 3.14: Adroit Process Control System .......................................................................................... 87

Photo 4.1: Dunrobin Mineralised Core ............................................................................................... 124

Photo 4.2: Coreshed ........................................................................................................................... 127

Photo 4.3: RC Chip Storage and RC Chip Trays ................................................................................... 127

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EXECUTIVE SUMMARY

This Competent Person’s Report presents information pertaining to the assets held by Alecto Minerals

Plc in Africa. These comprise the recently acquired and re-opened Mowana Mine in Botswana, the

Matala and Dunrobin properties in Zambia, and other Joint Ventured assets in Mali.

Phil Newall, BSc (ARSM), PhD (ACSM), CEng, FIMMM, Managing Director of WAI, Phil King, BSc (Eng)

Mineral Technology (Hons), Technical Director, and Mark Mounde BEng, CEng, MIMMM, Technical

Director conducted a personal inspection of the Mowana Project between 11 to 12 January 2017,

whilst over the same time period, Mark Kenwright, BSc, MSC, CP (Geo), FAusIMM, Associate Director

visited the Zambian property.

More recently (5th April 2017), Phil Newall has re-visited the Mowana operations to observe the re-

opened mine and plant.

As WAI has previously worked on the Malian assets, no recent site visits were required, as WAI had

completed site visits in 2013.

Botswana

General

As per recent press releases, PenMin has purchased the assets of Mowana Mine out of liquidation,

and sold this to Alecto for an approximate amount of GBP7.6m. The mine has now recommenced

operations and is producing copper concentrate.

This CPR assessment has focussed on evaluation of the underlying data extant of the Mowana Mine,

the business strategy of re-opening the mine and existing plant, as well as upgrading the process plant

to incorporate the use of Dense Media Separation (“DMS”) pre-concentration, and the processes

required to bring the operations in line with internationally accepted standards.

The shortfalls in the quality of supporting data in terms of resources and reserves are being addressed

by an extensive program of core relogging, mineralogical and metallurgical characterisation testwork

and assays, which will culminate in the re-modelling of the resource to fill in the identified shortfalls

of the mine planning.

Indicative DMS testwork has supported the potential for upgrading the ores prior to milling and

flotation, further works to qualitatively and quantitatively support the proposed upgrade project has

been commenced by the PenMin team. A DMS process route also has the potential for handling the

carbonate mineralisation, which at present has been excluded from the Mineral Resources reported,

providing a potential increase to the Mineral Resource base. As such, although there are underlying

historical shortfalls in data generation, as well as the poor management and control of all processes

by previous owners, WAI believes that these can be readily rectified. The Company has gone a long

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way towards this through the proper implementation of data systems and controls which has enabled

Alecto to bring the Mowana mine back into operation.

History

Previously known as the Dukwe Copper Project, the Mowana Mine is located in northeastern

Botswana, some 120km northwest of Francistown, the second largest city in Botswana. As the mine

only went into care and maintenance in 2015, all the existing infrastructure in terms of power, water

and communications are still present.

The recent history of the project involved African Copper PLC, an AIM quoted company, who acquired

the project and undertook additional drilling and metallurgical testwork which was compiled into a NI

43-101 Compliant Feasibility Report by Read, Swatman and Voight (“RSV”), relying on geological

modelling by Caracle Creek (“CCIC”), mine design by Turgis Consulting and plant design by Senet

Projects. This new mine plan relied on recovering copper rich concentrates through flotation, and

these concentrates would be sold on to smelter companies. Construction of the project occurred in

2006/2007, with commissioning in 2008.

The following data is sourced from financial statements published by African Copper:

Mowana, under African Copper’s ownership, was profitable and cash generative at an operating level

in the years ending 31 March 2013, 2014, and in the half year ending 30 September 2014. This

information is the latest available published financial reports for African Copper, prior to the cessation

of production in 2015. However, African Copper owed ZCI US$96M and had net liabilities of almost

US$60M at 30 September 2014, as shown from the extracts from African Copper plc’s published

financial statements, as shown in the table below:

Extracts from African Copper Plc’s Published Financial Statements

Year ended 31 March 2013

(audited) US$’000

Year ended 31 March 2014 (audited) US$’000

Six months ended 30 September 2014 (unaudited) US$’000

Turnover 60,464 58,735 30,830

Operating profit from mining operations before impairment and administrative expenses

13,712 12,714 3,966

Operating profit/(loss) 5,447 (20,788) (489)

Loss after tax (12,967) (32,639) (5,414)

Total non-current assets 72,635 50,910 61,531

Net current liabilities (86,417) (96,933) (105,529)

Total non-current liabilities (16,149) (8,601) (16,008)

Total equity (29,931) (54,624) (60,006)

Net cash inflow from operating activities

8,703 13,712 9,330

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In 2015, African Copper expected to end production at the nearly exhausted Thakadu mine, and move

production to the Mowana pit, incurring significant capital costs. The Mowana pit was expected to

achieve lower grades than Thakadu, and at the same time copper prices were falling.

Furthermore, African Copper had had a series of problems with mining contractors which had meant

production falling behind schedule, and requiring more working capital in the short term. Accordingly,

African Copper’s financial position was under pressure from a combination of factors, including: a high

level of debt, rising working capital requirements, rising costs and falling copper prices.

In May 2015, African Copper announced proposals to cancel its admission to trading on AIM as a cost

saving measure, which became effective in June 2015. In November 2015, ZCI, the major shareholder

and creditor in African Copper, announced the provisional liquidation of Messina Copper (Botswana)

Pty Ltd, the African Copper subsidiary which held the Mowana assets.

Following the acquisition, Alecto has re-opened the Mowana open pit (as per the acquisition

requirements), with initial production coming from previously blasted ore in the North pit and

stockpiled material. At the time of the second site visit conducted by Dr Phil Newall, (early April 2017),

a bench has been drilled and is awaiting an explosives license to proceed. The plant has been re-

started and is working efficiently.

In time, the Company may also be looking to install a DMS plant at Mowana and is considering

development of an underground operation at Makala (the underground extension to Thakadu).

Clearly this process is somewhat fluid, but Alecto is taking every measure to address the main areas

of concern that hampered previous mining operations at Mowana.

Geology & Mineralisation

The Mowana Copper Project is hosted within north-northeast striking, steeply east dipping

carbonaceous and argillaceous metasediments of the Matsitama Metasedimentary Group which are

enclosed within foliated granitoids of the Mosetse Complex.

Previous open pit mining exploited oxide ores from the Mowana Main (North and South pits), although

the ore zone continues to the north into Mowana North and Conical Pit.

Hypogene sulphide mineralisation occurs within sub-vertical epithermal quartz-calcite vein breccias

containing predominantly chalcopyrite + pyrite ± galena and sphalerite mineralisation. Hypogene

mineralisation is capped by secondary oxide and supergene copper enrichment up to depths of

approximately 50m and 150m below surface respectively. Ore zone thicknesses can be several

hundred metres related to the geometry of the Bushman Shear which hosts the orebodies.

Sulphide bearing veins are generally spatially associated with carbonaceous (graphitic) argillites and

are composed of quartz+calcite ± K feldspar in varying ratios with three stages of quartz veining having

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been identified. Only the second vein generation bears Cu, Pb & Zn sulphides. Areas of intense vein

stockworks have been termed breccias and form the copper deposits.

The presence of graphite within the metasediments that enclose the mineralisation has historically

been a problem for processing. In terms of the current Mowana pit, evidence suggests that the South

Pit has a higher copper grade, less graphite, but the sulphide mineralisation is deeper, whilst the North

Pit has a lower grade, but with more graphite, although the sulphides are nearer surface. However,

the very visual nature of the graphite should allow avoidance of the worst of this material during

mining.

Therefore, in summary, the near surface tenor of the orebody at Mowana is characterised by the

mixed nature of oxide and supergene enrichment. With increasing depth supergene chalcocite

mineralisation continues and dominates with a nominal transition to chalcopyrite-bearing hypogene

mineralisation at around 150m below surface.

Mineral Resources

Mineral Resource Estimates for the Mowana deposit have been carried out by Golder Associates

according to the guidelines of the JORC Code (2012) and the SAMREC Code. The modelling and

estimation works were carried out in two phases with the southern Mowana Mine, and Mowana

North areas estimated separately. In September 2014, Golder Associates issued the report

“Geological Modelling and Resource Estimation of the Mowana North Project” on behalf of African

Copper, the previous owners of the project. A second report “Geological Modelling and Resource

Estimation Update of the Mowana South Project” was issued in June 2015 by Golder Associates.

The Mineral Resources for Mowana Mine South as reported by Golder Associates as of June 2015, at

a cut-off grade of 0.25% CuTotal is provided in the table below.

Mowana Mine South Mineral Resources (after Golder Associates, 2015)

Classification Tonnage

(000) Cu (%) Pb (%)* Zn (%)* Ag_ppm Au_ppm

Measured 14,725 1.00 0.04 0.02 0.58 0.005 Indicated 26,308 0.88 0.04 0.03 1.30 0.002

Measured + Indicated

41,033 0.92 0.04 0.02 1.05 0.003

Inferred 23,976 0.71 0.03 0.03 1.57 0.00001 Notes: *Typographical error in the Golder Associates report records the units for Pb and Zn as being ppm.

The Mineral Resources for Mowana Mine North as reported by Golder Associates as of September

2014, at a cut-off grade of 0.25% CuTotal is provided in the table below.

Mowana Mine North Mineral Resources (after Golder Associates, 2014)

Classification Tonnage (000) Cu (%) Pb (%) Zn (%) Ag_ppm Indicated 31,060 1.00 0.02 0.01 1.50 Inferred 75,802 0.78 0.0006* 0.0009** 2.08

Notes: *Reported in Golder Associates report as 6.19ppm Pb. **Reported in Golder Associates report as 9.06ppm Zn

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WAI has carried out a review of the Golder Associates Mineral Resource reports along with the

corresponding block models, wireframes and sample data. Overall the modelling approach adopted

by Golder Associates is appropriate and in line with industry best practice, and the grade estimates

are a fair representation of the sample data on which the estimates are based. WAI has, however,

identified a few areas that require additional work, as detailed below.

One of the most notable risks to the Mineral Resource Estimate was the lack of detail pertaining to

the oxide, supergene and hypogene zonation within the deposit and the associated copper speciation.

WAI is aware that previous mining operations have faced challenges regarding the handling of

different oxidation and mineral species through the process plant. For robust mine planning, it is key

that the Mineral Resource model on which the mine plan is based contains sufficient detail to

understand how material will behave when it is passed through the processing plant.

WAI is aware that the Alecto geologists are currently completing remedial action in terms of capturing

missing core logs, and undertaking metallurgical characterisation. These additional works will allow a

more accurate domaining of the block model. As such, WAI is aware that the Alecto database is being

updated with these missing logs, and recognises that these logs will add considerable value to the

understanding of the geological model.

The historic lack of detailed geological logging and limited number of acid soluble copper assays (Cuacid)

impacts on robustly defining the redox zonation at Mowana. Whilst the oxide, supergene and

hypogene zones have been modelled at Mowana Mine (South), no such zones have been modelled at

Mowana North. The limited numbers of Cuacid assays that were used by Golder Associates in the

Mineral Resource database, has resulted in no Cuacid estimates into the Mineral Resource block

models. WAI understands that there are an additional 156 vertical holes with CuAcid assays, which have

been omitted from the Mineral Resource Estimates.

This information is being compiled by Alecto and will be a good basis for improving the definition of

mineralisation domains. The incorporation of CuAcid assays into the models is important when trying

to ascertain the proportion of copper oxides in relation to copper sulphides and silicates.

The current lack of domaining for the oxide, supergene, and hypogene mineralisation at Mowana

North, and the limited support for the interpretation of these domains at Mowana Mine is a key

feature of the geological interpretation that requires improvement. Given the implication of these

domains on the processing of ore, and likely recoveries, it is paramount that future estimation works

improve the domaining within the modelling.

To address this, WAI is aware that Alecto has commenced the process of re-evaluating the data to

better model the mineralisation and with the updated database and domaining, which will add value

to any re-estimation.

Golder Associates has carried out two separate resource estimates for Mowana Mine (South) and

Mowana North, however, both these areas are part of the same mineralised structure. WAI has noted

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that there is a degree of overlap between the two models in the central part of the deposit. WAI

estimates the degree of overlapping to be in the order of 10Mt at a cut-off grade of 0.25% CuTotal.

Whilst this overlap impacts upon the current Mineral Resources, WAI is aware that Alecto has

combined the models for internal mine planning purposes, thus rectifying the overlap. Future Mineral

Resource Estimates should be undertaken over the whole deposit yielding a single block model, thus

resolving the overlaps and ensuring consistency in the estimation methods.

WAI has noted that the Mineral Resource Estimates currently exclude the carbonate mineralisation,

as Golder Associates considered this material to be non-recoverable. Ongoing DMS testwork by Alecto

shows this is a potentially erroneous assumption. Subject to confirmation by the DMS testwork, the

carbonate mineralisation could be reported under future Mineral Resource Estimates.

Lastly, the Mineral Resources have been reported in their entirety, whilst under the JORC Code (2012)

there is a requirement to demonstrate reasonable prospects for eventual economic extraction.

Standard industry practice is to carry out a pit optimisation on the Mineral Resource Estimate (“MRE”)

using realistic, albeit uplifted, pricing, to demonstrate which portion of the Mineral Resource has

prospects for extraction.

Alecto has carried out a series of their own internal pit optimisations, and whilst these do not have a

bearing on the officially reported JORC Mineral Resources, they show a commitment by Alecto to best

practice and will assist in constraining future Mineral Resource Estimates. Any future Mineral

Resource updates will require such pit optimisations to be carried out and this may potentially lead to

the omission of some of the currently reported Mineral Resources.

Therefore, as WAI understands, optimisations, Life of Mine plan and designs were completed in

MineSight, with medium and short-term planning, designs and scheduling completed in DataMine, by

PenMin, which has been independently reviewed by Sound Mining.

Thus, given the rapidity with which Alecto has acted upon to rectify the issues, which WAI has

highlighted above, WAI does not consider any of the above items fatal flaws.

Mining

The open pit Mowana Mine was commissioned in 2008 by its previous owner (Messina Copper

Botswana (Pty) Ltd ). The mine operated at a mining rate of 100kptm and a 1.2Mtpa processing plant.

Operations at its sister Thakadu mine were suspended in June 2015 as the operation neared the end

of its scheduled mine life.

Mining operations were undertaken from two pits within a contiguous part of the deposit (the North

and South pits) and continued down to 65m below surface.

The previous mining operation used mining contractors and Alecto has contracted a mining contractor

(Giant) who arrived on site mid-February with two excavators and 5 ADT’s for general clean-up where

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some 300kt of material were moved. Since that time, further equipment has been added, see table

below.

Item February March April Total

Bell L2706E FEL 1 1

JCB 467 FEL 1 1

Komatsu PC 850 Excavator 2 2

Komatsu PC220 Excavator/Rock Breaker 1 1

Bell TLB 1 1

CAT 740B ADT 5 4 9

Bell B30D ADT 2 2

Komatsu 315 Dozer 1 1

Bell 670G Grader 1 1

18,000l Water Bowser 1 1

Diesel Bowser 200l 1 1

Since January, pit dewatering has been progressing which has allowed access to some previously

blasted ore at the south end of the North pit which is now providing feed for the mill with additional

stockpile material.

In addition, the Company has instigated a RC drilling grade control programme with holes on a 10m

spacing, drilled at 60-80o angle and to a depth sufficient to cover four benches (10m benches). These

data, coupled with blast hole samples from the ore zone, and 1m outside the ore in waste from outside

the main ore zones should provide more detail for the short-term model.

Following this, a bench has been drilled for blasting (approximately 70kt) with a second on-going, and

as of 12th April 2017, the explosives permit had been granted, with a blast undertaken on Saturday

29th April 2017.

For the short-term mine plan (22-month plan) which takes the operation to January 2019, this sees

some 3.7Mt of ore mined at 0.91% Cu using a cut-off of 0.25% Cu. Beyond this, two options are being

considered – a base case whereby production remains at the 1.2Mt per year as per the short-term

plan, or utilising DMS to increase production. A preliminary financial assessment of the DMS route

does seem to indicate better overall project economics.

Notwithstanding the above, for the base case, from consideration of the previous mining operations,

as well as the plant configuration, WAI believes that this production schedule is achievable given the

proper level of study required to justify the parameters, work which is currently on-going.

Current mine planning has used a copper price of US$1.85 per lb to define the pit shell to be used for

the mine design as this provides a higher-grade shell with which to start up the operations. WAI

believes that this copper price is conservative and provides significant upside to the project for the

longer-term mine life.

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The scheduling of the mine is currently being undertaken by a contractor “Sound Mining” using

Datamine. Sound Mining has further been appointed to perform the life of mine scheduling and revise

the short-term plan, also using Datamine.

As reviewed by WAI, the capital and operating cost rates put forward in the PenMin study are within

the range expected for this type of operation.

WAI is aware that Pre-feasibility level engineering works will be completed by PenMin and Alecto prior

to the project upgrade.

PenMin’s recommissoning strategy, at the time of the site visit, was based on assessments of historic

technical data and operating costs taken from analogous operations and projects. In justification of

the processing strategy to process sulphide material, mine planning has excluded the most strongly

oxidised material.

Mineral Processing

The Mowana plant was constructed in 2006-2007, with commissioning taking place in 2008. Only

oxide ore was treated for periods during 2009-10 before the plant feed was switched to Thakadu ore.

Mowana oxide ore was then treated for a few months during 2015 after the Thakadu ore was

exhausted and before production was stopped. The plant was not able to efficiently recover the

Mowana copper oxide minerals and also experienced problems with graphite, particularly from the

North Pit, which significantly lowered the final concentrate grades.

In their review of the operations, PenMin, outlined the key reasons that the mine failed as being:

• Inefficient Geological and Mining Understanding and Management;

• Inefficient control of processing;

• Low commodity prices;

• Management and control; and

• Inappropriate technology.

The current management (PenMin) intends a base case processing throughput of around 1.2Mtpa

(with an optional higher throughput using DMS pre-concentration), fixing the various plant

bottlenecks and adding an appropriate level of automation and control.

To this extent, the mill commenced operations on 14th March 2017, although a bearing problem (which

was solved on-site) caused a delay. Since then, the plant is now up and running with a functioning

process control system and with the primary change from the previous operations being the use of a

different collector – xanthate has been replaced by H88L which appears to reduce the problem of

graphite.

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Presently, some 100t per day of copper concentrate is being produced (approximately 14% Cu) from

the low-grade ores (0.7% Cu) which is transported off site by Fujax as part of the off-take agreement.

The current mine plan involves treating only <25% acid soluble copper ore in the future. However,

currently, there may not be sufficient chemical and mineralogical knowledge of the orebody to fully

understand the ore type definitions or their location in the deposit. A thorough review of the block

model data and relogging of all cores available has commenced. In addition, WAI recommends that a

more detailed analysis is made of any available, or future samples, using a diagnostic leaching (copper

speciation) technique. This will allow the chemical and mineralogical knowledge of the orebody and

the ore type definitions and their location in the deposit to be more fully understood.

Flotation testing has indicated that the supergene ore type contains significant levels of oxidised

copper minerals. It may therefore be necessary to mine into the lower depths of the supergene zone

in order to achieve the <25% acid soluble target for the mill feed. The flotation response of the

sulphide ore was excellent, with high concentrate grades achieved at copper recoveries greater than

90%.

Previous DMS results for the sulphide ore type are encouraging, but some of the metallurgical

balances of the tests undertaken on the oxide and supergene ores are inaccurate and the overall DMS

balances, including fines, are not clearly presented.

WAI is aware that a testwork protocol on all potential ores has been commenced, and is currently

being supervised by both the Alecto Competent Person (Mike Ware) as well as the Oxflo

representatives, who are providing flotation reagents and consulting services in this field. The

testwork includes mineralogical characterisation, DMS response, and flotation response, in both a

natural sulphide float environment and sulphidation with NaSH.

WAI understands that the company is actively evaluating the feasibility of DMS though a rigorous

programme of heavy liquid testing. These samples should include the correct levels of mining dilution

as this will be an important factor when assessing the viability of DMS.

As discussed, the plant is lacking in certain areas of process control and it is planned to install an On

Stream Analyser (“OSA”) when treating the less refractory ores in the future. Treating the more

sulphide rich ore types will be significantly less onerous, and may not require the same degree of

process control. As such, an OSA, although desirable, may not be essential provided that the copper

minerals treated are predominantly sulphides with significant levels of secondary (copper rich)

minerals.

A detailed scoping study has been completed by Minero Consulting and SENET (Pty) Ltd, a leading

South African project management and engineering company, for the introduction of a new DMS pre-

concentration process and upgraded crushing plant that is designed to increase throughput to 2.6

million tonnes per annum and achieve increased copper production of circa 22,000 tonnes of saleable

Cu per annum. A DMS process route also has the potential for handling the carbonate mineralisation,

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which at present has been excluded from the Mineral Resources reported, providing a potential

increase to the Mineral Resource base.

As previously announced by Alecto in December last year, the study shows enhanced economics with

the NPV at a 10% discount rate moving up to US$245m and the IRR at 55%.

Once a feasibility study is completed, the process route upgrades will be funded through an existing

agreement with Fujax Minerals and Energy Limited and Northern Heavy Industries Group Company

Limited.

Further works to qualitatively and quantitatively support the proposed upgrade project has been

commenced by the PenMin team, but as the work completed to date is at scoping level, WAI can only

confirm that the costs and parameters quoted in the study are broadly in line with projects of a similar

nature and that more work is required to ensure the value previously announced by the company can

be achieved.

Environmental and Social Issues

Alecto’s Botswana assets are considered in compliance with local legislation and requirements prior

to being placed into Care and Maintenance. The current licences, permits and associated

documentation will require updating based on the revised project description.

WAI reviewed the environmental and social performance of Alecto’s assets in Botswana. Whilst some

environmental and social management actions were developed for the site under its previous

ownership regimes and a 2014 Scoping Study, including a 2006 Environmental Impact Assessment and

Environmental Management Plan, these would have to be updated by Alecto in order for the project’s

development to gain international finance.

To gain international finance, it is recommended that Alecto support previous studies by carrying out

a full internationally compliant environmental and social impact assessment (“ESIA”) for the Mowana

asset. The updated ESIA would be based on new baseline studies across all relevant aspects, including

hydrogeology, air quality, biodiversity, noise, socioeconomic and cultural heritage impacts.

To action this, WAI is aware that Alecto has appointed Environmental and Social Technical staff to

address this issue.

Economic Appraisal

The financial model presented by the Client for the Mowana Project has been developed to a

reasonable standard. The general model structure is integral and consistent and provides an

appropriate level of detail required for the project valuation.

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For the purposes of this CPR, WAI has only considered the non-DMS scenario (base case) for the LOM,

although preliminary indications are that if the DMS can be proven to work successfully, this will

improve overall project economics.

For the base case, a detailed 22-month model sets out the parameters in detail, whilst the 11-year

LOM model provides a project overview.

Financial highlights are presented in the table below:

Nominal Cash Flow Model Results (US$)

Gross Revenue 908,995,871

Less: Off-mine Cost (168,464,323)

Less: Royalty (20,852,453)

Less: Sales Commission (19,505,041)

Net Revenue 700,174,054

Less: Operating Cost (420,802,609)

Less: Closure Cost Provision (3,265,481)

Less: Capital Maintenance (3,597,086)

Cash from operations 272,508,879

Interest Received 16,305,417

Profit Before Tax 288,814,295

Less: Taxation Paid 64,272,420

Profit After Tax 224,541,875

Less: Working Capital Movement 3,605,870

Less: Capital Cost (20,679,968)

Debt & Equity Draw Down 22,000,000

Debt Repayment (26,234,819)

Net Project Cash Flow 203,232,959

NPV (Leveraged) 87,485,182

UNLEVERED IRR 56%

WAI believes that the costs and parameters used in the Financial Model are broadly in line with other

projects of a similar nature and that the assumptions made are fair and reasonable. Furthermore,

future utilisation of DMS does provide a significant upside to the project.

Zambia

General

The Matala and Dunrobin Gold Projects (previously called the Luiri Hill project) are located in south-

central Zambia, approximately 120km west-northwest of the Zambian capital of Lusaka in the

Mumbwa District.

The projects are included in a mining lease (8074-HQ-LML formerly issued as LML48) which is owned

100% by Luiri Gold Mines Ltd, a fully owned subsidiary of Luiri Gold Limited, which in turn is a wholly

owned subsidiary of Alecto.

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Alecto is focused on capitalising on the near-to-mid-term production potential at the historic Matala

and Dunrobin Gold Mines, with a PenMin Feasibility Study, focused on the evaluation of commencing

operations at the Matala Deposit on the oxide and transitional ores, allowing for a low cost start-up

of the project, and then progressing to the Dunrobin oxidised ores.

WAI has utilised the information provided by Alecto, namely a previous Mineral Resource Estimate

completed by Coffey Mining, engineering works undertaken for Luiri Gold Limited in 2013, and a

Feasibility Study Report completed by PenMin (Pty) Ltd in 2015/16.

Geology & Mineralisation

The Matala and Dunrobin project is located in an area of south-central Zambia that is dominated by

the Mwembeshi Shear Zone. A significant number of south-central Zambia’s gold and gold-copper

occurrences are located within, or close to this regionally significant structural zone.

The Mwembeshi Shear Zone defines the boundary between the late Proterozoic Katanga Supergroup

basinal sediments to the north, and the more intensely deformed Zambezi Metamorphic Belt terrain

to the south.

The project area incorporates a prominent and geologically complex area known as the Matala Dome.

The Dome is located approximately 5km east-northeast of the main body of the Hook Granite and it

appears to be located within or is just north of the Mwembeshi Shear Zone. The Dome is elongated in

an east-northeast direction and is parallel or subparallel to the trend of the shear. The Matala Dome

is host to the most important gold occurrences so far identified within the project area.

Unconformably or disconformably overlying the basement rocks of the Matala Dome are limestones

and dolomitic marbles of the Lusaka Formation (of the Katanga Supergroup).

At the historic Matala mine, gold mineralisation is characterised by strong stratigraphic disruption

(deformation), shearing and the presence of quartz-dolomite-pyrite-tourmaline-albite-sericite

alteration and vein stockworks. Reportedly, chalcopyrite is replaced by chalcocite proximal to and

within the ore zones. The alteration directly above the ore zone in the hangingwall is characterised by

strong quartz-sericite and disseminated pyrite with minor jarosite staining (yellow). The quartz-

dolomite-pyrite-tourmaline-albite-sericite mineralised assemblage occurs in a steep, south-dipping

stockwork as highlighted in the PenMin FS report, and observed during the WAI site visit.

Gold mineralisation at Dunrobin occurs in two principal styles, ferruginous (hematite) gossans within

the dolomites (observed in the open pit by WAI) and limestones with associated quartz veining; and

quartz veins and quartz vein stockworks within the quartz-mica schists of the underlying basement.

Mineral Resources

The following Mineral Resource statement has been disclosed by Coffey Mining for the Matala

deposit. The statement is reported as of 20 January 2012, and has been constrained by the surface

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topopgraphy and at depth by the 750mRL. A summary of the Coffey Mining Matala Mineral Resource

Estimate is provided in the table below:

Matala Gold Deposit Mineral Resource Summary (after Coffey Mining, 2012)

Classification Lower Cut-Off Grade (g/t Au)

Tonnes (‘000) Average Grade (g/t

Au) Gold Metal (‘000

ozs)

Indicated

0.4 4,150 2.2 300

0.5 4,015 2.3 298

0.7 3,727 2.4 292

1.0 3,204 2.7 278

1.5 2,334 3.2 243

Inferred

0.4 7,649 1.5 360

0.5 7,200 1.5 354

0.7 6,106 1.7 333

1.0 4,525 2.0 290

1.5 2,600 2.6 213 Note: Mineral Resources reported above 750mRL

Coffey Mining also produced a Mineral Resource Estimate for the Dunrobin deposit. The statement is

reported as of October 2012, and has been constrained by the surface topography and open pit. Bulk

density values were adjusted using a void factor of 0.94 for the model above the 1040mRL to represent

the stope depletion and karst voids, in the absence of detailed stope surveys.

A summary of the Coffey Mining Dunrobin Mineral Resource Estimate is provided in the table below:

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Dunrobin Mineral Resource Statement (Coffey Mining, 2012) Lower Cut-Off Grade

(g/t Au)

Measured Indicated Inferred Total

(Measured+Indicated+Inferred)

Tonnes (kt)

Au (g/t)

Metal (koz)

Tonnes (kt)

Au (g/t)

Metal (koz)

Tonnes (kt)

Au (g/t)

Metal (koz)

Tonnes (kt)

Au (g/t) Metal (koz)

Zonecode=120 (Main Mineralised Zone)

0.6 1,465 2.0 94 1,606 1.6 83 1,543 1.3 63 4,614 1.6 240

0.8 1,196 2.3 88 1,306 1.8 76 1,091 1.5 53 3,592 1.9 216

1.0 978 2.6 81 1,063 2.0 69 763 1.8 43 2,804 2.1 193

1.2 830 2.9 76 843 2.2 61 547 2.0 35 2,220 2.4 172

1.4 717 3.1 71 670 2.5 54 403 2.2 29 1,790 2.7 154

Note:

• Reported as of October 2012;

• MIK derived SMU model using a 10m x 5m x 5m SMU;

• Coffey Mining preferred cut-off of 1.0g/t Au;

• Depleted to the approximated underground workings, and nominally dated January 2012; and

• 0.94 void factor applied to the block model above the 1040mRL.

In the case of both the Matala and the Dunrobin estimates, Coffey Mining has utilised a Multiple

Indicator Kriging (“MIK”) approach to the grade estimates. Overall the estimation method is

reasonable providing a fair representation of the composite data on which the estimates are based.

WAI would query the benefit of using the MIK method, over other methods such as Ordinary Kriging

(“OK”) given the style of mineralisation and the log normal grade distributions encountered at the

deposits.

At both Matala and Dunrobin a degree of underground mining has taken place, in both cases there is

a distinct lack of detailed underground surveys. At Matala the depletion of the block model has been

based on a long section of the mined-out areas, whilst this approach is valid given the lack of survey

data, WAI would recommend future works include detailed underground surveys.

The Dunrobin underground depletion presents a more complex picture, whilst some development

survey wireframes have been provided to Coffey Mining for depletion, there are no stope surveys to

accurately deplete the model. To account for the stopes as well as possible karst voids, Coffey Mining

has applied a 0.94 void factor to the density values at elevations >1,040mRL. The lack of detailed

depletion wireframes for the stopes presents a material impact to the project. Whilst the void factor

applied to the model by Coffey Mining tries to account for the loss of tonnage it does not account for

the impact on contained metal and grade. The Dunrobin Mineral Resource Estimate contains

Measured resources in the near surface area where there has been infill drilling in 2012. As the

Measured material is above the 1,040mRL, WAI would question the allocation of the Measured

classification. Given the lack of certainty in what has been mined, this can present a material impact

on the tonnage and grade of resources being reported in this area.

A total of 485 density measurements from chip and drill core samples has been used by Coffey Mining

to assign density values to the Mineral Resource block model based on lithology and oxidation state.

Coffey Mining has highlighted that density determinations of the gossan have been problematic with

high degrees of variation between results. Other density issues highlighted include the influence of

massive sulphide, giving high density values. No density measurements using drill core have been

carried out above the 1,130mRL which includes the overburden material, Coffey Mining therefore

applied nominal density values to the >1,130mRL domain. Given the density measurement issue

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noted, particularly in the near surface parts of the deposit, and the lack of detailed surveys of the

underground workings, WAI is of the opinion that there is a material risk to the reported tonnage and

grades, particularly in the areas classified as Measured.

Mineral Resources at Matala and Dunrobin have been reported in their entirety, however, under the

JORC Code (2012) there is a requirement to demonstrate reasonable prospects for eventual economic

extraction. Standard industry practice is to carry out a pit optimisation using realistic, albeit uplifted,

pricing, to demonstrate which portion of the Mineral Resource has prospects for extraction.

If an underground Mineral Resource is to be reported then a minimum mining width with appropriate

dilution needs to be applied to the model, and the reported Mineral Resource should be at a cut-off

grade in line with typical underground mining economic cut-off grades.

Both deposits have been reported at a preferred cut-off grade of 1.0g/t Au. WAI considers the cut-off

grade of 1.0g/t Au to be low for an underground mining operation, and without a mining dilution being

applied, would likely include material that would not be considered economic for an underground

operation.

From an open pit perspective, the cut-off grade of 1.0g/t Au maybe considered too high and a lower

cut-off might be more applicable. Any future Mineral Resource updates will require such pit

optimisations to be carried out and this may potentially lead to the omission of some of the currently

reported Mineral Resources.

Mining

The open pits will be mined by conventional truck and excavator mining methods. Development at

Matala involves a single-phase pushback to pit depth, whereas Dunrobin has previously been mined

and so design parameters have been based on prior experience at the deposit. The mining operations

and maintenance will be undertaken on a contractor basis so the parameters and costs presented

within the cashflow should be considered at a Scoping Study level.

The bulk of the Matala pit has dimensions of approximately 700m x 250m and the Dunrobin starter

pit has dimensions of approximately 230m x 230m. Mining is to commence at Matala and then

transition to Dunrobin as Matala is exhausted.

A detailed scoping study was completed by Coffey Mining in 2012 for the suitability of the Matala

deposit towards underground mining methods to a depth of 300m, since amended by PenMin. The

Matala underground mineral inventory can be summarised as 2,037,400t at 3.00g/t Au.

Underground mining at Matala will start at the bottom of the pit and progress east and west of the pit

along strike, with a portal and decline established at the western side of the pit above the bottom

bench. Longhole open stoping has been identified as a suitable mining method, although this should

be finalised in further studies before design progresses. WAI would also expect a detailed

underground geotechnical assessment to be undertaken in order to better determine the stoping

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method best suitable for the deposit and also any likely backfill requirements. A crown pillar study

should also be undertaken to determine the most suitable dimensions to ensure stability but maximise

recovery.

Although the work undertaken by PenMin broadly addresses the issues that will be involved in

underground mining, this work is to a Scoping Study level and so considerably more detail will be

required before a definitive mine plan can be formulated.

Mineral Processing

Test results undertaken on four Matala Composite samples, designated A-D and representing

mineralisation at increasing depth, indicated that the Matala ore is predominantly non-refractory,

with significant levels of free gold. The ore types may be treated efficiently by gravity leaching, albeit

with moderately high cyanide consumptions, and the deeper Composite C and D ore types may also

be processed by flotation to produce saleable copper/gold concentrates.

In a similar test programme for Dunrobin, Composites A and C both gave satisfactory recoveries of

gold using a conventional gravity-leach process route. Composite A gave a recovery of 94.8% and

Composite C a recovery of 94.7%, whilst composite B and D gave recoveries of 65.7 and 71.4%

respectively.

Only Composite A gave levels of cyanide consumption that would be regarded as economically viable

– with values of 1.6 to 2.6kg/t. Cyanide consumptions for Composites B, C and D were typically 4kg-

6kg/t which is attributable to the high levels of cyanide soluble copper present. Consequently, the

sulphidisation, acidification, recycling and thickening process (“SART”) which is an industry standard

process was recommended to recover both copper and cyanide from process solutions.

Two process development studies were undertaken in 2016 on the treatment of the Matala and

Dunrobin ores. The first, by Deswick/PenMin, considered treating 200,000tpa of Dunrobin ore using

gravity, cyanidation and SART technology. The capital cost estimate for such a plant was predicted to

be US$10.32 million which WAI considers is exceptionally low for a 200,000tpa plant using SART

technology. The process operating cost was predicted to be US$24.6 per tonne of ore.

A second study by PenMin in 2016 considered a 400,000tpa operation treating the Matala oxide and

transitional ores and then progressing to the Dunrobin oxidised ores. An Engineering, Procurement,

Construction (“EPC”) proposal was obtained from Xinhai Mining Machinery Company Limited (China)

for US$14.4 million which WAI considers very low. The total operating cost was estimated at

US$23.3/t, which WAI considers to be reasonable.


WAI reviewed the environmental and social performance of Alecto’s assets in Zambia (Matala and

Dunrobin).

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The Environmental Permit granted by the Zambian authorities in 2013 was based on an Environmental

Impact Assessment (“EIA”) which covers the entire mining block, although the scope of this was

restricted to a 150Ktpa (ore) open pit mine and processing plant located solely around the Dunrobin

site.

Currently, the Alecto plan is to mine 400Ktpa (ore) starting at Matala (open pit Phase 1) for 3 years,

then at Dunrobin (open pit Phase 2) whilst the underground mining infrastructure is prepared and

equipped at Matala (Phase 3).

As this is a departure from the original 150tpa plan, the Department of Mines has asked for a new

Development Plan to be submitted. This will be done once financing is finalised, and the detailed

engineering design is completed for the mine and plant, with the development schedule known with

some accuracy. WAI is aware that Alecto has accepted WAI’s recommendations, and Alecto has

received proposals for these works.

In addition, the new plan to start mining at Matala, with the construction of a new haul road to the

larger Dunrobin Plant, requires an amendment to the Environmental Permit through the Zambia

Environmental Management Agency (“ZEMA”).

Recent discussions with the Director of Mines’ Safety, (a Department of the Ministry of Mines and the

most significant consultee to ZEMA on environmental applications), has indicated the appropriate way

forward. They have suggested that, on the basis that a Mining Licence and Environmental Permit have

already been approved, that the most efficient way to include the new proposals is to upgrade the

existing Environmental Permit. This should typically take some 6-8 weeks and cost +/US$15K to

prepare.

The only legislative requirement, in the case of an existing Environmental Permit, for when an EIA is

mandatorily required, is if ore is required to be hauled >10km. The planned route between Matala

and the Dunrobin plant is reported as 8km, and so a full EIA is not required.

WAI understands that in 2013 Luiri Gold Mines reached agreement to resettle members of households

living in close proximity to the project. These agreements were enacted in 2016, but these along with

further economic and physical displacement should be verified and formalised within an

internationally compliant Livelihood Restoration Plan. This plan should also include hydrogeology, air

quality, biodiversity, noise, socioeconomic and cultural heritage impacts. Best practice also

recommends the development of an Environmental and Social Action Plan, formalising the delivery of

mitigation measures over time.

To comply with, and in effect to “start” the Environmental Permit, in October 2016 Alecto cleared and

fenced the proposed plant site, and resettled 5 families who were required to leave. The resettlement

process and compensation was agreed historically through the local traditional leadership. The

families were paid (ZMW10,000 each) and left amicably, thereby maintaining the company’s good will

in the local community.

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Alecto has recently updated the local chief as well as the Minister of Mines of the items above, and

the government is fully supportive of the company’s efforts.

WAI has been provided with copies of the relevant mining and environmental licences and permits,

according to domestic laws, which were provided for review, and currently, WAI foresees no concerns

regarding these licences.

Economic Appraisal

The project has excellent potential to be developed into production in the near to mid-term

considering the presence of a renewable mining licence, an associated environmental permit, and an

advanced JORC Code compliant Mineral Resource Estimate which reportedly demonstrates

approximately 750koz of Au over the two projects, as stated in the PenMin Feasibility Study.

Alecto has identified the potential to develop a low-cost, profitable 400,000tpa annum open-pit mine

at Matala and satellite deposits, targeting the oxide and transitional ore and using a simple crushing,

milling and gravity circuit with subsequent direct cyanidation. An updated scoping study for Matala,

completed by Alecto, indicates the potential to generate cash flows and strong economics at an

assumed gold price of US$1,150 and a discount rate of 10% through an initial three-year open pit

operation at Matala.

A summary of the Alecto findings from the PenMin Feasibility Study are as follows:

• Indicative IRR of 52%;

• Indicative NPV (8%) of US$28.6 million; and

• Low initial capital cost of approximately US$14.4 million.

The positive economics have been delivered in part due to the good regional infrastructure with

access, power and water available. The Alecto Board believes that considerable upside potential exists

to target further high-grade underground ores and thereby further extend the life of mine, with the

known resource at Matala open at depth, as well as sulphide ores at Dunrobin and Chosa (which was

a historic mine close to Dunrobin). The Company plans to use the resultant surplus cash flow from

production at Matala to develop these.

Mali

General

Alecto and its predecessor African Mineral & Exploration (“AME”), have been actively exploring their

gold projects in Mali for more than six years.

The Kossanto Project consists of 3 exploration licences, covering a total area of 204.8km2 in the Kayes

administrative district in Western Mali. The licences are all 100% owned by Alecto. The Kossanto

Project is comprised of Kossanto East (Gourbassi East, Gourbassi West, and Gourbassi Northeast) and

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Kossanto West (Massakama, Goreba, Big Pit etc). The Kossanto Project is situated within the world-

famous Kenieba inlier which hosts numerous other gold deposits.

Exploration on the Kossanto Project has been conducted by Bureau de Recherches Géologiques et

Minières (“BRGM”), Randgold Resources (“Randgold”), Caracal Gold (“Caracal”), AME, and presently

Alecto who have completed trenching, drilling, mapping and a Maiden Mineral Resource Estimate for

the projects.

Recently, Alecto has decided to develop these projects by way of JV partners, (see details below) to

free themselves up to concentrate on their Zambian and Botswana projects.

Joint Ventures

Alecto has recently entered into two Joint Venture agreements on the Kossanto East and West assets

which has seen the Company transfer exploration management to Ashanti Gold and Randgold

respectively.

At Kossanto East, Ashanti Gold Corp. has the exclusive right to earn-in for a 65% interest in the Project

(58.5% effective interest after allowing for the 10% carried interest of the Government of Mali) by

completing a Preliminary Feasibility Study (“PFS”) within a period of 36 months. Ashanti will be

required to maintain and keep the Project’s licence in good standing during the Option Period.

At Kossanto West, Caracal Gold Mali SARL, Alecto’s wholly owned subsidiary, has entered into a joint

venture agreement with Randgold Resources (Mali) Limited (“Randgold”) for the exploration and

development of Alecto’s 137km2 Kossanto West Gold Project in western Mali comprising the Kobokoto

East and Koussikoto exploration permits. On completion of the Joint Venture, Randgold will fund all

costs up to and including the completion of a Pre-Feasibility Study (‘PFS’) on the Project and will hold

65% and Alecto will retain a 35% participating interest in the Permits, with the Government also

holding 10%.

Mineral Resources

A Maiden Mineral Resource estimate for the Gourbassi East deposit was undertaken by WAI in 2013

for Alecto Minerals. The effective date of this Mineral Resource estimate was 17 April, 2013.

Following the completion of further drilling in 2013 and 2014, WAI completed an updated Mineral

Resource estimation for Gourbassi East and a Maiden Mineral Resource for Gourbassi West in May

2014, see table below.

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Gourbassi Mineral Resource Estimate 2014 (Mineral Resources not limited by optimised open pit shell)

Area Resource Classification

Cut-Off Grade (g/t) Au

0.3 0.5 0.7

Year 2013 2014 2013 2014 2013 2014

Gourbassi East

Inferred

Tonnes (kt) 3,248 4,274 2,350 3,080 1,823 2,332

Au (g/t) 1.14 1.03 1.42 1.27 1.66 1.49

Metal kg 3,694 4,391 3,338 3,919 3,025 3,475

koz 119 141 107 126 97 112

Gourbassi West

Inferred

Tonnes (kt) - 5,442 - 3,638 - 2,488

Au (g/t) - 0.82 - 1.03 - 1.24

Metal kg - 4,457 - 3,754 - 3,074

koz - 143 - 121 - 99

Total Inferred

Tonnes (kt) 3,248 9,716 2,350 6,717 1,823 4,820

Au (g/t) 1.14 0.91 1.42 1.14 1.66 1.36

Metal kg 3,694 8,848 3,338 7,673 3,025 6,549

koz 119 284 107 247 97 211 Notes: 1. Mineral Resources are not reserves until they have demonstrated economic viability based on a feasibility study or pre-feasibility study. 2. Mineral Resources are reported inclusive of any reserves. 3. Grade represents estimated contained metal in the ground and has not been adjusted for metallurgical recovery. 4. Mineral Resources are quoted based on a 2.5m mining selectivity 5. Reported Mineral Resources have not been limited by an optimised pit shell 6. Numbers may not add due to rounding


WAI reviewed the environmental and social performance of Alecto’s assets in Mali (Kossanto East and

West). Whereas some environmental and social management actions were previously developed for

the site under its previous ownership regimes, these would have to be updated by Alecto in order for

the Project’s development to gain international finance. Further, it is recommended that Alecto carry

out a full internationally compliant environmental and social impact assessment for the Kossanto

assets, based on updated baseline studies across relevant aspects, including hydrogeology, air quality,

biodiversity, noise, socioeconomic and cultural heritage impacts.

In 2013, WAI noted that artisanal miners were active in the area, though as WAI understands, very

few artisanal miners are active presently in 2016/2017.

WAI was given copies of the exploration licences, and as WAI understands, no environmental permits

are currently required for the ongoing exploration activities.

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1 TERMS OF REFERENCE

1.1 Introduction

Wardell Armstrong International (“WAI”) was commissioned by Alecto Minerals plc (the “Company”

or “Alecto”) to prepare a Competent Person’s Report (“CPR”) on the material assets held by the

Company in Botswana, Zambia and Mali.

In detail, the assets comprise:

• Botswana – the Mowana copper mine;

• Zambia – the recently acquired Matala historic underground mine and the former open pit, heap leach Dunrobin mine; and

• Mali – Kossanto East (now in a JV with Ashanti), and Kossanto West (managed by Randgold).

This CPR process has been triggered by the recent proposed acquisition by Alecto of Cradle Arc

Investments (Proprietary) Limited (“Cradle”), a company incorporated in Botswana, which owns the

Mowana Copper Mine (“Mowana”) in northeastern Botswana through its 100% holding in Leboam

Holdings (Pty) Ltd. Mowana was previously operated by African Copper plc.

The Vendor of the Mowana Copper Mine, PenMin (Botswana), is a Botswana registered company

wholly owned by PenMin, a South African company performing Design, Build and Operate contracts

within the mining sector in Africa, and is ultimately controlled by Kevin van Wouw. PenMin has been

appointed by Leboam to operate the Mowana Copper Mine and Mr van Wouw will be appointed as a

director of Alecto on Admission.

Alecto is an Africa-focused gold and base metal exploration and development company. The

acquisition of Mowana is in line with Alecto’s strategy to become a major metals producer in Africa.

Alecto has encountered challenges in providing adequate security to raise debt financing, which has

delayed the development of the Matala Gold Project in Zambia. It is expected that by acquiring a near-

term producing asset (Mowana) Alecto will be able to provide the necessary security and raise finance

to develop the Zambian assets.

Therefore, this CPR considers the geology, mineralisation, mineral resources, mining, processing and

environmental and social issues.

This CPR will be valid for 6 months from the completion date.

1.2 Project Description

1.2.1 Botswana

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Following the acquisition process, since mid-March 2017, the Company has re-opened the mine and

re-commissioned the plant and is currently producing approximately 100t per day of low grade copper

concentrate as a lead up to full production in the next few months.

The Mowana mine is located 120km northwest of the regional hub of Francistown along the A3

national road, while the Thakadu and Makala projects are located 100km west of Francistown and

70km from Mowana (Figure 1.1).

Figure 1.1: Location Map of Mowana

African Copper PLC was the 100% holding company of Messina Copper Botswana (Pty) Ltd (“MCB”)

which was a copper concentrate producer from its 100% owned major asset, the Mowana Copper

Mine in northeast Botswana.

The Mowana mine was commissioned in 2008, with open pit mining at a rate of 100,000t/month and

a 1.2Mtpa processing plant. Operations at its sister Thakadu mine were suspended in June 2015 as

the operation neared the end of its scheduled mine life.

MOWANA MINE

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MCB had total copper resources of more than 100Mt at an average grade of 0.94% Cu, with higher

grade zones within the extensive ore body. This includes a Measured resource at Mowana of 14Mt at

1% Cu.

Between the period from 2012 to 2015, MCB sourced the majority of its feed requirements from its

100% owned higher-grade Thakadu mine. The Mowana Mine was re-opened in 2014 to supplement

the Thakadu ore, but MCB was placed in liquidation on 13 November 2015, following an application

to the High Court of Botswana by creditors of MCB. All mining and processing activities ceased at this

point and a structured wind-down and care and maintenance program was implemented. On 15

December 2015 MCB was put in final liquidation.

A summary of the Company’s mineral assets in Botswana is presented in Table 1.1 below:

Table 1.1: Alecto’s Botswana Mineral Assets

Asset Holder Interest

(%) Status

Concession Expiry Date

Concession Area (units)

Comment

Mowana (ML2006/53L)

Leboam 100% Production 2031 32.7km² Production re-

started March 2017

Thakadu (ML2010/96L)

Leboam 100% Development 7 Dec 2017 28.5km² Planned

underground operation at Makala

PL 180/2008 Leboam 100% Exploration 30 November

2017 65.2km² Further North extension of

Mowana


2017 76.5km² North extension of

Mowana

WAI is aware that Leboam shall be making applications to the Ministry of Mines, before the expiry of

ML2010/96L, for a new underground mining licence at Makala, or an extension of the existing licence,

depending on the results of a future feasibility study for Makala.

Significant Mineral Resources remain at Mowana due to the problems of the previous owner trying to

treat the oxide mineralisation. Details are provided in Table 1.2 below. The Mineral Resources were

classified as Indicated and Inferred and reported in accordance with the 2012 Australasian Code for

Reporting of Mineral Resources and Ore Reserves (JORC Code (2012)).

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Table 1.2: Alecto Mineral Resource

Deposit Cut-off Category Tonnes

(kt)

Cu Grade

(%)

Cu Metal (kt)

Mowana South* 0.25% Cu

Measured 14,725 1 147

Indicated 26,308 0.88 232

Inferred 23,976 0.71 170

Total 65,009 0.84 549

Mowana North Conical Pit** 0.25% Cu Indicated 31,060 1 311

Inferred 20,720 0.89 184

Total 51,780 0.96 495

Mowana North Extension ** 0.25% Cu Inferred 55,082 0.74 408

Total 55,082 0.74 408

Total Mowana

Measured 14,725 1 147

Indicated 57,368 0.94 539

Inferred 99,778 0.76 758

Grand Total 171,871 0.84 1,445

Thakadu*** 0.25% Cu Indicated 2,268 1.11 25

Inferred 5,380 0.63 34

Total 7,648 0.77 59 Notes:

* Reported by Golder and Associates. Effective June 2015

** Reported by Golder and Associates. Effective September 2014

*** Reported by Golder and Associates. Effective November 2014

Currently, no Ore Reserves are defined at Mowana or Thakadu.

1.2.2 Zambia

The Matala project (previously called the Luiri Hill Project) is comprised of the historic Matala and

Dunrobin mines that are located in Central Province of Zambia, approximately 120km northwest of

the capital Lusaka, see Figure 1.2 below.

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Figure 1.2: Zambia Map

The project has excellent potential to be developed into production in the near to mid-term

considering the presence of a renewable mining licence, an associated environmental permit, and an

advanced JORC Code Mineral Resource Estimate which demonstrates approximately 750koz of Au

over the two projects, as stated in the PenMin feasibility study.

Alecto has identified the potential to develop a low-cost, profitable 400,000tpa open-pit mine at

Matala and satellite deposits, targeting the oxide and transitional ore and using a simple crushing,

milling and gravity circuit with subsequent direct cyanidation. An updated scoping study for Matala,

completed by Alecto, indicates the potential to generate cash flows and strong economics at an

assumed gold price of US$1,150 and a discount rate of 10% through an initial three-year open pit

operation at Matala.

A summary of the Alecto findings from the PenMin feasibility study are as follows:

• Indicative IRR of 52%;

• Indicative NPV (8%) of US$28.6 million; and

• Low initial capital cost of approximately US$14.4 million.

The positive economics have been delivered in part due to the good regional infrastructure with

access, power and water available. The Alecto Board believes that considerable upside potential exists

to target further high-grade underground ores and thereby further extend the life of mine, with the

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known resource at Matala open at depth, as well as sulphide ores at Dunrobin and Chosa. The

Company plans to use the resultant surplus cash flow from production at Matala to develop these.

Full details of the Zambia assets are given in Section 4 of this CPR.

1.2.3 Mali

Alecto currently holds licences in Mali, namely the Kossanto East and Kossanto West projects, see

details below.

Kossanto East

The Kossanto East permit, has been the exploration focus of Alecto Minerals since its acquisition in

2013, see Figure 1.3 below. The project has an independent Inferred Mineral Resource Estimate of

6.72Mt grading at 1.14g/t for an aggregate of 247,000 ounces Au (at a cut-off grade of 0.5g/t Au),

reported in accordance with the guidelines of the JORC Code (2012) by Wardell Armstrong

International in June 2013. This has been delineated across the Gourbassi East and West targets

within this project.

Figure 1.3: Kossanto East (Farikounda) Permit Area

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Kossanto West

Adjacent to the Kossanto East project is Alecto’s wholly owned 137km² Kossanto West exploration

project, see Figure 1.4 below, comprising the permits of Kobokoto East and Koussikoto. This expansive

project area has recently undergone permit consolidation and renewals in order to maximise the

exploration potential at what is considered to be one of the most prospective terrains in western Mali,

allowing for exploration activities to continue to 2022.

Kossanto West has been subject to soil geochemical sampling, pitting, trenching and scout drilling

since Alecto acquired the project in 2013, and the results have been extremely encouraging,

demonstrating high-grade gold mineralisation (peak intercepts shown in Figure 1.4 below) over a

significant area of the regionally significant Main Transcurrent Shear Zone (“MTZ”).

The MTZ is considered to be one of the major controls on gold mineralisation in western Mali and

eastern Senegal, and an important control at several major gold deposits such as Sabodala (3Moz -

Teranga Gold), Massawa (3Moz - Randgold), Makabingui (1Moz - Bassari Resources), and Sadiola and

Yatela. The area has been a centre for significant artisanal mining activity that has uncovered some

previously unknown gold occurrences that also highlight the area’s potential.

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Figure 1.4: Kossanto West Permit Area

Full details of the Mali assets are given in Section 5 of this CPR.

1.3 Independent Consultants

WAI, formerly CSMA Consultants, is part of Wardell Armstrong LLP, an independent British, partner-

owned engineering and environmental consultancy, established in 1837. The company has 12 offices

in the UK with around 500 staff.

WAI provides the mineral industry with specialised geological, mining, processing and environmental

expertise from our main offices in Truro, Cornwall, as well as Russia and Kazakhstan. The office in

Truro, at the old Wheal Jane mine site, includes an extensive mineral assaying, processing and pilot

plant testing facility.

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WAI, its directors, employees and associates neither has nor holds:

• Any rights to subscribe for shares in Alecto Minerals Plc either now or in the future;

• Any vested interests in any concessions held by Alecto Minerals plc;

• Any rights to subscribe to any interests in any of the concessions held by Alecto

Minerals plc either now or in the future;

• Any vested interests in either any concessions held by Alecto Minerals plc or any

adjacent concessions; or

• Any right to subscribe to any interests or concessions adjacent to those held by Alecto

Minerals plc, either now or in the future.

WAI’s only financial interest is the right to charge professional fees at normal commercial rates, plus

normal overhead costs, for work carried out in connection with the investigations reported here.

Payment of professional fees is not dependent on the success of the Admission or linked to the value

of the Company.

1.4 Data Reviewed

For the CPR, WAI has downloaded all data provided by the Client and has used this along with

observations made during the site visits to prepare the report.

For Botswana and Zambia, much of the data are historic, reflecting that Zambia is a brownfield site

and Botswana was a care and maintenance operation. A more complete data collection exists for Mali,

helped by the fact that WAI has had an input to some of these studies, in providing the Mineral

Resource Estimates.

Notwithstanding the above, the author has relied upon this information covering the areas of previous

exploration, geology, mining, infrastructure, processing, financial and environmental and social

matters, all in good faith. As a general comment, the quality of the exploration data including drill logs,

sections and plans is acceptable under the guidelines of the JORC Code (2012).

It should be noted that WAI has not taken any independent samples, nor independently verified the

legal status of the operations, though in terms of the Zambian and Malian Licences WAI has had sight

of either legal letters or mineral license documentation, and as such, is of the view that these do not

represent fatal flaws to the relevant projects. WAI has been provided with, and has reviewed, the

independent legal opinions from the relevant jurisdictions that confirm the validity and standing of

each of the licences.

1.5 Personal Inspections

Phil Newall, BSc (ARSM), PhD (ACSM), CEng, FIMMM, Managing Director of WAI, Phil King, BSc (Eng)

Mineral Technology (Hons), Technical Director, and Mark Mounde BEng, CEng, MIMMM, Technical

Director conducted a personal inspection of the Mowana Project between 11 to 12 January 2017,

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whilst over the same time period, Mark Kenwright, MSC, BSc, CP (Geo), FAusIMM, Associate Director

visited the Zambian property.

More recently (5th April 2017), Phil Newall has re-visited the Mowana operations to observe the re-

opened mine and plant.

As WAI has previously worked on the Malian assets, no recent site visits were required, as WAI had

completed site visits in 2013.

These visits primarily covered the geology, exploration, existing mining activity, infrastructure layout,

construction schedule, costs and environmental and social review.

1.6 Units and Currency

All units of measurement used in this report are metric unless otherwise stated. Tonnages are

reported as metric tonnes (“t”), precious metal values in grams per tonne (“g/t”) or parts per million

(“ppm”), base metal values are reported in weight percentage (“%”) or parts per million (“ppm”).

Other references to geochemical analysis are in parts per million (“ppm”) or parts per billion (“ppb”)

as reported by the originating laboratories.

Unless otherwise stated, all references to currency or “$” are to United States Dollars (“US$”).

1.7 Curriculum Vitae of the Directors

The Curriculum Vitae of the Directors, proposed directors and Management are as follows:

1.7.1 Toby David Howell, aged 41 (Non-Executive Chairman)

Mr Howell is a corporate finance professional with 17 years’ experience in the financial services

industry and has specific natural resources experience on AIM. He began his career at UBS Warburg

and went on to hold positions at firms including ARM Corporate Finance Ltd and Hichens, Harrison &

Co plc. He is currently a director of Nash & Co Capital Limited, a corporate finance business focused

on M&A, SME finance and asset backed lending. He is an officer in the British Army Reserve with

operational leadership experience, a graduate of Newcastle University and holds the CISI diploma.

1.7.2 Mark Christopher Jones, aged 57 (Chief Executive Officer)

Mr Jones is a mining engineer with over 35 years’ experience in mining production and associated

businesses, 25 years of which have been spent in Africa. He has specific expertise in gold and base

metals in Africa, Europe and the Former Soviet Union. Mark was founder and CEO of African Mining

and Exploration plc (now named Savannah Resources plc) that sold the Malian assets to Alecto.

Previous positions include CEO of Aurum Mining plc and Expert Explosives (Pty) Ltd and Mark was

formerly a non-executive director of Antracor Mining Ltd. Mr Jones is a graduate of the Camborne

School of Mines and holds an MBA.

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1.7.3 Dominic James Doherty, aged 38 (Operations Director)

Mr Doherty is a retired British Army Office with a Law Degree from the University of Exeter. He has

spent over 20 years’ working in Africa where he has forged strong bonds and a close network of

relationships within some of the most inhospitable environments. With over 10 years’ experience in

commodity trading, mining and exploration he acted as Country Manager for African Mining and

Exploration plc (now named Savannah Resources plc) in Mali and was responsible for the selection

and acquisition of the Kossanto projects. At Alecto he has managed operations on the ground

throughout its portfolio of assets and handled M&A matters relating to the Company’s joint ventures

and recent acquisitions in Zambia and Botswana.

1.7.4 Roger Alyn Williams, aged 54 (Non-Executive Director)

Mr Williams is a Chartered Accountant with over 20 years’ international experience in mining finance

and an honours degree in French and Spanish. He was previously CFO of Randgold Resources Limited

and part of the management team that transformed Randgold Resources Limited from an exploration

and development company into a major gold producer. He then went on to become CFO of JSE-listed

AECI Limited. His other experience includes directorships and interim executive appointments with

various mining and mining services companies. Mr Williams is currently a Non-Executive Director of

Sylvania Platinum Limited and interim Commercial Executive for Digby Wells and Associates, an

environmental and social consultancy to the resources sector in Africa.

Proposed Director

1.7.5 Kevin John Ludolph van Wouw, aged 53 (Non-Executive Director)

Mr van Wouw has over 30 years’ experience in the mining industry and is currently the Managing

Director of PenMin. Prior to PenMin, Mr van Wouw was the General Manager, Operations at FLSmidth

(Pty) Ltd, where he introduced both the project management and risk management systems. Before

this, he founded Minero Consulting, working as Project Director on numerous African mining projects,

and was also Projects Director at LionOre Mining International Limited where he was directly

responsible for the commercialisation of its ActivoxTM technology, as well as conceptualising and

implementing the Commercial DMS application for Tati Nickel Mining Company (Pty) Ltd, in Botswana.

He was also Senior Project Manager for the Ngezi and Mimosa Platinum Projects while working for

DRA International (Pty) Ltd. He has in-depth knowledge of the development of projects across many

different currencies and sovereign regions, and the macroeconomic impact of African projects. Mr

van Wouw holds an Honours degree in Metallurgy from Pretoria University and is a Fellow of the South

African Institute of Mining and Metallurgy.

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Proposed senior management/technical team:

1.7.6 David Swan (Chief Financial Officer)

Mr Swan is a Chartered Accountant with a career focus on the natural resource industries. He joined

Arthur Andersen after graduating in 1977, and from 1991-1996 acted as Chief Financial Officer or

Finance Director for a number of ASX listed mining companies. He returned to the accounting

profession in 1996 as Group Leader of the Mining and Resource Group at Ernst & Young in Sydney.

After relocating to the UK in 2001 he continued his involvement in the natural resources industry

including the position as Chief Financial Officer of Oriel Resources plc undertaking the IPO, TSX listing

and reverse take-over of a major smelting business, until its eventual sale to the Mechel Group for

US$1.4 billion. He is currently a Non-Executive Director of AIM quoted companies, Sunrise Resources

plc and Central Asia Metals plc.

1.7.7 Sebele Molalapata (Acting General Manager, Mowana)

Sebele Molalapata is a Professional Mining Engineer with over 28 years' experience in Mining, of which

15 years is at Senior Management and executive levels. Mr Molalapata has extensive experience in

both surface and underground mining having worked for De Beers/Debswana Diamond Company and

Norilsk Nickel/Tati Nickel Mining Company in Botswana. Mr Molalapata has a Bachelor of Mining

Engineering, from the Technical University of Nova Scotia, a Certificate in Mining Engineering from

Mount Allison University in New Brunswick and a Diploma in Business Management from the

European School of Business Studies in Paris.

1.7.8 Thuso Cecil Dikgaka, (Botswana Country Director)

Mr Dikgaka is a mining engineer with over 35 years’ experience in the mining industry, with expertise

across a number of commodities including base metal production with Botswana Copper Limited and

Tati Nickel, diamond production with Debswana Diamond Company, and coal at Morupule Colliery.

Mr Dikgaka spent a number of years working in Canada and South Africa, and has worked extensively

in Botswana holding senior positions at Orapa and Letlhakane Mines; Burrow Binnie Botswana and

the Botswana Department of Mines in legislative and regulatory capacities. Mr Dikgaka is graduate of

the Haileybury School Of Mines and the Technical University of Nova Scotia.

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2 RELIANCE ON OTHER EXPERTS

2.1 Introduction

This technical report has been prepared by WAI for Alecto and WAI has wholly relied upon the data

presented in formulating its opinion. The information, conclusions, opinions, and estimates contained

herein are based on:

• Information made available to WAI by Alecto at the time of preparing this CPR, and

• Assumptions, conditions, and qualifications as set forth in this CPR.

The competent person has not carried out any independent exploration work, drilled any holes or

carried out any sampling and assaying at the project area.

The majority of technical data, figures and tables used in this report are taken from reports prepared

by others and provided to WAI by Alecto.

Whilst WAI has endeavoured to validate as much of the information as possible to ensure that the

information contained in the CPR is, to the best of its knowledge and belief, factually accurate without

omission that would otherwise materially affect the import of the document, WAI cannot be held

responsible for any omissions, errors or inadequacies of the data received. WAI has not conducted

any independent verification or quality control sampling, or drilling.

Alecto and Strand Hanson were provided a final draft of this report and requested to identify any

material errors or omissions prior to its lodgement.

WAI has not undertaken any accounting, financial or legal due diligence of the assets or the associated

company structures and the comments and opinions contained in this report are restricted to

technical and economic aspects associated with principally the proposed project.

WAI has not undertaken any independent testing, analyses or calculations beyond limited high level

checks intended to give WAI comfort in the material accuracy of the data provided. WAI cannot accept

any liability, either direct or consequential for the validity of information that has been accepted in

good faith.

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3 BOTSWANA - THE MOWANA PROJECT

3.1 Location, Access and Infrastructure

Previously known as the Dukwe Copper Project, the Mowana Mine was re-named during the first

quarter of 2007. It is located in north eastern Botswana, some 120km northwest of Francistown, the

second largest city, with its centre on co-ordinates 20o31’38”S and 26o35’46”E (Figure 3.1).

Figure 3.1: Location Map of Mowana Project, Northeastern Botswana

It is accessed by a 12.5km private road off the main Francistown-Maun paved road. Driving time is

approximately 1½ hours from Francistown.

As the mine only went into care and maintenance in 2015, all the existing infrastructure in terms of

power, water and communications are still present.

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The area is a flat semi desert with scrub-bush vegetation that slopes gently from east to west, and

which drains into the Sua Pan salt flats of the Makgadikgadi basin.

3.2 Topography & Climate

The area is generally very flat with little or no relief (Photo 3.1).

Photo 3.1: Topography Around the Mowana Pit

In terms of climate, in general the summer season lasts from November to March with usually very

high temperatures. It also witnesses a lot of rain, which brings down the temperatures for a short

period. The winter season lasts from May to August. This is also the dry season when there is almost

no rainfall.

The rainy season lasts from October to April. January and February are generally the peak months for

rain. The mean annual rainfall varies from a maximum of 650mm+ in the extreme northeast area of

the Chobe District to a minimum of less than 250mm in the extreme southwest part of Kgalagadi

District.

In the Mowana area, the climate is warm and dry, and the annual rainfall is less than 250mm. The

temperature varies from 7°C winter night time lows to summer highs of 40°C.

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3.3 Botswana Summary Information

The Republic of Botswana is a landlocked country located in Southern Africa. It is bordered by South

Africa to the south and southeast, Namibia to the west and north, and Zimbabwe to the northeast. Its

border with Zambia to the north near Kazungula is poorly defined, but at most is a few hundred metres

long.

Botswana is the world's 48th-largest country with a surface area of 581,730km2. The country lies

between latitudes 17° and 27°S, and longitudes 20° and 30°E.

A mid-sized country of just over 2 million people, Botswana is one of the most sparsely populated

nations in the world. Around 10% of the population lives in the capital and largest city, Gaborone.

Botswana is predominantly flat, tending toward gently rolling tableland. Botswana is dominated by

the Kalahari Desert, which covers up to 70% of its land surface. The Okavango Delta, one of the world's

largest inland deltas, is in the northwest. The Makgadikgadi Pan, a large salt pan, lies in the north.

The Limpopo River Basin, the major landform of all southern Africa, lies partly in Botswana, with the

basins of its tributaries, the Notwane, Bonwapitse, Mahalapswe, Lotsane, Motloutse and the Shashe,

located in the eastern part of the country. The Notwane provides water to the capital through the

Gaborone Dam. The Chobe River lies to the north, providing a boundary between Botswana and

Namibia's Zambezi Region.

Over the past half-century political stability, good governance and prudent economic and natural

resource management helped to secure robust economic growth, supported by the discovery of

diamonds. Botswana is now an upper-middle income country, after being one of the poorest countries

in Africa with a GDP per capita of about US$70 per year in the late 1960s.

The economy is dominated by mining, cattle, and tourism. Botswana boasts a GDP (purchasing power

parity) per capita of about US$18,825 per year as of 2015, which is one of the highest in Africa. Its

high gross national income (by some estimates the fourth-largest in Africa) gives the country a modest

standard of living and the highest Human Development Index of continental Sub-Saharan Africa.

The https://tradingeconomics.com/ Website, 2017 (“Trading Economy”) has projected Botswana GDP

Forecasts of which mining has been estimated at 10,970 BWP Million by the end of this quarter

(Q2/2017). Headline GDP rates are provided in Table 3.1.

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Table 3.1: Botswana GDP Forecast (2016-2020)

Botswana GDP Last Q2/17 Q3/17 Q4/17 Q1/18 2020

GDP Growth Rate (%) 0.1 0.95 1.2 1.59 1.61 1.18

GDP Annual Growth Rate (%) 4.2 4.8 5 5 4.9 5.5

GDP (US$billion) 14.39 14.3 13.86 13.43 13.62 13.59

Source: https://tradingeconomics.com

Mining activities have been taking place in Botswana since the nineteenth century with the advent of

the gold rush in the northern part of the country. Diamonds have been the leading component of the

mineral sector since large-scale diamond production began. In 2016, Botswana was the world’s second

leading producer of diamonds by value. The country also produces coal, cobalt, copper, gold, nickel,

platinum-group metals (PGMs), salt, sand and gravel, semiprecious gemstones, and silver.

Botswana has an estimated 822Mt of uranium and 200Bt of coal. The uranium reserves have been

recently discovered, while the coal resources require exploitation to convert to revenue.

Currently, the country has one active coal mine, the Morupule mine, owned by Debswana – a 50/50

joint venture by the Botswana government and mining company De Beers. It has also granted only

one uranium exploration licence to Australian exploration company A-Cap Resources.

Notable mining activities included the gold mines around Francistown, copper mines at Matsitama,

manganese mines at Kgwakgwe hills in Kanye and asbestos mines at Moshaneng.

Mining production in Botswana increased 13.4% year-on-year in the third quarter of 2016, following

a downwardly revised 12.9% fall in the previous quarter.

In the long-term, the Botswana GDP From Mining is projected to trend around 11114 BWP Million in

2020.

Despite being landlocked, Botswana has a well-developed infrastructure in comparison to other

countries in the region. The country’s road sector remains strong, benefitting from many years of

careful planning and investment, although more funding will need to be made available for routine

and periodic maintenance. There are prospects for expansion of the railway network, particularly as a

means to export coal from the Mmamabula coal fields through Namibia. The country has a thriving

mobile telecommunications industry with one of the highest penetration levels in Africa. Botswana

has 971km of rail lines, 18,482 km of roads (23% of which are paved) and 92 airports (12 of which have

paved runways). The national airline is Air Botswana, which flies domestically, and to other African

countries.

3.4 Regulatory Environment & Mineral Tenure

3.4.1 Regulatory

MMEWr oversees the operations and development of the energy, water and minerals sector in

Botswana. Mining activities are chiefly administered under the Mines and Minerals Act, 1999. The

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legislation allows the government to acquire a minority stake (generally 15%) in mining projects as a

partner and seek participation in the mining projects by having representation in their boards. The act

regulates the issuance of exploration and mining licenses and tries to reach a balance between mining

activity and environmental impact.

The act states the following:

• All rights of ownership of minerals are vested in the republic of Botswana subject to

the provisions of mineral rights in the Tribal Territories Act;

• The right to prospect or to mine minerals can be acquired and held only in accordance

with the provisions of this act, and no person is allowed to prospect or mine minerals

except as provided in this act;

• The Minister of MMEWr is responsible for the most efficient, beneficial and timely

investigation and exploitation of mineral resources of the country; and

• No right to explore or produce petroleum (as defined in section 2 of the Petroleum

Exploration and Production Act) may be granted or exercised under this act.

The following are the licenses and permits granted under this act.

3.4.2 Prospecting License

It enables the holder to intentionally look for minerals in the prospecting area and determine their

extent and economic value. The holder of a prospecting license shall:

• Commence prospecting operations within three months of the date of issue of his

license or a period as the minister may allow;

• Carry on prospecting operations in accordance with the program of prospecting

operations;

• Notify the minister of the discovery of the mineral to which his prospecting license

relates within a period of 30 days of such discovery; and

• Notify the minister of the discovery of any mineral deposit of possible economic value

within a period of 30 days of such discovery.

A prospecting license is valid for such period as the applicant has applied for and cannot exceed three

years. The holder of a prospecting license can apply for a renewal three months before the expiry of

his license and specify the period for which the renewal is sought. An applicant is entitled to the grant

of not more than two renewals, each for the period applied for and not exceeding two years in either

case. The licence also provides a right of retention over a prospecting area.

The holder of a prospecting license can apply for a retention license in relation to the area and a

mineral covered by his license, a retention license is granted if:

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• The applicant has carried out a feasibility study of the deposit in accordance with good

industry practice, and the study has established that the deposit cannot be mined on

a profitable basis at the time of the application;

• The approved prospecting programs of the area applied for has been completed; and

• The applicant is not in default.

The holder of a retention license is entitled to:

• Retain the retention area to which the retention license relates for future mining

operations;

• Carry on prospecting operations in the retention area from time to time to determine

the prospect of mining any mineral to which the retention license relates on a

profitable basis;

• Remove any mineral or sample of a mineral for any purpose other than sale or disposal

in the course of prospecting operations to any other place within Botswana or outside

Botswana with the permission of the director of mines; and

• Carry on investigations and operations from time to time to determine the prospect

of mining any mineral to which the license relates on a profitable basis.

3.4.3 Mining License

The holder of a prospecting license, retention license or a waiver (issued by the minister once being

satisfied that the area over which a mining license is required has been sufficiently prospected and

that no other person has exclusive rights to that area) can apply for a mining license for an area in

respect of which the waiver has been issued, or for an area within his prospecting area or retention

area.

The holder of a mining license may enter any land to which his mining license relates and:

• Take all reasonable measures on or under the surface to mine the mineral for which

a mining license has been granted;

• Erect the necessary plant, equipment and buildings for the purposes of mining,

transporting, dressing, treating, smelting or refining minerals recovered by them

during mining operations;

• Dispose of any mineral product recovered;

• Prospect within his area for the mineral for which he holds a mining license or any

other mineral; and

• Stack or dump any mineral or waste product in a manner approved by the director of

mines.

A mining license is valid for a period not exceeding 25 years. The government has the option of

acquiring up to 15% working interest participation in the proposed mine upon the issuance of a mining

license.

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3.4.4 Mineral Tenure

A summary table of Alecto’s mineral assets in Botswana is shown in Table 3.2 below.

Table 3.2: Alecto’s Botswana Mineral Assets

Asset Holder Interest

(%) Status

Concession Expiry Date

Concession Area (units)

Comment

Mowana (ML2006/53L)

Leboam 100% Production 2031 32.7km² Production re-

started March 2017

Thakadu (ML2010/96L)

Leboam 100% Development 7 Dec 2017 28.5km² Planned

underground operation at Makala


2017 65.2km² Further North extension of

Mowana


2017 76.5km²

North extension of Mowana

3.5 Project History

The history of the Mowana project can be traced back to the early 20th century with the discovery of

the Dukwe Copper Project as it was then known.

The Bechuanaland Geological Survey conducted geological mapping, geophysical surveying and

several drill holes on the Dukwe Copper Project in 1953. This was followed by a first major period of

exploration by Bamangwato Concessions Limited (“BCL”), a subsidiary of Rhodesian Selection Trust.

This work occurred in the periods from 1959 to 1963 and from 1972 to 1974 included limited diamond

drilling and substantial percussion drilling leading to the re-discovery of the oxide resource. They

reopened the underground workings, developed a short winze, and completed a property wide

geochemical and prospecting programme along the 25km length of the Bushman lineament.

BCL mineral rights in the area lapsed at the end of 1976 and Falconbridge Explorations Limited

(“Falconbridge” or “FEB”) subsequently applied to the Botswana Government for a prospecting licence

covering the Matsitama area, including the Dukwe Copper Project. This licence, State Grant 7/77

(Matsitama), was first approved on June 15, 1977. Falconbridge held the licences until 1993 at which

time they were allowed to lapse.

FEB undertook a major exploration programme on the Dukwe property, between 1977 and 1982, to

evaluate the deeper chalcopyrite resources for development of a possible underground mine and

concentrator. Falconbridge identified a mineral inventory (not NI 43-101 compliant) of about 13Mt at

a grade of 3.85% Cu. That was set out in a comprehensive in-house pre-feasibility study in 1982, and

updated in 1987 and in 1992. Their work also included reopening the first two levels of the original

underground workings, underground chip sampling, extensive diamond drilling, geophysical surveys

and percussion holes for exploration and water resources.

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Minvest through its Botswana subsidiary Messina Copper Botswana (“MCB”) acquired the Dukwe

property in 1992 and completed metallurgical sampling and permitting for a proposed underground

mine, concentrator and smelter. MCB acquired the property in 1996 and commenced a drilling

program designed to test the concept that the chalcopyrite was overlain by a potential leachable oxide

blanket. MCB undertook a limited RC and diamond drilling programme in 2001-2002.

This work was concentrated on the oxide and supergene environments to a depth of 150m below

surface. The drill program consisted of some 6,800m of diamond core and RC drilling culminating in

resource estimation and pit optimisation studies. It confirmed the existence of the mixed copper

oxide-copper carbonate cap, and identified an extensive and thick zone of secondary copper

enrichment as a supergene chalcocite blanket at intermediate depths between the shallow mixed

copper oxide-copper carbonate and the deeper chalcopyrite hypogene zone.

In January 1996, Mortbury acquired the property through an agreement with Minvest. Between July

and December 1996, MPH Consulting Ltd managed an exploration programme on the property on

behalf of Mortbury.

In 1999, Mortbury estimated the leachable copper Mineral Resource at a lower cut-off grade based

on an open pit, heap-leach, SX-EW operation. In early 2000, A.C.A. Howe International prepared a

base case order-of-magnitude estimate of mining costs and designed some preliminary pit outlines.

In July 2000, Mortbury compiled key information on the project and began soliciting proposals from

consulting companies to complete a bankable feasibility study in October 2000.

In April 2002, SNC-Lavalin Engineers and Constructors Inc. (“SNC-Lavalin”) completed a feasibility

study report for Mortbury on the Dukwe Copper Project. This report analysed the technical and

economic viability of a conventional open pit and SX-EW copper processing plant for the oxide copper

zone at Dukwe. The SNC-Lavalin report was complemented by specialist reports on resources/reserves

by Roscoe Postle and Associates Inc. (“RPA”), as well as environmental impact assessment,

archaeological assessment and water resources reports, all by Water Surveys (Botswana) (Pty) Ltd.

Subsequent to that report, additional technical information through an additional study by

MDMFerroman (Pty) Ltd. of South Africa in July 2004 and changes in economics, indicated an

economically viable project.

In 2004, African Copper PLC, an AIM quoted company, acquired the project, following which much of

the more recent drilling and metallurgical testwork was compiled into a NI 43-101 Compliant

Feasibility Report (2008) by Read, Swatman and Voight (RSV), relying on geological modelling by

Caracle Creek (“CCIC”), mine design by Turgis Consulting and plant design by Senet Projects. This new

mine plan relied on recovering copper rich concentrates through flotation, and these concentrates

would be sold on to smelter companies.

Construction of the project occurred in 2006/2007, with commissioning due to commence in 2008.

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The following data is sourced from financial statements published by African Copper:

Mowana, under African Copper’s ownership, was profitable and cash generative at an operating level

in the years ending 31 March 2013, 2014, and in the half year ending 30 September 2014. This

information is the latest available published financial reports for African Copper, prior to the cessation

of production in 2015. However, African Copper owed ZCI US$96M and had net liabilities of almost

US$60M at 30 September 2014, as shown from the extracts from African Copper plc’s published

financial statements, as shown in Table 3.3 below:

Table 3.3: Extracts from African Copper Plc’s Published Financial Statements

Year ended 31 March 2013

(audited) US$’000

Year ended 31 March 2014 (audited) US$’000

Six months ended 30 September 2014 (unaudited) US$’000

Turnover 60,464 58,735 30,830

Operating profit from mining operations before impairment and administrative expenses

13,712 12,714 3,966

Operating profit/(loss) 5,447 (20,788) (489)

Loss after tax (12,967) (32,639) (5,414)

Total non-current assets 72,635 50,910 61,531

Net current liabilities (86,417) (96,933) (105,529)

Total non-current liabilities (16,149) (8,601) (16,008)

Total equity (29,931) (54,624) (60,006)

Net cash inflow from operating activities

8,703 13,712 9,330

In 2015, African Copper expected to end production at the nearly exhausted Thakadu mine, and move

production to the Mowana pit, incurring significant capital costs. The Mowana pit was expected to

achieve lower grades than Thakadu, and at the same time copper prices were falling.

Furthermore, African Copper had had a series of problems with mining contractors which had meant

production falling behind schedule, and requiring more working capital in the short term. Accordingly,

African Copper’s financial position was under pressure from a combination of factors, including: a high

level of debt, rising working capital requirements, rising costs and falling copper prices.

In May 2015, African Copper announced proposals to cancel its admission to trading on AIM as a cost

saving measure, which became effective in June 2015. In November 2015, ZCI, the major shareholder

and creditor in African Copper, announced the provisional liquidation of Messina Copper (Botswana)

Pty Ltd, the African Copper subsidiary which held the Mowana assets.

WAI Comment: The Mowana Project is very well situated in northeastern Botswana and is well

served by infrastructure, including power, water and communications. However, the history of

the mine has been blighted by both low metal prices and a poor understanding of the

mineralogical characteristics of the various ore types leading to poor plant recoveries. In

addition, the choice to mine and process ore clearly identified as oxides, was apparently not in

line with the African Copper business model.

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3.6 Geology & Mineralisation

3.6.1 Regional Geology

The Archean-age “basement” rocks in eastern Botswana (Figure 3.2) are divided into three major

units. These units are the Kaapvaal Craton in the south, the Zimbabwe Craton in the northeast and the

inter-cratonic Limpopo Mobile Belt in between. Each of these terrains is comprised of granitoids and

supra-crustal lithologies.

The greenstones and gneisses of the Kaapvaal Craton are older than those of the Zimbabwe Craton,

although some degree of temporal overlap is apparent. On the Zimbabwe Craton the Mosetse

Complex is of particular interest for the project described here. This unit comprises supracrustal rocks,

the Matsitama Metasedimentary Group, together with widespread granitoids and gneisses with

various compositions that enclose amphibolite sheets in places.

Figure 3.2: Regional Geology and Mineral Deposits of Botswana

(Bushman = Mowana)

The Bushman lineament, or shear, is a major zone of cataclastic deformation trending north-northeast

from the northern margin of the Matsitama belt. This lineament consists of mylonitised granitic rocks

of the Mosetse Complex with relict sedimentary lenses in which copper mineralisation is located. This

metasedimentary sequence differs in lithological composition from typical Archean greenstone belts

with volcano-sedimentary associations in that it is poor in mafic and ultramafic components, and rich

in carbonates.

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Collision between the Kaapvaal and Zimbabwe Cratons commenced in the Late Archean with major

consequent deformation in the Limpopo Mobile Belt. Subsequent to this collision, these three Archean

terrains have acted as a single crustal or cratonic block through to the present day. This enlarged block

is sometimes known as the Kalahari Craton.

Late Archean and early to mid-Proterozoic, largely sedimentary platform sequences succeed and cover

the basement rocks of the Kaapvaal-Zimbabwe Craton, usually unconformably.

The Phanerozoic Karoo Supergroup succession covers a large part of the Archean and Proterozoic

rocks of central and western Botswana. These Karoo rocks comprise undeformed sediments and coal

bearing formations, culminating with the Stormberg basaltic lavas.

More recently, the Kalahari beds comprise a thin veneer of continental aeolian, fluvial and lacustrine

sediments of post-Cretaceous age, which cover some 75% of the area of Botswana.

3.6.2 Project Geology & Mineralisation

3.6.2.1 Mowana

The Mowana Copper Project is hosted within north-northeast striking, steeply east dipping

carbonaceous and argillaceous metasediments of the Matsitama Metasedimentary Group which are

enclosed within foliated granitoids of the Mosetse Complex (Figure 3.3).

Hypogene sulphide mineralisation occurs within sub-vertical epithermal quartz-calcite vein breccias

containing predominantly chalcopyrite + pyrite ± galena and sphalerite mineralisation. Hypogene

mineralisation is capped by secondary oxide and supergene copper enrichment up to depths of

approximately 50m and 150m below surface respectively. This in turn is overlain by Phanerozoic Karoo

Supergroup siltstones, conglomerates and local tillite over the north and west areas of the deposit

with depths varying from 1 to 90m. Regolith cover over the southern extent of the deposit generally

consists of shallow (1 – 3m) clay rich black soils.

The metasediments hosting the deposit occur parallel to and within the northern extent of the 200km

long north-northeast trending regional Bushman lineament exhibiting thicknesses variable between

200 to 400m mostly due to large scale pinch and swell amplitudes of up to 600m. However, the contact

between the footwall sediments and the western granitoid has not been intersected in any of the

historical or recent drilling.

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Figure 3.3: Local Geology and Cross Section of the Mowana Deposit

Four deformation periods have been interpreted within the project area, the strongest and most

significant with regards to veining and mineralisation being the deformation that initiated the regional

scale Bushman lineament. A final post mineralisation deformation event produced a number of

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northeast trending parallel faults transecting the mineralised breccia at a low angle into three main

zones of roughly equal length. From north to south, they are Mapanipani North, Mapanipani and

Bushman sections.

The footwall argillaceous metasedimentary rocks exhibit alteration mineralogy and textures of

retrograde regional greenschist metamorphism from either a higher grade lower amphibolite facies

or arguably a more localised thermal metamorphic hornfels. In the Mapanipani and Bushman sections,

localised but well developed talc/serpentine alteration from metasomatism occurs within dolomitic

lithologies.

Sulphide bearing veins are generally spatially associated with carbonaceous (graphitic) argillites and

are composed of quartz+calcite ± K feldspar in varying ratios with three stages of quartz veining having

been identified. Only the second vein generation bears Cu, Pb & Zn sulphides. Areas of intense vein

stockworks have been termed breccias and form the copper deposits. Photo 3.2 shows a block of

typical brecciated oxidised ore.

Fluorite and barite are rare but locally evident. Pyrite + chalcopyrite occur mostly as semi-massive

patches and coarse aggregates. Galena±sphalerite occurs locally usually associated with fluorite in

discreet zones generally separate from chalcopyrite mineralisation which it slightly post-dates.

Photo 3.2: Typical Brecciated, Carbonate-rich Oxidised Ore

Regarding veining and mineralisation, the graphitic argillite (Photo 3.3) is the most significant lithology

of the metasedimentary assemblage.

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Photo 3.3: Looking South from North Pit Showing Large Graphitic Mass in Centre

It is moderately to strongly graphitic, fine to very fine grained, black to very dark grey, laminated to

fissile. The unit may grade into both cleaner limestones and more argillaceous pelitic rocks. Lamination

is at a mm-scale ranging from planar to highly contorted and it commonly hosts fine grained pyrite in

disseminations and small irregular stringers. Most of the intervals identified as carbonaceous phyllite

or graphite schist form either the immediate wallrocks to the mineralised breccias and/or host

moderate to high density veining forming a graphitic breccia.

The distribution of this unit is somewhat irregular, since it can form a relatively thick envelope to the

breccias, be absent or entirely replaced by the breccia units up to their contact with the host

limestone. This is also evident in cross section where the graphitic unit may occur in the upper part of

a section and is absent lower down and/or vice versa. This is probably due to the unit having a pod

like or lensoidal nature both along strike and down dip throughout the metasedimentary assemblage

due to deformation. Its highly ductile nature would have led to this unit absorbing a lot of the strain

under deformation.

Similar juxtapositions are seen with other lithologies in that, in the North Pit, limestone is on the

hangingwall side of the orebody, whereas in the South Pit it is on the footwall.

In terms of the current Mowana pit, evidence suggests that the South Pit has a higher copper grade,

less graphite, but the sulphide mineralisation is deeper, whilst the North Pit has a lower grade, but

with more graphite, although the sulphides are nearer surface. In essence, the graphite is a problem

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for processing (although the use of a different collector may reduce this affect), but the very visual

nature of it should allow avoidance of the worst of this material during mining.

Therefore, in summary, the near surface tenor of the orebody at Mowana is characterised by the

mixed nature of oxide and supergene enrichment extending from surface to a maximum depth of

approximately 70m. With increasing depth supergene chalcocite mineralisation continues and

dominates with a nominal transition to Chalcopyrite-bearing hypogene mineralisation at around 150m

below surface.

3.6.2.2 Thakadu Geology and Mineralisation

The Thakadu Copper Project is hosted within the Matsitama Metasedimentary Group, comprising

carbonaceous and argillaceous metasediments which are enclosed within foliated granitoids of the

Mosetse Complex. The Matsitama Metasedimentary Group lies in structural contact or unconformably

over the granite/gneisses and forms two main areas of outcrop; the Matsitama Belt (which hosts the

Thakadu and Makala deposits) and the arcuate “Bushman Belt” to the north where the Thakadu Mine

is situated. The Matsitama Metasedimentary Group consists of greenschist to amphibolite facies

metamorphic rocks with the following types of rocks identified: calcareous sandstones,

conglomerates, pelites, arkoses, quartzites, volcanic tuffs and agglomerates, amphibolites,

limestones, banded ironstones and serpentinites.

The copper mineralisation is broadly strata-bound and hosted by a complexly folded sequence of felsic

sedimentary rocks, about 50-150m thick. The felsic metasedimentary sequence includes siliceous

carbonates, biotite schists, calcareous pelites and graphitic carbonates. The stratigraphy above and

below the felsic package is dominated by amphibolite derived from mafic/intermediate intrusives,

volcanic and volcaniclastic rocks.

Hypogene sulphide mineralisation is predominantly hosted by quartz and quartz-carbonate rich

arenites and to a lesser extent in biotite schists. Chalcopyrite is the dominant Cu-sulphide with minor

bornite. Pyrrhotite is present in some zones and the sulphides generally occur as irregular stringers

and disseminations in the quartz-carbonate rich units and in irregular quartz-carbonate veined zones.

Pyrite is common throughout the sequence and galena and sphalerite mineralisation is poorly and

sporadically developed. Hypogene mineralisation is capped by secondary oxide and minor supergene

copper mineralisation at depths of approximately 45m to 55m below surface.

The Thakadu mineralisation has been traced from surface to approximately 420m below surface and

over a strike length of some 600m. The deposit dips at approximately 44⁰ on 224⁰ (dip and dip

direction) with increased deformation and steepening dips up to 70⁰ locally in the east of the deposit.

The copper mineralisation is generally hosted by two quartz-carbonate units near the base of the felsic

metasedimentary package and the footwall amphibolite unit is distinct from the hangingwall

amphibolite unit. Copper mineralisation also occurs in other quartz-carbonate beds, but is not as

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laterally extensive. Where mineralisation is well developed, it often spreads into the surrounding

(predominantly biotite) schist units.

The Thakadu Copper Project hosts various different styles of mineralisation, but is dominated by

hypogene sulphides (chalcopyrite ± bornite) hosted within the quartz-carbonate units with lesser near

surface oxide zone. There has been some secondary supergene alteration and enrichment but it is

sporadic and poorly developed.

The copper mineralisation is preferentially developed within two of the quartz carbonate units

towards the base of the felsic sequence and locally quartz-carbonate rich veins. It often transgresses

from the quartz-carbonate unit into adjacent biotite schists or graphitic conglomerates where well

developed. The mineralised zone varies in thickness from about 35m at the eastern near surface end

of the Thakadu Copper Project, to less than a metre thick further to the west and as it pinches down

toward the base.

3.6.3 Exploration Potential

The location of the Bushman Lineament has been known for many years as has the prevalence of

copper (and gold to a lesser extent) mineralisation along its length. However, copper distribution

appears to be localised by dilation and lithological controls. This has led to an uneven distribution of

copper mineralisation along the zone.

The Mowana area clearly represents one such area of dilation. To test the full depth extent of the

mineralisation, a 1.27km deep hole was drilled which passed in and out of the copper mineralisation

to a depth of around 1,000m. This hole and others usually to around a maximum of 450m clearly

showed that the mineralisation is heterogeneous particularly where supergene copper mineralisation

is present in proximity to the more common breccia type.

In terms of surrounding potential, drilling to the south of the South Pit has intersected gold

mineralisation which appears to be part of the same system, although more work is needed to

understand the importance of this. Mineralisation also continues to the north of the North Pit into

Mowana North and Conical Pit, both of which are likely to feature in any future mine plan.

Taken together, the potential of the area is good, and Figure 3.4 places into context the known

resources in the area.

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Figure 3.4: Resource Potential Within the License Areas

WAI Comment: The Mowana and nearby Thakadu deposits are relatively well known through

detailed exploration and previous mining at both. The latter has been mined to exhaustion by

open pit, although the underground potential of the Makala orebody which can be accessed

from the Thakadu pit remains undeveloped, but does feature within Alecto’s mine plan.

Notwithstanding this, the Mowana Mine has suffered through a poor understanding of the

mineralogical characteristics of the various ore types leading to poor plant recoveries. In

addition, the choice to mine and process ore clearly identified as oxides, coupled with low

metal prices combined in premature mine closure. However, this has presented a significant

opportunity for Alecto in that the majority of the Mowana orebody is still insitu and therefore

through careful management, further studies particularly related to the variability in ore types,

and an overall better understanding of the project should deliver a viable mining operation.

3.7 Mineral Resource Estimation

3.7.1 Introduction

The Mowana deposit is a shear hosted epigenetic gold type exhibiting a quartz-carbonate-

chalcopyrite-pyrite vein stockwork system. The deposit has a strike length of approximate 4.7km and

has been subdivided into two areas, Mowana Mine (Mowana South) and Mowana North. Although

the deposit has been classified as two separate areas, both Mowana Mine and Mowana North form

part of the same continuous mineralised structure as shown in Figure 3.5.

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Figure 3.5: Mowana Deposit Plan

Mineral Resources have been estimated by Golder Associates, with separate estimates carried out for

Mowana North and Mowana Mine. In September 2014, Golder Associates issued the report

“Geological Modelling and Resource Estimation of the Mowana North Project” on behalf of African

Copper, the previous owners of the project. A second report “Geological Modelling and Resource

Estimation Update of the Mowana South Project” was issued in June 2015 by Golder Associates. WAI

has been provided with copies of both reports, in addition to the corresponding Mineral Resource

block models, the models provided comprise:

• Mowana North: mwn_201407_v3c

• Mowana South: GA_Combinedmodel_0515

The following sections summarise the WAI review of the Mowana Mineral Resource Estimates.

3.7.2 Topography

WAI has been provided with topographic Digital Terrain Models (“DTM”) of the Mowana surface

topography with dates of August 2014 and January 2015. Open pit mining has been carried out in the

south at Mowana Mine (North and South pits), but no mining has taken place at Mowana North.

The topographic surveys for the Mowana Mine open pit appear detailed and suitable, the topographic

surveys to the north and periphery of the site appear to be based on very broad surveys. Drill hole

collar surveys correlate with the topographic DTM including the more broadly spaced surveyed area

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in the north, WAI is therefore of the opinion that the topographic survey is suitable for use in a Mineral

Resource Estimate.

3.7.3 Database Compilation

Multiple database drill hole files have been provided in the data package supplied to WAI, including

Microsoft Excel and Datamine formats. For the purpose of this review, WAI has used the Datamine

drill hole file “Totalmw_dd.dm” which appears to be the most recent and complete drill hole database,

and the one used in the Mineral Resource Estimates.

The sample database “Totalmw_dd.dm” represents a more simplified version of the data available for

the project and contains the information considered by Golder Associates to be the most relevant for

the Mineral Resource Estimation, the information includes:

• Assays CuTotal, Cuacid, Pb, Zn, Ag, Au;

• Lithology code;

• Drill type;

• Ore code;

• Density; and

• Hole diameter.

WAI notes from additional drill hole data provided that multi element assays have been completed

for 61 other elements, which may be of use in defining zones within the deposit with differing

mineralogical or processing characteristics.

Mineralisation at Mowana comprises hypogene, supergene and oxide, given the differences in grade,

mineralisation, processing and recovery characteristics between these zones, the definition of these

domains in a Mineral Resource block model is of great importance. Definition of these zones is often

based on visual alteration and mineralogical logging and/or grade characteristics. According to the

reports provided to WAI, the degree of oxidation and weathering has been logged, however, limited

logging information appears to have been recorded in the sample databases.

Understanding the copper speciation within a deposit is of intrinsic importance when assessing the

proportion of copper that can be recovered. Projects typically assay for Total Copper (“CuTotal“) and

Acid Soluble Copper (“Cuacid“) providing information on the proportion of copper oxides in relation to

copper sulphides and silicates. The Cuacid assays can be used to define the oxide and supergene

horizons.

The Mowana databases used by Golder Associates shows approximately a third of CuTotal assays have

a corresponding Cuacid assay. For a project with this style of mineralisation, WAI would expect all

samples to have been assayed for both CuTotal and CuAcid. WAI is aware that Alecto has been reviewing

the available information for the Project and have noted that a total of 156 vertical holes with depths

ranging between 10-150m containing CuAcid assay results were omitted from the Mineral Resource

Estimates by Golder Associates. The rational for omitting the vertical holes is due to the holes not

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intercepting the waste ore contacts, having been drilled entirely in the mineralisation. WAI is of the

opinion that such an omission of the samples is erroneous. The presence of other drill holes which do

define the mineralisation extents nulls the argument for removing the vertical holes. By leaving the

vertical holes out of the Mineral Resource database, Golder Associates has removed assay data,

particularly CuAcid assays which is of value in defining the copper speciation through the deposit.

Alecto has compiled the 156 vertical drill holes into a more complete database to aid in developing a

more detailed geological block model.

WAI has also noted that the bulk of the sample database comprises absent assays, with sample

intervals having been chosen by the site geologist based on areas logged as mineralised. Some absent

grade values have been noted by Alecto in the vertical drill hole records, however, checks of the

original hard copy files show that grades are available for these absent entries, and Alecto are updating

the database accordingly. Alecto has provided WAI with the current updated database, along with

PDF scans of the original log sheets demonstrating how the database is being brought into a more

complete and robust format. WAI recommends that for any outstanding absent values, the selection

of samples be verified to ensure any potential mineralisation has been adequately assayed.

3.7.4 Geological Interpretation

Only the wireframes corresponding to the Mowana North estimation (Golder, 2014) have been

provided to WAI. Whilst the wireframes include an interpretation for the Mowana Mine (South) area,

there are a few minor differences between the wireframe in this area and the

“GA_Combinedmodel_0515.dm” block model.

Wireframes of the mineralisation for both Mowana South and Mowana North were constructed by

Golder Associates based on the drill hole database with wireframes constructed to a 0.1% CuTotal cut-

off grade. In reviewing the wireframes against the drill hole database, WAI notes that the wireframes

encompass nearly all the samples assayed; samples should ideally be sampled into the waste rock on

either side of the mineralised intercepts to ensure the mineralisation is adequately delineated.

WAI notes that the Golder Associates Mineral Resource Estimates have reported only the breccia

mineralisation as ore, with the carbonate mineralisation recorded as waste. WAI is aware that Alecto

is currently in the process of investigating Dense Media Separation (“DMS”) at Mowana, which subject

to DMS testwork confirmation, would make copper mineralisation from the carbonates recoverable.

Therefore, this has the potential for the carbonate mineralisation to be included in future Mineral

Resource Estimates.

The bases of the oxide and supergene wireframes have been provided for the Mowana Mine (South)

area in the data package to WAI. The block model for this area also contains a redox code

(“MINZONE”) which defines the oxide, supergene, and hypogene zonation. The redox code in the

model differs from the wireframes provided, suggesting that the wireframes were superseded. No

details have been provided in the Mineral Resource reports, to quantify how the redox horizons were

defined by Golder Associates, possibly it could have been either through alteration logging, or from

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the limited Cuacid assays. From the lack of alteration logging, and the limited numbers of Cuacid assays,

WAI would question the veracity of the different modelled oxide, supergene, and hypogene horizons.

No oxide, supergene, or hypogene codes have been assigned to the Mowana North model, indicating

that the lack of information in the north has precluded its use in modelling.

WAI Comment: The lack of domaining in the Golder Associates interpretations for the oxide,

supergene, and hypogene mineralisation at Mowana North, and the limited support for the

interpretation of these domains at Mowana Mine is a key feature of the geological

interpretation that requires improvement. Given the implication of these domains on the

processing of ore, and likely recoveries, it is paramount that future estimation works improve

the domaining within the modelling. Alecto has undertaken its own revision of the Golder

Associates block models to improve the level of geological information in the models to aid in

the mine planning. Both the Golder Associates Mowana Main (South), and Mowana North

models have been combined by Alecto into a single block model. WAI has been provided with

a copy of the combined block model, however, this updated model has not been audited in

detail.

WAI Updated Comment: Subsequent to the review by WAI, as a result of the ongoing works

being completed by Alecto, WAI is now aware that 156 of the drill holes completed at Mowana

do have CuAcid values. WAI is also aware that, as Alecto drill new RC holes and blast holes,

these too will be used in future modelling for improved understanding and confidence.

3.7.5 Sample Data Processing

3.7.5.1 Mowana North

As part of the Mowana North Mineral Resource model, a total of 10 different mineral domains were

defined by Golder Associates. Samples within these 10 domains were selected and assigned the

corresponding domain code. Based on the average sample length, samples were composited to 1m

prior to top-cutting.

The Golder Associates report (Golder, 2014) notes that the data was reviewed statistically for each

grade field (CuTotal, CuAcid, Pb, Zn, Ag, Au) for the mineralised domains, as well as waste rock types. To

prevent the undue influence of high grade outliers, Golder Associates top cut samples from 8 of the

10 domains.

WAI has reviewed the composite length and top-cuts used by Golder Associates at Mowana North,

and is of the opinion that the statistical work undertaken is suitable.

A total of eight mineralised domains were defined by Golder Associates for the Mowana Mine Mineral

Resource Estimation, with domain codes allocated as 41-48. Samples were selected within the

mineralised domains and assigned the corresponding domain code. Based on the average sample

length, samples were composited to 1m prior to top-cutting.

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3.7.5.2 Mowana Mine (South)

Unlike the Mowana North estimation, no top-cuts have been used for the mineralised domains. WAI

has carried out a decile analysis of the mineralised samples, and is of the opinion that there are some

higher-grade outliers which may influence the grade estimates, resulting in localised grade

overestimations.

3.7.6 Variography

3.7.6.1 General

WAI has not carried out its own variographic assessment, but has relied on the variogram outputs

reported by Golder Associates.

Variography has been carried out by Golder Associates for each grade field (CuTotal, CuAcid, Pb, Zn, Ag,

Au), for each separate domain, with down hole and anisotropic variograms reported.


The experimental variograms reported in the “Geological Modelling and Resource Estimation of the

Mowana North Project” (Golder, 2014) typically show poorly structured variogram results. The poorly

structured variograms are due to the limited number of sample pair nodes. Broader drill hole spacing

at Mowana North, compared to Mowana South, reduces the amount of sample data which can be

used in the variography which precludes defining robust variogram structures.

WAI is of the opinion that whilst the variograms for Mowana North lack structure, this is a function of

the drill hole spacing and not necessarily grade continuity. The current variogram results at Mowana

North prevent adequate support for grade continuity, a key consideration when it comes to assigning

Mineral Resource classifications. Given the style of mineralisation at Mowana, WAI would expect

additional infill drilling at Mowana North would result in similar variogram results as seen at Mowana

South, and WAI recommends that such infill works be carried out.


A greater degree of variography appears to have been undertaken at Mowana Mine (North), including

the use of variogram continuity fans, this may be a reflection of the denser coverage of sample spacing

at Mowana Mine (South).

Unlike the experimental variogram results for Mowana North, the results at Mowana Mine have a

greater number of sample pairs at a range of lags, this has resulted in reasonable variogram structures

being defined.

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The down hole variogram results show a low nugget effect with overall ranges of 5-10m. Anisotropic

variogram results show a very rapid increase in variance over a small distance (<20m) before attaining

a slight spherical structure, ranges appear to be in the order of 20-40m.

Overall the variographic studies appear to be suitable and carried out in line with industry standard

practice.

3.7.7 Volumetric Block Model

For Mowana Mine (North) and Mowana Mine (South), 15m x 5m x 10m (X/Y/Z) parent cell block

models have been used by Golder Associates.

3.7.8 Density

Density measurements have been taken for each assayed interval, from a selection of drill holes

considered to be representative across the deposit, with measurements taken for holes on

approximately every 1 in 4 drill profile line. Measurements were made using the Archimedes water

immersion method, the results were recorded and imported into Micromine software. A comparison

was made of the density results against the lithology and oxidation state.

For the Mowana Mine (South), block model average density values from the testwork have been

applied to the model based on the lithology, mineralised domain, and oxidation state. In contrast

density values have been estimated into the Mowana North block model using the assay values within

the drill hole file to estimate values into the block model.

Density values have only been estimated into the southern extent of the Mowana North block model

(central part of the overall Mowana deposit), due to an absence of density measurements for the bulk

of the Mowana North Area. No details have been provided regarding the density measurements

Golder Associates have chosen to apply to the bulk of the Mowana North model. In reviewing the

density values reported, there appears to be a correlation with the areas of Mowana that have been

sampled.

WAI Comment: WAI is of the opinion that the quantity and distribution of density

measurements taken at Mowana Mine (South) is suitable for reliably determining density for

a Mineral Resource Estimate. The approach adopted by Golder Associates for applying the

density measurements to the Mowana Mine (South) block model is suitable. The lack of density

measurements at Mowana Mine (North) provides a lower confidence in the application of

density values to the block model, and therefore a lower confidence in the estimates of the

contained Mineral Resource tonnage. Further density measurements are required at Mowana

North in order to provide the same level of support and confidence as a Mowana Mine (South).

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3.7.9 Grade Estimation

Grade estimation for both the Mowana Mine (South) and Mowana Mine (North) models has been

carried out using Ordinary Kriging (OK), with estimates run using a three pass approach with the search

ellipse radii increasing on each successive pass.

Based on the Golder Associate variography results for Mowana Mine (South), the choice to use OK as

the principal estimation method appears reasonable. However, WAI is of the opinion that the search

radii adopted for the Mowana Mine (North) estimates are too long and that the initial two estimation

passes should have adopted radii more in line with the variogram results.

Some blocks in the Mowana Mine model were not estimated during the OK estimation works, due to

their distance from samples, or the lack of samples within that domain. Golder Associates decided

that where blocks were not estimated, a default grade would be applied to the block based on the

average grade value of all the samples within that domain. WAI is of the opinion that this approach

may result in a grade over, or underestimation, of these blocks, as it fails to take into account spatial

grade variability. If blocks were not estimated, then either the estimation parameters should be

revised to enable grades to be estimated into these areas, or these areas should be omitted from the

estimation due to a lack of data support.

Ordinary Kriging relies on robust variogram models for the purpose of weighting samples during the

grade estimation. Given the lack of robust variogram models for Mowana North, WAI is of the opinion

that Inverse Power Distance (“IPD”) would have been a more preferable estimation method. As with

the Mowana Mine (South) estimation, the search radii used appear to be too large for the initial

estimation runs, and this may result in excessive grade smoothing in the block model.

3.7.10 Validation

3.7.10.1 Introduction

Following the grade estimations, Golder Associates carried out a series of validations on the estimation

results including visual comparison of samples and the block model, average grade comparison and a

grade profile plot analysis (swath plots). Grade profile plots are a graphical display of the grade

distribution derived from a series of bands, or swaths, generated in several directions through the

project. The plot compares the grade within these bands of the composite samples and the block

estimated grades for the different methodologies used. Where the composite grades and the

estimated grades show a good correlation, greater confidence can be placed on the estimate.


Golder Associates concluded from their validation work that the average grade conformance between

the estimates and the sample data was acceptable. As part of this CPR, WAI has carried out an

independent validation of the model using a swath analysis and global grade comparison. WAI is of

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the opinion that the validation results appear reasonable, indicating that the model is a fair

representation of the sample data.


As with the Mowana Mine (South) validation work, Golder Associates carried out visual, global grade,

and swath analysis checks of the block model. Golder Associates noted in the global grade comparison

that there are areas with high differences between the composites and the blocks. It is the opinion of

Golder Associates that the differences may be due to the high variability and spatial distribution of

copper grades, and/or the lack of samples. Golder Associates have also stated that it may be a function

of insufficient top cutting of higher grade samples, or the angle of intercept of the drill hole relative

to the mineralisation, resulting in a bias in the estimation.

WAI Comment: WAI has carried out an independent validation of the model relative to the

composite sample data. A swath analysis and global grade comparison was carried out by

WAI indicating the potential for excessive grade smoothing resulting in overestimation in

areas. WAI is of the opinion that the Golder Associates views on possible sources of bias are

valid, and that in addition, the excessive search radii and the use of poorly defined variogram

models in the grade estimation may have had a bearing on the resultant estimation results.

3.7.11 Mineral Resource Classifications


Golder Associates has stated that the Mineral Resources for Mowana Mine (South) have been

reported in accordance with the JORC Code (2012) and the South African SAMREC code. The Mineral

Resource classifications were applied based on the sample spacing and grade estimation search radii.

The following classification criteria has been applied by Golder Associates:

• Measured, areas of the model above the 835mRL with a drill spacing of <60m;

• Indicated, areas of the block model estimated in the second search ellipse; and

• Inferred, all other areas of the model not falling within the criteria for Measured or

Indicated.

Under the JORC Code (2012) “A ‘Measured Mineral Resource’ is that part of a Mineral Resource for

which quantity, grade (or quality), densities, shape, and physical characteristics are estimated with

confidence sufficient to allow the application of Modifying Factors to support detailed mine planning

and final evaluation of the economic viability of the deposit.”

WAI Comment: The proportion of copper oxide relative to total copper plays an important role

in understanding what proportion of the mineralisation can realistically be processed and

recovered. Given the lack of Cuacid estimates in the model, WAI is of the opinion that at present

the Mineral Resource model does not fulfil the JORC (2012) requirements for disclosing

Measured Mineral Resources. The lack of Cuacid grades results in a model for which there is

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insufficient detail on grades, to sufficiently enable the application of modifying factors to

support a detailed mine plan. WAI is of the opinion that the portion of the Mineral Resource

classified as Measured, be considered more in line with an Indicated Mineral Resource.

Alecto has identified 156 vertical holes which were omitted by Golder Associates from the

Mineral Resource Estimates which contain CuAcid grades, which attain depths of between 10-

150m, and extend the strike length of the deposit. Future Mineral Resource Estimates should

incorporate these drill holes, with the aim of improving the understanding what proportion of

the mineralisation can realistically be processed and recovered.


Golder Associates has stated that the Mineral Resources for Mowana North have been reported in

accordance with the JORC Code (2012) and the South African SAMREC code. The following Mineral

Resource classifications have been applied:

• Indicated, the southern extent of the Mowana North block model above the 600mRL

that was estimated using the first search radii, as shown in Figure 3.6. This area

correlates with a drill spacing of approximately 60m and covers the area of the model

for which density measurements have been taken; and

• Inferred, all other areas of the model not falling within the criteria for Indicated.

Figure 3.6: Mowana North Mineral Resource Classification (Golder Associates, 2015)

Overall WAI considers the Mineral Resource classification for Mowana North to be suitable.

3.7.12 Reasonable Prospects for Eventual Economic Extraction

Under the JORC Code (2012), a Mineral Resource needs to demonstrate a reasonable prospect for

eventual economic extraction for it to be reported. For deposits such as Mowana, which is likely to

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be mined through open pitting, the standard industry approach is to carry out a pit optimisation using

realistic, albeit uplifted, pricing, to demonstrate which portion of the Mineral Resource has prospects

for extraction.

The Mineral Resources currently reported by Golder Associates are reported in their entirety. No pit

optimisation works have been carried out to constrain the Mineral Resource to that portion which has

realistic prospects for eventual economic extraction.

WAI understands that as part of the current work being undertaken by Alecto, a series of pit

optimisations have been undertaken to define potential mineable material. These optimisations are

of internal use by Alecto and therefore do not pertain to the above comment regarding the

constraining of the Golder Associate Mineral Resource statement. However, such an approach shows

the adoption by Alecto of best practice and this will help form the foundation for suitably constraining

future Mineral Resource Estimates based on reasonable prospects for eventual economic extraction.

WAI Comment: in order to meet the reporting requirements of the JORC Code (2012), WAI

recommends that future Mineral Resource Estimates be constrained by pit optimisations in

line with the work being undertaken internally by Alecto. The pit optimisation works will result

in a reduction of the Mineral Resources currently reported, however, until such an exercise is

undertaken the amount of Mineral Resources to be omitted is unknown.

WAI Comment: As WAI understands, optimisations, LOM plan and designs have been

completed in MineSight, with Medium and short-term planning, designs and scheduling

completed in DataMine, by PenMin, and has been independently reviewed by Sound Mining.

Going forward, any updated MRE should have a pit optimisation applied to demonstrate the

economic prospects for extraction, Alecto has agreed with this approach suggested by WAI.

3.7.13 Golder Associate Mineral Resource Statements


The following Mineral Resource statements have been disclosed by Golder Associates for the Mowana

Mine (North) and Mowana Mine (South) models. It should be noted that due to the approach taken

by Golders in modelling the two areas of Mowana, there is a degree of overlap between the two

models resulting, if both models are taken into consideration, a degree of over reporting. WAI

estimate the degree of over reporting due to the overlapping models to be in the order of 10Mt at a

cut-off grade of 0.25% CuTotal. Alecto has combined the two models for the purpose of internal mine

planning, therefore the impact on the internal Alecto mine plan and schedule is negated. Future

Mineral Resource Estimates should carry out the estimation of Mowana Mine (South) and Mowana

North as a single estimation, this will provide consistency in the estimation methods, and remove the

overlap in reporting.

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The Mineral Resources for Mowana Mine (South) as reported by Golder Associates as of June 2015,

at a cut-off grade of 0.25% CuTotal is provided in Table 3.4 below.

Table 3.4: Mowana Mine (South) Mineral Resources (after Golder Associates, 2015)

Classification Tonnage

(000) Cu (%) Pb (%)* Zn (%)* Ag_ppm Au_ppm

Measured 14,725 1.00 0.04 0.02 0.58 0.005

Indicated 26,308 0.88 0.04 0.03 1.30 0.002

Measured + Indicated

41,033 0.92 0.04 0.02 1.05 0.003

Inferred 23,976 0.71 0.03 0.03 1.57 0.00001 Notes: *Typographical error in the Golder Associates report records the units for Pb and Zn as being ppm.

WAI has noted that for the purpose of reporting, Golder Associates has considered the carbonate

mineralisation to be waste and unrecoverable. Alecto are currently evaluating a DMS process route

which should make the carbonate mineralisation recoverable. Based on the Golder Associate model

for Mowana Mine (South), the proportion of additional carbonate mineralisation at a 0.25% CuTotal cut-

off grade to be circa 50Mt with an average grade of 0.60% CuTotal.

3.7.13.3 Mowana Mine (North)

The Mineral Resources for Mowana Mine (North) as reported by Golder Associates as of September

2014, at a cut-off grade of 0.25% CuTotal is provided in Table 3.5 below. As with the Mowana Mine

(South) mode, there appears to be some confusion in the reporting of Pb and Zn grades. The Pb and

Zn units in the Golder Associates report are stated as ppm, however, whilst the Inferred Mineral

Resources are reported correctly in ppm, the Indicated Pb and Zn values are actually reported in

percent.

Table 3.5: Mowana Mine (North) Mineral Resources (after Golder Associates, 2014)

Classification Tonnage (000) Cu (%) Pb (%) Zn (%) Ag_ppm

Indicated 31,060 1.00 0.02 0.01 1.50

Inferred 75,802 0.78 0.0006* 0.0009** 2.08 Notes: *Reported in Golder Associates report as 6.19ppm Pb. **Reported in Golder Associates report as 9.06ppm Zn

3.7.14 Conclusions

Overall, the modelling approach adopted by Golder Associates is appropriate and in line with industry

best practice, and the grade estimates are a fair representation of the sample data on which the

estimates are based. WAI has, however, identified a few areas of risk.

One of the most notable risks to the Mineral Resource estimate is the lack of detail pertaining to the

oxide, supergene and hypogene zonation within the deposit, and the associated copper speciation. A

lack of detailed geological logging and limited number of acid soluble copper assays (Cuacid) impacts

on robustly defining the redox zonation at Mowana.

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The choice by Golder Associates to omit 156 vertical holes for which there are Cuacid assays is

inappropriate, limiting the assay data available to define the deposit zonation and copper speciation.

Whilst the oxide, supergene and hypogene zones have been modelled at Mowana Mine (South), no

such zones have been modelled at Mowana Mine (North). The removal of 156 vertical holes from the

Mineral Resource database by Golder Associates has resulted in no Cuacid estimates being undertaken

into the Mineral Resource block models. This is important information when trying to ascertain the

proportion of copper oxides in relation to copper sulphides and silicates.

The lack of domaining for the oxide, supergene, and hypogene mineralisation at Mowana Mine

(North), and the limited support for the interpretation of these domains, is a key feature of the

geological interpretation that requires improvement.

Golder Associates has carried out two separate estimates for Mowana Mine (South) and Mowana

Mine (North), however, both these areas are part of the same mineralised structure. WAI has noted

that there is a degree of overlap between the two models in the central part of the deposit. WAI

estimate the degree of overlapping to be in the order of 10Mt at a cut-off grade of 0.25% CuTotal. Alecto

has combined the Golder Associate block models into a single block model for use internally, and for

planning purposes this solves the overlap issue. For future Mineral Resource Estimation works, the

deposit should be modelled as a single entity ensuring no overlaps and consistency in the estimation

methods. As new geological and metallurgical testwork becomes available, it is proposed to

incorporate this information and develop a more detailed model for mine planning.

The Mineral Resources reported by Golder Associates excludes the carbonate mineralisation on the

premise that it is not recoverable. Current works by Alecto on DMS processing shows this is potentially

an incorrect assumption. Subject to confirmation from the DMS testwork, future Mineral Resource

Estimates should include the carbonate mineralisation providing a marked increase in the overall

Mineral Resource base.

Lastly, the Mineral Resources have been reported in their entirety, under the JORC Code (2012) there

is a requirement to demonstrate reasonable prospects for eventual economic extraction. Standard

industry practice is to carry out a pit optimisation using realistic, albeit uplifted, pricing, to

demonstrate which portion of the Mineral Resource has prospects for extraction. Whilst Alecto has

carried out a series of their own internal pit optimisations, these have not been applied in an official

capacity to the currently reported JORC Code Mineral Resource Estimates. Any future Mineral

Resource updates will require such pit optimisations to be carried out, and this may potentially lead

to the omission of some of the currently reported Mineral Resources.

WAI Comment: As WAI understands, pit optimisations have been completed by PenMin using

MineSight software. Going forward, any updated MRE should have a pit optimisation applied

to demonstrate the economic prospects for extraction, Alecto has agreed with this approach

suggested by WAI. Also, WAI is aware that the recently rediscovered CuAcid sample values are

being captured into the site database, which could allow a remodelling of the block model,

with CuTotal and CuAcid values being estimated. Finally, WAI understands that the Alecto

geologists are currently completing remedial action in terms of capturing missing core logs,

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and studying metallurgical characterisation. These additional works (currently ongoing and

not yet complete) will allow a more accurate domaining of the block model.

3.8 Mining

3.8.1 Overview

The Mowana Mine is an open pit that was commissioned in 2008 by its previous owner (Messina

Copper Botswana (Pty) Ltd (“MCB”). The mine operated at a mining rate of 100kptm and a 1.2Mtpa

processing plant. Operations at its sister Thakadu mine were suspended in June 2015 as the operation

neared the end of its scheduled mine life.

Mining operations were undertaken from two contiguous pits (the North and South pits) and

continued down to 65m below surface. Currently, approximately 65,000t of blasted ore is lying at the

base of the North pit which is being extracted (Photo 3.4), and there is also a quantity of mixed ore on

a stockpile located at the ROM pad. There is also a large amount of low grade (0.5%-0.65%) mixed ore

in surrounding stockpiles.

Photo 3.4: Mining Previously Blasted Material, South end of North Pit

The previous operation used mining contractors for the mining operation and Alecto has followed the

same route. At the time of the April site visit, extraction of previously blasted ore was taking place as

well as blasthole drilling and a programme of RC holes had also been instigated. Although one bench

containing approximately 70kt had been drilled (Photo 3.5), delays with the explosives license had

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prevented this from being blasted. However, the explosives permit has now been granted (12th April

2017) which should allow the mine to move forward.

WAI Comment: WAI is very pleased to see production re-commencing from the North Pit at

Mowana, and although a blast has not yet taken place, previously blasted ore and stockpile

material are providing low-grade feed to the plant. Furthermore, the inclusion of RC drilling

for grade control measures is a positive step.

The production rate of the Mowana Mine is planned at 1.2Mtpa and the Makala underground mine is

planned for 1Mtpa.

Photo 3.5: Drilled Bench and ADT, North Pit

As the processing plant will be focusing on processing primarily the sulphide material, the majority of

the oxide material from the open pits shall be stockpiled at the ROM pad.

WAI Comment: PenMin report that the non-recoverable oxide material will be mined as

waste, but stockpiled in a separate area to the waste dump for potential future processing

(potentially ammonia heap leach).

3.8.2 Hydrogeology

Water is present within the two pits which are currently being dewatered (Photo 3.6). However, data

as to how much of this water is estimated to have come from rainwater or groundwater is not known.

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PenMin report that the water table is approximately 100m below ground level and that there is

possibly a water bearing structure that lies within the open pit.

A hydrogeological investigation is planned for when the mine is operational, although no further

details have been developed as to the extent of the study. However, PenMin did comment that if a

water bearing system of sufficient recharge quantity had been found within the extents of the licence

area, then this water could be used for the process water.

WAI Comment: Whilst no detailed hydrogeology has been undertaken by any consultancies,

currently PenMin report that there is little indication of any significant water inflow into any

of the holes drilled within the footprint of the open pits.

Photo 3.6: Dewatering the South Pit

3.8.3 Geotechnical

The slope angles within the mine design are summarised in Table 3.6 below.

Table 3.6: Mowana Slope Angles

West

Karoo 40

Weathered 51

Fresh 55

East

Karoo 50

Weathered 51

Fresh 55

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In 2015 Open House Management Solutions, a third party consultancy, reviewed the slope angles

presented above and concluded that “the likelihood of failure occurring is however remote, given the

high Factor of Safety and low Probability of Failure”.

On the basis of the conclusions above, PenMin report that the slope angles are likely to be steepened

once all of the data has been studied and better identification of the rock types have been completed

and their geotechnical characteristics are defined.

However, the slope angles of the current pit appear to be stable with no failures in evidence; some

spalling has occurred in the benches although this could be attributed to weathering.

3.8.4 Mine Design

A mine design has been undertaken using MineSight and Datamine software, based on optimisation

parameters considered appropriate for the level of study presented. The optimisation parameters will

be developed as actual operating data become available.

The mine has been developed in two phases with the first phase based on the pit shell developed with

a copper price of US$1.85 per lb, and a second phase with a copper price of US$2.15 per lb, so that

the higher-grade material is mined first.

The optimised pit shells and cross sections for the US$1.85 /lb Cu, and US$2.15/lb Cu pits, are shown

below in Figure 3.7 to Figure 3.10.

Figure 3.7: Pit Shape @ US$1.85/lb Cu

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Figure 3.8: Cross Section @ US$1.85/lb Cu

Figure 3.9: Pit Shape @ US$2.15/lb Cu

Figure 3.10: Cross Section @ US$2.15/lb Cu

Slope angles have been designed based on available geotechnical knowledge and a target COG of

0.25% Cu with a strip ratio of 3.5 (t:t) has been set.

This assumes a bench height of 10m, ramp width of 17m, ramp gradient of 10%, catch berm width of

2.5m and safety berm width of 1.5m.

WAI Comment: A copper price of US$1.85 per lb has been used to define the pit shell to be

used for the mine design as this provides a higher-grade shell with which to start up the

operations. WAI believes that this copper price is conservative and provides long term mine

life upside to the Project. As WAI understands, optimisations, LOM plan and designs were

completed in MineSight, with Medium and short-term planning, designs and scheduling

completed in DataMine, by PenMin, and has been independently reviewed by Sound Mining.

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Sound Mining has further been appointed to perform the life of mine scheduling and revise the

short-term plan, using Datamine.

For the longer-term view on the mine, it is not decided whether the mineral processing plant will be

installing a Dense Medium Separation (“DMS”) Plant, whereby the mining operation can take a more

bulk mining approach, as opposed to the lower production rate selective mining approach which will

be the situation with the base case 1.2Mtpa. As such, dilution has been assumed at 10% for the pit

optimisation. WAI would recommend that when the mine servers are accessed by PenMin, the past

production records should be analysed to establish if dilution has been calculated previously, and if

this value is found, then a revised pit optimisation and production schedule is produced.

WAI Comment: Alecto report that as they will use a contractor responsible for drilling and

blasting, with blast engineers full time on site, these measures should help reduce this dilution.

3.8.5 Mining Equipment

The current operations are now using a contractor (Giant) who arrived on site mid-February with two

excavators and 5 ADT’s (40t capacity) for general clean-up where some 300kt of material were moved.

Since that time, further equipment has been added, see Table 3.7 below. Further equipment will be

added as the mine ramps up to full capacity, see Table 3.8 below.

Table 3.7: Mowana Equipment Recently Added

February March April Total

Bell L2706E FEL 1 1

JCB 467 FEL 1 1

Komatsu PC 850 Excavator 2 2

Komatsu PC220 Excavator/Rock Breaker 1 1

Bell TLB 1 1

CAT 740B ADT 5 4 9

Bell B30D ADT 2 2

Komatsu 315 Dozer 1 1

Bell 670G Grader 1 1

18,000l Water Bowser 1 1

Diesel Bowser 200l 1 1

A list of the equipment expected on site by December 2018 is given in Table 3.8 below.

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Table 3.8: Mowana Projected Equipment by December 2018

Item Number

PC 850 excavator at 650tph 3

60t ADT at 200tph/truck 14

Drill rigs at 23.6mph/drill 3

Track dozers 3

Grader 2

Water bowser 2

FEL 2

30t ADT 2

100mH pumps @650lph 2

PC 850 excavator at 650tph 3

3.8.6 Waste Dumps

The single mine waste dump is located on the western side of the Mowana open pits (Photo 3.7) and

its current eastern edge lies approximately 50m from the ultimate pit edge of the US$2.15/lb Cu pit

shell. PenMin report that given the configuration of the deposit, no waste movement is required

within the current life of mine.

The dumping strategy will to extend the western side of the waste dump in the future mining

operations, in order to not sterilise any ore within the northern section of the Mowana open pit.

Photo 3.7: Mowana South, Looking North with Waste Dumps on Western Pit Rim

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3.8.7 Production Schedule

As part of the re-opening process, the Company has focussed on the next 22 months as a key time for

the mine. A detailed production schedule as presented within the Financial Model which excludes the

potential DMS is shown in Figure 3.11 below.

This provides a detailed breakdown of the tonnages coming from the Very Low Grade (“VLG”) ores,

Low Grade (“LG”) and High Grade (“HG”) as well as the total waste produced. A breakdown of the

different ore types by month is shown in Figure 3.12 below.

This shows that mining gets into the sulphide ores towards the end of 2017 when better recoveries

and higher grade concentrates are expected.

Beyond January 2019, the mine is projected to continue to produce some 1.2Mtpa until 2027,

although the amounts of waste material to be stripped (including some of the oxide material) varies

year-on-year dependent on the pushback scenario adopted.

WAI Comment: From consideration of the previous mining operations as well as the plant

configuration, WAI believes that this production schedule is achievable given the proper level

of study required to justify the parameters.

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Figure 3.11: Proposed 22 Month Production Schedule

Row Labels HG CU% CUT LG CU% CUT VLG CU% CUT TOTAL ORE >0.5%CU CU% CUT >0.5%CU TOTAL ORE CU% CUT WASTE TOTAL MINED STRIPN RATIO

Apr-17 14,373 1.64 235.41 29,628 0.65 192.54 61,667 0.37 229.31 44,001 0.97 428 105,668 0.62 657 426,105 531,773 4.03

May-17 35,242 1.69 594.99 39,948 0.69 274.46 64,944 0.38 244.70 75,190 1.16 869 140,134 0.80 1,114 454,291 594,425 3.24

Jun-17 31,967 1.95 624.74 43,996 0.66 290.97 39,461 0.38 149.46 75,963 1.21 916 115,424 0.92 1,065 692,967 808,391 6.00

Jul-17 50,233 1.75 877.61 70,248 0.68 478.15 81,106 0.37 296.10 120,481 1.13 1,356 201,587 0.82 1,652 635,675 837,262 3.15

Aug-17 41,235 1.70 700.11 66,983 0.68 458.22 56,967 0.38 215.85 108,218 1.07 1,158 165,185 0.83 1,374 672,077 837,262 4.07

Sep-17 67,690 1.73 1,171.56 86,484 0.68 592.00 80,676 0.36 293.11 154,174 1.14 1,764 234,850 0.88 2,057 544,671 779,521 2.32

Oct-17 53,166 1.49 792.38 55,371 0.68 378.10 88,431 0.35 305.70 108,536 1.08 1,170 196,967 0.75 1,476 611,424 808,391 3.10

Nov-17 69,649 1.80 1,253.00 64,054 0.70 450.35 57,961 0.37 212.91 133,703 1.27 1,703 191,663 1.00 1,916 313,971 505,635 1.64

Dec-17 92,387 1.57 1,453.66 90,276 0.73 660.97 101,899 0.35 361.14 182,664 1.16 2,115 284,563 0.87 2,476 221,072 505,634 0.78

Jan-18 71,870 1.93 1,385.22 77,632 0.72 560.73 38,028 0.36 137.08 149,502 1.30 1,946 187,530 1.11 2,083 96,500 284,029 0.51

Feb-18 18,496 1.52 281.45 21,161 0.70 148.02 44,126 0.37 163.04 39,657 1.08 429 83,783 0.71 593 200,247 284,029 2.39

Mar-18 58,909 1.80 1,061.50 53,659 0.67 359.20 36,458 0.39 140.77 112,568 1.26 1,421 149,027 1.05 1,561 165,434 314,461 1.11

Apr-18 59,145 1.73 1,025.73 57,577 0.69 398.26 68,314 0.35 241.10 116,722 1.22 1,424 185,035 0.90 1,665 119,282 304,317 0.64

May-18 25,347 1.79 452.57 84,061 0.72 607.05 46,463 0.40 186.34 109,409 0.97 1,060 155,872 0.80 1,246 158,589 314,461 1.02

Jun-18 60,549 1.83 1,108.45 49,975 0.70 350.15 33,673 0.37 123.66 110,525 1.32 1,459 144,198 1.10 1,582 160,119 304,317 1.11

Jul-18 44,200 1.78 785.12 51,704 0.70 362.48 48,678 0.38 183.06 95,905 1.20 1,148 144,583 0.92 1,331 169,878 314,461 1.17

Aug-18 44,421 1.66 736.24 74,075 0.70 516.96 70,769 0.40 286.21 118,496 1.06 1,253 189,265 0.81 1,539 100,692 289,957 0.53

Sep-18 62,696 1.51 945.59 57,217 0.75 430.33 61,433 0.38 230.67 119,913 1.15 1,376 181,346 0.89 1,607 63,244 244,590 0.35

Oct-18 63,236 1.71 1,081.70 38,321 0.74 284.72 14,487 0.40 58.33 101,557 1.35 1,366 116,044 1.23 1,425 97,677 213,720 0.84

Nov-18 57,261 1.67 954.48 97,367 0.72 703.58 49,054 0.37 182.36 154,629 1.07 1,658 203,683 0.90 1,840 100,634 304,317 0.49

Dec-18 48,333 1.70 824.03 77,241 0.70 539.72 45,215 0.37 167.86 125,574 1.09 1,364 170,789 0.90 1,532 8,303 179,093 0.05

Jan-19 72,537 1.75 1,270.73 60,179 0.74 444.53 22,508 0.36 81.00 132,716 1.29 1,715 155,224 1.16 1,796 55,846 211,070 0.36

Grand Total 1,142,941 1.72 19,616 1,347,159 0.70 9,481 1,212,321 0.37 4,490 2,490,099 1.17 29,098 3,702,421 0.91 33,588 6,068,697 9,771,118 1.64

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Figure 3.12: Production by Ore Type for the 22 Month Schedule

3.8.8 Grade Control

The Company has instigated a RC drilling grade control programme using a rig contracted from

Maquana Explorations, Botswana (Photo 3.8).

Photo 3.8: RC Rig on the Saddle Between North and South Pits

-

50,000

100,000

150,000

200,000

250,000

300,000

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21

ORE TYPE-ROM

OXIDE ORE MIXED ORE SUPERGENE ORE SULPHIDE ORE

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The present bench which is prepped for blasting has been tested by RC holes on a 10m spacing, drilled

at 60-80o angle and to a depth sufficient to cover four benches (10m benches). These data, coupled

with blast hole samples from the ore zone and every other blast hole from outside the main ore zones

should provide more detail for the short-term model.

3.8.9 Ore Reserves

Under the JORC Code (2012), to be able to report an Ore Reserve the information contained within

the presented data must be to a minimum of a Pre-Feasibility Study level of engineering. Whilst the

mine design has used slope angles that have been used within the pit previously, the level of

engineering behind the other factors within the pit optimisation parameters are, in WAI’s opinion, at

a Scoping Study level.

As such, an Ore Reserve cannot be reported for either the Mowana or the Makala Mines

3.8.10 Makala Underground Mine

3.8.10.1 Overview

The Financial Model reports that ore will be sourced from an adit driven from the base of the Thakadu

Open pit, into the Makala deposit, with ore being produced in early 2018. A retreat open stoping

mining method has been proposed, although at the time of the site visit, no stope designs have been

developed to sequence the required haulage developments and ore extraction.

The location of the Makala underground portion is indicated below in Figure 3.13 and lies

approximately 600m to the north of the Thakadu open pit.

Figure 3.13: Thakadu / Makala with Indicated Decline Development

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WAI notes that the grades at the Makala deposit for both Cu and Ag are much better than at the

Thakadu deposit (Figure 3.13 and Figure 3.14).

Figure 3.14: Makala/ Thakadu with Indicated Cu Grades

Figure 3.15: Makala/ Thakadu with Indicated Ag Grades

3.8.10.2 Makala Operating Costs

The estimated mining cost for the Makala Mine is shown below in Table 3.9. These costs have not

been derived from first principles and based on stope designs, so should be considered

conceptual at this stage of the process.

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Table 3.9: Makala Operating Costs

Item Unit Rate (US$/t moved)

Mining Equipment Opex 6.00

Mining Labour 4.69

Reef Development Consumables 0.22

Slot Raises Consumables 0.10

Stoping Consumables 2.46

Engineering Labour 2.85

Admin and Management Labour 1.92

Technical Services 1.08

Contingency @ 1% 0.15

Grand Total 19.46

3.8.10.3 Capital Costs

The capital cost estimate presented is based on PenMin’s proposed mine design and is depicted in

Table 3.10. The mining capital expenditure estimate has been estimated at US$10.9 million. Mining

related equipment has been estimated at US$8.54 million, which is based on two development crews

and one stoping section. The decline development was estimated at US$0.8 million including

consumables and ventilation at US$1.69 million. However, PenMin propose to contract the provision

of the mining equipment, thereby reducing the working capital to the required ventilation and on

strike development costs. In WAI’s opinion therefore these costs should be considered conceptual

only.

Table 3.10: Makala Capital Costs

Item Cost (US$ million)

Mining Equipment 8.47

Decline development 0.76

Ventilation holes 0.87

Ventilation Fans 0.82

Total 10.93

3.8.11 Mowana Mine Infrastructure

3.8.11.1 Mining Workshop

A single covered workshop is located on the northern side of the open pit and is serviced by electricity.

There is a water supply, with the boreholes supplying water to the workshop being re-

commissioned/re-established.

3.8.11.2 Diesel Storage

Diesel storage of 200,000 litres is proposed which will come in the form of an additional three storage

bunkers. The current capacity is 83,000 litres with an additional 2 x 83,000 litre storage tanks to be

mobilised end of April 2017.

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WAI Comment: WAI is aware that Vivo Energy has signed a contract to supply fuel, create

bunding, provide fuel management systems, and has started to mobilise to site to attend to

these issues.

3.8.11.3 Mine Accommodation

Located 15km from the mine site, in the Motese Village, is a fenced housing complex with 50 (three

or four bedroom) houses for the management and their families. As the workers are to be sourced

from the local villages, no dedicated accommodation is provided for these workers.

3.8.11.4 Electrical Power Supply

Electrical power is supplied via a 20MVA power line from the national grid network. Whilst there are

generation capacity issues within Botswana, PenMin report that the governmental position on load

shedding is that mining operations should not be affected, and as such power supply is assumed to be

reliable. PenMin also report that there is sufficient capacity within the line to meet the increased

power demand with the DMS and sulphide plant retrofitting.

The Mowana Mine has a 500kV diesel generator on site that could provide sufficient back up

generating capacity to maintain the vital components of the processing plant if mains power is not

available.

3.8.11.5 Process Water Supply

Process water is supplied from five boreholes in a dedicated borehole field located 7km from the mine

site; PenMin report that there are an additional 3 boreholes that are currently non-operational and

can be re-established if required. Additional amounts of process water will be required as the process

plant transfers from processing oxide material to the primary sulphide material. PenMin report that

sufficient water is available within the borehole field, although WAI has not validated this statement.

3.8.11.6 Value of Plant

WAI has been requested to comment on the value of the plant and equipment on the project currently

in use for mining.

WAI has reviewed the Aon Risk management (Pty) Ltd report for African Copper Mining dated August

2014, and notes that the findings of the Gross Replacement value of BWP 680,147,000 (valued at +/-

US$65.7M) appears reasonable, (see report in appendix).

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3.8.12 Management Structure

The operating philosophy of the Mowana mine will be to operate the main functions under a

contractor basis, whereby the main areas indicated below will be run under a discreet contract:

• Drill and Blast;

• Ore and Waste Load and Haul;

• Mineral processing; and

• Tailings Storage Facility.

The Mowana Mine will be managed by Alecto, with the Process Plant managed by Penmin and Mining

managed by Digmin.

In addition to the general management facilities, PenMin shall be responsible for the following

functions:

• Geological Exploration and Mine Planning;

• Financial Management and Stores;

• Security; and

• Safety Health and Environmental.

PenMin envisage that a staff of ten people shall cover the mine management roles over two shifts

which are shown below:

• Mine manager;

• Mine Superintendent;

• Engineer;

• Mine foreman;

• Engineering Foreman;

• Geologist;

• Technician;

• Administration; and

• Shift Boss.

3.8.13 Summary

Excellent progress is being made by PenMin in addressing the main issues that will be required for

mine development, although as production ramps up, more detail is required before a definitive mine

plan can be formulated.

Notwithstanding this, many of the issues highlighted in this report are being addressed by PenMin on

what is a rapidly changing project as the mine advances.

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3.9 Mineral Processing

3.9.1 Introduction

Construction of the Mowana plant was undertaken in 2006-2007, with commissioning in 2008.

However, due to the various detrimental factors discussed elsewhere in this report, production from

Mowana was only short-lived and the oxide ores were initially treated only between September 2009

and Q1 2011.

The plant switched back to treating Mowana ores for a few months during 2015, but then production

was stopped. It was verbally reported that concentrate grades were 22-23% Cu at recoveries of 70-

75%. The plant was able to treat up to 100kt per month.

The plant has experienced problems with graphite, particularly from the North Pit which significantly

lowers final concentrate grades.

Although the base case is for 1.2Mtpa plant throughput with a similar configuration to that used prior

to liquidation, the company is also considering installing Dense Medium Separation (“DMS”) as a

means of rejecting both mining waste and carbon ahead of flotation. A further expansion may

consider increasing capacity to 2.4Mtpa by upgrading the crushing plant and using the oxide flotation

circuit to treat sulphide ore.

In their review of the operations, PenMin, outlined the key reasons that MCB ran into difficulty as:

• Inefficient Geological and Mining Understanding and Management - The presence of

significant oxidized material, down to 300m depth in the orebody, meant that the

mining operations could not correctly identify the ore types to be processed, and ore

type grades and volumes were highly variable. Additionally, the presence of significant

levels of graphite had a deleterious effect on downstream efficiencies;

• Inefficient control of processing - Due to the complex geology and hence mineralogy,

processing always resulted in variable recoverable grades and reagent mixes in the

processing facility. The lack of on-line measurement and control mechanisms resulted

in low processing recoveries. De-bottlenecking was not accentuated due to higher

commodity prices, thus allowing the project to limp forward with these inefficiencies;

• Low commodity Prices - The project was commissioned into a higher overall

commodity pricing environment, and as such many inefficiencies were not properly

identified and corrected;

• Management and Control - The application of the above shows clear lack of

management and control of the overall operations. It must be noted that the

geological characteristics of the ores means this is a difficult project to manage and

operate, and will require close supervision and application of skills to ensure its

success; and

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• Inappropriate Technology - It has been shown that right from the outset, the proper

use of pre-concentration, mining and processing controls will simplify the operations

of this project, even in low commodity price environments.

Taking into consideration the above difficulties, PenMin has now brought the plant back into

production with the assistance of a number of consultants such as SENET and Oxflo with a view to

reaching steady-state production, fixing the bottlenecks and adding an appropriate level of

automation and control. Concomitant with this is the redesign and sizing of the mining operations

based on a re-logging of the drill cores and a geological remodelling exercise to better define the ore

types.

3.9.2 Previous Testwork


There has been a reasonable amount of metallurgical testwork undertaken on the Mowana project

although much of it appears to be either of a “fire-fighting nature” that was undertaken during

production, or not directly relevant to the current processing plan.

Initially, the work was centred on investigating acid leaching as a means of recovering copper.

Although reasonable leach recoveries were achieved on the oxide ore (up to 90%), the recoveries on

the supergene were lower (61%) at a pH of 1.80. The high levels of carbonate in the ore resulted in

very high acid consumption (up to 200kg/t) and therefore acid leaching was considered not to be

economically viable at the acid prices prevailing at the time.

3.9.2.2 Dense Medium Separation (“DMS”)

One of the options the Company is considering involves pre-concentrating the transition/sulphide ores

using DMS. This involves crushing the ore, screening out the fine material (-1.0mm) and subjecting

the coarser fraction to a density separation to remove waste material, whilst minimising losses of

copper to this product.

The advantages of DMS are increased flotation plant throughput, reduced fine tailings production, the

ability to mine lower grade ore, and the ability to reject carbon ahead of flotation.

In 2006 heavy liquid tests were undertaken by SGS on a sample of low grade sulphide copper ore (0.3%

Cu). The results were encouraging, with a 57% mass rejection (overall) with a copper loss to floats of

only 6.4% at a 15mm crush size. Further testing on a higher-grade sample (1.2% Cu) at the same crush

size gave a 50% mass rejection with copper losses of 10.3%.

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The Report “DMS Plant Leach and SX-EW Project” dated 2007, contains test results relating to pre-

concentration undertaken at Lakefield and Mintek. Work at Lakefield was undertaken at a crush size

of 1.7mm, which is too fine for DMS pre-concentration. Another programme was undertaken at

Mintek on samples of Oxide, Supergene and Sulphide ore at a crush size of 20mm. The provenance of

the samples is unknown. The results are given in Table 3.11.

The oxide sample gave a high weight rejection (81%), but with stage copper losses of 47% which is

clearly not viable. The tests were undertaken at a separating density of 2.65g/cc which is very low

and the high mass rejection to “floats” possibly suggests very porous mineralisation (or a wrongly

reported separating density). The tests should be repeated at a lower density. The back calculated

head grade for total copper appears to be wrongly calculated, being lower than the acid soluble figure.

The supergene sample also gave a high mass rejection (46%) and also gave unacceptably high copper

losses to floats (46%). The head grade was rather low at 0.89% CuTOT, which is surprising for a zone

that should be elevated in copper grade.

Table 3.11: Heavy Liquid Pre-Concentration Test Results

Oxide Heavy Liquid Test Results at 20mm

Assay % Distribution %

Product Mass % CuSOL CuTOT CuSOL CuTOT

Floats 81.15 1.44 1.57 46.65 46.89 Sinks 18.85 7.06 7.65 53.35 53.11 Head 100 2.72 2.06 100.0 100.0

Supergene Heavy Liquid Test Results at 20mm




Sulphide Heavy Liquid Test Results at 20mm




The sulphide sample gave a reasonable response, with a stage mass rejection of 58% and copper losses

of 12%. The copper head grade was 1.46% of which 1.42% was acid soluble, which is not in keeping

with primary sulphide mineralisation.

The test on the Supergene sample was repeated at a crush size of 6mm, the results are given in Table

3.12.

Table 3.12: Supergene Heavy Liquid Test Results at 6mm



Floats 57.8 0.4 0.2 14.6 6.9 Sinks 42.2 3.2 3.7 91.0 95.8 Head 100 2.6 2.6 100 100

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At the 6mm crush size, mass rejection was 57.8% with copper losses of 7%. The back calculated head

was higher at 2.6% Cu (both total and acid soluble) suggesting that a different sample was used and

that all of the copper was acid soluble. There appears to be errors in the distribution calculations.

The heavy liquid testwork gave variable results and clearly needs to be repeated on representative

samples which reflect the current Mine Plan. Of the samples tested, the sulphide sample gives the

most encouraging response, and does indicate that the ore type may be amenable to pre-

concentration. The fact that the analyses indicate that the sulphide sample contained predominantly

acid soluble copper does undermine the results.

The supergene sample gave mixed results, showing poor amenability at 20mm at a head grade (0.89%)

lower than the proposed ROM head grade. Significantly improved results were achieved with the

sample crushed to pass 6mm, although the size is too fine for DMS, and would have resulted in a

significant proportion of fines which bypass the DMS.

WAI Comment: The DMS pre-concentration testwork is preliminary in nature and needs to be

repeated on more representative samples. The results achieved so far have been mixed and

do not conclusively prove that the Supergene and Sulphide ore types are amenable to DMS.

The Oxide ore does not appear to be amenable to pre-concentration.

The results do show that increased liberation, between 10-15mm would be better for the

Supergene sample, as indicated by work done at 6mm. It is noted that the design criteria is for

DMS treating 15mm, and supporting DMS work has been started on the ores and samples

being generated.

3.9.3 Flotation Testing

3.9.3.1 Flotation Testing on Head Samples

Supergene - Flotation tests undertaken during the initial plant design studies predicted that a

‘sulphide’ concentrate containing 40% copper could be produced at an overall copper recovery of

65%, and an ‘oxide’ concentrate containing 24% copper could be produced at an overall recovery of

17%. Combining the two concentrates gives a ‘supergene’ concentrate of 34% Cu grade at 83% copper

recovery. It therefore appears that the Supergene material may contain significant levels of oxidised

copper minerals.

Sulphide Ore - As part of the initial plant design, testing by SGS on a sulphide composite gave a

concentrate grading 33.7% Cu at a recovery of 91.9%.

3.9.3.2 Flotation Testing on DMS “Sinks” Products

As part of the Mintek DMS testwork, rougher flotation testing was undertaken on the DMS “sinks”

products. It does not appear that the fines were added to the DMS sinks to fully simulate the process.

The results are summarised in Table 3.13.

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Table 3.13: Grade and Recovery of Rougher Concentrates

Grade % Distribution

Ore Type Mass % CuTOT CuSOL CuSUL CuTOT CuSOL CuSUL

Oxide 9.2 29.7 23.2 6.5 44.6 39.1 90.4 Supergene 11.8 20.1 2.5 17.6 79.1 46.1 88.0 Sulphide 22.9 10.2 1.1 9.1 95.3 93.5 95.5

The supergene sample responded moderately well and gave a rougher recovery of 79% to a

concentrate grade of 20% Cu. The sulphide sample gave a high stage recovery, but to a concentrate

grading of only 10.2% Cu. The oxide sample gave a low 45% copper recovery to a high grade

concentrate of 29.7% Cu.

WAI Comment: The flotation testwork undertaken on the DMS products is very preliminary in

nature and further work is currently being undertaken. The overall recoveries, which will take

into account both the DMS and flotation recoveries need to be evaluated.

3.9.4 Current Process Plant


The plant was designed and constructed by SENET and began processing in 2009. The plant consists

of a conventional three stage crushing plant followed by single stage ball milling to achieve a product

grading 80% passing 150 microns.

The copper flotation is also a conventional circuit consisting of a sulphide rougher and cleaning circuit

followed by an oxide rougher and cleaning circuit. The flotation tailings were initially filtered and

stacked as a filter cake, but were later pumped to settlement dams.

The plant restarted operations on 14th March 2017, although a broken bearing early on caused a

temporary stoppage. Since then, the plant has been working continuously under the supervision of

SENET personnel.

3.9.4.2 Stockpile and Crushing

ROM ore is trucked to a stockpile where it can be blended before being fed into a 350t ROM bin. The

ore is recovered using an apron feeder to an Osborne jaw crusher (Photo 3.9), where it is reduced in

size from a nominal 600mm to 150mm.

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Photo 3.9: ADT Tipping into Primary Jaw Crusher

The jaw crusher is rated at 350tph, but can do up to 400tph. The crushed product is transported via

three conveyors, fitted with metal detectors and magnets, a distance of some 900m to a 30kt coarse

ore stockpile.

The coarse ore is reclaimed via two of three sub-level feeders, and is conveyed to a double deck screen

fitted with 38 and 15mm mesh. The screen undersize is conveyed to the fine ore stockpile and the

oversize gravitates to a secondary Osborne 38 cone crusher. The crushed product is conveyed to one

of two 16mm screens in parallel, and the screen oversize gravitates to an Osborn 38 tertiary crusher.

The crushing plant is shown in Photo 3.10.

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Photo 3.10: Crushing Plant

The final product is approximately -16mm and is conveyed to a 20kt fine ore stockpile (Photo 3.11).

The two cone crushers were installed new in 2012, replacing the second-hand machines that were

originally installed.

The crushing circuit was designed to operate 12 hours per day, but generally worked 18 hours due to

operational issues.

3.9.4.3 Grinding

The crushed ore is conveyed to a FL Smith rubber lined overflow ball mill. The mill is 4.6 x 6.7m and is

fitted with 2.5MW motor. The maximum capacity of the mill was stated to be 160tph, depending on

ore hardness and is currently the bottleneck to current and future processing operations.

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Photo 3.11: Fine Ore Stockpile

The mill discharge is pumped to two of three cyclones, the underflow is returned to the mill and the

overflow, at 80% passing 150 microns, passes to flotation.

3.9.4.4 Flotation

There are two separate circuits for sulphide and oxide flotation. Rougher flotation takes place at

natural pH (i.e pulp ‘as-is’ i.e. with no modification) in six 20m3 Bateman flotation cells. The rougher

concentrate is cleaned in a cleaner scavenger circuit consisting of 4+1 5m3 cells. The first cleaner

concentrate is further cleaned in two 10m3 cells.

The cells have automatic air and level controls. The flotation plant is shown in Photo 3.12.

The final concentrate is pumped to a high rate thickener, and the thickener underflow is pumped via

a stock tank, to a Larox pressure filter, rated at 250tpd. The filtered concentrate is loaded into 2t Bulka

Bags and transported from site by 30t road truck by Fujax as per the off-take agreement.

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Photo 3.12: Mowana Flotation Plant

3.9.4.5 Tailings

The flotation tailings are pumped to a 20m diameter thickener and overflow water is returned to the

process plant. The thickened tailings are pumped via a 200mm plastic pipeline approximately 1km to

an unlined tailings impoundment area. Due to the flat nature of the terrain, the impoundment area

is surrounded by a continuous embankment some 3-4m in height. There is only sufficient capacity for

another one year’s deposition and a new tailings area has been identified some 2km to the southwest

of the site offices. Scott Wilson has prepared a preliminary design study. The tailings impoundment

area is shown in Photo 3.13.

Water is decanted and reclaimed via a pontoon mounted pump and returned to the process water

pond.

3.9.4.6 Process Control

The Company has taken some steps towards process control through the introduction of the Adroit

software system (Photo 3.14) which the Company believes now controls approximately 50% of

systems, although considerable work is still required to render this system fully functional.

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Photo 3.13: Mowana Tailings Impoundment Area

Photo 3.14: Adroit Process Control System

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3.9.5 Laboratory

A laboratory is located on site, equipped with a range of sample preparation equipment (LabTech Essa

and Rocklabs) including drying ovens, jaw crushers, Tema mills and sample splitters. The lab is

equipped with a Varian ICP and a Varian AAS. It should be relatively easy to re-commission the

laboratory and expand its capability to undertake the copper speciation analysis recommended by

WAI.

The laboratory also includes a small metallurgical testing facility.

3.9.6 Previous Metallurgical Performance

It is apparent that generally poor metallurgical performance was achieved when treating Mowana

oxide ore. The original feasibility study was based on treating oxide ore for four years. However, it

should be remembered that the majority of the ore treated originated from the Thakadu mine.

Oxide ore flotation is usually difficult and often laboratory test results, on which a plant is designed,

are significantly better than in plant practice, due to the build-up and break down of sulphidising

reagents during full scale processing. Alternatively, the ore mineralogy between the original

laboratory testing and the plant operations may have been different.

Whatever the reason for the failure of the Mowana plant to efficiently treat oxide ore, the company

has made the decision that only a portion (<25% acid soluble copper) of the oxide ore will be treated

in the future, the remainder will be stockpiled.

Carbon has also proved an issue in the past. There are two options when treating carbon rich ore:

• A pre-float to remove the carbon ahead of copper flotation; and

• Adding reagents to prevent the carbon from floating.

It has been found that the carbon pre-float was unsuccessful due to the high losses of copper into the

pre-float concentrate. The use of reagents (depressants) was tried and was successful, but the reagent

used (Aero 633) is expensive and high dosages would probably be required.

The metallurgical staff report that the ROM ore contained up to 7% organic carbon which would

render the production of a saleable concentrate impossible, no matter what reagent regime was used.

It was also reported that the design figure was 3% carbon, which is extremely high compared with

other operations, but this level was reported to be “manageable”.

To overcome the carbon issue after start-up, it is intended to mine primarily from the South Pit, which

has lower levels of carbon.

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3.9.7 Future Plans

As of the April 2017 visit, operations had commenced with low-grade (14%) Cu concentrate being

produced. During the WAI site visit of January 2017, management were preparing to recommence

operations by the end of the month and to complete a programme of plant upgrades by the end of

the year. The strategy is based on treating only ores which contain <25% acid soluble copper and

essentially stockpiling the oxide ores.

To successfully achieve this, it will be necessary to review the geological database to determine exactly

where the non-oxide ore types are in the orebody. It is essential that acid soluble copper data is

available for all of the orebody in order to be able to achieve this.

It is understood that the “acid soluble” analytical method refers to dilute sulphuric acid. This method

is extremely sensitive to grind size, temperature and duration of leach. More importantly, dilute

sulphuric acid will also leach some secondary copper minerals, and therefore will be an unreliable

method upon which to define the ore types.

Further drilling may be required to better define the location of the copper mineralogy within the

orebody, and WAI recommends that any samples currently available, or those produced from future

drilling, should be subjected to copper speciation, in order to gain a greater understanding of the

mineralogy of the ore body. This will include:

• Acetic acid soluble (oxides and carbonates);

• Dilute sulphuric acid soluble;

• Cyanide soluble; and

• Total.

There are plans to install a DMS circuit, including a fines dewatering section, although given the very

preliminary nature of the testwork, this may be premature.

WAI Comment: WAI is aware that further work has already commenced with a view to having

resolved the geological model issues and testwork characterisation of DMS and flotation on

the ores, to support the decision to proceed with the upgrades to the process plant. In addition,

experimentation with different collectors (H88L) is showing good results with regard to

negating the graphite issue, which in turn might make more amenable to treatment, although

this is still at the trial stage.

The throughput of the plant will be increased by fundamental changes to the crushing circuit involving:

• Replacing the double deck screen with a single deck secondary screen cutting at

40mm;

• Secondary screen oversize passing to secondary crushing;

• Screen undersize to two new double deck tertiary screens, fitted with 15mm and 1mm

decks;

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• Secondary crusher product is conveyed to the tertiary screens;

• Tertiary screen undersize (-1mm) is conveyed to Elutriation and then the mill;

• The tertiary screen oversize is returned to the tertiary crusher; and

• The -15+1mm fraction passes to DMS.

In addition, mobile crushers will be utilised to reduce the circulating load within the tertiary crushing

section.

The -1mm product is pumped to a thickener (new) and the underflow is pumped to the flotation via

the ball mill discharge sump.

The proposed modifications are shown in Figure 3.16. When used in conjunction with an efficient DMS

process, if viable, this will have the effect of substantially increasing the plant throughput, although

additional concentrate thickening capacity is also required. With these process options, it is

anticipated that production could be increased to 2.4Mtpa. The maximum throughput of the plant

could be as high as 3.0Mtpa, assuming 85% utilisation of a 400tph crushing plant operating 360 days

per year. The feed rate to flotation cannot exceed 1.2Mtpa and therefore this will only be achievable

if the DMS section is capable of rejecting 60% of the ROM.

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Figure 3.16: Mowana Plant Modified Flowsheet

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3.9.8 Conclusions

The current Mowana plant has been generally well engineered but has suffered, as far as the Mowana

orebody is concerned, by not being able to efficiently treat the oxide copper ore. It should be

remembered that for the majority of the project’s life, the ore treated has come from the Thakadu

mine.

However, as of April 2017, the plant has been re-commissioned and is producing in the order of 100t

per day of low-grade copper concentrate with feed coming from low-grade ore from the south end of

the North pit and previously stockpiled material.

The base case scenario sees a steady ramp up to approximately 11kt per month through the plant

without DMS, although testwork is on-going to see if this is a viable option moving forward.

The future processing strategy is based on treating only ores which contain <25% acid soluble copper

and essentially stockpiling the oxide ores. To successfully achieve this, it will be necessary to review

the geological database to determine exactly where the low copper oxide ore types are in the orebody.

It is essential that acid soluble copper data is available for all of the orebody in order to be able to

achieve this.

WAI Comment: WAI is aware that a testwork protocol on all potential ores has been

commenced, and is currently being supervised by both the Alecto Competent Person (Mike

Ware) as well as the Oxflo representatives, who provide flotation reagents and consulting

services in this field. This testwork includes mineralogical characterisation, DMS response, and

flotation response in both a natural sulphide float environment, and including sulphidation

with NaHS.

A review of the acid soluble method used in the past should be undertaken, and future copper analysis

should be more detailed and include copper speciation to gain a greater understanding of the copper

mineral distribution throughout the orebody.

It is understood that the “acid soluble” analytical method used previously refers to dilute sulphuric

acid. This method is extremely sensitive to grind size, temperature and duration of leach. More

importantly, dilute sulphuric will also leach some secondary copper minerals, and therefore will be an

unreliable method on which to define ore type definition.

Flotation testing undertaken by SGS indicated that the supergene material may contain significant

levels of oxidised copper minerals. It may therefore be necessary to mine into the lower depths of

the supergene zone in order to achieve the <25% acid soluble target for the mill feed. The sulphide

ore type gave an excellent concentrate grade (33.7% Cu) at recoveries in excess of 90%.

If a decision is made to include DMS as part of the process, this will require further investigation as

the information obtained to date is preliminary. Some of the metallurgical balances, particularly for

the oxide and supergene ore types are inaccurate and the overall DMS balance, including fines, is not

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clearly presented. The tests undertaken do generally confirm that the sulphide ore is amenable to pre-

concentration by DMS.

The samples tested in the future should include the correct levels of waste material as this will be an

important factor when assessing the viability of DMS.

The plant is lacking in certain areas of process control and it is planned to install an On Stream Analyser

(OSA) when treating the less refractory ores in the future. Treating the more sulphide rich ore types

will be significantly less onerous, and may not require the same degree of process control. As such,

an OSA, although desirable, may not be essential provided that the copper minerals treated are

predominantly sulphides with significant levels of secondary (copper rich) minerals.

A detailed scoping study has been completed by Minero Consulting and SENET (Pty) Ltd, a leading

South African project management and engineering company, for the introduction of a new DMS pre-

concentration process and upgraded crushing plant that is designed to increase throughput to 2.6

million tonnes per annum and achieve increased copper production of circa 22,000 tonnes of saleable

Cu per annum. A DMS process route also has the potential for handling the carbonate mineralisation,

which at present has been excluded from the Mineral Resources reported, providing a potential

increase to the Mineral Resource base.

As previously announced by Alecto in December last year, the study shows enhanced economics with

the NPV at a 10% discount rate moving up to US$245m and the IRR at 55%.

Once a feasibility study is completed, the process route upgrades will be funded through an existing

agreement with Fujax Minerals and Energy Limited (“Fujax”) and Northern Heavy Industries Group

Company Limited (“NHI”)

Further works to qualitatively and quantitatively support the proposed upgrade project has been

commenced by the PenMin team, but as the work completed to date is at scoping level, WAI can only

confirm that the costs and parameters quoted in the study are broadly in line with projects of a similar

nature and that more work is required to ensure the value previously announced by the company can

be achieved.

3.10 Environment, Social, Health & Safety

3.10.1 Introduction

This review of the environmental and social performance of Alecto Minerals Plc assets in Botswana

(Mowana) is based on a brief desk-based survey of existing documentation, primarily a Scoping Study

developed in 2014.

In the short time available, it is only possible to have an overview of the project and the way that the

company manages its health, safety, environmental and social obligations across its sites. Whilst WAI

believes it has gained insight into the key issues and performance, there may be additional information

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that was not seen, or variations in interpretation of the available data that could not be explored

further.

This review was carried out to comply in form and content with the requirements of BSE Rules.

Recommendations and guidance also take into account international best practice including World

Bank/International Finance Corporation guidelines and standards.

The main documents inspected for this report were:

• Scoping Study – Mowana Mine Upgrades MC1408, Minéro Africa (Pty) Ltd, October

2014;

• Environmental Liability Fund – costing spreadsheet;

• Environmental Statement, Environmental Impact Assessment – Final Report on

Changes to the EIA and EMP, Water Surveys Botswana Ltd. (September 2006);

• Licenses and permits – Messina Copper: Mining License (2006); Enlargement of

Mining License (2006); Approval of Mining License (2006); Agreement to Lease (2007);

Conditional Impact Permit (2005); Approval of Impact Assessment of Access Road

(2006); Agreement of Grant to Lease Business Plots Mosetse and Dukwi (both 2007);

First Renewal of Prospecting License (2005); Water Rights (2006); Water Abstraction

Permit (2006); Impact Permit – Wellfield and Pipeline, Dukwi Mine (2005); Water

Supply Report – Dukwi Mine (2006); Electricity Supply Agreement (2006); First

Renewals of Prospecting License (2004-5);

• Environmental Management Plan for Dukwe Copper Project (2006) and separate

chapters for the following aspects: Hydrocarbon Storage & Recycling; Management of

Stock Piles; Management of Waste Rock Dumps; Natural Vegetation; Noise Prevention

and Management; Sanitation Management; Storage & Use of Hazardous Chemicals;

Vehicle & Workshop Management; Water Use and Conservation; and

• Archaeological Impact Assessment, Bushman Mines (2002); Archaeological

Management Plan (2006).

3.10.2 Environmental & Social Setting and Context

Details of the project setting are given in Section 3.5 above.

An Environmental Impact Assessment (EIA) was undertaken for the project and approved in 2006

which assesses the environmental conditions and some socio-economic aspects associated with the

project. The report, prepared by Water Surveys (Botswana) (Pty) Ltd. (“WSB”) was approved by the

Government of Botswana in November 2006. The report covers environmental and social aspects and

summarises the potentially significant impacts of development as the following:

• Positive socioeconomic benefits to the local community, the region and the country;

• Impacts on local land users: no land user would be displaced but grazing areas would

be lost in communal areas; increase in nuisance (disturbance) to community; increase

in probability of conflict due to sharing of access road;

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• Impacts on surface water quality: risk of spillage and contamination; risk of silt eroding

or being blown into watercourses; greater risk of contaminants reaching watercourses

in the Wellfield recharge area;

• Impacts on hydrogeology: spillage and contamination; leaching of contaminants from

waste dumps, greater risk of contamination of watercourses; drawdown of local

boreholes; drawdown of Dukwi wellfield boreholes;

• Impacts on ecosystems: loss of environmental interest and diversity within area of

operations; potential for degradation of soils and vegetation by elevated PH of tailings

dump;

• Visual and topographical issues: potential for considerable visual and topographic

impact; and

• Positive impacts on local aquatic resources and animal life (birds and possibly

elephants).

Based on the EIA, an Environmental Management Plan (“EMP”) was developed in 2006 for Messina

Copper (Botswana) Limited for land around the Project area. The purpose of this EMP was to achieve

proactive management of environmental impacts and risks that could arise from the project. The EMP

provides a summary of significant objectives and key performance indicators for each phase of the

project.

WAI Comment: The 2006 EIA provides an environmental and social impact assessment to

Botswana standards, including extensive reporting on potential environmental impacts and

associated mitigation measures. In order to comply with international best practice, it is

understood that Alecto are currently seeking consultants to update this existing EIA and

support previously developed mitigation measures based on the most recent project

description. In particular, existing impact assessments will more closely align with

international best practice if they further develop understanding of the Project’s social impacts

complemented by appropriate mitigation measures. The extensive EMP from 2006 should be

updated accordingly.

An Environmental Permit was granted in November 2006. This document supported the application

to the Commissioner of the Botswana Ministry of Minerals Energy and Water Affairs (“MMEWA”) for

a Mining Licence for the Project. It also supported an application to the Lands Board - Bamangwato

Tribal Administration for the Application for Surface Rights. The Mining Licence was granted in late

2006 and the surface rights were granted in early 2007.

WAI Comment: WAI has reviewed a number of other environmental licenses and permits held

by the Project in 2005-2007 (see list of documents consulted).

A Water Abstraction Permit was approved in 2006 to supply the mine and requires an annual

update in accordance with Botswanan legislation. Once a suitable Consultant has been

identified, these will require updating for the current project.

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An Electricity Supply Agreement was previously signed (2006) between Botswana Power

Corporation and Messina Copper Ltd for a supply of electricity in bulk. WAI has been informed

that a new agreement has been signed by Alecto with Botswana Power Corporation.

3.10.3 Relevant Legislation

Mining law in Botswana is primarily governed by the Mines and Minerals Act, CAP 66:01 of the Laws

of Botswana (the “MMA”) and subsidiary legislation and the Environmental Assessment Act, CAP

65:07 of the Laws of Botswana (which relates to the environmental impact assessment of prospecting

and mining activities).

The Mines, Quarries, Works and Machineries Act, CAP 44:02 of the Laws of Botswana (the “MQWM”)

relates to the health and safety of employees involved in prospecting, mining and quarrying

operations.

WAI General Comments: it is recommended that in addition to local requirements, environmental

and social aspects of the project are developed in compliance with international requirements, for

example those stipulated within the International Finance Corporation (IFC) Sustainability

Framework (Performance Standards). This includes development of an IFC-compliant

Environmental & Social Impact Assessment (ESIA) documenting predicted impacts of the project in

the context of recent environmental and social baseline data. It is also recommended that Alecto

develop a Livelihood Restoration Plan, focusing on the economic and physical displacement of

Affected Communities as a result of the project. Additional best practice guidelines include:

• The Equator Principles (EPs)

• The IFC’s Environmental, Health and Safety (EHS) guidelines

• The International Cyanide Management Code (ICMI)

3.10.4 Archaeology and Cultural Heritage

An Archaeological Impact Assessment (AIA) was developed in 2002 as part of the Bushman Feasibility

Study. The AIA was written in compliance with Botswana Law, in particular the 2001 Monuments and

Relics Act, which protects all archaeological sites and artefacts dating to before 1902 as well as any

historic structures and objects since 1902 that have been proclaimed a historic monument, historic

landscape or recent artefact, as well as natural features that have been proclaimed a natural

monument.

The 2002 AIA found prehistoric copper mines present at Malokojwe and Mapanipani and these were

the focus of an Archaeological Management Plan (“AMP”) issued in 2006. The Development Permit

issued to Messina Copper Ltd in 2006 was conditional on measures of preservation and mitigation

relating to, in particular, three well-preserved prehistoric copper mine complexes of national

significance and 14 prehistoric ore processing/smelting sites.

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WAI Comment: WAI believes Archaeology and Cultural Heritage is well documented for the

project area as part of these previous studies. For international compliance purposes it is

recommended that Alecto continue to develop a Chance Finds Procedure which formalises

methods in case the project encounters further objects of potential interest.

3.10.5 Conclusions

Environmental Aspects

Alecto’s Botswana assets are considered in compliance with local legislation and requirements prior

to being put in Care & Maintenance. The current licences, permits and associated documentation will

require updating based on the updated project description. It is understood Alecto is in the process of

obtaining a consultant to review the previous works. It is recommended that the 2006 EIA is updated

to international requirements at the same time as Botswanan local requirements.

The existing Environmental Liability Fund should be continuously updated to reflect changes to the

project description.

Social Aspects

International best practice requires that stakeholders are mapped in order to support sustainability

standards, including employment creation and ensuring the protection of fundamental rights of

workers and members of the local community. Although this was carried out previously for the 2006

EIA, these aspects should be updated to reflect the updated project description.

On the basis of existing documentation, previous owners of the project appear to have a positive

relationship with the local population. Nevertheless, Alecto should ensure that potential conflicts with

local communities are mitigated by engaging with stakeholders whenever possible, formalising

interactions within a Social Community Management Programme (SCMP) to international best

practice standards. The increased volume of traffic on roads and resulting potential conflicts with local

populations was flagged previously and should continue to be monitored.

The 2006 EIA suggests economic and physical displacement as a result of the project will be negligible.

This aspect should continue to be monitored and, if shown to have potentially negative impacts, Alecto

should develop a Livelihood Restoration Plan.

To further support development of stakeholder engagement activities, a grievance mechanism should

also be established, allowing workers and members of local communities to communicate directly

with Alecto’s management.

It is recommended that Alecto develop a list of past, current and future social initiatives and

community development to include the most recent initiatives and stakeholder engagement activities.

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3.11 Economic Appraisal

3.11.1 Introduction

WAI has reviewed the technical financial model developed by the Client and outlined a summary of

the key findings in the section below. The base case model is without the inclusion of the DMS which

may be considered in the future.

The Company has developed a detailed 22-month plan as well as the life-of-mine schedule on which

this financial appraisal is based.

The basic strategy for this Financial Model Review is to examine the Financial Model structure and

ensure its integrity from both technical and economic perspective as well as verify consistency of the

input parameters and assumptions used.

The financial models that have been reviewed by WAI are presented in excel format in the files:

C0152 MCB Financial Model Rev ALO RTO 0 7.2 – Without DMS.xlsx

Copy of MOWANA 22 MONTHS PLAN (APRIL 2017-JANUARY 2019.xlsx

3.11.2 Financial Model Structure and Key Input Parameters

The Financial Model has been developed to demonstrate the potential viability of the Mowana Copper

Mine project which relies on open pit extraction from two pits – North and South.

The financial model has been built with first production in 2017, and comprises a project life of 12

years, with 11 years life of mine. Financial results are presented in both nominal and real values.

All numbers are reported in US Dollars, unless otherwise specified.

The Model is represented on a number of Microsoft Excel sheets with the main parts as follows:

• Assumptions;

• Summary;

• Annual and monthly cash flow models (in Real and Nominal Cash Flows);

• Operating, Capital Costs, Mining Schedule and Funding requirements presented on

the individual sheets; and

• Financial Statements.

3.11.3 Input Assumptions

3.11.3.1 Production Schedule

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The Financial Model is built on 11 years mine life with the maximum production capacity of 1.2Mtpa

(of mined ore) and average Cu grade of 1.16% (LOM). A separate, detailed 22 month model is also

presented.

3.11.3.2 Operating Costs (Real Values)

The overall life of mine operating cost was estimated at US$373.7.5M, or US$30.56/t ROM (in real

terms).

Mining

The LOM costs have been estimated as US$174.0M, or US$14.23/t ROM.

The open pit production (base case) is presented on a monthly basis, showing grade variation. The

costs associated with open pit operations are estimated from first principles with the relevant

breakdown provided.

A summary of the total mining operating costs is shown in Table 3.14 below.

Table 3.14: Project Mining Operating Costs (LOM, Real Values)

Description US$

Waste Mined 82,708,148

Ore Mined 12,230,000

Labour 16,267,600

Equipment Owning 25,123,436

Equipment Operation 20,658,515

Fuel 19,299,308

Miscellaneous 319,143

Drill & Blast 70,365,921

Margin 4,653,615

Subtotal 174,026,324

Total US$ per ROM tonne 14.23

US$ per total tonne rock mined 1.83

Operating mining costs related to the open pit operations have been based on the Bell CAT hard coded

quotations dated March 2017. There is no link between the specified quotations and related mining

capacity, nor there are any details on the mineable tonnage available for open pit production.

WAI recommends that the model is revisited with more recent quotations obtained.

A summary of these costs is provided below (Table 3.15).

Table 3.15: Open Pit Mining Cost (Bell & CAT Quotations)

BELL & CAT QUOTES CAPEX (Annual, USD)

CAPEX (Monthly Rate, USD)

Monthly Operating Rate (USD)

CAPEX (ZAR)

OPEX (DRY) (ZAR)

Liebherr R980 Excavator 9,227,935 404 904,699.51 US$18,561 US$12,753

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Cat 390 excavator 10,114,026 490 991,571 US$20,344 US$15,452

HX310 Excavator 2,676,012 310 262,354 US$5,383 US$9,785

CAT 777G (90 ton) 17,896,061 640 1,754,516 US$35,997 US$20,202

Bell B50 E 5,451,749 387 534,485 US$10,966 US$12,216

Liebherr PR754 Dozer 5,160,125 344 505,895 US$10,379 US$10,859

CAT D7 Dozer 6,100,000 357 462,121 US$9,481 US$11,258

Bell 770G Motor Grader 2,887,471 228 283,085 US$5,808 US$7,199

Bell 315SL TLB 825,259 195 80,908 US$1,660 US$6,155

Bell B30E Water Tanker 3,603,298 380 353,265 US$7,248 US$11,995

LDV 687,500

67,402 US$1,383 US$719

Bell B25E Diesel Tanker 3,207,099 335 314,421 US$6,451 US$10,588

Powerstart Service Truck 2,095,732 188 205,464 US$4,215 US$5,934

Water pump 1,732,500

169,853 US$3,485 US$1,708

Bell 220A Tyre Handler 1,957,561

191,918 US$3,937 US$1,575

Minibus 687,500

67,402 US$1,383 US$719

Crane truck 1,188,000

116,471 US$2,390 US$1,673

Light Plant 274,390 26,901 US$552 US$276

Bell L2706 Wheel Loader 2,995,394 152 293,666 US$6,025 US$4,798

* Note: ZAR: USD 13.2

However, the mine is now operational and has opted for the contract mining route as well as contract

drill & blast and as such, much of the information in Table 3.15 is for guidance only.

Processing

Plant operating costs are based on a 1.2Mtpa throughput capacity. WAI notes that plant operating

costs have been derived from first principles with total LOM being estimated at US$149M, or

US$12.15/t ROM (Table 3.16). A summary of these costs with a monthly rate breakdown is provided

below in Table 3.17.

Table 3.16: Project Operating Processing Costs (LOM, Real Values)

US$/t ROM US$’000 LOM

Plant Operating Costs 12.15 148,648

Fixed 2.19 26,796

Variable 9.55 116,782

Sustaining Capex 0.25 3,038

Tailings 0.17 2,032

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Table 3.17: Plant Operating Cost (Monthly, Real Values)

Item Contingency [%] Total Monthly Cost [US$]

Manpower 2.5 US$194,873

Power 2.5 US$206,510

Water 5.0 US$5,000

Reagents 5.0 US$125,822

Grinding Media 5.0 US$36,120

Mill Liners 5.0 US$18,060

Crusher Liners 5.0 US$22,917

Platework Liners 5.0 US$18,500

Maintenance Spares 10.0 US$116,550

E&I Spares 10.0 US$33,300

Piping and Valves 5.0 US$24,864

Laboratory 5.0 US$15,900

Miscellaneous 5.0 US$140,000

Contingency Value

US$95,849

Estimated Opex

US$1,054,264

Plant Cost per ton ROM

US$10.54

G&A

General and Administration cost was estimated at US$51.1M for the life of mine, or US$4.18/t ROM.

A summary of the life of mine G&A costs is shown in Table 3.18.

Table 3.18: Project G&A Costs (US$’000 LOM, Real Values)

Head Office Costs 51,061

General Management 41,098

Project Management 2,467

Closure & Rehabilitation Costs 2,836

Insurance Costs 4,661

3.11.3.3 Capital Costs (Real Values)

Total LOM cost was estimated at US$20.5M, with initial cost of purchase estimated at US$20M (see

Table 3.19 below) and upgrade contract of US$469,000.

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Table 3.19: Initial Capital Costs

Description % Machinery & Equipment Costs in US$

Earthworks 10% 468,103

Civils 2,149,773

Structural Steel 374,033

Platework 543,363

Machinery & Equipment 4,681,025

Piping 12% 561,723

Electricals 1,264,235

Instrumentation 14% 655,344

Transport 15% 702,154

Infrastructure - Plant Buildings 5% 234,051

Plant First Fills 156,000

Spares Operational 2.5% 117,026

Spares Insurance (Strategic) 3.5% 163,836

Vendor Services 2% 70,215

Construction Labour (SMPP) 39% 1,848,043

Construction Labour (E&I) 16% 767,831

EPCM 1,460,076

TSF (incl EPCM) 202,115

DMS Plant (excluded from financial model 2,186,410

SUB TOTAL 18,605,356

Contingency 1,394,644

TOTAL PROJECT 20,000,000

No mining costs were included under project capital costs, as the Client is using a mining contractor

(Giant).

3.11.3.4 Revenue

In the Financial Model the Revenue is generated by the Cu concentrate sales. A summary of the LOM

feed tonnages and key recovery parameters is given below (Table 3.20).

Table 3.20: Processing Inputs and Concentrate Production Summary

Area Unit Amount

Ore to Processing (Flotation Feed) t 12,230,000

Cu to Processing t 143,564

Ore Grade to Processing % 1.17%

Flotation Recovery % 91%

Total Recovery % 91%

Concentrate Tons t 522,481

Recovered Cu t 130,620

The project uses the following Cu forward prices (Table 3.21).

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Table 3.21: Nominal Conversion Factors and Project Cu Price 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Depreciation Term 5

US$ Inflation 2.50%

Interest 2.00% 0.50%

Forward Curve on Cu (nominal) US$/lb

2.60 2.70 2.79 2.88 2.98 3.08 3.18 3.29 3.40 3.52

Implied Forward Curve (real) US$/lb

2.60 2.63 2.66 2.68 2.70 2.72 2.75 2.84 2.94 3.04

As expected, calculations of revenue from concentrate realisation consider payability factors, and

treatment charges. Concentrate shipping cost has also been included in the model (Table 3.22).

Table 3.22: Project Realisation Costs

Concentrate Shipping Costs (US$/t) 118.93

Concentrate Sales Commission Franchise Loss 2.50%

Treatment & Refining Charges Loss 3.50%

Concentrate Treatment Cost (US$/t concentrate) 97.50

Concentrate Refining Cost (US$/t recovered Cu) 0.10

Penalties (US$/t Cu) 0

The LOM Gross Revenue was estimated at US$909M with realisation costs being estimated at

US$200M. The Net Revenue calculation resulted in US$709M (Table 3.23)

Table 3.23: Project Net Revenue Calculation (LOM)

Cu Price (LOM average) US$/lb 3.17

Gross Revenue US$'000 908,996

Sales Commission (Franchise Loss) US$'000 (19,505)

Logistics US$'000 (62,139)

Treatment Charge US$'000 (50,942)

Refining Cost US$'000 (28,077)

TC/RC Loss US$'000 (27,307)

Royalty Cost US$'000 (20,852)

Net Revenue US$'000 708,529

3.11.3.5 Discount Rate

Selection of the discount rate is a subjective decision based on the individual expectations of the

potential investor and therefore WAI recommends that a sensitivity analysis is undertaken to

demonstrate project behaviour subject to various discount rates.

The nominal base case discount rate was assumed by the Client at 12.5% (real discount rate at 10%

adjusted for inflation).

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3.11.4 Financial Model Results

The Financial Model contains both real and nominal cash flow models. Each of the models is presented

on the individual sheets, providing monthly and annual cash flow breakdown.

WAI notes that there is an inconsistency in the production schedule utilisation (see Monthly Cash Flow

(R) sheet), and therefore the Concentrate tonnages in do not match. Also, logistics cost, treatment

charge and refining costs have not been adjusted for the inflation rate in the Nominal Cash Flow

model. Furthermore, no escalation has been applied to the Debt calculations in the Nominal Cash Flow

Model.

Table 3.24 below shows a comparison of Real and Nominal values, and Table 3.25 demonstrates

financial results estimated in Nominal Cash Flows (“LOM”).

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Table 3.24: Real vs. Nominal Cash Flows Summary

Units Real Nominal (Adjusted for

Inflation)

Waste Mined t 107,821,118 107,821,118

Ore Mined t 12,230,000 12,230,000

Cu Grade Mined t 1.16% 1.16%

Ore to Processing (Flotation Feed) t 12,230,000 12,230,000

Cu to Processing t 143,564 143,564

Ore Grade to Processing t 1.17% 1.17%

Concentrate Tons t 522,481 522,481

Recovered Cu t 130,620 130,620

Cu Price US$/lb 2.84 3.17

Gross Revenue US$’000 780,202 908,996

Sales Commission (Franchise Loss) US$’000 (19,505) (19,505)

Logistics US$’000 (62,139) (62,139)

Treatment Charge US$’000 (50,942) (50,942)

Refining Cost US$’000 (28,077) (28,077)

TC/RC Loss US$’000 (27,307) (27,307)

Royalty Cost US$’000 (17,182) (20,852)

Interest Received US$’000

16,305

Net Revenue US$’000 567,100 708,529

Capital Costs US$’000 20,469 20,680

Purchase Price US$’000 20,000 20,209

Upgrade Contract US$’000 469 471

Mining Costs US$’000 174,026 198,674

Fleet Owning Cost US$’000 25,123 28,120

Monthly P&G US$’000 19,634 22,621

Variable Costs US$’000 97,268 111,087

Contractor Margin US$’000 4,654 5,375

Fuel Cost US$’000 27,347 31,471

Plant Operating Costs US$’000 148,648 170,483

Fixed US$’000 26,796 30,674

Variable US$’000 116,782 133,877

Sustaining Capex US$’000 3,038 3,597

Tailings US$’000 2,032 2,335

Head Office Costs US$’000 51,061 58,508

General Management US$’000 41,098 47,173

Project Management US$’000 2,467 2,727

Closure & Rehabilitation Costs US$’000 2,836 3,265

Insurance Costs US$’000 4,661 5,342

TOTAL COSTS US$’000 394,204 448,423

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Table 3.25: Nominal Cash Flow Model Results (US$)

Gross Revenue 908,995,871

Less: Off-mine Cost (168,464,323)

Less: Royalty (20,852,453)

Less: Sales Commission (19,505,041)

Net Revenue 700,174,054

Less: Operating Cost (420,802,609)

Less: Closure Cost Provision (3,265,481)

Less: Capital Maintenance (3,597,086)

Cash from operations 272,508,879

Interest Received 16,305,417

Profit Before Tax 288,814,295

Less: Taxation Paid 64,272,420

Profit After Tax 224,541,875

Less: Working Capital Movement 3,605,870

Less: Capital Cost (20,679,968)

Debt & Equity Draw Down 22,000,000

Debt Repayment (26,234,819)

Net Project Cash Flow 203,232,959

NPV (Leveraged) 87,485,182

UNLEVERED IRR 56%

3.11.4.1 Sensitivity Analysis

A sensitivity analysis has been performed by the Client using a Monte Carlo simulation method via

software @Risk 6.2. This software is an add-in to Microsoft Excel, with 10,000 iterations run in the

simulation. Each of the input variables is randomly varied within the defined probabilistic

distributions.

The purpose of running the Monte Carlo Simulation is to determine the likely range of operational

parameters that will be experienced, by adjusting the key variation inputs to the financial analysis. A

sensitivity analysis was performed on key parameters within the financial model to assess the impact

of changes upon Net Present Value of the project. These parameters are as follows:

• Copper Forward Price;

• Flotation;

• DMS Recovery;

• Mining Cost;

• Processing Cost;

• Concentrate Treatment Cost;

• Diesel Price;

• Concentrate Refining Cost;

• DMS Yield; and

• Drill and Blast Cost / Ton Waste.

A 90% range of NPV and IRR performance that is achieved has been derived, as each of the variables

is adjusted, best reflecting a real-world scenario where the actual inputs achieved on a particular day

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would in all likelihood vary per the operating ranges expected. This has the effect of testing the

robustness of the project against real world scenario’s where design rates are perhaps not achieved

at the same time.

It is common that the key metrics of revenue as determined by the metal price and the process plant

recovery will dwarf the operating cost variances, but using these inclusive variables will therefore test

the project robustness even in such scenarios as low metal prices and recoveries with poor

performance on the cost drivers.

A summary of the input and output results for NPV and IRR is presented in Figure 3.17 below.

The sensitivity analysis results demonstrate that the project is mostly sensitive to commodity price,

followed closely by the process plant recovery, and relatively less sensitive to change in operating

costs.

3.11.5 Recommendations

Overall, WAI finds the Model to be developed to a reasonable standard. The general model structure

is integral and consistent and provides an appropriate level of detail required for the project valuation.

In order to improve the financial analysis of the Project, WAI recommends that the Company review

nominal cash flow model inputs and validate that all inputs are adjusted for inflation.

Furthermore, preliminary studies indicate that the inclusion of a DMS plant into the LOM does improve

the project economics, although additional work is required to demonstrate the viability of the DMS

process.

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Figure 3.17: Sensitivity Report for NPV

Workbook Name C0152 MCB Financial Model Rev ALO RTO 0 7.2 - Without DMS.xlsx

Number of Simulations 1

Number of Iterations

Number of Inputs 27

Number of Outputs 2

Sampling Type Latin Hypercube

Simulation Start Time

Simulation Duration

Random # Generator

Random Seed

Statistics Percentile

Minimum 15,091,471$ 5% 44,256,824$

Maximum 143,035,940$ 10% 49,433,950$

Mean 76,800,989$ 15% 54,471,587$

Std Dev 20,800,081$ 20% 58,868,217$

Variance 4.32643E+14 25% 62,025,889$

Skewness 0.123987819 30% 64,753,374$

Kurtosis 2.594789822 35% 67,810,387$

Median 76,070,036$ 40% 70,672,117$

Mode 82,403,621$ 45% 73,470,069$

Left X 44,256,824$ 50% 76,070,036$

Left P 5% 55% 78,875,266$

Right X 112,199,350$ 60% 81,666,664$

Right P 95% 65% 84,680,016$

Diff X 67,942,527$ 70% 87,721,491$

Diff P 90% 75% 91,162,339$

#Errors 0 80% 95,101,201$

Filter Min Off 85% 99,959,426$

Filter Max Off 90% 105,374,283$

#Filtered 0 95% 112,199,350$

Rank Name Lower Upper

1 Copper Forward Price45,904,525$ 109,284,806$

2 Flotation 60,674,512$ 89,228,368$

3 Processing Cost 72,014,858$ 81,151,509$

4 Drill and Blast Cost / Ton Waste73,490,135$ 79,244,876$

5 Mining Cost 73,661,322$ 79,189,478$

6 Concentrate Treatment Cost73,424,167$ 78,815,780$

7 BPC Price / kW/h 74,858,821$ 78,151,844$

8 Concentrate Refining Cost75,289,956$ 78,521,225$

9 Drill and Blast Cost / Ton Ore74,804,444$ 77,971,622$

10 Diesel Price 75,240,677$ 78,324,753$

Simulation Summary Information

Change in Output Statistic for NPV

5000

11/04/2017 16:35

00:03:33

Mersenne Twister

1366345572

Summary Statistics for NPV

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4 ZAMBIA ASSETS


The Matala and Dunrobin Gold Project (also referred to as the Luiri Hill project) is situated

approximately 120km west-northwest of the Zambian capital of Lusaka in Zambia’s Central Province.

The central Province is located between longitudes 27˚E and 31˚E and latitudes 13˚S and 16˚S,

occupying an area of approximately 93,374km² and shares borders with eight other Zambian

provinces, in addition to the international border with the Democratic Republic of Congo (“DRC”) to

the northwest. The province is divided into five administrative districts. The Luiri Hill Project is situated

the Mumbwa District. The Mumbwa township is located 25km northwest of the Dunrobin mine area.

The site can be accessed from the capital, where an international airport is located, by vehicle within

two hours via the M9 road and then south for 5km along a gravel road (Figure 4.1).

Figure 4.1: Location of Project Area, Zambia

There is a power line between Nampundwe and Mumbwa see Figure 4.2 below, which crosses the

project area from southeast to northwest. The power line is 90km long, built for a capacity of 88kV,

but is operated at 33kV. When operated at 33kV, the existing power line cannot deliver more than

2.3MW without deterioration of voltage. As of the publication of the 2013 EIA, the Mumbwa town

power requirements approached 3MW at peak times, resulting in low voltage.

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WAI Comment: WAI is aware that the Nampundwe OHL connects to the Sanje substation

which provides power to Mumbwa. WAI has been provided with a copy of a letter that Alecto

received in December 2016, which indicates that the substation will be upgraded in Q1/2017

and will be able to supply the planned Alecto mine.

Figure 4.2: Locality Map of Project


The licence area is situated in an area where the dominant landforms are gently rolling hills of

limestone with little surface drainage. The terrain, which is referred to as “sandveldt plateau” stands

between 1,065m and 1,220m above sea level.

The regional land surface of the project is generally covered by colluvial and alluvial material with

scattered outcrops along ridge tops. The drainage is directed southwards and comprises a network of

seasonal creeks and streams flowing into the Nangoma stream, which then connects with the Kafue

River to the south.

The vegetation is typically savannah but varies according to the drainage, soil-depth and bedrock.

There is considerable contrast between the northern and southern areas. The mature soils in the north

of the project area support undulating woodlands interspersed with broad semi-alluvial areas

(dambos) supporting dense growths of grass. The central part is covered by soils containing variable

proportions of residue and colluvial soils and clays. This soil supports widespread belts of high-grass

woodland. The dambos are replaced by shallow, fertile valleys. In the extreme south, the valley and

floodplain grasslands are abundant in the dark grey colluvial soils and clays of the Kafue Flats.

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Although within the tropics, the climate is tempered by an altitude of just over 1,200m. The year is

divided into wet and dry seasons. The wet season continues from mid-November to late March, during

which time it rains almost daily.

The climate imposes no restriction on the length of the field operating season. The maximum

temperature occurs in October, the coolest in July when frosts can occur.

Annual expected rainfall is about 1,000mm. The length of the day changes little through the year being

about twelve hours.

4.3 Zambia Summary Information

The Republic of Zambia is a landlocked country surrounded by eight countries in Southern Africa and.

These are the Democratic Republic of the Congo to the north, Tanzania to the northeast, Malawi to

the east, Mozambique, Zimbabwe, Botswana and Namibia to the south, and Angola to the west. The

country lies mostly between latitudes 8° and 18°S, and longitudes 22° and 34°E.

Zambia is the 39th-largest country in the world covering an area of 752,614km2. The current

population of Zambia is 17 million based on the 2017 United Nations estimates.

The capital city of Lusaka is located in the south-central part of Zambia. The population (over 2 million)

is concentrated mainly around Lusaka in the south and the Copperbelt Province to the northwest, the

core economic hubs of the country.

The climate of Zambia in Central and Southern Africa is tropical modified by altitude. The country

consists mostly of high plateaus with some hills and mountains, dissected by river valleys. Zambia is

drained by two major river basins: the Zambezi/Kafue basin in the centre, west and south covering

about three-quarters of the country; and the Congo basin in the north covering about one-quarter of

the country. A very small area in the northeast forms part of the internal drainage basin of Lake Rukwa

in Tanzania.

The country attained macroeconomic stability for more than a decade (2000-2010) and achieved

impressive real growth averaging 7.7% per annum and lifting Zambia above the threshold of lower

Middle Income Countries.

However, following the peak of copper prices in 2011 and the recent rising fiscal deficits, the economy

has slowed down. It is believed that growth will largely be subdued by the energy crisis. The 2015

agriculture season saw a decline in maize output by 21%, leading to a slowdown in growth in the

sector. Zambia ranked 97 of 189 in the 2016 Doing Business Report moving 6 places down due to

decline in trading across borders. Zambia scored 3.60 points out of 7 on the 2016-2017 Global

Competitiveness Report published by the World Economic Forum. Competitiveness Index in Zambia

averaged 3.60 Points from 2007 until 2017, reaching an all-time high of 3.87 Points in 2016 and a

record low of 3.16 Points in 2007.

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Economic Forecast (2016-2020) by Trading Economy is summarised in Table 4.1.

Table 4.1: Zambia Economic Forecast (2016-2020)

MARKETS Actual Q2/17 Q3/17 Q4/17 Q1/18 2020

Currency 9.44 9.75 9.84 10.13 10.04 11.58

GDP

GDP Annual Growth Rate 3.6 3.8 3.8 3.8 4.4 5 percent

GDP 22.06 24.3 22.8 21.31 20.8 17.45 USD Billion

GDP Constant Prices 183381 199527 202231 204935 210179 285545 ZMW THO

GDP per capita 1607.36 1637 1634 1631 1635 1675 USD

GDP per capita PPP 3602.33 3677 3682 3686 3690 3814 USD

LABOUR

Unemployment Rate 13.3 13.98 14.02 14.07 14.23 15.34 percent

Population 15.47 62.2 62.31 62.42 74.57 267 million

TRADE

Balance of Trade -998.8 -741 -728 -734 -733 -733 ZMK Million

Exports 4818.8 4986 4986 4986 4986 4986 ZMK Million

Imports 5817.6 6048 6054 6055 6056 6056 ZMK Million

Current Account -107.2 -162 -169 -172 -168 -168 ZMK Billions

Current Account to GDP -3 -1.33 -2.38 -3.44 -3.03 -2.49 percent

Terrorism Index 0 0 0 0 0 0

Zambia is known for its copper, but it is also a great gold producer with number of active mines.

Mining in 2015 maintained the same output level as in 2014 at 710kt. In 2017, it is estimated that

Zambia’s copper production will double due to production in Kalumbila copper mine, a new project

by Glencore.


4.4.1 Regulatory

On 22 November 2015, Alecto Minerals PLC acquired 100% of the Luiri Gold Mines Ltd company which

owned the Matala and Dunrobin assets.

Both assets are incorporated within one tenement within south-central Zambia, focused on the

historic Matala and Dunrobin mines. The Dunrobin and Matala mines fall under the previously named

Mining Lease LML48 which was renamed 8074-HQ-LML in 2008. Mining Lease 8074-HQ-LML is set to

expire in 2028, and covers a total area of 32km².

4.4.2 Tenure

8074-HQ-LML extends approximately 10.9km in an east-northeast direction by 2.9km in a north-

northwest direction covering 31.39km². The centre of the lease is located at approximately 27º 14’

east, 15º 9.5’ south.

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The concession area is bounded by the coordinates shown in Table 4.2 below. WAI notes that the

concession coordinates are presented in LML48 Coordinate Listing UTM Arc 1950 Zone 35S

coordinates system. A plan of the concession area is shown in Figure 4.3 below.

Table 4.2: Concession Area Coordinates (LML48 Coordinate Listing UTM Arc 1950 Zone 35S)

No Easting Northing No Easting Northing No Easting Northing

1 520771 8325407 19 522917 8322640 37 529726 8326872

2 520771 8325222 20 522917 8322824 38 529725 8326687

3 519696 8325223 21 523991 8322823 39 528472 8326689

4 519696 8325039 22 523991 8323007 40 528472 8326505

5 519159 8325039 23 525066 8323006 41 527397 8326506

6 519158 8324302 24 525066 8323191 42 527397 8326322

7 519337 8324302 25 526140 8323189 43 526323 8326323

8 519337 8323749 26 526140 8323374 44 526323 8326138

9 519516 8323749 27 527215 8323372 45 525248 8326140

10 519516 8323196 28 527215 8323557 46 525248 8325955

11 519695 8323196 29 528289 8323556 47 524174 8325956

12 519694 8322458 30 528289 8323740 48 524173 8325772

13 519873 8322458 31 529364 8323739 49 522920 8325773

14 519873 8322274 32 529364 8323923 50 522920 8325589

15 520768 8322273 33 530080 8323922 51 521845 8325590

16 520768 8322457 34 530082 8325028 52 521845 8325406

17 521842 8322456 35 530261 8325028 53 520771 8325407

18 521843 8322641 36 530263 8326871

The corner beacons of the lease/concession boundaries were surveyed in November 2015 by the

Government Cadastre and a pegging certificate has been issued, additionally, WAI has located one of

the licence beacons as part of the recent site visit.

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Figure 4.3: Concession Area, Showing the Historic Matala and Dunrobin Mines

4.5 Project History

An ownership and exploration summary covering the period prior to Luiri’s acquisition of the project

in 2003 is provided in Table 4.3 below.

LML48 was originally granted to Luiri on 13th November 2003 for a period of 10 years. In 2008 with

the introduction of the cadastre system under the Mining Act 2008, Luiri had to reapply for LML48

and was subsequently granted LML48 until 2028 under the original provisions and conditions set out

in the annexure to the original grant on 13th November 2003.

On June 14th 2010, Luiri Gold Mines announced that they had received a letter from the Director of

Mines in Zambia alleging that the company was in default of provisions made in the granting of Mining

Licence LML48 at the Luiri Hill Gold Project. This was followed by an announcement on 28th July 2010

that the company had received a letter from the Director of Mines rejecting the response to the earlier

letter of default and informing the company that LML48 had been cancelled. Luiri Gold Mines

announced that they had lodged an appeal to the Minister of Mines.

On the 29th July 2010, Luiri Gold Mines received a letter from the Minister of Mines in Zambia in which

he has upheld the decision of the Director of Mines to cancel the mining license LML48. In accordance

with the provision of the Mines and Minerals Development Act of 2008, the company then lodged an

appeal with the High Court of Zambia on 1st October 2010.

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On 7th September Luiri Gold Mines was granted an order in the High Court of Zambia for the stay of

the decision of the Minister of Mines and Minerals Development to cancel its Large Scale Mining

Licence pending the hearing of a High Court appeal lodged by Luiri.

After negotiations, on the 15th September 2011, a consent settlement order was filed in the High Court

Principal Registry which extinguished the cancellation notice and restored the rights over LML48 which

Luiri enjoyed prior to the issuance of the cancellation notice.

Luiri obtained legal opinion that it has full security of Tenure over 8074-HQ-LML. In terms of the

consent order, Luiri undertook to commence construction of a large-scale mining operation by 29th

December 2013

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Table 4.3: Ownership and Exploration Summary

Luiri Hill Gold Project, Ownership and Exploration Summary 1912 Gold discovered in the Matala area

1927-1941 Dunrobin mine exploited. The deposit was reported to consist of a large black iron-oxide surface expression, which was mined initially by open cast methods and then by underground methods down to a depth of 75m below the surface before flooding closed the mine in 1941.

1928 Mining starts at the Matala mine, initially producing 49.48oz Au.

1929-1941 Matala mine along with several other localities pegged.

1920s-1930s Rhodesia Mineral Concession Company carries out detailed geological investigations in the area.

1944 Col. Stevens a prospector, repegged four locations of which “Mining Title 20” represented the Matala mine. The claims were abandoned in 1959 after an unsuccessful attempt to rework the old tailings.

1959-1962 Matala Gold Mining Co. commenced a 500 tonne per day operation using a stamp mill with amalgamation and cyanide recovery processes.

1969-1970 Mindeco Small Mines Unit (a department of the Zambian Mines Department) was unsuccessful in its attempt to rehabilitate the old mine workings at Matala.

1970 Mumbwa Gold Fields Ltd. re-examined the Matala mine, and reported near surface and underground reserves but no mining ensued.

1973-1976

Dunrobin mine was re-opened, with the underground workings dewatered by the Zambian Government’s Mindeco Small Mines Unit (Mindex). A fifth level was developed with the intention of examining the down-plunge extensions of the orebody. A limited amount of ore was delineated but further work was abandoned due to flooding of the workings.

1976 Mindex Department (Mindeco), conducted detailed regional geological work over the Matala Dome, concentrating on known gold occurrences and further broadening the area to the whole of the surrounding region.

1983-1984 Mindex conducted a detailed trench sampling program along the Matala “dyke”.

1985-1986 24,000t of mill sands and slimes, at Dunrobin, were treated in a CIP percolation leach plant.

1987 Mindex sampled the Matala dumps.

1988 ZCCM applied for a 40 hectare PL over Matala and commenced an underground rehabilitation and sampling program.

1988 PL 589 was granted to AGIP Miniere. The PL covered the Matala Dome area except for the ground around the Matala and Dunrobin mines. Field work carried out included geological mapping, soil and rock sampling, geophysics and diamond drilling.

1988-1990 At Dunrobin 31,000t of slimes (0.6g/t Au) and 37,000t of sands (~1.0g/t Au) were treated using a simple percolation leach plant similar to that used in the 1930s.

1989 COGEMA/ZCCM sign a joint venture agreement over the Matala mine. COGEMA’s work concentrated on the 40 hectare area around the Matala mine and included diamond drilling.

1992 COGEMA/JCI Ltd sign a JV agreement.

1997-1999

Reunion Mining Ltd re-opened the Dunrobin mine and carried out preliminary investigations at Matala. The gossanous deposit at Dunrobin was mined by open cut on an initial resource estimate of 2.3Mt at 1.3g/t Au. An initial estimate of a resource at Matala indicated 469,219t at 8.34g/t in the western zone and 832,887t at 6.08g/t in the eastern zone. The average vein width was said to be 3.4m.

1999 - 2000

Sutherland Services acquired Dunrobin and appointed Caledonian Minerals to manage. It completed a resource estimate for Dunrobin and surrounding deposits. An undocumented amount of mining is understood to have taken place from the base of Reunion’s open pit at Dunrobin with ore processed via a heap leach operation.

2000 - 2003 Mukoti acquired two PLs surrounding the Dunrobin and Matala mines. Mukoti assessed the regional geology and compiled previous exploration data.

2003 - 2005 Luiri Gold acquired the Dunrobin ML in 2003, along with Mukoti’s interest in the surrounding PLs.

On 22 November 2015, Alecto Minerals PLC acquired 100% of the Luiri Gold Mines Ltd company, and

as part of this acquisition undertook to revert with a Feasibility Study (FS), contingent on the state-

owned power company (“ZESCO”) providing adequate power supply to the mine site.

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As part of this acquisition, a letter from the Director of Mines, Zambia, notified that an extension to

the date of mine construction has been granted. This FS shall outline the new development schedule,

which will in turn define the government’s new position on development.

4.6 Geology & Mineralisation

4.6.1 Geology of Zambia

The regional geology of Zambia can be broadly divided into five principal supergroups, of which three;

the Basement, Muva and Katanga Supergroups are Proterozoic in age. The Basement Supergroup

represents the oldest succession and consists mostly of granitic gneiss, migmatites and amphibolites

which are evident throughout eastern, central and southern Zambia (Figure 4.4). Overlying the

Basement Supergroup is a sequence of metamorphosed pelites, quartzites and schists of the Muva

Supergroup, which is best represented by the Irumide and Zambezi belts of central Zambia.

Figure 4.4: Regional Geological Map of Zambia Showing the Luiri Hill Tenement Area

Straddling the Mwembeshi Shear

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The Katanga Supergroup overlies the Basement and Muva sequences within northwestern and

northern Zambia, where it forms the economically significant Lufilian Arc. The Katanga Supergroup

may be further divided into the Roan, Mwashia and Kundelungu Groups in part reflecting a change

from continental to marine to glacial sedimentation.

The Roan Group forms the basal sequence of the Katanga Supergroup and comprises a lower sequence

of conglomerate, sandstone and argillites (Roan is not present in the Luiri Hill Project area) which

progressively grade into a predominantly dolomite-argillite sequence.

The overlying Mwashia Formation consists of carbonaceous shales, argillites and minor carbonate

rocks. After a prolonged hiatus, glacial sediments of the Kundelungu were deposited and include

dolomitic limestones, shale and tillite.

These Proterozoic rocks are largely overlain in the east, south and west of the country by Phanerozoic

sedimentary and volcanic units of the Karoo and Kalahari Supergroups. The Karoo sedimentary

succession is best exposed within the Luangwa and Zambezi rift valleys of eastern Zambia and

comprises clastic sediments, coal, tillites and minor basalts of Carboniferous to Cretaceous-age. The

overlying Kalahari Supergroup is best represented by extensive aeolian sands and minor epiclastic

sediments of Quaternary to Present-age, which are evident over much of western Zambia.

The Muva and Katanga Supergroups are intruded by several granitoid bodies, the most prominent of

which is the Hook Granite within south-central Zambia (Figure 4.4 above and Figure 4.5 below).

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Figure 4.5: Map Showing Gold and Gold/Copper Occurrences

in North-Central and South-Central Zambia

Zambia is underlain by a complex network of Proterozoic orogenic belts located along the margin of

the stable Archaean-age Congo, Zimbabwe-Kaapvaal and Tanzanian Cratons. The geological evolution

of Zambia is largely the result of a protracted history of differential movement between these cratons.

At least five major deformational events are evident within the country’s geological record including

extensive folding and thrusting which has culminated in the juxtaposition of various geological terrains

along major structural discontinuities.

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One such structure is the regional-scale, east-northeast trending Mwembeshi Shear Zone of central

Zambia, which separates rocks of the Zambezi Belt to the southeast, from those of the Lufilian Arc to

the northwest.

A significant proportion of the gold and copper-gold occurrences within southern Zambia are spatially

associated with the Hook Granite and thrust faults related to the Mwembeshi Shear Zone. The Luiri

Gold Mines license area is just to the North of this shear, and is located to the east of the main body

of the Hook Granite.


The Luiri Hill Project is located in an area of south-central Zambia that is dominated by the well-known

and important Mwembeshi Shear Zone (Figure 4.5). A significant number of south-central Zambia’s

gold and gold-copper occurrences are located within or close to this regionally significant structural

zone.

Regional geological studies suggest that the Mwembeshi Shear Zone defines the boundary between

the late Proterozoic Katanga Supergroup basinal sediments to the north, and the more intensely

deformed Zambezi Metamorphic Belt terrain to the south. These rocks have been classified as the

Muva and Basement Supergroups.

Associated with the Mwembeshi Shear Zone are late granitoid intrusions and thrust faults. The Hook

Granite, the main body of which is located about 30km west of the Luiri Hill Project, is one of the

largest of these granites. Small stocks and plugs of granite, syenite and quartz diorite, which intrude

the project area, are believed to be related to the Hook Granite.

4.6.3 Project Geology

The geological setting of the Luiri Hill Project is illustrated on Figure 4.5 and Figure 4.6. The southern

part of the project area (Figure 4.6) incorporates a prominent and geologically complex area known

as the Matala Dome. The Dome is located approximately 5km eastnortheast of the main body of the

Hook Granite and it appears to be located within or is just north of the Mwembeshi Shear Zone. The

Dome is elongated in an east-northeast direction and is parallel or subparallel to the trend of the

shear. The Matala Dome is host to the most important gold occurrences so far identified within the

project area.

The Matala Dome apparently comprises two adjacent doubly plunging anticlinal structures with long

axes striking towards the east-northeast. It is cored by quartz schists and various gneissic metamorphic

rocks that have been classified as Mpande Formation of the Basement Supergroup, as well as Muva

Supergroup rocks.

The rocks of the Dome are reported to be extensively altered to greisen and now consist of a range of

schists made up of varying proportions of quartz - muscovite - biotite - feldspar - sericite. Overlying

the Basement, and appearing to act as a rim to the Dome, is a distinct “layer” comprising quartzite,

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kyanite schist and metamorphosed conglomerates. These rocks have been included as part of the

Basement on Figure 4.6. Small stocks and plutons of Hook Granite have intruded the Basement and

Muva Supergroup rocks of the Matala Dome.

Figure 4.6: Geological Map of the Matala Dome and Surrounding Area

Gold and gold/copper occurrences hosted by Katanga Supergroup dolomites and Basement rocks

respectively are identified.

Unconformably or disconformably overlying the Muva and Basement rocks of the Matala Dome are

limestones and dolomitic marbles of the Lusaka Formation (of the Katanga Supergroup) which are in

turn stratigraphically overlain by argillaceous and calcareous sandstones.

The Lusaka Formation marbles are grey, white and pink with occasional thin argillaceous horizons.

Disseminated pyrite is reported to be abundant within the contact zone between the Lusaka

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Formation and the underlying Basement. These rocks appear to underlie most or all of the project

area away from the Matala Dome (Figure 4.6).

It is evident from Figure 4.6 that the former Matala mine is located within the Basement rocks of the

Matala Dome, on or close to its axial plane trace. The old Dunrobin mine is located within the dolomite

and limestone rocks immediately overlying the Basement in the hinge of the west-southwest plunging

Matala Dome anticline. The apparent concentration of gold mineralisation along the axial zone of the

Matala Dome anticline is noteworthy.

4.6.4 Local Geology and Mineralisation

4.6.4.1 Gold Mineralisation in Zambia

Work by Coffey and PenMin has identified that the majority of Zambian gold deposits and occurrences

are lode-style bodies that appear to be associated with basement domes, large crustal-scale shear

zones and syn-orogenic granite and syenite intrusions. The Mwembeshi Shear Zone, and to a lesser

extent, the broadly contemporaneous Kapiri Mposhi–Mkushi Shear Zone, appear to be important

controlling features. The clusters of gold deposits and occurrences tend to fall within or near these

structurally disturbed zones, particularly in the vicinity of the Hook Granite (Figure 4.5).

All gold mineralisation so far discovered within the Luiri Hill Gold Project occurs within the Matala

Dome or in the rocks immediately peripheral to it. The most intensively studied mineralisation occurs

within the former Matala and Dunrobin mine areas.

4.6.4.2 Gold Mineralisation - Matala Mine Area

Work by Coffey and PenMin has identified that at the Matala mine, gold mineralisation is

characterised by strong stratigraphic disruption (deformation), shearing and the presence of quartz-

dolomite-pyrite-tourmaline-albite-sericite alteration and vein stockworks.

Apart from the presence of non-visible gold, chalcopyrite is replaced by chalcocite proximal to and

within the ore zones. The alteration directly above the ore zone in the hangingwall is characterised by

strong quartz-sericite and disseminated pyrite with minor jarosite staining (yellow).

The quartz-dolomite-pyrite-tourmaline-albite-sericite mineralised assemblage occurs in a steep,

south-dipping stockwork. The stockwork is reported to be variable in terms of intensity, fabric and

composition along strike and down dip.

WAI Comment: This mineralisation is typical of gold mineralisation, and was observed in the

DD core examined briefly during the site visit.

According to past mining and observations made by WAI during the site visit, WAI would agree that

the mineralised zone is oxidised to a depth of approximately 50m below surface and comprises

pseudomorphs of limonite and chrysocolla, cuprite, malachite and azurite. A transitional zone of

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partially oxidised iron and copper sulphides occurs below the oxidised zone, and such mineralisation

was observed in the in pit ore dumps.

4.6.4.3 Gold Mineralisation - Dunrobin Mine Area

The PenMin review of the available literature on the gold mineralisation at Dunrobin indicates that

there are two principal styles, notably ferruginous (hematite) gossans within the dolomites and

limestones with associated quartz veining, and quartz veins and quartz vein stockworks within the

quartz-mica schists of the underlying Basement.

Quartz Veining

As reported in the PenMin FS, in both styles of mineralisation, quartz veining is evident and attests to

the hydrothermal nature of the primary gold mineralisation. Quartz veining is reported by Luiri to be

associated with the Basement schist - dolomite contact, but shows particular concentration in the

basal part of the dolomite sequence.

The “vein horizon” within the dolomites is described by Coffey Mining as ranging in width from 1m to

4m in thickness, comprising a number of parallel or subparallel sheets of vein quartz. Coffey Mining

has noted that one of the well-developed veins in the dolomites at Dunrobin strikes at approximately

120° and dips 30° to the southwest.

Quartz Vein Hosted Mineralisation in the Basement

Early underground mining at Dunrobin (mostly prior to 1941) appears to have exploited gold

mineralised quartz veins and vein stockworks within the Basement. Luiri has noted old records

describing the mineralisation as occurring in a 0.5m to 0.75m thick quartz vein within a shear that was

traced over a 140m strike length. The quartz vein reportedly contained auriferous pyrite and minor

chalcopyrite, bismuthinite, sphalerite and pyrrhotite. The full extent of the Basement hosted quartz

veining remains to be established.

WAI Comment: WAI examined the location of the old shaft to the south of the open pit, and

this would have provided access to the deeper underground ore.

Dolomite Hosted Mineralisation

The gold mineralisation exploited during open pit mining by Reunion and subsequently by Caledonian

in the period 1997 to 2000 occurs within “gossanised dolomite” in association with a quartz vein

system immediately above the Basement unconformity/disconformity. The gossanised dolomite

appears to reflect the occurrences of a deeply oxidised (weathered) halo of pyrite enriched dolomite

with hematite alteration. The pyrite appears to occur within an alteration zone associated with the

quartz veins which are also pyrite enriched.

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The gossan consists primarily of hematite, limonite pyrite and quartz. The gossan zone appears to dip

in conformance with the quartz veins at a shallow angle to the southwest. The gossanous rock

sequence is estimated to be generally about 10m to 20m in thickness, but drilling has returned some

intervals in excess of 30m.

WAI Comment: WAI observed the gossanous material and the dip and dip direction of the

orebody.

Gossanous ore and its associated quartz veins was the principal type of mineralisation mined by

Reunion during the period 1997 to 1999. The latest round of drilling (undertaken by Luiri) has shown

that the primary source of the gossan is the weathering of second generation pyrite, whereas the

primary disseminated sulphidation represents the bulk of mineralisation at depth, see Photo 4.1 below

taken by Mark Kenwright during the recent WAI site visit.

Photo 4.1: Dunrobin Mineralised Core

Based on the Dunrobin findings, economic concentrations of gold were trapped at the nose of a large

west plunging fold, in the lower sequences of limestone above a meta-sandstone-siltstone sequence.

In the Dunrobin scenario, the fold nose (and hingeline) is the locus for circulating hydrothermal fluids,

a thrust fault is the pathway and the limestone cover sequence acted as both a physical and chemical

barrier to relatively acid hydrothermal solutions. The Dunrobin mineralised system is a carbonate

hosted gold deposit, and a number of other localities about the Matala Dome have similar lithology

and geometric relationships, and will provide suitable targets for Alecto’s future exploration program.

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4.7 Exploration

4.7.1 Initial Exploration

As reported in the PenMin FS, between 2002 and 2008 all exploration work was carried out under the

management of RSG Global (now merged with Coffey Mining Pty Ltd), the geological and mining

consulting firm appointed by Luiri to manage its exploration at Luiri Hill. Thereafter, Luiri managed its

own exploration programme from 2009.

Since acquiring the Luiri Hill Project in 2002, Luiri’s principal exploration focus was directed towards

the exploration drilling of the old Matala and Dunrobin mine areas. Other work undertaken, included

field mapping around the Matala Dome (2007), alteration studies of the Matala and Dunrobin core,

geochemical soil sampling programs across the Matala Dome (2006 and 2007) and the excavation (or

re-excavation) of shallow trenches across the Matala deposit, and other prospects such as Eclipse and

Matala West Extension (2007).

An RC drilling programme was undertaken during the first quarter of 2008. This drilling programme

tested prospective lithologies and soil anomalies both along strike and in similar lithological and

structural settings to those present at Matala and Dunrobin, on a number of previously identified

prospects.

The overall comments from Coffey were that the data gathered for the two projects were fit to be

used in the Mineral Resource estimation process.

WAI Comment: In WAI’s opinion, the exploration programme completed is reasonable and

logical.

4.7.2 Drilling

As reported in the PenMin works, several Diamond and RC drilling programmes have been completed

at Luiri projects, mainly Matala and Dunrobin. Data collection can be subdivided into two distinct

periods of exploration; prior to 2000 and then 2005 onwards.

The first period relates to data collected as part of JCI and Reunion’s, and Cogema’s exploration

management at Matala and Dunrobin respectively.

The second period relates to data collected under work programmes conducted by Luiri. As such,

further comments are directly attributed to each company grouping.

Coffey Mining reviewed all the available historical data pertaining to Diamond core/RC chip boards,

etc, of pre 2005 data, and utilised these data as part of their QA/QC review of the Mineral Resource

Estimate.

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According to these reviews:

• Luiri’s first drilling programme at Dunrobin was carried out in January and February

2005, with a total of 30 RC holes drilled for 2,861m;

• In February and March 2005, Luiri drilled 12 RC holes at Matala with the objective of

verifying the previously completed COGEMA drilling results and in-fill drilling areas of

the Matala deposit that were previously defined by very wide-spaced holes, with a

total of 1,322m drilled;

• Furthermore, in 2006/2007, Luiri drilled 15 RC holes at Dunrobin for 2,077m, and 18

(RC and DD) holes at Matala for 2,076m, as a follow up on the previous drilling

programme;

• A subsequent drill programme in 2007 was undertaken at both Matala and Dunrobin.

This consisted of 16 DD holes at Dunrobin for a total of 3,495m and 30 DD holes at

Matala for a total of 8,683m;

• A further subsequent drill programme in 2010 was undertaken at Dunrobin. This

consisted of 4 diamond drillholes at Dunrobin for a total of 296m; and

• In 2012, RC drilling programmes were undertaken at Matala West (950m), Eclipse

(620m), Shadreck (672m), Chosa (1,708,) and Dunrobin (3,298m).

4.7.3 WAI Observations

As part of the WAI site visit by Mark Kenwright, undertaken from the 9th January 2017, WAI was able

to briefly examine the following DD Holes and RC chips at the coreshed located at the offices on the

Dunrobin site. At Matala, MTL103A, MTLRC53D and MTLDDH57, at Dunrobin, DUNDD121 and

DUNDD119, and RC chips Dunrobin, DUNDRC128 and DUNDDH103.

The consensus from the inspection was that the core had been collected properly and that high grade

intersections (from assay) did appear to correlate with the core in the boxes. Moreover, the aluminium

boxes were stored properly (Photo 4.2) had distance markers and were annotated.

After comparing the logging, assay sheets, storage, and marking of the core and plastic markers,

overall WAI is satisfied that the logging practices are to an international standard, and the logging is

of sufficient quality to be used in a Mineral Resource Estimate.

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Photo 4.2: Coreshed

In addition, RC chip storage was also examined (Photo 4.3) which was also in good condition.

Photo 4.3: RC Chip Storage and RC Chip Trays

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4.8.1 Matala


The Matala deposit is situated within the Luiri Hill Gold Project area, along with the adjacent Dunrobin

deposit. Gold mineralisation at Matala is shear hosted and characterised by a quartz-dolomite-pyrite-

tourmaline-albite-sericite alteration assemblage. The mineralisation strikes east-west for

approximately 1,300m, and dips approximately 70° to the south.

Coffey Mining Pty Ltd (Coffey Mining) has produced a Mineral Resource Estimate in accordance with

the JORC Code (2012) for the Matala deposit, dated 23 December 2011. As WAI understands, Maxwell

GeoServices validated the drill hole database prior to Coffey commencing their Mineral Resource

Estimation. For the purpose of this review, WAI has been provided with the Coffey Mining estimation

report “Dunrobin and Matala Gold Deposits Resource Estimation” (Coffey Mining, 2012).

In addition to the Mineral Resource report, WAI has also been provided with the block model

“mdmatdeplfac_client.dm”, as well as the corresponding wireframes and drill hole database.

The following sections summarise the WAI review of the Matala Mineral Resource Estimate.

4.8.1.2 Database Compilation

Coffey Mining carried out the Mineral Resource Estimation using the exploration drill hole database

that had been compiled by Maxwells GeoServices. The database was reviewed and validated by

Maxwell Geoservices prior to commencing the resource estimation study. The sample database

comprises trenching, and drilling results from diamond core and Reverse Circulation (RC) drilling

methods. Coffey Mining has stated (Coffey Mining, 2012) that the diamond drilling procedures are

equivalent to the best international industry standards. Coffey Mining has also stated that the RC drill

procedures are in line with industry standard practice, with the exception of using drilling fluid to

return cuttings to surface rather than compressed air.

WAI has reviewed the sample database and compared the sample populations for the diamond and

RC drilling, as well as the trenching results. The drill hole sample populations show comparable

distributions. The trenching assay results show higher grade results compared to the drill hole

samples, possibly indicating either a sampling bias or possible enrichment in the upper surface layer.

No details quantifying the deviation between drilling and trenching sample population is provided by

Coffey Mining in the “Dunrobin and Matala Gold Deposits Resource Estimation” report. The sample

database comprises results for only four trenches so the influence of the trenching samples on the

Mineral Resource Estimate is low.

According to Section 14.2.1 of the “Dunrobin and Matala Gold Deposits Resource Estimation” report,

‘Samples were composited to 2m downhole lengths with residual intervals less than 1m length being

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deleted from the composite file’. WAI has not been able to ascertain the rationale behind omitting the

smaller sample intervals, or whether the samples were composited to 2m lengths before the

geological interpretation. Standard industry practice is to carry out the geological interpretation on

the raw unadjusted sample data, with samples falling within the wireframes selected and

subsequently composited. Compositing samples prior to the interpretation poses a risk of grade

smearing resulting in over or under reporting the true mineralised thickness. In addition, samples

should not be omitted due to their sample length, but only in those instances where there is a lack of

confidence in the quality of the sample data.

4.8.1.3 Geological Interpretation

Mineralisation was modelled by Coffey Mining based on a 0.3g/t Au cut-off grade, resulting in a main

ore body striking east-west and dipping to the south at approximately 70°, and which has been classed

by Coffey Mining as Zone 100. A second small lens of mineralisation at the eastern end of the deposit

has also been modelled and classed as Zone 200. Coffey Mining has used a minimum mineralised

intercept width of 3m.

All sample data (Diamond/RC/Trenching) was used for the purpose of defining the mineralised

envelopes, however, the trenching data was excluded from the subsequent grade estimations due to

concerns surrounding its quality.

A plan view of the Coffey Mining geological interpretation is provided in Figure 4.7: below.

Figure 4.7: Plan View of Mineralised Domains (Coffey Mining, 2012)

Oxidation at Matala has been recorded to depths of 50m below surface, with a transitional zone

situated beneath the oxide. Both the oxide and the transitional material has been defined by Coffey

Mining.

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WAI Comment: WAI has reviewed the Matala geological interpretation and is of the opinion

that the resultant wireframes are robust and suitable for use in a Mineral Resource Estimate.

4.8.1.4 Statistical Analysis

Coffey mining selected samples within the mineralised wireframes and assigned the samples the

corresponding domain code (Zone 100 and Zone 200). The Coffey Mining report states that the

sample lengths were reviewed statistically to ascertain a suitable composite length. The statistical

review identified that 16% of the samples had a length of <1m, 62% of the samples had 1m sample

lengths, 4% between 1m and 2m, 2% of the samples had 2m intervals, with the remainder sampled at

intervals >2m. Based on the statistical sample length review, Coffey Mining opted to composite the

sample data to 2m lengths.

The Coffey Mining report mentions compositing at two stages of the report, once prior to the

geological interpretation and a second time after the samples were selected within the wireframe

envelopes. WAI is therefore unclear as to exactly at what stage the samples were composited and any

impact this may have on interpretation of mineralised intercept widths. The choice of a 2m sample

length also appears unusual given that the bulk of the sample data (62%) is of a 1m sample length.

Whilst WAI would recommend a 1m sample length for future estimation works, it is of the opinion

that the use of a 2m composite would have little impact on the overall Mineral Resource Estimate.

The 2m composite samples were reviewed by WAI statistically for each of the two domains (Zone 100

and Zone 200), the results of which are shown in Table 4.4.

Table 4.4: Domain Composite Statistics (Au g/t)

Domain Number of

Composites Min Max Mean Median

Std Dev

Variance CV

Zone 100 Zone 200

1,429 11

0 0.01

66 2.81

1.96 0.79

0.7 0.4

4.46 0.83

19.86 0.69

2.27 1.06

All Domains 1,440 0 66 1.95 0.7 4.44 19.72 2.27

The sample data displays a single log normal distribution for both domains. WAI note that no statistical

review of the sample data was carried out based on oxidation state. Areas of oxidation can sometimes

yield different grade characteristics compared to sulphide mineralisation, and may warrant domaining

separately for grade estimates. Although the single log normal distribution indicates the lack of any

discernible changes in grade characteristics between oxidation horizons, WAI recommends that future

works carry out a more detailed statistical evaluation.

An evaluation to assess the need for top cutting of high grade samples was conducted by Coffey

Mining. Based on this work, Coffey Mining applied a 30g/t Au top-cut to the sample data. WAI has

reviewed the top-cut applied by Coffey Mining and is of the opinion that the top-cut level is

appropriate. It was noted by Coffey Mining that the top-cut sample data was used for the variography

only, sample data without top-cuts applied, was used in the actual Multiple Indicator Kriging (MIK)

estimation.

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For the MIK estimation approach, the data set was coded with indicator values according to a series

of grade ranges, in total 12 grade indicators were used by Coffey Mining.

WAI Comment: WAI is unsure as to the decision to use an MIK estimation methodology on a

deposit that essentially comprises one ore body which displays a log normal grade distribution.

MIK is often the preferred method for estimating deposits with grade populations that are

strongly skewed, enabling a more representative estimation of grades without requiring

excessive top-cutting. Given the geological and grade characteristics at Matala, WAI is of the

opinion that Ordinary Kriging (OK) would be perfectly suitable as the principal estimation

method.

4.8.1.5 Variography

WAI has not carried out its own variographic assessment, but has relied on the variogram outputs

reported by Coffey Mining.

Coffey Mining carried out the variography using the geostatistical software, Isatis. Variography was

conducted on gold grades as well as the MIK indicators.

It was reported by Coffey Mining that variography was carried out on six of the indicator thresholds.

Variograms were carried out along the principal ore body orientations, along strike (085°), down dip

(175°/70°) and across strike (355°/30°), with results plotted as experimental correlogram’s. The

variogram results show a slightly high nugget, indicative of a high small scale grade variability. Coffey

Mining defined gold grade variogram ranges in Zone 100 as 90m, 60m and 6m for the major, semi-

major, and minor axis respectively.

Correlograms for the MIK indicators were reported by Coffey Mining to display nugget effects in the

range of 25% to 70%.

WAI Comment: Overall WAI considers the variography performed by Coffey Mining to be

suitable.

4.8.1.6 Block Modelling

For Matala, an un-rotated model with 25m x 5m x 10m (X/Y/Z) parent cells has been used by Coffey

Mining. The block model was coded according to the mineralised domain (Zone 100 and Zone 200) as

well as oxidation state and lithology. Table 4.5 summarises the block model parameters used.

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Table 4.5: Block Model Parameters

East North Elevation

Origin Extent (m) Parent Block Size (m) Minimum Sub-Block Size (m) Number of Blocks (Parent)

527,000 2,000

25 5

80

832,4500 700

5 1

140

500 700 10 1

70

4.8.1.7 Density

Density measurements have been carried out initially using RC chips before switching to drill core

using the Archimedes water immersion method. The density measurements were correlated with

lithology and oxidation state. Coffey Mining has defined three density groupings based on depth,

which correlates with the depth of oxide, transition and fresh material.

The average bulk density for each depth subdivision is summarised in Table 4.6. These density values

were applied to the block model.

Table 4.6: Dry Bulk Density

Depth Below Surface DBD t/m³

0 – 45m 45m – 75m

>75m

2.11 2.53 2.65

WAI Comment: WAI considers the application of density measurements to the Mineral

Resource block model to be suitable.

4.8.1.8 Grade Estimation

Grade estimation for the Matala deposit has been carried out using Multiple Indicator Kriging (“MIK”)

as the principal estimation method. Coffey Mining also carried out Ordinary Kriging (“OK”), Inverse

Distance Squared (“IDW2”) and Nearest Neighbour (“NN”) estimates for comparison purposes.

WAI Comment: given the log normal grade characteristics of the deposit WAI questions the

requirement to use MIK as the main estimation method. The MIK introduces a greater degree

of complexity to the estimation method and a greater potential for an error to be introduced

during the estimation process. The resultant block model will also require adjustment to an

average block grade in order for the model to be used for mine planning, any error in the

calculation of the average block grades may impact on subsequent mine planning results.

4.8.1.9 Validation

Following the grade estimation, Coffey Mining carried out a series of validation checks on the grade

estimates including a visual comparison of samples and the block model in cross section, plan and long

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section, and a statistical grade check of the E-type block grade and the sample composite grade. Grade

profile plots were also carried out to check the veracity of the grade estimation.

Overall Coffey Mining concluded that the estimates correlate with the composite data.

WAI has also carried out a number of validation checks.

WAI Comment: WAI is of the opinion that whilst the choice of MIK as the principal estimation

method may not be wholly warranted for the Matala deposit, adding a lot more complexity to

the estimation than may be warranted, the overall grade estimates appear reasonable.

4.8.1.10 Depletion

Mining via underground methods has been carried out at Matala, and is disclosed in the Coffey Mining

report (2012) as being in the order of 25,000 tonnes for production of approximately 8,254ozs Au

(inferring a head grade of approximately 10g/t Au). Due to a lack of a detailed underground mine

surveys, Coffey Mining has used a digitised long section of the underground workings to code and

deplete the Matala block model in the Zone 100 domain.

WAI Comment: WAI is of the opinion that the depletion method used is appropriate given the

lack of detailed underground surveys.

4.8.1.11 Resource Classification

Coffey Mining has stated that the Mineral Resources at Matala have been reported in accordance with

NI43-101 guidelines. The Mineral Resources have been classified based on the sample spacing relative

to the search radii of the grade estimation. The following classification criteria has been applied by

Coffey Mining:

• Indicated, blocks estimated in the first search radii (<60m), with the nearest samples

located at <25m from the block centroid, and a minimum of 12 samples used from at

least 3 drill holes; and

• Inferred, blocks estimated in the second search radii (120m) and above the 850mRL.

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The resultant classifications are shown in Figure 4.8.

Figure 4.8: Matala Resource Model above 850mRL (Coffey Mining, 2012)

Red=Indicated, Green=Inferred, Blue=Unclassified

4.8.1.12 Reasonable Prospects for Eventual Economic Extraction

Under the CRIRSCO group of reporting codes, there is a requirement for a Mineral Resource to

demonstrate a reasonable prospect for eventual economic extraction for it to be reported. If a deposit

is to be considered for open pit mining methods, then standard industry practice is to carry out a pit

optimisation using realistic, albeit uplifted, pricing, to demonstrate which portion of the Mineral

Resource has prospects for extraction.

If an underground Mineral Resource is to be reported, then a minimum mining width with appropriate

dilution needs to be applied to the model, and the reported Mineral Resource should be at a cut-off

grade in line with typical underground mining economic cut-off grades.

WAI Comment: WAI is aware that Coffey undertook a Feasibility Study published 5 November

2013 which reported reasonable prospects for eventual economic extraction and upgraded

part of the Mineral Resource to a Probable Reserve.

The Mineral Resources have been reported at a range of cut-off grades, with the preferred cut-off

grade defined by Coffey Mining set at 1.0g/t Au. WAI considers the cut-off grade of 1.0g/t Au to be

low for an underground mining operation, and without mining dilution applied likely includes material

that would not be considered economic for an underground operation. From an open pit perspective,

the cut-off grade of 1.0g/t Au maybe considered too high, and a lower cut-off maybe more applicable.

Any future Mineral Resource updates will require an adequate assessment of the potential for

economic extraction, this may result in a reduction in the quantity of reported Mineral Resources.

4.8.1.13 Coffey Mining Mineral Resource Statement

The following Mineral Resource statement has been disclosed by Coffey Mining for the Matala

deposit. The statement is reported as of 20 January 2012, and has been constrained by the surface

topography and at depth by the 750mRL. A summary of the Coffey Mining Matala Mineral Resource

Estimate is provided in Table 4.7.

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Table 4.7: Matala Gold Deposit Mineral Resource Summary (after Coffey Mining, 2012)

Classification Lower Cut-Off Grade (g/t Au)

Tonnes (‘000) Average Grade

(g/t Au) Gold Metal (‘000 ozs)

Indicated

0.4 4,150 2.2 300

0.5 4,015 2.3 298

0.7 3,727 2.4 292

1.0 3,204 2.7 278

1.5 2,334 3.2 243

Inferred

0.4 7,649 1.5 360

0.5 7,200 1.5 354

0.7 6,106 1.7 333

1.0 4,525 2.0 290

1.5 2,600 2.6 213 Note: Mineral Resources reported above 750mRL

4.8.2 Dunrobin


The Dunrobin gold deposit is situated adjacent (±8km) to the Matala deposit. Dunrobin comprises

two styles of gold mineralisation, a ferruginous gossan within the dolomites and limestone with quartz

veining, and a second style of quartz veins and stockworks hosted within quartz-mica schists.

Coffey Mining Pty Ltd (Coffey Mining) has produced a Mineral Resource Estimate for the Dunrobin

deposit, dated October 2012. For the purpose of this review WAI has been provided with the Coffey

Mining estimation report “Dunrobin Resource Estimation” (Coffey Mining, 2012).

A previous Mineral Resource Estimate for Dunrobin was carried out in December 2011 by Coffey

Mining. The October 2012 update builds upon the previous estimate to include infill drilling conducted

in 2012.

4.8.2.2 Database Compilation

As with the Matala deposit the Dunrobin Mineral Resource estimate is based on the available

exploration drill hole database which was compiled by Maxwells GeoServices. In addition to the

sample data used in the December 2011 Mineral Resource estimate, infill drilling conducted in 2012

was also used for the Mineral Resource update. Coffey Mining note in the “Dunrobin Resource

Estimation” report (Coffey Mining, 2012), that percussion drill holes DUNPD1-DUUNPD44 were

excluded from the estimation due to concerns regarding sample smearing and contamination.

Sample data was selected by Coffey Mining below the existing open pit, any sample data above the

open pit appears to have been excluded from the estimation process. WAI would typically advise that

the depletion of a model for mining activities be conducted after the Mineral Resource Estimate. By

constraining the modelling with the open pit at such an early stage reduces the quantity of sample

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data available to define the grade continuity, can impede the geological interpretation, and prevents

estimates being carried out in mined out areas for reconciliation purposes.

The database has been reviewed and validated by Coffey Mining prior to commencing the Mineral

Resource Estimation study. A number of absent assay records were present in the sample database,

where samples have been considered as waste and not sampled, or where the sample intercept was

poor, such as where voids were encountered. If absent values were due to the presence of a void,

then the assay interval was left as absent. Where absent assays are where material is considered

waste, a zero gold grade was assigned.

4.8.2.3 Geological Interpretation

Geological and mineralised wireframes were constructed by Coffey Mining using Vulcan software.

Three geological units were defined by Coffey Mining based on the regolith logging. The units

modelled comprise a surface overburden REGOL=20, a gossan modelled based on the lithology logs in

the sample database using the REGOL=25 code, and material below the gossan classed as REGOL=999.

Coffey Mining note that the regolith logging is questionable, and therefore the regolith interpretation

is rudimentary.

The mineralisation interpretation has been produced based on a 0.3g/t Au cut-off grade and a

minimum thickness of 3-4m. Figure 4.9 below shows an oblique view of the Coffey Mining

interpretation of the Dunrobin mineralisation. The mineralisation wireframes are overlain by the

regolith horizons providing coding for the sample and block model data, based on mineralisation and

regolith, as shown in Figure 4.10.

As can be noted in Figure 4.10, Coffey Mining has allocated three domains to represent the vertical

oxidation profile at Dunrobin (DOMAIN 1, 2 and 3). The domains have been defined based on a fixed

elevation due to a lack of detail in the sample database on which to more robustly define these

horizons.

Overall WAI considers the geological interpretation of the Dunrobin deposit to be reasonable based

on the information available. However, in line with Coffey Mining’s own recommendations, WAI

would advise that further works be conducted to better define the oxidation domains.

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Figure 4.9: Dunrobin Mineralisation Interpretation

(Coffey Mining, 2012)

Figure 4.10: Dunrobin Cross Section Outlining Zonal and Domain Coding


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4.8.2.4 Statistical Analysis

Samples falling within the mineralised wireframes were selected and coded according to the

mineralisation zone code (ZONECODE), the regolith domain (REGOL), and the oxidation domain

(DOMAIN).

The selected sample data was composited to 2m sample lengths to provide samples with an equal

level of support. As with the Matala project, the choice of a 2m sample length appears unusual given

that the bulk of the sample data is of a 1m sample length. Whilst WAI would recommend a 1m sample

length for future estimation works, WAI is of the opinion that the use of a 2m composite would have

little impact on the overall Mineral Resource Estimate.

The selected and composited sample data was reviewed based on the mineralised zone field which

defines the ore and waste. Coffey Mining outline that the results show a positively skewed grade

distribution for the mineralisation, with a mean declustered grade of 1.32g/t Au, and a coefficient of

variation of 2.47. In reviewing the statistical results, WAI considers the population to be log normal.

With two types of gold mineralisation encountered at Dunrobin, gossan and quartz veins/stockwork,

WAI would expect a statistical analysis to have been carried out on these domains to ascertain if there

are different grade populations encountered, and a requirement to estimate each zone separately.

WAI would recommend that such a study be conducted as part of any future Mineral Resource

updates.

An evaluation to assess the need for top cutting of high grade samples was conducted by Coffey Mining

which concluded that the mineralised sample data should be top-cut at 30g/t Au. WAI considers the

top-cut level chosen by Coffey Mining to be reasonable. It was noted by Coffey Mining that the top-

cut sample data was used for the variography only, sample data without top-cuts applied was used in

the actual Multiple Indicator Kriging (“MIK”) estimation.

As with the Matala Mineral Resource Estimate, the Dunrobin estimation used MIK as the principal

estimation method.

WAI Comment: Given the log normal grade distribution at Dunrobin, and the style of the

mineralisation, WAI is unsure whether the use of MIK has a material benefit compared to

Ordinary Kriging (OK), and whether the use of MIK adds a level of complexity that is not

warranted.

4.8.2.5 Variography

WAI has not carried out its own variographic assessment, but have relied on the variogram outputs

reported by Coffey Mining.

Coffey Mining carried out the variography using the geostatistical software, Isatis. Variography was

conducted on both gold grades as well as for 6 of the MIK indicators. Variograms (correlograms) were

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constructed for the principal along strike (125°), down dip (215°/-27°) and across strike directions. The

grade variogram results show a nugget of approximately 45%. The major axis is reported to be down

dip and attained variogram ranges of 80-120m, the semi-major along strike variograms showed ranges

of 75-90m, whilst the across strike variograms had ranges in the order of 5-27m.

WAI Comment: Overall WAI considers the variography performed by Coffey Mining to be

suitable.

4.8.2.6 Block Modelling

For Dunrobin, an un-rotated model with 20m x 20m x 5m (X/Y/Z) parent cells has been used by Coffey

Mining. The block model was coded according to the mineralisation, regolith and oxidation domains.

Table 4.8 summarises the block model parameters used.

Table 4.8: Block Model Construction Parameters (UTM Grid Coordinates)

Origin

(m) Extent

(m) Parent/Sub Block

Size

Dunrobin Gold Deposit

Easting Northing

RL

519,700 8,322,800

850

1,200 1,300 400

20/0.5 20/0.5

5/0.0006

4.8.2.7 Density

Coffey Mining has applied bulk densities to the Mineral Resource block model based on 485 density

measurements according to mineralised and non-mineralised material, by the regolith logging and

oxidation state. A summary of the density measurements applied by Coffey Mining is shown in Table

4.9.

Table 4.9: Dunrobin Block Model Bulk Densities (after Coffey Mining, 2012)

Domain

ZONECODE=120 REGOL=999 (non

gossan mineralized

material)

ZONECODE=999 REGOL=25 (non

mineralized gossan)

ZONECODE=120 REGOL=25

(mineralized gossan)

ZONECODE=999 REGOL=999 (background

waste)

ZONECODE=999 REGOL=20

(Overburden)

3 (>1130mRL) 2.74 2.70 2.20 2.70 1.70

2 (>1040mRL <1130mRL)

2.825 2.76 2.71 2.70 n/a

1 (<1040mRL) 2.85 2.76 2.89 2.70 n/a

Density testwork has been carried out in several phases and has included testing of large chip samples

as well as drill core. Within the Coffey Mining “Dunrobin Resource Estimation” (Coffey Mining, 2012)

report, it is highlighted that density determinations of the gossan have been problematic with high

degrees of variation between results. Other density issues highlighted includes the influence of

massive sulphide, to account for this Coffey Mining capped the density measurements at 4t/m3. No

density measurements using drill core has been carried out above the 1,130mRL which includes the

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over burden material, Coffey Mining therefore applied nominal density values to the >1,130mRL

domain. Within the mineralised material the density values have also been adjusted with a void factor

of 0.94 to account for any karst voids.

Having robust density measurements is key for reporting tonnage values for Mineral Resources, given

the problems outlined above with density measurements, this presents a moderate risk to the Mineral

Resources reported.

4.8.2.8 Grade Estimation

Grade estimation for the Dunrobin deposit has been carried out using Multiple Indicator Kriging

(“MIK”) as the principal estimation method as well as Ordinary Kriging (“OK”) for comparison

purposes, and to ensure the resultant E-Type grade was derived correctly.

The grade estimation was carried out for the mineralisation only (ZONECODE 120) using a two pass

estimation. The initial search radii comprised 60m x 60m x 10m (down dip, along strike, across strike).

WAI Comment: Overall WAI considers the search parameters and estimation method to be

suitable. However, WAI would question the need for applying MIK to the Dunrobin deposit,

and whether the use of such a method adds a level of complexity to the estimation process

that is not required.

4.8.2.9 Validation

Following the grade estimation, Coffey Mining carried out a series of validation checks on the grade

estimates including a visual comparison of samples and the block model in cross section, plan and long

section, and a statistical grade check of the E-type block grade and the sample composite grade.

WAI Comment: WAI is of the opinion that the Dunrobin estimates appear to validate well

against the composite data on which the estimates are based.

4.8.2.10 Depletion

The Mineral Resource block model was depleted by Coffey Mining for the existing open pit based on

an up to date mine survey in the UTM co-ordinate system. In addition, underground mining activities

have been carried out historically at Dunrobin, with Coffey Mining depleting the model using shaft

and drive development wireframes supplied by the then owners of the project, Luiri Gold.

Coffey Mining note in the “Dunrobin Resource Estimate” report that historical stoping has not been

surveyed and accounted into the wireframes for depletion. To try to account for the stoping, Coffey

Mining has applied a 0.94 void factor to the mineralised model above the 1,040mRL. The lack of

detailed depletion wireframes for the stopes presents a material impact to the project. Whilst the

void factor applied to the model by Coffey Mining tries to account for the loss of tonnage it does not

account for the impact on contained metal and grade. Mining activities often focus on the higher

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grade areas of a deposit and the stopes may have a greater influence on the grade than the overall

tonnage. The lack of detailed surveys will also impact on the veracity of any mine planning.

4.8.2.11 Resource Classification

Coffey Mining has stated that the Mineral Resources at Dunrobin have been reported in accordance

with the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves,

published by the Joint Ore Reserves Committee (JORC) 2004. The Mineral Resources have been

classified based on the sample spacing relative to the search radii of the grade estimation. Measured,

Indicated and Inferred classifications have been applied to the deposit by Coffey Mining based on:

• Geostatistical distance to the nearest sample used in the estimate;

• Search pass used (first or second) for the estimate;

• Number of samples used in the estimate;

• Confidence in the interpretation of the individual zones; and

• Assumptions regarding mining methods for reporting purposes (i.e reported cut-off

grade of 1g/t Au).

No specific details have been reported by Coffey Mining regarding the exact application of

classifications to the Dunrobin model. Measured Mineral Resources have been reported where the

denser RC infill drilling from 2012 was carried out. Looking at the estimation, WAI believes that

Indicated Mineral Resources have been reported for areas covered under the first estimation run in a

60m search ellipse, and with the distance to the nearest sample 25m. Inferred Mineral Resources

appear to correlate with the second pass of estimates with a search radius of 180m along strike and

down dip.

The resultant classifications are shown in Figure 4.11 below.

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Figure 4.11: Oblique View of Dunrobin Mineral Resource Classification


4.8.2.12 Reasonable Prospects for Eventual Economic Extraction

Under the CRIRSCO group of reporting codes (including the JORC Code, 2012) there is a requirement

for a Mineral Resource to demonstrate a reasonable prospect for eventual economic extraction for it

to be reported. If a deposit is to be considered for open pit mining methods, then standard industry

practice is to carry out a pit optimisation using realistic, albeit uplifted, pricing, to demonstrate which

portion of the Mineral Resource has prospects for extraction. If an underground Mineral Resource is

to be reported, then a minimum mining width with appropriate dilution needs to be applied to the

model, and the reported Mineral Resource should be at a cut-off grade in line with typical

underground mining economic cut-off grades.

The Dunrobin Mineral Resources reported by Coffey Mining have not been adjusted for reasonable

prospects of eventual economic extraction. Mineral Resources have been reported at a range of cut-

off grades, with the preferred cut-off grade defined by Coffey Mining set at 1.0g/t Au. WAI considers

the cut-off grade of 1.0g/t Au to be low for an underground mining operation, and without mining

dilution applied, likely includes material that would not be considered economic for an underground

operation. From an open pit perspective, the cut-off grade of 1.0g/t Au maybe considered too high,

and a lower cut-off maybe more applicable.

Any future Mineral Resource updates will require an adequate assessment of the potential for

economic extraction, this may result in a reduction in the quantity of reported Mineral Resources.

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4.8.2.13 Coffey Mining Mineral Resource Statement

The following Mineral Resource statement has been disclosed by Coffey Mining for the Dunrobin

deposit, and has been reported according to the guidelines of the JORC Code (2012). The statement is

reported as of October 2012, and has been constrained by the surface topography and open pit. Bulk

density values were adjusted using a void factor of 0.94 for the model above the 1,040mRL to

represent the stope depletion and karst voids, in the absence of detailed stope surveys.

A summary of the Coffey Mining Dunrobin Mineral Resource Estimate is provided in Table 4.10.

Table 4.10: Dunrobin Mineral Resource Statement (Coffey Mining, 2012) Lower Cut-Off Grade

(g/t Au)

Measured Indicated Inferred Total

(Measured+Indicated+Inferred)

Tonnes (kt)

Au (g/t)

Metal (koz)

Tonnes (kt)

Au (g/t)

Metal (koz)

Tonnes (kt)

Au (g/t)

Metal (koz)

Tonnes (kt)

Au (g/t)

Metal (koz)

Zonecode=120 (Main Mineralised Zone)

0.6 1,465 2.0 94 1,606 1.6 83 1,543 1.3 63 4,614 1.6 240

0.8 1,196 2.3 88 1,306 1.8 76 1,091 1.5 53 3,592 1.9 216

1.0 978 2.6 81 1,063 2.0 69 763 1.8 43 2,804 2.1 193

1.2 830 2.9 76 843 2.2 61 547 2.0 35 2,220 2.4 172

1.4 717 3.1 71 670 2.5 54 403 2.2 29 1,790 2.7 154

Note:

• Reported as of October 2012;

• MIK derived SMU model using a 10m x 5m x 5m SMU;

• Coffey Mining preferred cut-off of 1.0g/t Au;

• Depleted to some approximated underground workings nominally dated January 2012; and

• 0.94 void factor applied to the block model above the 1040mRL.

• In accordance with the guidelines of the JORC Code (2012)

4.9 Mining

4.9.1 Mine Design

Open pit optimisations for Matala and Dunrobin were undertaken by PenMin based on the following

parameters (Table 4.11:), using Gemcom Whittle software.

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Table 4.11: Summary Optimisation Parameters (after PenMin, 2016)

FINANCIAL OPERATIONAL

Gold Forward Price US$1,200 Surface Stockpiles Tonnages 100,000

ZAR: USD 15.00 Surface Stockpiles Grade 2.83

KWACHA: USD 10,980 Plant Recovery 85%

BRITISH POUND: USD 1.49 Gold Shipping Costs (USD/Oz) 2.09

RMB: USD 6.49 Plant Operating Tonnage 400,000

Tax Rate 30% SG of Ore and Waste(Oxide) 2.11

Royalty 6% SG of Ore and Waste(Transition) 2.53

Starting TAX Credit 18,476,000 SG of Ore and Waste(Sulphide) 2.65

Senior Debt Interest Rate 7% Mining Utilization 85%

Debt Term 3 Overland Haul Cost/ton 1.20

Post Tax NPV Discount Rate 8% Tailings Handling 20,697.60

Finance Guarantee Costs (Vendor Financing)

2% Zesco Price / kW/h 0.14

Opening Cash Balance - Zesco Supply Discount / Ton processed

5.95

Plant Annual Depreciation Rate 10% Drill and Blast Cost / Ton 1.00

DSCR 1.50 Diesel Price 0.77

Contribution to Environment & Social Rehabilitation (% of Net Revenue)

1%

Detailed pit designs have been developed for both the Matala and Dunrobin pits based on a

US$1,200/t gold forecast.

The development plan for Matala involves a single phase pushback to pit depth. A central access ramp

will be mined concurrently through each bench as the mine deepens. Design parameters are shown

in Table 4.12: below, targeting a 55o inter ramp angle.

Table 4.12: Matala Pit Design Parameters (after PenMin, 2016)

Area Parameter

Pit Wall Parameters Batter Face Angle 70º 75º

Safety Berm Width 5.7m 4.3m

Berm Spacing 10m

Dual Lane Width NA

Haul Road Design Single Lane Width 5.7m

Gradient 0.1

Minimum Radius of Turning Circle 10m

Minimum Cutback Width 10m

Dunrobin has previously been mined as a small open pit, and so pit design parameters have been

based on prior experience at the deposit and geotechnical recommendations made by African Mining

Consultants (AMC). Design parameters are shown in Table 4.13 below, targeting a 35o to 50o inter

ramp angle depending on the lithology.

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Table 4.13: Dunrobin Pit Design Parameters (after PenMin, 2016)

Area Parameter Saprolite Fresh

Pit Wall Parameters Batter Face Angle 70º 75º

Berm Width 10.6m 4.3m

Berm Spacing 10m

Dual Lane Width NA

Haul Road Design Single Lane Width 8m

Gradient 0.1

Minimum Radius of Turning Circle 10m

Minimum Cutback Width 30m

WAI Comment: WAI considered the gold price reasonable, but notes that current (February

2016) exchange rates are 13 ZAR: 1 USD, 9.75 Kwacha: 1 USD (was 9,750 before

redenomination in 2013), 0.80 GBP: 1 USD, 6.85 RMB: 1 USD. WAI would recommend an

updated financial analysis to take these variations into account.

The pit slope angles provided by PenMin appear reasonable, although WAI has not seen any

background geotechnical analysis to add confidence. As Dunrobin has been previously mined,

it can be assumed that further extraction will take cognisance of pit stability assessments

during previous operations.

4.9.2 Mining Method and Equipment

4.9.2.1 General

The mining operations and maintenance will be undertaken on a contractor basis. The designed pits

will be mined through conventional truck and excavator mining methods.

For both the Matala and Dunrobin open pits, the ROM mineralised material will be loaded in pit with

an excavator equipped with a 5.2m³ bucket and transported by 41t articulated dump trucks (ADTs) to

the plant/ROM pad estimated to be 1,000m from the pit ramp. For the Matala open pit, the

overburden material is planned to be loaded utilising two 5.2m³ bucket excavators and transported

by up to six 41t ADTs to the overburden stockpile area located approximately 500m away. For the

Dunrobin open pit a single excavator is likely to suffice in association with three ADTs.

For both open pits, a 5m bench height is planned for the mineralised and overburden material. PenMin

consider these bench heights appropriate for the selected loading equipment.

4.9.2.2 Drill and Blast

Designs for both the Matala and Dunrobin open pits have been based on the following drill and blast

assumptions, as noted by PenMin. The benches are planned 5m high and mining blocks are 50m by

20m. Drilling is based on top-hammer percussion drill rigs utilising emulsion explosives with a drill hole

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size of 89mm for mineralised material and 115mm for waste. A powder factor of 0.5kg/m3 is used for

both mineralised material and waste material with a hole-loading factor of 67%.

A blast pattern based on a 3.1m burden with 3.1m spacing has been assumed for the blast design for

the mineralised material and a 3.7m burden by 3.7m spacing has been used for the waste material.

The blast holes are planned to be 5.6m deep inclusive of a 0.6m sub-drill for mineralised material and

5.7m deep inclusive of a 0.7m sub-drill for waste. It is assumed that 100% of the rock will be blasted.

Emulsion will be used in all holes and explosive supply costs are based on an inclusive rate with drilling

per BCM up to US$2.14 USD/BCM.

Based on the drill penetration rate and time allowed for tramming, levelling and collaring, a single drill

will be required for mining operations and will be shared between mineralised material and waste

material. A drill penetration rate of 14.6m/hr has been assumed for the mineralised material and a

drill penetration rate of 16.8m/hr for overburden material.

Drill and Blast activities will be undertaken by contractors.

WAI Comment: The mining method appears feasible, based on tried and tested practice. Drill

and blast will be undertaken by contractors so the parameters and costs suggested by PenMin

above are indicative only.

4.9.2.3 Load and Haul

PenMin has estimated the excavator fill factor as 80% with a truck fill factor of 85%. The availability

and utilisation of the mining equipment has been estimated to be 85% due to the new equipment and

close access to the major town of Lusaka, improving the ability to service the equipment.

Peak requirements for the mining machinery at the Matala open pit are quoted by PenMin as follows.

The 5.2m³ excavator operating on ROM will be utilised for approximately 830 hours per annum and

each of the two 5.2m³ excavators operating on waste (overburden) material will be utilised for

approximately 4,200 hours per annum supporting a peak annual ROM production of 400ktpa at an

overall stripping ratio of 5.92:1(w:o).

Peak requirements for the mining machinery at the Dunrobin open pit are quoted by PenMin as

follows. The 5.2m³ excavator operating on ROM will be utilised for approximately 1,300 hours per

annum and the 5.2m³ excavator operating on waste (overburden) material will be utilised for

approximately 3,920 hours per annum supporting a peak annual ROM production of 400ktpa at an

overall stripping ratio of 3.58:1 waste to ore (w:o).

WAI Comment: Loading and hauling will be undertaken by contractors so the parameters

suggested by PenMin above are indicative only.

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4.9.2.4 Ground Water

A ground water influx of 1,428 litres per minute for the Matala pit, and 540 litres per minute for

Dunrobin pit has been assumed by PenMin, based on average influx for open pits of equivalent size.

It has been assumed all water collected from the pits will be pumped to the existing storage facilities,

and after settling, will be used for processing purposes or for haul road dust suppression.

Water generated from seasonal weather will be collected before entering the pit and diverted to a

nearby riverbed. No allowance has been made in the mining costs for the external pit dewatering

borehole installation, operation or maintenance. Further detailed work has been budgeted to better

understand the geohydrology associated with the Matala and Dunrobin open pits, however PenMin

report that the proposed Matala pit sits above the water table. The Dunrobin water table is below the

open pit but the exact level is unknown.

4.9.3 Mine Design and Production Schedule

Pit designs for the two mines are provided in the PenMin Feasibility Study and reproduced in Figure

4.12 and Figure 4.13 below.

Figure 4.12: Matala Pit

(after PenMin, 2016)

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Figure 4.13: Dunrobin Pit

(after PenMin, 2016)

A mine production schedule was developed by PenMin based on the pit designs described above,

targeting an annual mill feed production of 400,000t. The mine production schedule is based on bench

by bench mining of the material inventory calculated within the individual pits. In order to achieve a

mill feed target of 400ktpa a vertical advance rate of 55m per annum is required. The bulk of the

Matala pit has dimensions of approximately 700m x 250m, and the Dunrobin starter pit has

dimensions of approximately 230m x 230m. Mining is to commence at Matala and then transition to

Dunrobin as Matala is exhausted.

Table 4.14 depicts the combined mines production schedule assuming 95% mining recovery and no

dilution. Over the six-year life of mine, 2.0Mt of ore will be mined at a head grade of 2.63g/t.

Table 4.14: Summary Mine Production Schedule (after PenMin, 2016)

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Total

Production Ore tonnes 29,593 382,912 387,490 390,459 399,996 218,617 1,809,067

Stockpile tonnes 25000 17088 12509 9541 4 181,383* 245,527

Total Ore tonnes 54,593 400,000 400,000 400,000 400,000 400,000 2,054,593

Grade g/t 2.10 2.32 3.19 2.60 2.87 2.72 2.63

Total Ounces oz 5,308 29,606 40,175 34,376 36,304 22,310 168,080

Total Waste tonnes - 3,208,884 2,209,078 2,444,650 666,318 104,109 8,633,039

Strip Ratio o:w - 8.02 5.52 6.11 1.67 0.26 4.20

Total BCM m³ 14,025 181,475 175,777 149,047 150,942 82,497 753,763 *Stockpiled tonnes in Year 6 are Production ROM tonnes carried over from Year 5 when the Dunrobin Open Pit is in full production

WAI Comment: The Matala pit design shown in Figure 4.12 (above) appears conceptual with

no evidence of haul roads, berms or detailed design. WAI would expect to see a detailed pit

design to correctly delineate the mineable tonnes of ore and waste from the pit. The Dunrobin

pit design shown in Figure 4.13 appears to have a more thorough design.

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The production schedule appears to be reasonable, although in order to improve confidence

as the project goes forward WAI would like to see a detailed production schedule based on an

Ore Reserve estimate in accordance with the guidelines of the JORC Code (2012).

4.9.4 Capital Costs

Capital expenditure and operating costs have been reported by PenMin. An initial capital expenditure

of US$14.439 million is required for the project, with all additional costs over the remaining life of the

mine covered by revenue (starting in year 1). US$1.1 million has been budgeted for the mobilisation

and initiation of the Dunrobin open pit in year 4.

A 12km haul road between Matala and the Dunrobin Mill will need to be established, and in addition

the Dunrobin haul road will require rehabilitation. The balance of infrastructure, as well as all ancillary

equipment required for the start-up of the project has been calculated on a capital basis. This figure

includes all engineering, project management, construction and commissioning of the process plant,

electrical supply and other related infrastructure.

Capital expenditure on mining equipment is quoted by PenMin in Table 4.15 below.

Table 4.15: Equipment Capital Cost (after PenMin, 2016)

Equipment Capital Cost Qty Total

Cat 390 Excavator US$739,394 2 US$1,478,788

Cat 340D Excavator US$257,576 1 US$257,576

CAT 75C ADT (41 ton) US$395,152 8 US$3,161,216

Cat D9T Dozer US$675,758 2 US$1,351,516

Cat 140k Grader US$200,000 1 US$200,000

CAT 416F TLB US$59,394 1 US$59,394

CAT 740B C/W plus 25kl Water Tanks US$363,636 1 US$363,636

LDV US$41,667 6 US$250,002

Cat 725 Diesel Truck US$303,030 1 US$303,030

Cat 730 Service Truck US$272,727 1 US$272,727

Water Pump US$105,000 1 US$105,000

Telehandler US$175,000 1 US$172,000

Minibus US$41,667 1 US$41,667

Crane Truck US$72,000 1 US$72,000

Light Plant US$12,500 4 US$50,000

Cat986H Wheel Loader US$503,030 3 US$1,509,090

Total US$9,650,642

WAI Comment: The costs quoted above are indicative only, as PenMin note that mining and

maintenance will be carried out by contractors. The equipment list consists of CAT equipment

which is recognised as of good quality.

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4.9.5 Operating Costs

Operating costs for the mining operations are reported as between US$11.84 and US$31.75 per ROM

tonne mined. The costs are largely influenced by the stripping ratio, with the higher costs associated

with Matala (stripping ratio 5.92:1) and lower costs associated with Dunrobin (stripping ratio 3.58:1).

Mining equipment operating rates and productivity assumptions calculated by PenMin are based on

typical operating parameters under normal operating conditions.

The financial modelling is based on a fully contracted mining fleet, with a separate overland haul

contract at US$1.20/ton. PenMin has assumed power will be supplied off the local grid at a cost of

US$0.14 per kWh. Diesel fuel has been estimated at US$0.77 per litre.

WAI Comment: The costs quoted by PenMin are likely to be indicative only, as mining will be

operated by contractor. A detailed mining cost model based on first principles should be

developed to add confidence to the figures quoted.

4.9.6 Matala Underground Mine

4.9.6.1 Overview

The relatively long strike and relatively steep dip of the Matala ore deposit lends itself to a long hole

open stoping mining method. A detailed scoping study was completed by Coffey Mining in 2012 for

the suitability of the Matala deposit towards underground mining methods to a depth of 300m, which

has since been amended by PenMin. The Matala underground material inventory can be summarised

as 2,037,400t at 3.00g/t Au.

4.9.6.2 Mining Method

Longhole open stoping has been identified as a suitable mining method, either based on modified

Avoca open stoping, or Radial-in-Reef longhole open stoping. For either method, longholes will be

developed by advancing ore drives along the bottom of the planned stopes.

For modified Avoca, longhole drilling will consist of drilling rings upwards into the stope above,

retreating backwards towards the level access, whilst Radial-in-Reef requires drilling rings upwards

into the stope above and downwards into the stope below. Radial-in-Reef is well suited to areas of

the reef where the orebody widens significantly, but requires additional development of a secondary

sublevel extraction ore drive beneath the stoping level, whilst modified Avoca allows for a single ore

drive acting as both the production and extraction level.

Diesel, rubber tyre Load Haul Dump machines (LHDs) will extract the ore from the stopes to stockpiles

located on the level access for loading into trucks. Remote loading will be necessary to safely maximise

ore recovery from the stopes. Stopes will be silled out to full width, to allow better stope wall control

by permitting the longhole drill to drill parallel to the final planned wall, mitigating blast damage and

minimising dilution.

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Underground mining at Matala will start at the bottom of the pit, and progress east and west of the

pit along strike, with a portal and decline established at the western side of the pit above the bottom

bench to allow sufficient holding capacity for an extended, significant rainfall event. This will enable

mining to be carried out during these periods and a secondary stage for underground dewatering.

A mining extraction rate of 85% has been applied to all stoping tonnes, which considers all operational

mining losses and planned pillar losses. Overbreak tonnes (dilution) of 15% has been added to the

Mineral Resources. A hanging wall grade of 0.9g/t Au and a footwall grade of 0.5g/t Au have been

used to estimate the grade and tonnage of the mineable package.

A crown pillar is left in place at the bottom of the open pit. This is necessary from a geotechnical

standpoint as stability of the pit could be jeopardized without it. Different methods can be employed

to allow extraction of the crown pillar if the resource contained warrants it.

Where possible, waste will be backfilled into depleted stopes, reducing haulage costs and reducing

geotechnical stress.

WAI Comment: The underground mining method planned by PenMin appears feasible. The

two stoping methods outlined are similar, but should be finalised in a detailed study before

further design progresses. WAI would also expect a detailed underground geotechnical

assessment to be undertaken in order to better determine the stoping method best suitable

for the deposit and also likely backfill requirements. A crown pillar study should also be

undertaken to determine the most suitable dimensions to ensure stability but maximise

recovery.

4.9.6.3 Underground Access and Development

Decline gradient for Matala will be a standard 1:8 allowing the best trade-off between necessary

development and haulage costs. Decline and level development sizing will be 4m by 4m, developed

with a twin boom development drill. These dimensions should allow the continued use of the surface

ADTs (modified for underground use) with adequate room to run the ventilation bag and two stage

fans up to 40kW capacity.

Decline development will be three months ahead of production areas, allowing for delays in

development, and any acceleration in stope production. The first 1,000m of decline will be completed

in advance of any stoping to allow ventilation to be established.

4.9.6.4 Ground Support

A field investigation will be required at Matala to collect additional data for kinematic analysis, rock

mass quantification and ground water in order to better understand ground support requirements for

the mine.

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Ground support is necessary to reduce risk to mining personnel and equipment. A mixture of industry

systems will be used dependent upon recommendations from the site geotechnical engineer. Critical

areas such as store rooms, refuelling areas and the decline will be designed with an enhanced safety

factor. Temporary openings such as ore drives will have minimal ground support due to their short

duration and to reduce unwanted metal in the ore feed. Further studies will establish the definitive

ground support program for each opening type.

WAI Comment: Along with the geotechnical assessment for ground support, WAI would expect

geotechnical input towards finalising mining method, stope sizing and development

dimensions.

4.9.6.5 Equipment Selection

Where possible, the Matala underground will make use of the same fleet of vehicles as that used in

the open pits to reduce the capital requirements for the purchase of new units. The main underground

equipment is summarised in Table 4.16 below.

Table 4.16: Matala Underground Equipment (after PenMin, 2016)

Use Manufacturer Model Number Specs

Development, ground support

Sandvik DD420-40 1 Development drill - 2 booms, drift size

class 4 x 4 m

Production drilling Sandvik DL310 2 38 m hole length, 51 - 64 mm

diameter

LHD Sandvik LH410 2 4.0 - 5.4 m3 bucket

Haul trucks Caterpillar 745C ADT 2 41 tonne capacity

Grader Caterpillar 140K 1 19’ tight turning wheel radius

Services, vent hanging

Volvo IT 1 Mobile, solid, elevated

safe work platform

Blasting Normet Charmec 1610 B

1 Ammonia Nitrate Fuel Oil (ANFO) loaded for both development and

production

Transportation Toyota Landcruiser 3 2 m wide, 2.5 m high,

Rockbreaker BTI TM12 HD 1 9.2 m long, 4.8 m reach

Raise drilling will be conducted by contractors. The development drill will be responsible for drive

development as well as ground support. During instances when quick development is necessary to

allow for production to provide mill feed, air drills can be used to bolt the backs and provide ground

support.

WAI Comment: The underground equipment PenMin plans to use is good quality, although

WAI assumes that the underground mining will be operated by contractor, along the same

lines as the open pit, and so the list above is likely to be indicative only.

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4.9.6.6 Ventilation

An exhaust fan located in a 2.1m diameter raise will ventilate the mine, pulling fresh air in through the

decline. Final location of the ventilation raise is dependent on any open pit developments, but will be

within the pit if possible to reduce shaft development costs. PenMin report that the final primary

ventilation for exhaust air will include two separate shafts, which will allow the ventilation to be

established to the upper and mid-levels before stope production at those locations start.

Blind headings will be ventilated to within 10m of the face by secondary ventilation from 40kW

auxiliary fans and vent bag.

4.10 Mineral Processing

4.10.1 Matala Testwork


A program of metallurgical testwork was carried out on composites of copper-gold ore from Matala

by ALS Ammtech in 2010. AMMTEC was supplied with several samples of drill core and specific

samples were selected by the client to be utilised for analysis and variability leach testing.

Selected samples were subsequently combined to produce the following composites for testing:

• Matala Composite A;

• Matala Composite B;

• Matala Composite C; and

• Matala Composite D.

WAI Comment: It is not clear from the ALS testwork exactly what ore types or domains the

four composite samples represent, although the A - D progression represents an increase in

depth from oxide to primary ore.

4.10.1.2 Composite Head Analysis

The Composite head analyses are given in Table 4.17.

A sub-sample of each of the four main testwork composites was submitted for detailed analysis and a

summary of selected results is presented in Table 4.18.

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Table 4.17: Matala Composite Head Sample Analyses

Variability Composite Identity

Head Assay - Analyses

Au (g/t)

Ag (g/t)

Cu (ppm)

As (ppm)

STOT (%)

Acid Sol. Cu (ppm)

CN Sol. Cu (ppm)

Matala Composite A Variability Composites

MTL 082 32.2-38.8 m 4.40/4.17 <2 187 120 <0.02 50 17

MTL 083 16.0-31.6 m 1.38 <2 75 277 0.05 46 13

MTL 103D 21.0-29.6 m 0.80 <2 78 312 0.04 39 11

Matala Composite B Variability Composites

MTL 057 67.0-75.0 m 1.12 4 3052 95 1.11 249 1303

MTL 100D 64.0-86.6 m 3.09 <2 805 153 0.08 357 733

MTL 100A 35.0-53.0 m 1.23 <2 133 159 3.71 38 18

MTL 103A 50-56 m+61-68 m 4.30 <2 71 295 0.24 16 6

Matala Composite C Variability Composites

MTL 101D 105.0-110.7 m 3.14 <2 32 416 5.62 8 31

MTL102D 84.0-102.0 m 2.53 <2 1677 241 1.79 495 1670

MTL 104D 84.0-97.0 m 1.72/1.58 <2 1318 169 3.10 239 899

Matala Composite D Variability Composites

MTL 090 118.5-129.0 m 3.38 3 664 366 8.12 101 445

MTL 093 146.1-178.5 m 1.98 <2 276 787 10.5 46 221

MTL 096 132.6-137.9 m 1.39 <2 170 58 0.53 84 148

MTL 102D 108.0-121.0 m 18.50 17 5877 585 12.8 1464 5436

Table 4.18: Matala Composite Detailed Chemical Analyses

Analyte Unit Composite A Composite B Composite C Composite D

Au g/t 0.99/1.46 1.77 2.41 8.56

Ag g/t <2 <2 <2 6

As ppm 245 180 230 572

Cu ppm 108 447 1,671 2,095

Acid Sol. Cu ppm 102 40 408 604

CN Sol. Cu ppm 15 337 1,291 1,673

Fe % 6.65 5.48 6.07 16.2

Ni ppm 31 43 56 75

STOT % 0.05 1.28 2.78 10.3

SiO2 % 68.9 68.6 65.9 49.2

Te ppm 0.4 <0.2 0.7 0.7

Zn ppm 147 115 99 202

The sample head grades ranged from 0.99 to 8.56ppm Au. Total sulphur grades ranged widely, from

0.05% to 10.3%. Composite C and D contained elevated levels of copper, of which a significant

proportion was acid soluble.

4.10.1.3 Gravity Separation/Cyanidation Time Leach Testwork: Variability Samples

Gravity separation followed by direct cyanidation time leach testwork was carried out on Composites

A and B, the more oxidised ore types, at a nominal grind size of P80 150µm. The results are given in

Table 4.19.

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Table 4.19: Gravity and Gravity Tailings Leach Test Results

Sample Identity Grind

Size P80 (µm)

% Au Extraction @ Hours

Consumption (kg/t)

Gravity 2 4 8 24 48 Lime NaCN

Comp A MTL 082

150

64.51 76.30 81.82 85.64 95.25 97.82 0.49 1.57

Comp A MTL 083 40.35 83.00 86.45 88.01 89.90 94.80 0.67 1.59

Comp A MTL 103D 36.57 73.41 82.08 84.66 89.96 93.97 0.52 1.35

Comp B MTL 100A

150

54.54 80.75 85.94 86.83 90.12 92.40 0.89 1.74

Comp B MTL 100D 48.55 72.33 81.28 82.93 87.30 93.31 0.39 2.36

Comp B MTL 103A 42.74 70.54 80.35 84.77 89.75 93.56 0.73 2.14

Gravity gold recoveries were generally high, ranging from 36.57% to 64.51%. Gold leach recoveries

from the gravity tailings were also high, resulting in overall recoveries ranging from 92.4% to 97.82%.

Cyanide consumptions were high, ranging from 1.35kg/t to 2.36kg/t.

A programme of grind optimisation gravity-leach testwork was undertaken on the four composites.

The results are given in Table 4.20.

Table 4.20: Gravity-Leach Grind Optimisation Testwork

Composite Identity Grind

Size P80 (µm)


Consumption (kg/t)


Composite A

212 35.97 65.47 71.86 76.91 82.79 89.35 0.47 1.50

150 48.02 80.23 86.49 90.04 92.19 95.64 0.46 1.44

106 59.38 86.48 89.71 92.65 93.93 96.49 0.45 1.75

Composite B

212 34.29 58.83 65.86 74.72 82.61 89.73 0.47 1.69

150 42.20 73.17 80.46 85.49 90.00 93.64 0.44 2.42

106 58.81 69.79 77.40 80.96 89.73 93.58 0.45 1.61

Composite C

212 50.95 60.45 63.67 66.21 70.35 75.82 0.44 2.91

150 60.98 68.45 70.27 71.79 72.82 80.96 0.30 2.67

106 76.14 86.43 89.63 89.69 92.01 94.14 0.29 2.86

Composite D

212 36.58 43.25 48.50 53.08 57.72 65.93 0.27 3.58

150 45.92 50.89 54.08 56.84 64.87 76.51 0.30 3.85

106 66.24 68.42 73.90 77.89 80.41 84.57 0.29 3.77

Overall gold recoveries were high, in excess of 93% for Composites A - C, but lower, at 84.6% for

Composite D. Composites A and B could be efficiently processed at a grind d80 of 150µm, whereas

Composites C and D required a finer grind of 106µm.

Cyanide consumptions were again high with all four samples, particularly so for Composites C and D

which reportedly represented the deeper mineralisation.

4.10.1.4 Matala Grindability Tests

Matala SMC Testwork

SMC testwork was undertaken on the Matala Main Composites B, C and D only. The SMC test

generates a relationship between specific input energy (kWh/t) and the proportion of

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fragmented/broken product passing a specified sieve size. The Axb values ranged from 80.8 (Comp B),

44.9 (Comp C) and 35.1 (Comp D).

Matala Bond Rod and Ball Mill Work Indices

The results of Bond Road and Ball Tests are given in Table 4.21.

Table 4.21: Bond Rod and Ball Mill Work Index Results

Composite Bond Rod Wi Bond Ball Wi

B 12.4 12.7

C - 15.3

D 14.9 13.2

The results indicate the samples were in the “moderately hard” category. 4.10.1.5 Flotation Testing

Flotation testing was undertaken on composites with the objective of maximizing copper and gold

recoveries to a saleable concentrate. Composite C gave a copper concentrate grading 17% Cu and

334ppm Au, at copper and gold recoveries of 91.9% and 85.9% respectively. Composite D gave a

copper concentrate grading 18.2% Cu and 934ppm Au, at copper and gold recoveries of 94.2% and

88.6%.

4.10.2 Dunrobin Testwork


A defined program of metallurgical testwork was carried out on composites of copper-gold ore from

the Dunrobin deposit by ALS Ammtech in 2010. AMMTEC was supplied with several samples of drill

core and specific samples were selected to be utilised for analysis and variability leach testing.

The selected samples were subsequently combined to produce the following composites for testing:

• Dunrobin Composite A;

• Dunrobin Composite B;

• Dunrobin Composite C;

• Dunrobin Composite D; and

• Dunrobin Master Composite.

WAI Comment: It is not clear from the ALS testwork exactly what ore types or domains the

four composite samples represent although the A - D progression represents an increase in

depth from Oxide to Primary ore.

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4.10.2.2 Head Sample Analysis

The results of the head sample analyses are given in Table 4.22.

Table 4.22: Dunrobin Composite Testwork Head Analyses

Variability Composite

Identity

Head Assay – Analytes

Au (g/t)

Ag (g/t)

Cu (ppm)

As (ppm)

STOT (%)

Acid Sol. Cu (ppm)

CN Sol. Cu (ppm)

DUNROBIN COMPOSITE A VARIABILITY COMPOSITES

DUNDD 119 0-12 m

2.46/2.62/ 1.48

< 2 1,454 12,900 0.05 151 55

DUNDD 120 3–36 m

2.13/2.24/ 6.22

3 970 11,300 0.07 130 42

DUNROBIN COMPOSITE B VARIABILITY COMPOSITES

DUNDD 120 45–50 m

1.32/0.73 2 619 2,401 0.04 222 80

DUNDD 121 62–75 m

2.13/2.31/ 2.08

38 12,300 45,200 18.0 2,846 1,030

DUNDD 122 32–65 m

4.86/4.43/ 4.51

6 611 10,100 5.69 225 375

DUNROBIN COMPOSITE C VARIABILITY COMPOSITES

DUNDD 121 75–87 m

0.95/1.24 3 16 586 4.01 23 22

DUNDD 122 75–82 m

1.31/1.45 < 2 3,125 1,885 0.03 1,716 3,272

DUNROBIN COMPOSITE D VARIABILITY COMPOSITES

DUNDD 103 115-143.9 m

1.60/1.53/ 1.41

7 2,785 12,200 10.4 998 2,611

DUNDD 108 140-159.5 m

2.38/2.03/ 2.30

13 2,403 42,800 14.5 443 1,655

DUNDD 112 140.8-167.3 m

2.73/1.20/ 1.22

11 1,780 3,264 12.8 955 1,849

Gold head grades ranged from 0.73 to 4.86ppm Au. Copper, arsenic and sulphur grades were variable

and often high with values of up to 12,300ppm Cu, 45,200ppm As and 18.0% STOT. Levels of cyanide

soluble copper were also significant.

4.10.2.3 Gravity Separation/Cyanidation Time Leach Testwork

Gravity separation followed by direct cyanidation time leach testwork was carried out on Composite

A samples at a grind P80 of 150µm. The results are given in Table 4.23.

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Table 4.23: Dunrobin Composite A Gravity/Gravity Tails Leach Testwork

Sample Identity

Grind Size P80

(µm)


Consumption (kg/t)


Composite A DUNDD 119 0-12 m

150 50.14 70.01 75.80 82.80 88.87 92.64 0.97 2.31

Composite A DUNDD 120 3-36 m

150 42.52 79.67 83.22 86.64 89.91 92.56 0.99 2.83

Gravity gold recoveries were 50.1% and 42.5%. Gold recoveries from gravity tails were also high at

92.6% for each sample.

4.10.2.4 Dunrobin Grindability Tests

Dunrobin SMC Testwork

SMC testwork was undertaken on the Dunrobin Composites B and D only. The SMC test generates a

relationship between specific input energy (kWh/t) and the proportion of fragmented/broken product

passing a specified sieve size. The Axb values were 75.5 (Comp B) and 82.0 (Comp D).

Bond Abrasion Index

Dunrobin Composites B and D were subjected to Bond Abrasion tests and values of 0.1339 and 0.1502

were obtained.

Dunrobin Composites B and D were subjected to Bond Rod and Ball Mill work index tests. The results

are given in Table 4.24.

Table 4.24: Bond Rod and Ball Mill Work Index Results

Composite Bond Rod Wi Bond Ball Wi

B 12.2 11.6

D 12.4 11.1

The results indicate the the samples were in the “moderately hard” category.

4.10.2.5 Gravity Separation/Cyanidation Time Leach Testwork: Main Composites

Sub-samples of each of the four Dunrobin Composites were utilised for grind optimisation gravity

separation/cyanidation leach testwork, to ascertain the effect of grind size on gold, silver, arsenic and

copper extraction. The results are given in Table 4.25.

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Table 4.25 : Dunrobin Gravity Separation/Cyanidation Time Leach Testwork

Composite Identity

Grind Size P80

(µm)


Consumption (kg/t)


Composite A

212 43.64 82.43 85.93 90.24 92.46 92.90 1.22 1.68

150 44.83 79.69 82.44 86.37 88.27 95.10 1.45 2.62

106 51.40 86.28 88.62 91.62 93.31 96.01 1.44 2.43

75 49.57 86.51 88.15 90.15 94.80 96.12 1.69 2.26

Composite B

212 5.57 17.64 31.06 48.97 63.98 70.53 1.06 6.02

150 19.96 28.71 44.65 57.44 61.93 67.31 0.57 6.18

106 24.46 32.64 47.71 60.47 60.70 63.66 0.53 5.52

75 22.62 28.79 42.53 59.29 63.23 65.71 0.71 5.92

Composite C

212 36.87 66.49 71.36 78.66 85.96 88.64 0.68 4.05

150 47.98 77.38 81.48 86.44 88.57 93.69 0.83 3.54

106 54.23 80.54 83.75 87.12 89.42 94.52 0.86 4.43

75 59.47 83.79 85.05 86.22 91.50 94.69 0.96 4.19

Composite D

212 17.93 35.07 40.96 50.60 57.34 60.06 0.72 4.19

150 25.85 40.96 47.68 56.38 61.95 65.72 0.51 4.02

106 25.94 36.90 42.76 50.20 59.04 63.82 0.44 4.33

75 36.22 46.58 55.90 68.56 71.18 71.39 0.55 4.88

Gravity recoveries were generally reasonable and increased with fineness of grind. Gold extractions

from gravity tailings also increased, with fineness of grind and resulted in recoveries in excess of 94 %

for Composites A and C. Overall recoveries were significantly lower for Composite B (65.7%) and

Composite D (71.4%).

4.10.2.6 Dunrobin Flotation Testing

Flotation testing was undertaken with the objective of maximizing copper and gold recoveries to a

saleable concentrate. The results are summarized in Table 4.26.

Table 4.26: Dunrobin Flotation Testwork

Assay Distribution %

Composite Grind d80 Cu% Au ppm Cu Au

B 75 18.0 44.5 69.6 31.2

C 106 13.8 178 74.8 62.3

D 75 18.6 73 46.9 21.2

The results were generally poor with low grade copper concentrates with moderate to poor recoveries

of copper. Gold recoveries to the copper concentrate were high with Composite C but low with

Composite B and C. Rejection of pyrite was not readily achieved and the low gold recoveries with

Composite B and C suggest an association between gold and pyrite.

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4.10.2.7 SART Testwork 2012

The high cyanide consumption and significant levels of copper in the leach solutions merited the

investigation of sulphidisation, acidification, recycle, thickening technology (“SART”) to be

investigated. The technology would enable both cyanide and copper to be recovered from the leach

solutions, thus reducing cyanide consumptions and enabling a copper rich product to be sold.

Samples from the previous ALS Dunrobin test programme were used to investigate the suitability of

the SART process.

Cyanide leach tests were conducted using conditions established from the previous testwork. The

cyanide leach tests were primarily conducted to provide leach solutions containing gold values and

copper cyanide species for subsequent SART tests. Composites B, C and D contained appreciable

amounts of cyanide soluble copper, hence relatively high cyanide dosages were required during

leaching to obtain satisfactory gold recoveries.

Composite A contained a relatively low amount of cyanide soluble copper and high gold extraction

had been achieved with relatively low cyanide addition.

The SART testwork demonstrated that approximately 90% of the copper could be recovered from the

leach solution at pH 3.5 and using near stoichiometric additions of Sodium hydrosulfide (NaSH). A

final bulk test conducted on a composite leach sample included a carbon contact step on the barren

SART solution.

4.10.2.8 Geometallurgy Tests

A programme of testing on over 600 drill core samples in 2012 determined that a significant

proportion of the gold in the Dunrobin orebody is cyanide leachable (93.5%) provided that sufficient

cyanide is added. The particle size used in the tests is not reported, and was probably not determined,

so care must be taken when interpreting this data set into process conclusions. The results do however

indicate the non-refractory nature of the Dunrobin ore, and suggest that the low recoveries on the

Composite B and D samples in the ALS testwork may have been due to insufficient cyanide being

added.

4.10.3 Deswick 2013 Feasibility Study Process Design

4.10.3.1 Design Treatment Rate and Ore Parameters

Following numerous reviews and studies, it was decided to initially process the Dunrobin ore. In their

2013 Feasibility Study, Deswick developed a process plant design on the following assumptions:

• The ore processing facilities were designed to treat 200,000 tonnes of ore per annum;

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• It was anticipated that the crushing section would operate for about 5,000 hours per

year on a three shifts per day basis, for 6 days per week, 50 weeks per year (40t/h for

16.7 operating hours per day); and

• The milling, leach, filtration and solution management circuits would operate for

about 7,500 hours per year, on a 7 days per week, 50 weeks per year basis.

4.10.3.2 Process Route

The first stages in the gold recovery process were conventional crushing and grinding followed by

cyanide leaching. The product from these processes is a finely ground slurry of the ore with the gold

and soluble copper dissolved in cyanide.

A review of the recent technical literature on copper gold plant operations indicated that the SART

(sulfidisation, acidification recycle & thickening) process appeared to be the best option for

precipitation of soluble copper and liberation of associated cyanide. The SART process is applicable to

solution rather than slurry streams, so some form of solids liquid separation is required. The flowsheet

is shown in Figure 4.14.

Figure 4.14: Dunrobin Plant Flowsheet

The process consists of the following sections:

• Crushing and grinding. This stage reduces the ore to fine slurry containing 45% to 50%

solids. Run of mine ore is fed to a two stage semi-mobile crushing plant. Crushed ore

and alkaline process water are then fed to a ball mill operating in closed circuit with a

cyclone. The ore is ground to an 80% passing size of 106 microns;

• Cyanide leaching in agitated tanks. Slurry from the mill cyclone overflow flows through

a series of six agitated leach tanks with a total residence time of 24 hours. Oxygen is

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sparged into the tanks to ensure dissolved oxygen levels of >7ppm for efficient gold

dissolution;

• Belt filtration and washing. In this module gold in solution is separated from the slurry

solids by vacuum filtration. The barren filter cake discharges from the filter and is then

repulped with alkaline process water and pumped to the tailings neutralisation and

water recovery module;

• Gold recovery using carbon columns. The solution is pumped through a series of up-

flow fluidised-bed columns containing activated carbon. Gold is adsorbed onto the

carbon;

• Carbon elution and regeneration. The carbon is acid washed to remove calcium. The

gold is then eluted from the carbon using a hot caustic cyanide solution. Metallic gold

is recovered from the solution by electrowinning. The carbon is then regenerated in a

steam atmosphere at 550°C to restore gold recovery activity before it is returned to

the carbon columns;

• Gold bar production. Steel wool loaded with metallic gold from electrowinning is first

calcined to oxidise the iron. The calcined product is then melted with fluxes in a small

furnace before being cast into gold bars;

• Copper Recovery. In this module, copper is precipitated from the barren solution by

the addition of sulfuric acid and sodium hydrogen sulphide (“NaHS”) solution. This

causes copper to precipitate as the mineral chalcocite, Cu2S. The precipitate is settled

in a thickener, and most of the settled material is recycled back to precipitation. This

recycle provides solids for nucleation sites, and promotes the formation of a coarse

and easily settled precipitate. The tailings solution from copper recovery is mildly

acidic at pH4;

• Cyanide recovery. In this module, cyanide is recovered from copper precipitation

tailings solution. The first step is to volatilise the cyanide from the solution as

hydrogen cyanide (HCN) gas. The mildly acidic (pH 4) solution from volatilisation is

then pumped to the tailings neutralisation and water recovery module. The HCN gas

is then absorbed by a caustic soda solution to form sodium cyanide; and

• Tailings neutralisation and water recovery. Solution from cyanide recovery is mixed

with the repulped belt filter cake and lime is added to ensure an alkaline pH. The

resulting slurry goes to the tailing thickener for process water recovery. Thickener

underflow is pumped to the tailings storage facility.

4.10.3.3 Water Supply

Raw water will be supplied from boreholes, which currently supply the Zambian Air Force (“ZAF”) Base,

which are 2km away from the plant. Alecto has already a supply agreement with ZAF and process

water make-up is supplied from the raw water source as well as from the existing return water dam

at the exploration camp.

The plant will receive ore at 3% moisture and produce tailings at about 40% moisture. This will require

a make-up water rate of 0.37m3 per dry tonne of ore processed. For 200,000 tonnes milled, the annual

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water consumption in the plant will be 74,000m3. Daily water consumption for 350 operating days per

year will average 212m3/day.

4.10.3.4 Electricity Supply

Power will be supplied from the 33kV overhead line from Zambia Electricity Supply Authority (“ZESA”)

which runs approximately 1km from the plant. Sufficient power is available to meet the plant

requirement of approximately 2MW, as well as an additional (small amounts) of power for mining

operations. It is assumed that power will be available from ZESA 24 hours per day for the entire year.

A 1,200kVA emergency generator has been included in the plant design to ensure the milling circuit

and subsequent operations can operate in the case power interruptions occur.

WAI Comment: WAI is aware that the Nampundwe OHL connects to the Sanje substation

which provides power to Mumbwa. WAI has been provided with a copy of a letter that Alecto

received in December 2016, which indicates that the substation will be upgraded in Q1/2017

and will be able to supply the planned Alecto mine.

4.10.3.5 Costs

Capital Cost

Process plant capital cost was determined to include the up-front design, construction and

commissioning of the Luiri project, together with the required facilities to allow processing of ore. This

includes establishment of a processing plant, site infrastructure, preproduction costs and construction

of a facility for storage of process tailings. Key aspects of the capital cost estimate for the process plant

are as follows:

• Based on Q3-2013 in United States dollars (US$) – Exchange rate 9.1 Rand : USD (Note

2017 rate Q1 =13.2);

• Estimated to an overall accuracy of ±15 to 20%;

• Significant levels of Chinese equipment utilised; and

• Estimated based on an EPC execution strategy using Consulmet Metals for the

engineering design and construction.

A summary of the process plant capital cost estimate is given in Table 4.27.

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Table 4.27: Process Plant Capital Cost Estimate Summary

Cost Category Item Cost US$M

Direct Costs Process plant capital cost 8.60

Chinese Importation Costs / SA Delivery Costs to Zambia 0.15

Total Direct Costs 8.75

Indirect Costs EPC 0.38

First Fill – Consumables 0.19

Operational Spares 0.30

Critical Spares for Equipment 0.23

Other indirect costs 0.25

Laboratory 0.22

Total Indirect Costs 1.56

Grand Total 10.32

WAI Comment: The total cost was predicted to be US$10.32M which is exceptionally low for a

200,000tpa plant using SART technology.

Process Operating Costs

The process operating cost is predicted to be US$24.57 per tonne of ore treated, including US$20 per

tonne variable costs.

4.10.4 PenMin Study 2016

PenMin studied the feasibility of commencing operations at the Matala Deposit on the oxide and

transitional ores, allowing for a low cost start-up of the project and then progressing to the Dunrobin

oxidised ores.

The principle of plant design was based on a ROM feed rate of 400,000tpa or nominal 50t/h processing

plant. ROM ore with a maximum size of 500mm is fed via a hopper to a Jaw crusher, screen and

secondary cone crusher installation, where the size is reduced to -20mm for feed to the Ball Mill.

The Milling circuit included jigging as the means of gravity concentration with upgrading of the gravity

concentrates by two stages of shaking tables. This gravity tailing product (P80 = 106um) is then

subjected to a cyanide leach in the presence of activated carbon with a maximum residence time of

24hrs. The thickened slimes are filtered and washed before being combined with crushed waste

material to form a dry-stackable waste product. This waste is co-disposed with the ROM waste

materials produced.

The counter-current flow of activated carbon is passed through a desorption system, where the loaded

gold is recovered into solution and then precipitated. The spent carbon is re-activated in a kiln before

recycling to the leach plant.

The gold slimes, together with the gravity concentrates are subjected to acid washing before smelting,

allowing for the refining of the gold to 99.5% Au bars and 95% Ag bars.

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The Xinhai Mining Machinery Company Limited (Xinhai), of Yantai in Shandong Province, China, were

approached to perform the manufacture and supply, construction and engineering of the process

plant on an EPC basis.

An EPC proposal was obtained from Xinhai which included Project Management, design, manufacture,

supply, construct and commissioning of the overall process plant, including all civil design, mechanical

and steelwork design and supply, electrical design, and supply and all installation and commissioning

of the entire process plant.

The capital cost was estimated at US$7.73 million.

WAI Comment: The capital cost is very low and WAI cannot comment of the suitability of the

selected equipment, quality of construction and the long term reliability of the overall process

facility offered by Xinhai. WAI notes that the cost of a similar facility built under western

conditions would be in the order of US$30 million. PenMin calculated process operating costs

based on continuous operation of the plant on a 24/7 basis, with three shift rotation with a 4th

shift for changeover. The total operating cost was estimated at US$23.3, which WAI considers

to be reasonable.


4.11.1 Introduction

This review of the environmental and social performance of Alecto’s assets in Zambia (Matala and

Dunrobin) is based on a brief desk-based survey of existing documentation and information gained

from a 2016 site visit by WAI.





further. The Alecto Minerals Plc assets covered in this report are:

• Zambia – the recently acquired Matala historic underground mine and the former

open pit, heap leach Dunrobin mine





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• Resource Estimation, Coffey Mining Pty Ltd, January 2012;

• Luiri Gold Project – Environmental Impact Assessment, African Mining Consultants

Limited, March 2013;

• Luiri Gold Limited – Technical Note, Research and Development Work Undertaken for

the Zambian Gold Project, 20 March 2014;

• Dunrobin Gold Project – Scoping Study, Coffey Mining Ltd, May 2012;

• Matala Gold Project – Scoping Study, Coffey Mining Ltd, May 2012; and

• Luiri Hill Project Dunrobin Deposit Feasibility Study, Coffey Mining Ltd, November

2013.


4.11.2.1 Mining and EIA Legacy

Gold was discovered in the Matala area in 1912. The Dunrobin mine was first exploited in 1927 and

the Matala mine was first opened in 1928. Mining operations at both mines persisted on and off

throughout the 20th century. For more details, see the Luiri Hill Gold Project Resource Estimation

Report from 2012.

As part of the license agreement for the mining lease, an Environmental Impact Assessment (“EIA”)

was carried out by African Mining Consultants Limited and published in March 2013. The EIA applied

to the Luiri Gold Project at the old Dunrobin mine in Mumbwa and Luiri accepted environmental

liability for the area. The study was commissioned in July 2009 and was updated between March-

August 2012.

As part of the large scale mining right application, a biophysical and social environment baseline study

of the Luiri Hill Gold Project area was conducted by a Zambian company, African Mining Consultants

Limited (“AMC”) between 2009 and 2010. Luiri Gold retained AMC to conduct a 2013 Environmental

Impact Assessment (EIA) for the Luiri Gold Project.

The following are some of the 2013 EIA’s principal findings:

• The flora in the Luiri project area is composed of the following types – Chipya

woodland, Miombo woodland (plateaux and hill), Thickets, Acacia woodland, Scrub-

land, and Grasslands;

• The predominant soil type in the project area is Ferrisols – leached red brown loamy

soils with inert clay and low base saturation due to leaching by excessive rainfall;

• Sulphur dioxide ambient air quality is 0.37μg/m3 (WHO guideline limit is 12.5μg/m3);

• Three key forms of land use exist in the project area – farming, settlements and

mining;

• Quality of the surface water in the Matala stream is within the Zambian Drinking

Water Standards except for Faecal Coliform in the rainy season;

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• Average maximum allowable noise quality is 46dB (IFC/World Bank guideline is 55dB);

and

• There is no endangered fauna that will be displaced by the project implementation.

The project was predicted to have the following significant positive impacts:

• It will contribute to the central and provincial governments by remitting statutory

taxes;

• The project will generate approximately 80 and 150 direct and indirect employment

opportunities for Zambian locals;

• It will increase local and national economic development by creating business

opportunities for contractors and service providers; and

• It will provide skills training opportunities for unskilled staff.

To mitigate potential negative impacts, management plans were developed in terms of:

• All plant effluents will be settled in Return Water Dam and Storm Water Dam and

pumped to the processing plant for re-use;

• Encasing noise sources and providing noise protection equipment;

• Constructing a sustainable tailings dam and disposing of tailings and other solid waste

at the waste disposal site;

• Supporting the local government by helping to provide social and health services; and

• Educating workers on the dangers of HIV/AIDS and providing Voluntary Counselling

and HIV Testing.

WAI Comment: WAI has not reviewed the 2013 Management Plans, which were developed as a

result of the EIA published that year. In accordance with international best practice, updated

environmental and social baseline studies should be carried out in order to update previous impact

assessment results, including updated Management Plans.

4.11.2.2 Land Use and Hydrogeology

Previous EIAs suggest that three key forms of land use are noticeable in the area around the Dunrobin

and Matala mines: farming, settlements and mining. Generally, land has been converted from its

original use of forest stand to cultivation and grazing land.

The land tenure system within the project area is predominantly traditional/customary, where Chiefs,

through village headmen, provide pieces of land to families and clansmen without title. The Chief and

his/her clansmen communally own land.

The drainage from the project area is directed southwards and comprises a network of seasonal creeks

and streams flowing into the Nangoma stream, which then connects with the Kafue River to the south.

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WAI Comment: WAI has not reviewed any documents relating to the project’s stakeholder

engagement strategies, including the gathering of information around land use and

ownership. It is recommended that Alecto carry out consultations with local communities in

order to ascertain the potential for economic and physical displacement as a result of the

project. In particular, it is important to understand the impact of the project on any artisanal

mining activity in the area, if applicable, as well as the effect of potential land take on other

local businesses, including agriculture and farming.

4.11.2.3 Socioeconomic Aspects

A socioeconomic baseline of the local area was developed in January-February 2010, including a

review of relevant literature, a field visit to the project area and surrounding settlements, and

interviews with local people. The population of Mumbwa district was registered as 158,861 in 2000.

The population of the area of the project was recorded at 2,121, including the settlements of Stephen

Village, 85% of Shanaobe Village and the whole area constituting Luiri market. The market plays a

significant role in the economy of the area with commercial activities in all forms, including retail

outlets as well as bars and taverns.

As is common in Zambia, the medical infrastructure at the project site is poor, and the facility is in

need of upgrading, in particular if the population is anticipated to increase once the mining project

commences.

As of 2013, no documented sites of archaeological significance were reported in the project area.

A 2012 Scoping Study flagged a medium risk in terms of the recruitment process at the Dunrobin and

Matala projects because of the short-term nature of the jobs required and therefore the potential

difficulties that could be encountered in attracting high quality personnel.

As of November 2013, Luiri operated with a Local Labour and Economic Development Plan, which

aimed to promote employment of Zambian citizens, contribute to the transformation of the Zambian

mining industry and to ensure that holders of large-scale mining rights contribute to socioeconomic

development of the areas in which they are operating. Within this context, Luiri initiated several social

development projects in affected areas as well as establishing a Trust for social and community

development (2002, The Shakumbila Trust). Further details about the Trust and Luiri’s initial Corporate

Social Responsibility activities can be found in the November 2013 Feasibility Study.

Also as of November 2013, the operator had committed to a number of job creation and skills

development initiatives for members of local communities. To this end, the company developed the

‘Job Creation and `Skills Development’ strategy in a manner that supported its own corporate

objectives as well as those of the community, district, province and country that it operates in. The

strategy is aligned to the Zambian 6th national development plan for 2012-2015, and its strategic

objectives or education and skills development. Further details can be found in the 2013 Feasibility

Study. It is unclear whether Alecto will continue to develop these programmes.

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As of 2012, it was reported that the Matala Underground Project would be staffed with 124 mining

and mining-related maintenance personnel to support mining operations. This figure includes 15

workers within Management & Supervision roles (of which 1 Health & Safety Officer), 12 Technical

Staff, 15 engineers and 82 Stoping and Development staff. The same figures for the Dunrobin mine

were not reported. Staff numbers for forthcoming operations have not been reviewed by WAI.

WAI Comment: An updated social baseline would serve as a starting point for Alecto to

develop updated stakeholder engagement strategies as well as to gain an understanding of

the positive and negative social impacts the Project is likely to have on local communities. WAI

has not reviewed any documentation related to these issues dated after 2013.

4.11.2.4 Permitting and Licenses

The Project is located within one tenement of 32km2 constituting the Luiri Gold Mines Luiri Hill Project.

The Dunrobin and Matala tenements comprise the previously named Mining Lease 8074-HQ_LML,

renamed “LML48” in 2011. LML48 is set to expire in 2028 under the original provisions and conditions

set out in the annex of the original grant from 2013. The tenements together have a total area of

277km2.

In line with its stated Mining Policy, the Government of Zambia enacted new legislation, the Mines

and Minerals Development Act (2008). Government policy is not to participate in exploration or other

mining activities as a shareholder. Relevant licenses include the following:

• Prospecting Permit (small scale, 5 years, non-extendable, granted by Director of

Geological Survey);

• Prospecting License (large scale, 2 years, extendable, granted by Director of

Geological Survey); and

• Large Scale Mining License (25 years, extendable, granted by Director of Mines.

In addition, a number of Acts of Parliament are relevant to the Project. These include the

Environmental Management act (No 12, 2011), the Mines and Minerals Development Act (“MMDA”;

No. 7, 2008) and a number of other acts detailed within the 2013 Environmental Impact Assessment

report.

WAI Comment: As of the 2013 Feasibility Study, in terms of Zambian environmental

permitting, no contentious issues were identified, no agricultural land will be lost nor are there

archaeological interests in the area. These aspects need to be verified in an updated ESIA. In

2013, the conditions attached to an Environmental Permitting decision were that the operator

at the time (Luiri) resettle 4 families living in close proximity to the proposed processing plant

and that the operator provide an alternative borehole water supply to the Zambia Air Force

base, located nearby. Further stakeholder engagement as well as updated environmental and

social baseline studies would ascertain whether these conditions have been met and would

highlight any potential further issues in the context of Environmental Permitting as well as

economic and physical displacement of members of local communities.

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4.11.2.5 Closure and Post-Closure Activities

The 2013 EIA suggests that the mine site will be progressively rehabilitated throughout the life of the

mine as areas become available. At the time, Luiri Gold was tasked with implementing a programme

of post-closure environmental inspection and monitoring. An independent consultant was assigned to

conduct the site inspection and environmental monitoring, proposed by the company to be conducted

bi-annually for the first two years to establish seasonal variations. No significant post-closure

environmental issues were anticipated and environmental inspections and monitoring were

scheduled to cease in year five, subject to ministerial approval.

Activities relating to closure and post-closure activities, which the project operators were tasked with

at the time, are listed within Section 8.4 of the 2013 Feasibility Study.

An R&D report from 2014 suggests that the soluble copper levels are sufficiently high, and distributed

in varying amounts throughout the Dunrobin Gold Project ore body, that gold extraction and

environmental management problems may occur.

4.11.2.6 Relevant Mining Legislation

The primary law governing the mining sector in Zambia is the Mines and Minerals Development Act

No. 11 of 2015 of the Laws of Zambia (“MMDA”). The MMDA became effective on 1st July, 2015

although the date of assent is 14th August, 2015. It repealed and replaced the Mines and Minerals

Development Act No. 7 of 2008. The MMDA deals with mining rights, licences, large-scale mining in

Zambia, gemstone mining, health and safety, environmental protection, and geological services on

analysis, royalties and charges. Other pieces of legislation, other than the Mines and Minerals

Development Act, include: Mines Acquisition (Special Provisions) Act; Chapter 218 of the Laws of

Zambia and Mines Acquisition (Special Provisions) (No. 2) Act; and Chapter 219 of the Laws of Zambia.

The mining industry is administered by the Ministry of Mines and Minerals Development previously

called Ministry of Mines Energy and Water Development, specifically by the office of the Director of

Mines. The MMDA gives primary power to the Director of Mines, Director of Mines Safety, Director

of Mining Cadastre and Director of Geological Survey, while the Minister enjoys an appellate and

supervisory role over the respective Director’s actions.

The holder of a mining right is required to have approved environmental authorisation from the

Zambia Environmental Management Agency (“ZEMA”).

The 1969 Mines and Mineral Act gave way for the Government to introduce the Mining Regulations

1971 and the Mining Regulations 1973. Further, these two regulations have been amalgamated to

form the Guide to the Mining Regulations booklet currently being used in the copper mining industry.

The other Acts referred to, also include the Medical Examination of Young Persons (Underground

Work) Act, Chapter 216 of the Laws of Zambia, Pneumoconiosis Act, Chapter 217 of the Laws of

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Zambia, Occupational Health and Safety Act, Act 36 of 2010, the Workers’ Compensation Act 1999 and

either environmental-related or general medicine.

4.11.3 Environmental Permit

WAI reviewed the environmental and social performance of Alecto Minerals Plc assets in Zambia

(Matala and Dunrobin).

Currently the Environmental Permit granted by the Zambian authorities in 2013 was based on an EIA

which covers the entire mining block, although the scope of this was restricted to a 150Ktpa (ore) open

pit mine and processing plant located solely around the Dunrobin site.

The Alecto plan is to mine 400Ktpa (ore) starting at Matala (open pit Phase 1) for 3 years, then at

Dunrobin (open pit Phase 2) whilst the underground mining infrastructure is prepared and equipped

at Matala (Phase 3).

As this is a departure from the original 150tpa plan, the Department of Mines has asked for a new

Development Plan to be submitted. This will be done once financing is finalised, and the detailed

engineering design is completed for the mine and plant, with the development schedule known with

some accuracy.

In addition, the new plan to start mining at Matala, with the construction of a new haul road to the

larger Dunrobin Plant, requires an amendment to the Environmental Permit through the Zambia

Environmental Management Agency (“ZEMA”).

Recent discussions with the Director of Mines’ Safety, (a Department of the Ministry of Mines and the

most significant consultee to ZEMA on environmental applications), has indicated the appropriate way

forward. They have suggested that, on the basis that a mining licence and Environmental Permit have

already been approved, that the most efficient way to include the new proposals is to upgrade the

existing Environmental Permit. This should typically take some 6-8 weeks and cost +/US$15K to

prepare.

The only legislative requirement, in the case of an existing Environmental Permit, for when an EIA is

mandatorily required, is if ore is required to be hauled >10km. The planned route between Matala

and the Dunrobin plant is reported as 8km, and so a full EIA is not required.

To comply with, and in effect to “start” the Environmental Permit, in October 2016 Alecto cleared and

fenced the proposed plant site, and resettled 5 families who were required to leave. The resettlement

process and compensation was agreed historically through the local traditional leadership. The

families were paid (ZMW10,000 each) and left amicably, thereby maintaining the company’s good will

in the local community.

Alecto has recently updated the local chief as well as the Minister of Mines of the items above, and

the government is fully supportive of the company’s efforts.

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WAI Comment: WAI understands that in 2013 Luiri Gold Mines reached agreement to resettle

members of households living in close proximity to the project. These agreements were

enacted in 2016 but these along with further economic and physical displacement should be

verified and formalised within an internationally compliant Livelihood Restoration Plan. This

plan should also include hydrogeology, air quality, biodiversity, noise, socioeconomic and

cultural heritage impacts. Best practice also recommends the development of an

Environmental and Social Action Plan, formalising the delivery of mitigation measures over

time.

WAI has been provided with copies of the relevant mining and environmental licences and permits,

according to domestic laws, which were provided for review, and currently, WAI foresees no concerns

regarding these licences.

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5 MALI ASSETS

5.1 Introduction

Alecto currently owns the following projects in Mali, namely the Kossanto East, and Kossanto West

projects, see details below.


The Kossanto Project is centred on UTM coordinates 200,000E and 1,490,000N in the Kayes

administrative district in Western Mali. (Figure 5.1).

Figure 5.1: Location Map of the Kossanto Project

Kossanto East (see Figure 5.2 below) is located in the south-eastern part of the licence area and

consists of Gourbassi East, West and Gourbassi Northeast.

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Figure 5.2: Kossanto East Project

Kossanto West (see Figure 5.3 below) is located approximately 27km to the WNW of Gourbassi.

Massakama and Goruba are the most important mineral occurrences in Kossanto West.

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Figure 5.3: Kossanto West Project

Bamako is the capital city in Mali with a population of approximately 1.8M. It has an international

airport serviced by major airlines such as Air France and Royal Air Maroc. Flying time from Paris is

approximately 5.5 hours.

Travel to the project area is by road from the capital city of Bamako to Gourbassi. This journey covers

approximately 450km mainly by paved road, with the final 180km is by dirt road in varying states of

repair. The trip takes approximately 10 hours.

Within the project areas, access is limited to dirt tracks and the use of 4x4 vehicles is essential.

In Mali, there is a railway that connects to bordering countries and approximately 29 airports of which

8 have paved runways.

Energie du Mali (“EDM”) is the sole electric company that provides electricity within Mali. However,

only 55% of the population in the cities have access to EDM.

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Mali is divided into two distinct zones, the Savannah in the south, and the Sahara Desert in the north.

The country is mostly flat, rising to rolling northern plains covered by sand. The Adrar des Ifoghas

massif lies in the northeast.

The country’s climate ranges from tropical in the south to arid in the north. Most of the country

receives negligible rainfall; droughts are frequent. Late June to early December is the rainy season.

During this time, flooding of the Niger River is common, creating the Inner Niger Delta.

5.4 Mali Summary Information

The Republic of Mali is a landlocked country in West Africa (Figure 5.4). Mali is bordered by Algeria to

the north, Niger to the east, Burkina Faso and Côte d’Ivoire to the south, Guinea to the southwest,

and Senegal and Mauritania to the west. Its size is just over 1,240,000km² with a population of 14.5M.

Mali lies between latitudes 10° and 25°N, and longitudes 13°W and 5°E. At 1,242,248km², Mali is the

world’s 24th largest country and is comparable in size to South Africa or Angola.

Mali’s capital is Bamako and Mali consists of eight regions with its borders to the north reaching deep

into the middle of the Sahara, while the country’s southern part, where the majority of inhabitants

live, features the Niger and Senegal rivers.

Desert or semi-desert covers about 65% of Mali's area. The Niger River creates a large and fertile

inland delta as it arcs northeast through Mali from Guinea before turning south and eventually

emptying into the Gulf of Guinea.

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Figure 5.4: Map of Mali

Mali lies in the torrid zone and is among the hottest countries in the world. The northern desert part

of Mali has a hot desert climate whilst the central area has a hot semi-arid climate. The little southern

band possesses a tropical wet and dry climate with very high temperatures year-round with a dry

season and a rainy season.

Among the 25 poorest countries in the world, Mali depends on gold mining and agricultural exports

for revenue. The country's fiscal status fluctuates with gold and agricultural commodity prices and the

harvest; cotton and gold exports make up around 80% of export earnings. Mali remains dependent on

foreign aid. Economic activity is largely confined to the riverine area irrigated by the Niger River and

about 65% of its land area is desert or semi desert. About 10% of the population is nomadic and about

80% of the labour force is engaged in farming and fishing. Industrial activity is concentrated on

processing farm commodities.

Mali is developing its iron ore extraction industry to diversify foreign exchange earnings away from

gold, but the pace will largely depend on global price trends. Mali’s economic performance has

improved since 2013 although physical insecurity, high population growth, corruption, weak

infrastructure, and low levels of human capital remain hindrances to sustained growth.

Economic Forecast (2016-2020) by Trading Economy are summarised in Table 5.1.

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Table 5.1: Mali Economic Forecast

MARKETS Actual Q2/17 Q3/17 Q4/17 Q1/18 2020 Unit

Currency 614.98 619 626 644 638 736

GDP

GDP Annual Growth Rate 5.2 5.21 5.19 5.3 5.32 5.33 percent

GDP 12.75 13.11 13.04 12.97 13.06 12.05 USD Billion

GDP per capita 720.81 714 719 725 726 749 USD

GDP per capita PPP 1111.65 1121 1121 1120 1119 1123 USD

LABOUR

Unemployment Rate 8.2 9.38 7.51 6.38 6.03 8.5 percent

Population 17.6 16.13 16.26 16.39 16.39 18.84 Million

TRADE

Balance of Trade -226.1 -172 -172 -172 -172 -172 CFA Franc Billion

Exports 305.9 310 280 303 288 293 CFA Franc Billion

Imports 532 483 482 484 484 483 CFA Franc Billion

Current Account -406.4 -379 -367 -354 -342 -315 XOF Billion

Current Account to GDP -3.6 -6.21 -6.26 -6.32 -6.81 -7.27 percent

Terrorism Index 6.03 6.09 6.4 6.72 6.79 8.69

Source: https://tradingeconomics.com

Although Mali is a landlocked country with poor infrastructure, the government’s reformed mineral

code has attracted numerous foreign investors. This has resulted in several new mines (gold), which

has boosted the gold mining industry to be Mali’s second largest income earner after cotton.

Gold production dominates Mali’s natural resource sector, with Mali being the third largest gold

exporter in Africa and 11th largest in the world. Gold makes up the largest portion of Mali’s export

with nearly 65% of total exports in 2015. In 2015, Mali produced 50t of gold of which 46t are industrial

production and four tonnes are artisanal.

The price of gold fluctuates with the world market price. The sector has experienced some difficulties

as unproductive mines have been closed. Three new mines are expected to open by 2017 in Fakola,

Sadiola, and Kobana with a capacity of 20 tons a year. Two smaller mines (in Tabakoto and in Nampala)

opened in 2015. The mines of Morela and of Yatela will close by 2017. There is also a large traditional

mining sector, contributing approximately 10% of gold exports. Over two million people depend on

the mining sector for income.

Mali also has other mineral prospects as the majority of the territory remains largely unexplored and

unmapped. The Ministry of Mines estimate significant resources of iron ore, uranium, manganese,

lithium and limestone.


Alecto has recently entered into two Joint Venture agreements on the Kossanto East and West assets

which has seen the Company transfer exploration management to Ashanti Gold and Randgold

respectively.

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At Kossanto East, Ashanti Gold Corp. has the exclusive right to earn-in for a 65% interest in the Project

(58.5% effective interest after allowing for the 10% carried interest of the Government of Mali) by

completing a preliminary feasibility study (“PFS”) within a period of 36 months. Ashanti will be

required to maintain and keep the Project’s licence in good standing during the Option Period. This

expansive project area has recently undergone permit consolidation and renewals in order to

maximise the exploration potential at what is considered to be one of the most prospective terrains

in western Mali, allowing for exploration activities to continue to 2022.

At Kossanto West, Caracal Gold Mali SARL (“Caracal”), Alecto’s wholly owned subsidiary, has entered

into a joint venture agreement with Randgold Resources (Mali) Limited (“Randgold”) for the

exploration and development of Alecto’s 137km2 Kossanto West Gold Project in western Mali

comprising the Kobokoto East and Koussikoto exploration permits (the “Permits”).

On completion of the Joint Venture, Randgold will fund all costs up to and including the completion of

a Pre-Feasibility Study on the Project (“PFS”) and will hold a 65% and Alecto will retain a 35%

participating interest in the Permits.

WAI Comment: Malian Government interest: As noted above, the Kossanto West projects

sees ownership as 65% Randgold, and 35% Alecto. As WAI understands, the Malian

Government is entitled to a 10% free-carry upon formation of a new mining company (post-

successful feasibility study) and it has the right to acquire up to a further 10% by participating

financially to the operating company.

As long as Alecto and Randgold contribute proportionally, their 35%, and 65% remains through

the current exploration phase, with each party’s ownership being diluted proportionally by the

Government’s interest in the mining phase. So, for example, if the Malian Government

acquired an additional 5% interest over and above their 10% free carry, then the ownership of

the future mining company joint venture would look like this:

• Govt Mali: 15%;

• Randgold: 55.25%; and

• Alecto: 29.75%.

All the exploration licences have an initial term of three (3) years, and may be renewed twice each

time for an additional two years. A mine-operating permit when issued will be valid for a period of

thirty (30) years and shall be renewable.

The exploration licence is held in conjunction with a planned exploration programme, detailing the

work to be completed and expected costs of these works.

The Kossanto East + West Project cover a total area of 207km2 shown in Figure 5.5 below.

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Figure 5.5: Kossanto East and West Licence Areas

5.6 Exploration History

5.6.1 Kossanto East

Exploration on the Kossanto East project has, in order of exploration, been conducted by Bureau de

Recherches Géologiques et Minières (“BRGM”), Caracal Gold (“Caracal”), African Mining & Exploration

(AME), and presently Alecto Minerals Plc (“Alecto”).

Historically the area was previously explored by Randgold between 1995 and 1997 (permits under the

name of Kérékoto I & II). Works completed include several geochemical grids, lithosampling, extensive

pitting and trenches. This work led to the generation of the main prospects of Gourbassi East and

Gourbassi West, which have been the focus of subsequent exploration works by both Caracal Gold

Mali (“CGM”) and Alecto Minerals.

Previous exploration targets on Kossanto permits were generated in the main from regional soil

geochemistry and the regional geological map drawn up by the BRGM. Subsequently, Caracal targeted

a felsic intrusive body (Rhyolite) at Kobokoto, the Sadiola dyke at Koussikoto and a lithological contact

at Gourbassi.

Work by Alecto has resulted in the identification of numerous potential targets within an area of

41km². Additional drilling and integration of all data which led in April 2013 to a Maiden Resource

being declared at Gourbassi East.

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Following the completion of further drilling in 2013 and 2014, WAI completed an updated Mineral

Resource estimation for Gourbassi East and a Maiden Mineral Resource for Gourbassi West in May

2014.

5.6.2 Kossanto West

Historically the area was previously explored by Randgold between 1995 and 1997 (permits under the

name of Kérékoto I & II). Works completed include several geochemical grids, lithosampling, extensive

pitting and trenches. This work led to the generation of the Massakama prospect and CGM

concentrated their efforts over the Massakama Main Zone, initially with trenches completed over soil

geochemistry anomalies and proved the presence of in situ gold mineralisation, with significant

intercepts up to 22m @ 0.74g/t, including 1m @ 3.25g/t and 36m @ 0.55g/t, including 6m @ 1.2g/t.

This was followed up by an IP survey at Kossanto West and RC drilling, with anomalous results in the

region of a few hundred ppb seen throughout the drillholes, with one ‘bonanza’ hole, MRC08 returning

a very high intercept of 8m @ 18.5g/t Au, including 2m @ 43g/t Au.

5.7 Geology and Mineralisation


Mali is underlain by two cratonic nuclei, extensions of the West African Craton and the Tuareg Shield,

which were welded together during the Neoproterozoic Pan-African orogenic event. The West African

Craton outcrops at the border with Senegal, in southern Mali as part of the Leo Shield and in the far

north as part of the Reguibal Shield (Figure 5.6).

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Figure 5.6: Geology of Mali

The West African Craton, comprises basal granulites, charnockites, amphibolites and migmatiites

succeeded by marbles, ferruginous quartzites and paragneiss; these assemblages are intruded by

metagabbros-anorthosites and serpentinites and syntectonic granites are abundant in the eastern

part of the outcrop.

The Tuareg Shield outcrops in the east in the Adrar des Iforas mountains and is dominated by high-

grade granulitic assemblages unconformably overlain by Neoproterozoic volcano-clastic units.

Neoproterozoic–Palaeozoic sediments of the extensive intra-cratonic Taoudeni Basin underlie most of

Mali and large parts of northern and eastern Mali are covered by Cretaceous and Tertiary clastic

sediments.

The Kossanto Project is in the prolific Kedougou-Kenieba Inlier, the northwestern most exposure of

Birimian rocks in West Africa (Figure 5.7).

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Figure 5.7: Regional Geological Map of the Kenieba Inlier

Showing Location of Alecto Projects and Major Mines

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5.7.2 Birmian Gold Deposits

Structure is the principal control on the location of gold mineralisation. Major Birimian gold deposits

are typically located on or near shear zones, near or at intersecting crosscutting faults, and near or on

significant bends in the stratigraphy, or hosting shear zone. In addition, the presence of intrusive

bodies may or may not be significant. Major shear zones have strike extensions typically exceeding

10km, extend at depth to over 2km with widths varying from 10-200m.

The weathering profile is often deep and typically results in extensive surface oxidation of bedrock to

a depth of up to 100m. In such areas, gold deposits comprise a surface oxide zone, an intermediate

transition zone and a deeper fresh rock zone. Gold is typically free milling in the oxide zone, and the

target for both artisanal miners and mining companies, as the oxidation of primary mineralisation

under tropical conditions can form large deposits amenable to low-cost open pit mining and cyanide-

leach gold recovery.

As an example of the importance of structure within greenstone belts, see the surrounding gold mines

in close proximity to the Kossanto project in Figure 5.8.

Figure 5.8: Minerals Occurrences in Mali

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5.7.3 Local Geology


The Kossanto Project consists of three contiguous exploration licences in the Kenieba inlier, a block of

ancient greenstones and granites hosting many significant gold deposits in Senegal and Mali, making

it one of the most important gold regions in Africa.

Two distinct units can be recognised within the permitted area. The Saboussiré Formation is the main

formation in the Kossanto properties and represents a mature arc-type volcanic package which is

distinctly heterogenous and composed of felsic to intermediate composition volcanics, meta-basalts,

meta-andesites and dacites, volcanoclastics and pyroclastics. Meta-tuffs are largely represented, as

well as cherty intervals and calcic volcano-sediments. The Saboussiré Formation is known as the Mako

Group in Senegal.

The Kéniébandi Formation is mainly composed of meta-greywackes with carbonaceous cement

building monotonous sequences with locally polymictic conglomerates, about which certain authors

infer similarities to Tarkwaian. The conglomerates are believed to come from the erosion of the

Saboussire Formation. Some andesitic flows are intercalated within the Kéniébandi Formation.

Previous exploration targets at Kossanto were generated in the main from regional soil geochemistry

anomalies and the regional geological map drawn up by the BRGM (Bureau de Recherches

Géologiques et Minières). As a result, Caracal targeted a felsic intrusive body (rhyolite) at Kobokoto,

the Sadiola dyke at Koussikoto and a lithological contact at Gourbassi.

Subsequently, Alecto has integrated all of the available geological, geochemical and geophysical

information on the Kossanto area. This has resulted in the identification of a total of 11 potential target

areas of 41km² on the entire permit blocks including 8 new targets along with the 3 target areas drilled

previously by Caracal.

5.7.3.2 Kossanto East

The geology at the Gourbassi East prospect is dominated by volcanics which vary from felsic rhyolites

(the host of the mineralisation) through to intermediate and mafic volcanics. Red cherts, rich in iron

and manganese, have been mapped several hundreds of metres outside of the main mineralised zone.

In places these cherts contain sulphides, but do not seem to be gold-bearing.

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Figure 5.9: Geological Map of Gourbassi East

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The Gourbassi West prospect lies approximately 3.7km WNW of Gourbassi E and appears to be

analogous with its clear NNW striking zone of mineralisation associated with altered volcanic breccias

and silicified sandstones (Figure 5.10).

Figure 5.10: Geological Map of Gourbassi West

The host to mineralisation is associated with quartz veins orientated NNW and along the sheared

contacts between intrusive bodies and the host rock, along with the partial replacement of gold-

bearing pyrite and chalcopyrite within strongly silicified intrusives.

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5.7.3.3 Kossanto West

The Alecto permits at Kossanto West are intersected by the Main Transcurrent Zone (“MTZ”) structural

corridor, striking NNE-SSW. The MTZ plays an important role in the mineralisation of the Sadiola mine

and is likely a major factor in the mineralisation of the Alecto licenses. Two main geological formations

have been identified in this area:

• The Saboussiré formation occurs to the west of the areas and represents a mature

arc-type volcanic package which is distinctly heterogenous and composed of felsic to

intermediate composition volcanics, meta-basalts, meta-andesites and dacites,

volcanoclastics and pyroclastics. Meta-tuffs are largely represented as well as cherty

intervals and calcic volcano-sediments. The Saboussiré Formation is known as the

Mako Group in Senegal; and

• To the east lies the Kéniébandi which is mainly composed of meta-greywackes with

carbonaceous cement building monotonous sequences with locally polymictic

conglomerates, about which certain authors infer similarities to Tarkwaian. The

conglomerates are believed to come from the erosion of the Saboussire formation.

Some andesitic flows are intercalated within the Keniebandi formation.

The Massakama area, where much of the field work has been completed, is characterised by a complex

geology and contains mafic to felsic intrusive and volcanic rocks, along with carbonaceous sediments.

Areas of mineralisation have been altered with intense silicification and epidoditisation. The

Koussikoto is dominated by a felsic intrusive body in the centre of the permit, hosted by fluvio-deltaic

sandstones; focus of exploration is around the edges of the intrusion.

5.7.4 Mineralisation and Structure

5.7.4.1 Kossanto East

The mineralised rhyolite is interpreted as an isolated body hosted within more mafic units, suggesting

that the felsic nature of the rhyolite has led it to being a preferential host to the gold mineralisation.

The mineralised rhyolite is typically strongly silicified and very fine grained with varying amounts of

pyrite and lesser arsenopyrite. At surface, it exhibits intense microfracturing, but this is less evident at

depth. The rhyolite body is bound by chlorite altered intermediate- to mafic- extrusives which are

almost never mineralised even where they are strongly silicified and contain sulphides.

Mineralisation at Gourbassi East is formed of steep dipping “pervasive silica alteration” containing

disseminated gold grades which generally increase towards a lithological contact between a rhyolite

and a rhyodacite structure. The drilling indicated the continuity and the quality of the mineralisation

along a 900m strike length trending NNW, suggesting the area has significant resource upside

potential. AME (the previous owners) refined the geological model for the target area, and WAI issued

an initial resource estimate in April 2013.

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At the Gourbassi West target, 10 holes were drilled in this area, totalling 889m, all inclined at -60°

degrees drilled either West to East or East to West.

Importantly, these drill results indicated the continuity of mineralisation along a 1.8km corridor, which

ground and aerial geophysics had previously suggested. Alecto has conducted further successful

exploration on this target area, in order to better define the resource potential.

An ore microscopy study on Gourbassi East concluded that there were two stages of sulphide

mineralisation, one of which being pre-deformation, and suggests an epithermal-type model as

opposed to the more typical orogenic gold origin.

There are two prominent regional structures in the area, the first being the Sénégalo-Malian Fault

Zone (“SMFZ”), which has been interpreted as having a sinistral sense of movement striking NNW-SSE

(located 15km East of Kossanto) and the Main Transcurrent Zone (“MTZ”) which cuts through the

Kossanto permit, striking NNE-SSW. The MTZ plays an important role in the mineralisation of the

Sadiola mine, but appears un-mineralised in the Kossanto area.

5.7.4.2 Kossanto West

The MTZ is considered to be one of the major controls on gold mineralisation in western Mali and

eastern Senegal, and an important control at several major gold deposits such as Sabodala (3Moz –

Teranga Gold), Massawa (3Moz – Randgold), Makabingui (1Moz – Bassari Resources), and Sadiola and

Yatela (>7Moz).

The area has been a centre for significant artisanal mining activity that has uncovered some previously

unknown gold occurrences that also highlight the area’s potential. Mineralisation styles so far

discovered are varied and hosted by a range of lithologies; suggesting that the mineralisation is

predominantly structurally controlled, most likely by splays off the MTZ.

In the Massakama area, which has received most of the previous focus of work, drilling has indicated

that mineralisation is associated with quartz veins orientated NNW and along the sheared contacts

between intrusive bodies and the host rock, along with the partial replacement of gold-bearing pyrite

and chalcopyrite within strongly silicified intrusives. Significant intercepts from this area include 8m

@ 18.5g/t Au, including 2m @ 43g/t Au, with these high grade zones having undergone thin section

analysis which suggest a possible skarn-type mineralisation, different from the typical shear zone

hosted gold deposit type of the Birimian (Figure 5.11).

In other areas, mineralisation is related to felsic intrusives acting as preferential hosts to

mineralization and mineralized by sulphide- and gold- bearing quartz veins. Zones of gossanous cherts

and epidote alteration have also been identified as auriferous.

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Figure 5.11: Kossanto West, comprising the Kobokoto East and Koussikoto

Exploration Permits, Showing Interpreted MTZ and Key Exploration Results

from 2013/15 Field Work by Alecto

5.7.5 Exploration Potential

Alecto has focused on the known areas of mineralisation in a successful attempt to demonstrate an

increase in the known resources at Gourbassi.

Whilst there are other known (but under-explored) gold occurrences, other potential zones have not

been subjected to modern exploration techniques, and in fact a number of targets remain unexplored.

WAI considers that the work Alecto has focused on identifying mineralisation at Massakama and other

targets demonstrates strategic potential, and is to be commended.

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5.8 Exploration and Drilling

5.8.1 Kossanto East

Exploration activities at Gourbassi East and West are summarised in Table 5.2 below.

Table 5.2: Summary of Sample Data

Area Gourbassi East Gourbassi West

Sample Type

Number of Holes

Number of Samples

Total Length (m)

Number of Holes

Number of Samples

Total Length (m)

DD 2 197 279.7 - - - RAB 58 1,301 1,301 36 625 625 RC 49 4,794 5,023 37 3,948 4,012 RCDD 3 508 804.54 - - - TRENCH 30 1,605 1,565.8 - - -

Total 142 8,405 8,974.04 73 4,573 4,637

The main highlight is that in Gourbassi East and West, the company has added significant ounces to

the Maiden Mineral Resource, and appears to have intersected mineralisation in new areas, such as

along strike from known mineralisation and nearby targets.

The highlights of 2013-2014 drilling at Gourbassi East and Gourbassi West are shown in Figure 5.12

and Figure 5.13.

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Figure 5.12: Gourbassi East Drilling Highlights

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Figure 5.13: Gourbassi East Drilling Highlights

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5.8.2 Kossanto West


Since Alecto Minerals acquired the project in 2013, the Kossanto West area has been subject to

mapping, soil geochemical sampling, pitting, trenching and scout drilling, and the results have been

extremely encouraging, demonstrating high-grade gold mineralisation over a significant area of the

regionally significant Main Transcurrent Shear Zone (“MTZ”).

RC and first pass RAB drilling has been completed over several main targets in the Kobotoko license,

with very positive results throughout.

Follow up drilling at the Massakama Main Zone, which sits in the centre of a significant gold-in-soil

anomaly, to test the high-grade mineralisation previously found by CGM in MRC08, was completed in

2014. Historical trenching completed nearby this drill hole identified mineralisation in an outcrop of a

siliceous epidote rock, with field observations suggesting a broadly E-W siliceous epidote bearing unit.

Four RC holes for 304m were drilled around MRC08 in a box formation in order to delineate the control

on the mineralisation and extensions for follow-up. All four holes intersected gold mineralisation and

three contained significant intersections over good lengths. Mineralisation is in silicified meta basalts

and in the siliceous epidote rock. The mineralisation encountered in TRC019 and 021, the E-W holes

checking for N-S mineralised structures, is in silicified mafic volcanics whilst the mineralisation in

TRC022 is in the siliceous epidote altered unit. Multiple sulphides were identified in these holes (Figure

5.14).

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Figure 5.14: RC drilling at Massakama Central

5.8.2.2 Big Pit

In Big Pit, a total of four RC holes for 270m were completed in 2014 in the SW of the Kobokoto East

Permit, mainly targeting the contact between the granodiorite and mafic volcanoclastic host rocks

previously being worked by artisanal workers. All four holes encountered saprolite until approximately

25m, followed by a weakly altered granodiorite with minor sulphides. Abundant quartz veining was

found in each hole within the saprolite.

Weak mineralisation was discovered in all of the holes, the highlight being the 1m @ 12.8g/t Au found

at 49m in TRC004 within the granodiorite, mostly likely due to a high grade quartz vein (Figure 5.15).

Another intercept of 1m @ 3.95g/t Au was intercepted in the same hole at 9m depth within the

saprolite.

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Figure 5.15: Drill Hole Location Plan Map of the “Big Pit” Prospect

5.8.2.3 Goreba

The Goreba prospect was an active orpaillage area which has been host to up to several thousand

miners, where quartz veins are predominantly being targeted. A total of eight RC holes for 554m were

completed on the Goreba prospect in 2014 (Figure 5.16).

The majority of the holes intersected up to 20m of saprolite followed by quartz veins at the contact

with fresh sulphide bearing granodiorite. At depth, an intermediate to mafic volcanic unit was found,

which contains minor sulphides. In holes TRC005, 006 and 008 drilled under a line of high grade

artisanal pits, wherein flat lying quartz veins targeted by the artisanal miners exhibit visible gold

mineralisation, drill intercepts, including 1m @ 5.88g/t Au and 3m @ 1.81g/t Au, were reported at the

saprolite/fresh/granodiorite boundary, confirming the presence of the high-grade quartz veins.

Holes TRC009, 10 and 11 were all positioned around a series of NE-SW striking pits that follow a quartz

vein which grab sampling yielded an assay value of 34g/t Au. TRC009 appears to have intersected one

of the high-grade veins, with 2m @ 13.54g/t Au from 7m depth. TRC010 and 011 intercepted minor

mineralisation around the saprolite/ fresh rock boundary, with 2m @ 1.13g/t Au and 2m @ 1.14g/t

Au respectively.

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Figure 5.16: Drill Hole Location Plan Map of the Goreba Prospect

5.8.2.4 Rhyolite Hill

The Rhyolite Hill target is located proximal to the Massakama Main Zone and is characterised by a

steep flat topped hill with intense artisanal mining activity along its flanks. Miners are recovering

coarse grains of gold from surface. On the east side of the hill the artisanal miners are exploiting NNW-

SSE trending shear structures from 3m to 10m in width which have been found to be mineralised with

up to 3g/t Au in historical trenches.

Six RC holes, TRC013-TRC018, for a total of 870m, targeted the area to the south of Rhyolite Hill due

a lack of access to the northern area (Figure 5.17). Drilling intercepted the mapped sheared, silicified

structures from 1m to 10m in width, containing multiple sulphides, with pyrite, arsenopyrite,

chalcopyrite, millerite and galena were all identified. Most of these shear zones appear to be low

grade, with the best intercept discovered in TRC013 with 5m @ 2.04g/t Au. Fieldwork and analysis of

the tailings from artisanal pits have revealed that the granodiorite could be the preferential host

rather than the meta-basalts intercepted in the scout drill holes. Therefore, increased grades and

widths of mineralisation may exist and require further drill testing.

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Figure 5.17: RC Drilling at Rhyolite Hill

5.8.2.5 Toukwatou

The Toukwatou prospect was initially discovered during channel sampling of an area of artisanal

workings, with follow up scout RAB drilling in 2014 discovering significant high-grade intercepts from

the total of 761 metres drilled across 38 holes. Strong intercepts were encountered in 11 drill holes,

including: TRABL01/1 - 6m @ 4.23g/t Au from 9m depth, TRABL05/3 - 12m @ 3.34g/t Au from 6m

depth and TRABL06/8 - 6m @ 7.84g/t Au from 24m depth (Figure 5.18). Results indicate a NE-SW

trending corridor of mineralisation covering a strike length of 300m associated with an intensely

quartz veined felsic intrusive.

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Figure 5.18: RAB Drilling and Channel Sampling at Toukwatou

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5.9.1 Introduction

In May 2014, WAI provided an estimate of Mineral Resources in accordance with the guidelines of the

Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves [“JORC

Code (2012)”] for the Gourbassi Gold Project. The effective date of this Mineral Resource estimate

was 06 May, 2014 and superseded the previous Mineral Resource estimate dated 17 April, 2013.

This recent Mineral Resource estimate includes the most recent drill hole data up to 06 May, 2014.

There was no further drilling carried on the Gourbassi East and West sites since the 2014 Mineral

Resource estimation by WAI, therefore there is no change in estimated tonnage or grade.

Summary of MRE results are given in the following section, however full details of MRE methodology

can be found in Section 9 of WAI’s report “Updated Mineral Resource Estimate on the Kossanto Gold

Project, Mali in 2014”.

5.9.2 WAI Mineral Resource Estimation in May 2014

The stated Mineral Resources is based on the 2.5m SMU block model. No additional mining factors

such as (unplanned) mining dilution or mining recovery have been applied to the Mineral Resource

estimates. No mining has taken place at the project and all Mineral Resources are therefore

considered as remaining in-situ Mineral Resources.

The stated Mineral Resources are not materially affected by any known environmental, permitting,

legal, title, taxation, socio-economic, marketing, political or other relevant issues, to the best

knowledge of the author. There are no known mining, metallurgical, infrastructure, or other factors

that materially affect this mineral resource estimate, at this time.

The Mineral Resource estimates have been tabulated as follows:

1. Global Mineral Resource estimate in which the resources have not been constrained by an

optimised pit shell, as shown in Table 5.3; and

2. Mineral Resource estimate in which the Mineral Resources have been limited by the optimised

pit shell as shown in Table 5.4.

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Table 5.3: Gourbassi Mineral Resource Estimate (Unconstrained) (Mineral Resources not limited by optimised open pit shell)

(WAI, June 2014)

Area Resource

Classification Cut-Off Grade (g/t)

Au 0.3 0.5 0.7

Gourbassi East

Inferred

Tonnes (kt) 4,274 3,080 2,332

Au (g/t) 1.03 1.27 1.49

Metal kg 4,391 3,919 3,475

koz 141 126 112

Gourbassi West

Inferred

Tonnes (kt) 5,442 3,638 2,488

Au (g/t) 0.82 1.03 1.24

Metal kg 4,457 3,754 3,074

koz 143 121 99

Total Inferred

Tonnes (kt) 9,716 6,717 4,820

Au (g/t) 0.91 1.14 1.36

Metal kg 8,848 7,673 6,549

koz 284 247 211 Notes: 1. Mineral Resources are not reserves until they have demonstrated economic viability based on a feasibility study or pre-feasibility study. 2. Mineral Resources are reported inclusive of any reserves. 3. Grade represents estimated contained metal in the ground and has not been adjusted for metallurgical recovery. 4. Mineral Resources are quoted based on a 2.5m mining selectivity 5. Reported Mineral Resources have not been limited by an optimised pit shell 6. Numbers may not add due to rounding

Table 5.4: Gourbassi Mineral Resource Estimate (Constrained) (Mineral Resources limited by optimised open pit shell)

(WAI, June 2014)

Area Resource

Classification Cut-Off Grade (g/t)

Au 0.42

Gourbassi East Inferred

Tonnes (kt) 2,217

Au (g/t) 1.30

Metal kg 2,871

koz 92

Gourbassi West Inferred

Tonnes (kt) 2,005

Au (g/t) 1.06

Metal kg 2,116

koz 68

Total Inferred

Tonnes (kt) 4,222

Au (g/t) 1.18

Metal kg 4,987

koz 160 Notes: 1. Mineral Resources are not reserves until they have demonstrated economic viability based on a feasibility study or pre-feasibility study. 2. Mineral Resources are reported inclusive of any reserves. 3. Grade represents estimated contained metal in the ground and has not been adjusted for metallurgical recovery. 4. Mineral Resources are quoted based on a 2.5m mining selectivity 5. Reported Mineral Resources have been limited by an optimised pit shell using reasonable technical and economic parameters and a gold price of US$1,500/oz. 6. Numbers may not add due to rounding

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5.10.1 Introduction

This review of the environmental and social performance of Alecto Minerals Plc assets in Mali

(Kossanto East and West) is based on a brief desk-based survey of existing documentation and

information gained from a December 2013 site visit by WAI and subsequent Competent Person’s

Report under the guidelines of the JORC Code (2012). During the visit, WAI thoroughly reviewed the

site exploration activities and conducted QA/QC procedures.





further. The Alecto Minerals Plc assets covered in this report are:

• Mali – Kossanto East (now in a JV with Ashanti) and Kossanto West (managed by

Randgold).





• An updated Mineral Resource Estimate on the Kossanto Gold Project, Mali (June 2014

for Alecto Minerals Plc), Wardell Armstrong International; and

• Site Visit Report on the Kossanto Gold Project, Mali (February 2014 for Alecto Minerals

Plc), Wardell Armstrong International.


5.10.2.1 Background

The Kossanto East Project is a 66.41km2 concession in the Kedougou - Kenieba Inlier, the north-

western most exposure of Birimian rocks in West Africa. Adjacent to the Kossanto East project is the

137km2 Kossanto West exploration project, comprising the permits of Kobokoto East and Koussikoto.

This expansive project area has recently undergone permit consolidation and renewals in order to

maximise the exploration potential at what is considered to be one of the most prospective terrains

in western Mali, allowing for exploration activities to continue to 2022.

Details of the topography, climate and infrastructure are included elsewhere in this section.

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5.10.2.2 Socioeconomic Aspects

During a 2013 site visit, WAI noted a considerable amount of artisanal mining activity on the project

areas, however, WAI has been informed that currently in 2016/2017, there are very few artisanal

miners on site.

WAI Comment: In line with international best practice, the status of artisanal mining activity

in and around the Project area should be verified prior to further development of the mine.

Particular attention should be paid to the potential for economic displacement as a result of

small-scale miners losing their livelihoods if they are unable to continue working on the site,

even if they do not have the legal right to operate there. It is recommended that a Stakeholder

Engagement Plan is developed, allowing Alecto to fully understand the concerns of Affected

Communities, and subsequently that a Livelihood Restoration Plan be developed, focusing on

any potential economic or physical displacement related to the Project.

5.10.2.3 Relevant Legislation

In Mali, the mineral law is based on the French civil law. The mining code was revised Mining Code

Law No. 2012-015 of 27 February 2012 of the Republic of Mali. The State owns all the mineral rights.

Standard agreements are available. A scale of fees based on area is applied to mineral licences.

A founding agreement [Convention d'Etablissement] is signed between the (foreign) company and the

Malian government before exploration or mining commences. The agreement, negotiated between

the parties, comprehensively fixes all the conditions that will apply to the exploration and, in the event

of a discovery, exploitation periods. The conditions include work obligations, reporting, taxes, duties,

duty-free arrangements, state equity participation, etc. Prospecting licences (Autorisation de

Prospection) are awarded for two years and cover 8km².

5.10.2.4 Permitting and Licenses

The Kossanto Project consists of three exploration licences, covering a total area of 204.8km2 in the

Kayes administrative district in Western Mali within the Kenieba Inlier. In 2016, Ashanti Gold signed a

non-binding letter of intent (“LOI”) with Alecto Minerals, which will allow it to earn a 65% in the Africa-

focused firm’s Kossanto gold project in western Mali. As part of the deal, Ashanti will become the

operator of the project during a 36-month option period in which it would have to complete a

preliminary feasibility study (“PFS”). WAI has seen official certification of these licence areas, including

the Permit Establishment Agreements and the “Arretes”, and has no reason to question the validity

of the permits. In Mali an exploration permit (or 'Permis de Recherche') is granted for an initial three

years, which may be renewed for a further two years twice giving a total permit duration of 7 years.

As of 2013, the exploration licence has an initial term of three (“3”) years and may be renewed twice

each time for an additional two years. The exploration licence is held in conjunction with a planned

exploration programme, detailing the work to be completed and expected costs of these works.

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In Mali, an environmental permit is issued subsequent to the delivery of an Environmental and Social

Impact Assessment (ESIA), in addition to a Resettlement Action Plan (RAP) for families to be resettled

as a result of the Project, if applicable. The final ESIA is approved by the Minister of Environment

(Ministere de l’Environnement, de l’Assainissement et du Developpement Durable).

A permit is required for the discharge of water from the pit to ensure a safe working environment and

to ensure compliance with relevant standards. This is generally included in the ESIA report, when it is

submitted and subsequently approved by the Minister of Environment.

5.11 Summary

WAI is aware that Alecto has received updates of the JV activities from Randgold and works appear to

be progressing.

WAI is satisfied that the mineral rights Alecto holds in Mali are prospective for gold, and by

concentrating on the Zambia and Botswana assets, and allowing the Mali assets to be developed via

JV partners, this will enable all projects to progress independently.

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6 GLOSSARY

Glossary

Term Definition

“ADTs” Articulated Dump Trucks

“AIA” Archaeological Impact Assessment

“alteration” Changes in the chemical or mineralogical composition of a rock, generally produced by weathering or hydrothermal solutions.

“Alecto” Alecto Minerals Plc

“AMC” African Mining Consultants

“AME” African Mining & Exploration

“AMP” Archaeological Management Plan

“Au” Chemical symbol for the element gold

“BCL” Bamangwato Concessions Limited

“BRGM” Bureau de Recherches Géologiques et Minières

“C” Degrees Celsius

“Caracal” Caracal Gold Mali SARL

“CCIC” Caracle Creek

“Cgeol” Chartered Geologist of the Geological Society

“Coffey Mining” Coffey Mining Pty Ltd

“Cradle” Cradle Arc Investments (Proprietary) Limited

“chalcopyrite” The mineral sulphide of iron and copper, CuFeS2; sometimes called copper pyrite or yellow copper ore

“chlorite” Tetrahedral sheet silicates of iron, magnesium, and aluminium, characteristic of low-grade metamorphism; green colour, with cleavage like mica

“CPR” Competent Persons Report

“Cu” Chemical symbol for copper

“Cut-off grade” The minimum concentration of a valuable component in a marginal sample of the mineral. The cut-off grade is used to delineate parts of the deposit to be mined

“Cuacid“ Acid Soluble Copper

“CuTotal” Total Copper (“CuTotal“)

“cyanidation” A principal method of extracting gold from low grade ore by converting the gold to a water-soluble complex

“deposit” A body of mineralisation that represents a concentration of valuable metals.

“dilution” Waste rock that is, by necessity, removed along with the ore in the mining process subsequently lowering the grade of the ore

“dip angle” The angle between the direction of the described geological structure and horizontal plane.

“disseminated” Mineral deposit in which the desired minerals occur as scattered particles in the rock, but in sufficient quantity to make the deposit an orebody

“DMS” Dense Medium Separation

“DTM” Digital Terrain Models

“DRC” Democratic Republic of Congo

“EDM” Energie du Mali

“EHS” Environmental, Health & Safety

“EIA” Environmental Impact Assessment

“EPC” Engineering Procurement Construction

“EPs” The Equator principles

“ESIA” Environmental and Social Impact Assessment

“Falconbridge or FEB” Falconbridge Explorations Limited

“Fe” Chemical symbol for iron.

“feasibility study” Technical and financial study to assess the commercial viability of a project

“feldspar” Most important group of rock forming silicate minerals, with end-members, alkali feldspar KalSi2O8, sodium feldspar NaAlSi2O8 and calcium feldspar CaAlSi2O8

“FGS” Fellow of the Geological Society

“g/t” gramme per metric tonne

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Glossary

Term Definition

“GDP” Gross Domestic Product; total value of goods produced and services provided in a country in one year

“GFC” Global Financial Crisis

“grade” Relative quantity or the percentage of ore mineral or metal content in an orebod

“HCN” Hydrogen Cyanide

“hematite” Hematiteis the mineral form of iron(III) oxide (Fe₂O₃), one of several iron oxides

“HG” High Grade

“host rock” Wall rock that confines the mineral occurrence zone

“hydrothermal” Refers in the broad sense to the process associated with alteration and mineralisation by a hot mineralised fluid (water).

“ICMI” The International Cyanide Management Code

“IDW2” Inverse Distance Squared

“IFC” International Finance Corporation

“Indicated resource”

An economic mineral occurrence have been sampled (from locations such as outcrops, trenches, pits and drillholes) to a point where an estimate has been made, at a reasonable level of confidence, of their contained metal, grade, tonnage, shape, densities, physical characteristics.

“IPD” Inverse Power Distance

“JORC Code” Joint Ore Reserve Committee Code; the Committee is convened under the auspices of the Australasian Institute of Mining and Metallurgy

“kg” Kilogramme (1,000kg = 1t) “km(s)” kilometres

“km2” square kilometres

“lb” Unit of mass, pound (1 metric tonne = 2,204lb)

“leached” A rock that is subject to the process of being broken down by the action of substances dissolved in water.

“leaching” see cyanidation

“LG” Low Grade

“LHDs” Load Haul Dump

“LOI” Letter of Intent

“LOM” Life of Mine

“m” metre

“malachite” Cu2CO3(OH)2; bright green; occurs in oxidised zones of copper deposits and a source of copper.

“MCB” Messina Copper Botswana

“metamorphic rock” A rock that has, in a solid state, undergone changes in mineralogy, texture, or chemical composition as a result of heat or pressure.

“MIK” Multiple Indication Kriging

“mine plan” Describes activities to be conducted at the mine site over the life of the operation as well as post mining management to ensure environmentally sound mining, including leaving the area in a safe, non-polluting condition, and preserving as much land value as possible.

“mine” A mineral mining enterprise. The term is often used to refer to an underground mine.

“mineral deposit” A body of mineralisation that represents a concentration of valuable metals. The limits can be defined by geological contacts or assay cut-off grade criteria.

“mineral resource”

a concentration or occurrence of material of intrinsic economic interest in or on the Earth’s crust in such a form that there are reasonable prospects for the eventual economic extraction; the location, quantity, grade geological characteristics and continuity of a mineral resource are known, estimated or interpreted from specific geological evidence and knowledge; mineral resources are sub-divided into Inferred, Indicated and Measured categories

“mineralisation” Process of formation and concentration of elements and their chemical compounds within a mass or body of rock.

“mining method” A combination of technical solutions that define the geometry, technology and sequence of mining.

“mm” millimetre, one thousandth of a metre.

“MMDA” Mines and Minerals Development Act

“MMEWA” Ministry of Minerals Energy and Water Affairs

“Mowana” Mowana Copper Mine

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Glossary

Term Definition

“MRE” Mineral Resource Estimate

“Mt” Million tonnes.

“MTZ” Main Transcurrent Shear Zone

“MQWM” The Mines, Quarries, Works and Machineries Act

“NaHS” Sodium Hydrogen Sulphide

“NHI” Northern Heavy Industries Group Company Limited

“NN” Nearest Neighbour

“OK” Ordinary Kriging

“OSA” On Stream Analyser

“open pit” A mine that is entirely on surface; also referred to as open-cut or open-cast mine.

“ore” Naturally occurring material from which a mineral or minerals of economic value can be extracted profitably or to satisfy social or political objectives.

“orebody” Mining term to define a solid mass of mineralised rock which can be mined profitably under current or foreseeable economic conditions.

“ounce” or “oz” troy ounce (= 31.1035 grammes)

“oxide” Mineral formed by the union of an element with oxygen; the portion of an orebody near the surface that has been leached by percolating water carrying oxygen, carbon dioxide, or other gases.

“Pb” Chemical symbol for lead.

“PFS” Preliminary Feasibility Study

“PGMs” Platinum-group metals

“ppb” Parts per billion

“ppm” Parts per million

“precious metal” Gold, silver and platinum group minerals.

“processing” A combination of processes for primary treatment of solid minerals in order to extract the products amenable to further technically and economically feasible chemical or metallurgical treatment or use.

“pyrite” Mineral compound of iron and sulphur, sulphide mineral, iron sulphide, chemical symbol FeS2.

“QA/QC” Quality assurance/quality control.

“quartz” Mineral composed of silicon dioxide.

“Randgold” Randgold Resources (Mali) Limited

“RAP” Resettlement Action Plan

“RC” Reverse Circulation

“RPA” Roscoe Postle and Associates Inc.

“RSV” Read, Swatman and Voight

“sampling” The process of studying the qualitative and quantitative composition and properties of natural formations comprising a deposit.

“SART” SART (sulphidisation, acidification, recycling and thickening) is an industry standard process to efficiently manage and recycle the cyanide while complying with environmental regulations concerning cyanide destruction.

“schist” a medium-grade metamorphic rock with medium to large, flat, sheet-like grains in a preferred orientation.

“sedimentary rock”

Rock formed by sedimentation of substances in water, less often from air and due to glacial actions on the land surface and within sea and ocean basins. Sedimentation can be mechanical (under the influence of gravity or environment dynamics changes), chemical (from water solutions upon their reaching saturation concentrations and as a result of exchange reactions), or biogenic (under the influence of biological activity).

“sedimentary” Rocks formed from material derived from pre-existing rocks by processes of erosion, mass wasting and weathering.

“SMFZ” Sénégalo-Malian Fault Zone

“SNC-Lavalin” SNC- Lavalin Engineers and Constructors Inc

“sulphide” Mineral containing sulphur in its non-oxidised form; that part of a sulphide deposit that has not been oxidised by near-surface waters. Ore which is in its primary mineralised state and has not undergone the process of natural oxidation.

“SX-EW” Solvent extraction and electrowinning (SX-EW) is a two-stage hydrometallurgical process that first extracts and upgrades copper ions from low-grade leach solutions into a solvent containing

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Glossary

Term Definition a chemical that selectively reacts with and binds the copper in the solvent. The copper is extracted from the solvent with strong aqueous acid which then deposits pure copper onto cathodes using an electrolytic procedure (electrowinning).

“t” metric tonne (1,000kg)

“tailings” Liquid wastes of mineral processing with valuable component grade lower than that of the initial material.

“US$” United States Dollars

“vein” Tabular deposit of minerals occupying a fracture, in which particles may grow away from the walls towards the middle.

“VGL” Very low Grade

“WAI” Wardell Armstrong International

“WSB” Water Surveys (Botswana) (Pty) Ltd

“Xinhai” Xinhai Mining Machinery Company Limited

“XRF” X-ray fluorescence; emission of characteristic "secondary" (or fluorescent) X-rays from a material that has been excited by bombarding with high-energy X-rays or gamma rays; widely used for elemental analysis.

“ZAF” Zambian Air Force

“ZEMA” Zambia Environmental Management Agency

“ZESA” Zambian Electricity Supply Authority

“ZESCO” Zambian state-owned power company

“Zn” Chemical symbol for zinc

“$” United States Dollars

“%” Percent

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alecto minerals plc competent person's report on the mineral assets held

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