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DIRECTORATE SOUND MINING HOUSE P POTGIETER, B Ing Mynbou 2A Fifth Ave Rivonia 2128 D VAN BUREN, BSc (Hons) Geology PO Box 97194 Petervale 2151 M LOTRIET, BSc Min Eng (Hons), PMP, FSAIMM Tel No : +27 (0) 11 234 7152 G P STRIPP, BSc Min Eng (Hons), MSc PhD, FSAIMM, FMVSSA Reg No : 2002/002265/07 Website : www.soundmining.co.za CONSULTANTS TO THE MINING INDUSTRY INDEPENDENT TECHNICAL REPORT ZANDFONTEIN TAILINGS RETREATMENT PROJECT TO RECOVER CHROME FOR EASTERN PLATINUM LIMITED Report No: SMS/0708/17 1 September 2017

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Page 1: FOR...ITR for Zandfontein Tailing Retreatment Project to Recover Chrome Report No.: SMS/0708/17 8 24.1.3. Amendment of the Broad-Based Socio-Economic Empowerment Charter (2010) .....149

DIRECTORATE SOUND MINING HOUSE

P POTGIETER, B Ing Mynbou 2A Fifth Ave Rivonia 2128

D VAN BUREN, BSc (Hons) Geology PO Box 97194 Petervale 2151

M LOTRIET, BSc Min Eng (Hons), PMP, FSAIMM Tel No : +27 (0) 11 234 7152

G P STRIPP, BSc Min Eng (Hons), MSc PhD, FSAIMM, FMVSSA Reg No : 2002/002265/07

Website : www.soundmining.co.za

CONSULTANTS TO THE MINING INDUSTRY

INDEPENDENT TECHNICAL REPORT

ZANDFONTEIN TAILINGS RETREATMENT

PROJECT TO RECOVER CHROME

FOR

EASTERN PLATINUM LIMITED

Report No: SMS/0708/17 1 September 2017

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ITR for Zandfontein Tailing Retreatment Project to Recover Chrome

Report No.: SMS/0708/17

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Prepared by: SOUND MINING SOLUTION (PTY) LTD

Sound Mining House, 2A Fifth Avenue Rivonia, 2128

South Africa P O Box 97194, Petervale, 2151

South Africa

Tel: (011) 234 7152, Fax: (011) 234 8912

Compiled by:

Kayleigh Cooper

Reviewed and Approved by:

Vaughn Duke

Client Company: Barplats Mines Limited

Contact Person: Anton Lubbe

COPYRIGHT

This technical report enjoys copyright protection and the copyright vests in Sound Mining Solution (Pty) Ltd unless otherwise agreed to in writing. It may not be reproduced or transmitted in any form or by any means whatsoever to any person without the written permission of the copyright holder. Should any reproduction, electronically or otherwise, be made of this document, Sound Mining Solution (Pty) Ltd is indemnified against any consequence which may arise. While all reasonable efforts were taken by Sound Mining Solution (Pty) Ltd to verify the information contained in this report, Sound Mining Solution (Pty) Ltd does not accept responsibility for any inaccuracies in this regard, nor any action which might arise as a consequence.

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lowet
Typewriter
"Vaughn Duke"
lowet
Typewriter
"Kayleigh Cooper"
lowet
Typewriter
"Richard Phillips"
lowet
Typewriter
"John Ruddy"
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TABLE OF CONTENTS

1. Summary ............................................................................................................ 16

1.1. Introduction and Terms of Reference .................................................................. 16

1.2. Property Description, Title Status and Land Tenure ............................................ 16

1.3. Encumbrances, Environmental Liabilities and Permits ........................................ 17

1.4. History ................................................................................................................. 17

1.5. Geology ............................................................................................................... 18

1.6. Exploration, Drilling and Data Integrity ................................................................ 18

1.7. Mineral Processing and Metallurgical Testing ..................................................... 19

1.8. Mineral Resources and Mineral Reserves ........................................................... 19

1.9. Mining and Recovery Methods and Project Infrastructure ................................... 20

1.10. Marketing, Costs and Economic Analysis ............................................................ 20

1.11. Adjacent Properties ............................................................................................. 21

1.12. Interpretations and Conclusions .......................................................................... 21

1.13. Recommendations............................................................................................... 22

2. Introduction ....................................................................................................... 23

2.1. Terms of Reference ............................................................................................. 23

2.2. Personal Inspection ............................................................................................. 23

2.3. Sources of Information ........................................................................................ 24

2.4. Independence ...................................................................................................... 24

2.5. Qualifications and Experience ............................................................................. 25

3. Reliance on Other Experts ................................................................................ 27

4. Property Description and Location .................................................................. 29

4.1. Property Description and Property Location ........................................................ 29

4.2. Legal Tenure for the TSF .................................................................................... 29

4.3. Royalties .............................................................................................................. 33

4.4. Environmental Liabilities, Legislative and Permitting Requirements .................... 33

4.5. Other Significant Factors and Risks .................................................................... 33

4.6. Material Agreements ........................................................................................... 33

5. Accessibility, Climate, Local Resources, Infrastructure and Physiology .... 34

5.1. Accessibility ......................................................................................................... 34

5.2. Climate ................................................................................................................ 34

5.3. Physiology ........................................................................................................... 34

5.4. Local Resources and Infrastructure ..................................................................... 35

6. History ................................................................................................................ 36

6.1. Historical Exploration Work ................................................................................. 38

6.2. Historical Mineral Resource Estimates ................................................................ 38

6.3. Historical Operations ........................................................................................... 38

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7. Geological Setting and Mineralisation ............................................................. 40

7.1. Regional Geology ................................................................................................ 40

7.2. Local Geology ..................................................................................................... 42

7.3. Mineralisation ...................................................................................................... 43

7.4. Structure .............................................................................................................. 45

8. Zandfontein UG2 TSF ........................................................................................ 47

9. Exploration ......................................................................................................... 49

9.1. Sound Mining Observations ................................................................................ 49

10. Drilling ................................................................................................................ 50

10.1. Auger Drilling Methodology ................................................................................. 50

10.2. TSF Auger Hole Sampling Results ...................................................................... 52

10.2.1. Sound Mining Observations ........................................................................................... 52

11. Sample Preparation, Analyses and Security ................................................... 53

11.1. Sampling Procedure ............................................................................................ 53

11.2. Laboratory ........................................................................................................... 53

11.2.1. Au, Pt, Pd Determination by Pd Collection ICP-OES ..................................................... 54

11.2.2. Determination of Major Elements by Fused Disc XRF ................................................... 54

11.2.3. Relative Density Measurements .................................................................................... 55

11.3. Dry Bulk Density Measurements ......................................................................... 55

11.4. Quality Assurance and Quality Control ................................................................ 57

11.4.1. Certified Reference Material .......................................................................................... 57

11.4.2. Blanks ........................................................................................................................... 59

11.4.3. Field Duplicates ............................................................................................................. 60

11.5. Sound Mining Observations ................................................................................ 60

12. Data Verification ................................................................................................ 61

12.1. Sound Mining Observations ................................................................................ 61

13. Mineral Processing and Metallurgical Testing ................................................ 62

13.1. Pilot Plant Flowsheet Description ........................................................................ 62

13.2. Sample Selection and Compositing ..................................................................... 64

13.3. Test Work Results ............................................................................................... 64

13.4. Sound Mining Observations ................................................................................ 66

14. Mineral Resource Estimates ............................................................................. 67

14.1. Resource Estimation Process ............................................................................. 67

14.1.1. Construction of Wireframe Models ................................................................................. 67 14.1.1.1. Tailings Volumes ............................................................................................................................68 14.1.1.2. Variography ....................................................................................................................................71

14.1.2. Sound Mining Observation ............................................................................................ 72

14.2. Mineral Resource Statement ............................................................................... 72

14.2.1. Sound Mining Comments .............................................................................................. 74

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15. Mineral Reserve Estimate ................................................................................. 80

15.1. Mineral Reserve Tabulation ................................................................................. 80

15.2. Sound Mining Observations ................................................................................ 83

16. Mining Method ................................................................................................... 84

16.1. Introduction .......................................................................................................... 84

16.2. Mining .................................................................................................................. 84

16.2.1. Overarching Depletion Strategy ..................................................................................... 84

16.2.2. Mining Methodology ...................................................................................................... 89 16.2.2.1. Mechanised Operations .................................................................................................................89 16.2.2.2. Hydraulic Operations ......................................................................................................................91 16.2.2.3. Sound Mining Observations ...........................................................................................................93 16.2.2.4. Mining Operations ..........................................................................................................................93 16.2.2.5. Grade Control .................................................................................................................................96 16.2.2.6. Planning Aspects............................................................................................................................96

16.3. Deposition ........................................................................................................... 99

16.3.1. Design Considerations .................................................................................................. 99

16.3.1.1. Quantity of Tailings.........................................................................................................................100 16.3.1.2. Capacity Analysis ...........................................................................................................................104 16.3.1.3. Stability Assessment ......................................................................................................................105

16.3.2. Operational Considerations ........................................................................................... 106

16.4. Sound Mining Observations ................................................................................ 107

17. Recovery Method............................................................................................... 108

17.1. Engineering Design Philosophy and Design Criteria ........................................... 108

17.2. Process Flowsheet .............................................................................................. 109

17.3. Chrome Plant Tailings Disposal .......................................................................... 112

17.4. Concentrate Stockpiling Facility .......................................................................... 112

17.5. Dispatch Facility .................................................................................................. 112

17.6. Water Requirements ............................................................................................ 113

17.7. Spillage handling ................................................................................................. 113

17.8. Control instrumentation ....................................................................................... 113

17.9. Sound Mining Observations ................................................................................ 113

18. Project Infrastructure ........................................................................................ 114

18.1. Mining and Deposition Infrastructure: .................................................................. 114

18.2. Electrical Infrastructure and Supply ..................................................................... 116

18.3. Water Reticulation ............................................................................................... 117

18.4. Maintenance Strategy .......................................................................................... 119

18.5. Sound Mining Observations ................................................................................ 119

19. Market Studies and Contracts .......................................................................... 120

19.1. Demand ............................................................................................................... 120

19.2. Supply ................................................................................................................. 121

19.3. Export Logistics and Procedures ......................................................................... 124

19.4. Sound Mining Observations ................................................................................ 124

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20. Environmental Studies, Permitting and Social or Community Impact ......... 126

20.1. Safety Health and Environmental Study .............................................................. 126

20.1.1. Storm water Management ............................................................................................. 126

20.1.2. Dam Wall Integrity ......................................................................................................... 127

20.1.3. Air Quality Monitoring and Dust Suppression................................................................. 128

20.1.4. Surface Water, Groundwater and Water Quality Monitoring .......................................... 129

20.2. Social and Community Impact ............................................................................. 130

20.2.1. Soils, Land Use and Land Capability ............................................................................. 130

20.2.2. Archaeology, Cultural and Historical Sites ..................................................................... 130

20.2.3. Vegetation, Flora and Fauna ......................................................................................... 130

20.2.4. Social Labour Plan (SLP) .............................................................................................. 131

20.3. Recruitment and Training .................................................................................... 131

20.4. Industrial Relations .............................................................................................. 132

20.5. Environmental Provisions .................................................................................... 133

20.6. Sound Mining Observations ................................................................................ 133

21. Capital and Operating Costs ............................................................................ 134

21.1. Operating Expenditure ......................................................................................... 134

21.1.1. Introduction ................................................................................................................... 134

21.1.2. Accuracy of Estimate ..................................................................................................... 134

21.1.3. Methodology / Basis of Estimate .................................................................................... 134

21.1.4. Owner Operating Costs ................................................................................................. 134

21.1.5. Contractor’s Operating Costs ........................................................................................ 135

21.1.6. Operating Cost Summary .............................................................................................. 135

21.1.7. Sound Mining Observations ........................................................................................... 136

21.2. Capital Expenditure ............................................................................................. 137

21.2.1. Introduction ................................................................................................................... 137

21.2.2. Accuracy of Estimate ..................................................................................................... 137

21.2.3. Methodology / Basis of Estimate .................................................................................... 137

21.2.4. Owner Capital Expenditure ............................................................................................ 137

21.2.5. Contractor Capital Expenditure ...................................................................................... 139

21.2.6. Capital Expenditure Summary ....................................................................................... 140

21.2.7. Sound Mining Observations ........................................................................................... 140

22. Economic Analysis ............................................................................................ 141

22.1. Introduction .......................................................................................................... 141

22.2. Revenue .............................................................................................................. 141

22.3. Discounted Cash Flow Analysis .......................................................................... 141

22.4. Sound Mining Observations ................................................................................ 143

23. Adjacent Properties ........................................................................................... 144

24. Other Relevant Data and Information .............................................................. 145

24.1. Legislative Framework ......................................................................................... 145

24.1.1. Mineral and Petroleum Resources Development Act (Act 28 of 2002) (MPRDA) ........... 146

24.1.2. Broad-Based Socio-Economic Charter (2004) ............................................................... 148

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24.1.3. Amendment of the Broad-Based Socio-Economic Empowerment Charter (2010) ......... 149

24.2. Risk Assessment ................................................................................................. 151

25. Interpretation Data and Information ................................................................. 152

26. Recommendation .............................................................................................. 153

27. References ......................................................................................................... 154

LIST OF FIGURES

Figure 1: Barplats Organisational Chart ........................................................................................ 17

Figure 2: Barplats Locality Plan and Mining Rights over the TSF .................................................. 30

Figure 3: Surface Rights Covering the TSF ................................................................................... 31

Figure 4: Ownership Structure ...................................................................................................... 37

Figure 5: Simplified Geological Map Indicating the Extent of the BIC ............................................ 41

Figure 6: A generalised Stratigraphic Column of the UG2 Chromitite Seam .................................. 43

Figure 7: A Generalised Cross Section of the UG2 intercepted at CRM ........................................ 44

Figure 8: Location of Barplats Mining Area Against Major Faults .................................................. 45

Figure 9: TSF Domain 101 and Domain 102 ................................................................................. 48

Figure 10: 2016 Exploration Drill Plan Showing the Auger Drillholes ............................................. 51

Figure 11: Pilot Plant Flowsheet .................................................................................................... 63

Figure 12: Sampling Point on TSF ................................................................................................ 64

Figure 13: TSF Mineralised Wireframe as Determined by SRK ..................................................... 69

Figure 14: TSF Mineralised Wireframe (Plan View) ....................................................................... 70

Figure 15: SRK Mineral Resource Classification for the TSF ........................................................ 73

Figure 16: 3E PGEs Grade Distribution of the TSF ...................................................................... 75

Figure 17: Au Grade Distribution of the TSF ................................................................................. 76

Figure 18: Cr2O3 Grade Distribution of the TSF ............................................................................. 77

Figure 19: 3E PGEs Grade Distribution (Cross Section) ............................................................... 78

Figure 20: Cr2O3 Grade Distribution (Cross Section) ..................................................................... 79

Figure 21 : Plan View of TSF showing Reserved Categories ........................................................ 82

Figure 22 : Proposed Mining Area for TSF .................................................................................... 85

Figure 23: Grade plot Cr2O3 .......................................................................................................... 86

Figure 24: Mining sequence .......................................................................................................... 87

Figure 25: contours of the coarseness (µm) .................................................................................. 88

Figure 26: Schematic Showing Mechanical Loader Settings ......................................................... 90

Figure 27: Jet Pump System ......................................................................................................... 91

Figure 28: Typical Cross Section from Main Catchment to Vibrating Screen ................................. 92

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Figure 29: Mining plan .................................................................................................................. 98

Figure 30: Design for the Re-deposition of tailings on the TSF.................................................... 100

Figure 31: Process Flowsheet ..................................................................................................... 110

Figure 32: Proposed Single Line Electrical Reticulation .............................................................. 116

Figure 33: Water Balance Diagram ............................................................................................. 118

Figure 34: China GDP Real Annual Growth ................................................................................ 120

Figure 35: Global Stainless Steel Output in 2010-2016 ............................................................... 120

Figure 36: 2017-2022 Chrome Ore Market Research Report ...................................................... 121

Figure 37: Global Chrome Ore Reserve Distribution ................................................................... 121

Figure 38: Global Chrome Ore Output Distributions .................................................................... 122

Figure 39: Global Chrome Ore Production and Growth Rate in 2011-2016 ................................. 122

Figure 40: Chrome Ore Stocks in 2013-2017 .............................................................................. 123

Figure 41: South African Chrome Ore 42% Conc. From 2012 to 2017 ........................................ 123

Figure 42: Zone of Influence of failure of the TSF ....................................................................... 128

Figure 43: Sensitivity of Cash Flow to Revenue, Capex, Opex .................................................... 142

LIST OF TABLES

Table 1: Reliance on Other Experts .............................................................................................. 27

Table 2: Legal Tenure Details ....................................................................................................... 32

Table 3: SRK fixed Volume Dry Bulk Density Measurements for Domain 101 and 102 ................. 56

Table 4: AMIS 0321 Certification ................................................................................................... 57

Table 5: Summary Statistics of independent field duplicates ......................................................... 60

Table 6: Pilot Plant Test Work Results .......................................................................................... 65

Table 7: PGEs, Au and Cr2O3 Grade Frequency Distribution for Domain 101 ............................... 68

Table 8: PGEs, Au and Cr2O3 Grade Frequency Distribution of Domain 102 ................................ 68

Table 9: Modelled Semi-Variogram Parameters for the Tailing in Domain 101 .............................. 71

Table 10: Modelled Semi-Variogram Parameters for the Tailing in Domain 102 ............................ 72

Table 11: SRK Mineral Resource Statement for the TSF as at 1st August 2017 ............................ 72

Table 12: Mineral Reserve Estimation as at 1 September 2017 .................................................... 81

Table 13: Depletion Summary ....................................................................................................... 88

Table 14: Mechanical Loader Cutting Depth Settings .................................................................... 90

Table 15: Design criteria ............................................................................................................... 97

Table 16: Production Schedule ................................................................................................... 101

Table 17: Generalised Stratigraphic Column ............................................................................... 105

Table 18: Material Strength Properties ....................................................................................... 106

Table 19: Process Design Criteria (PDC) ................................................................................... 108

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Table 20: Chrome Quality ........................................................................................................... 124

Table 21: Labour Complement .................................................................................................... 132

Table 22: Summary of Contractor Operating Costs ..................................................................... 135

Table 23: Operating Cost Summary ............................................................................................ 136

Table 24 Summary of Owner’s Capex (excluding contingency) ................................................... 138

Table 25: Summary of Contractor Capex (excl contingency) ....................................................... 139

Table 26: Capital Expenditure Summary ..................................................................................... 140

Table 27: Types of Rights Applicable in South Africa .................................................................. 146

LIST OF GRAPHS

Graph 1: Monthly CRP Throughput ............................................................................................... 38

Graph 2: Overall CRP Recovery efficiency.................................................................................... 39

Graph 3: Chrome Recovery from Hydraulic Mining of the TSF ...................................................... 39

Graph 4: AMIS 0321 Certified Reference Material Results - Cr2O3................................................ 57

Graph 5: AMIS 0321 Certified Reference Material Results - Pt ..................................................... 58

Graph 6: AMIS 0321 Certified Reference Material Results - Pd .................................................... 58

Graph 7: AMIS 0321 Certified Reference Material Results - Au .................................................... 59

Graph 8: AMIS 0321 Certified Reference Material Results - Rh .................................................... 59

Graph 9: Calculation Production Yield- Regression Curve (Yield vs Feed Grade) ......................... 66

Graph 10: Comparison between FS and Revised Mining Schedule ............................................ 102

Graph 11: Combined Production Quantity ................................................................................... 102

Graph 12: Average Cr2O3 Grade ................................................................................................. 103

Graph 13: Progressive Average Cr2O3 Grade ............................................................................. 103

Graph 14: Stage curve - Height vs Rate of Rise .......................................................................... 104

Graph 15: Stage curve - Height vs Volume ................................................................................. 104

Graph 16: Stage curve - Height vs Area ...................................................................................... 105

Graph 17: Monthly and Cumulative Real Cash Flow ................................................................... 142

LIST OF APPENDICES

Appendix 1: Consent of Qualified Person .................................................................................... 155

Appendix 2: Risk Assessment ..................................................................................................... 157

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Confidentiality

Information contained within this document is wholly owned by Sound Mining Solution (Pty) Ltd (Sound

Mining). Distribution of information is the explicit right of Sound Mining. Information contained herein is the

best available at date of issue and is subject to change as deemed by the author/s. Please note that if this

document is of draft status it is not for distribution.

Limited Purpose and Context of Information

The opinions expressed in this document are addressed only to Barplats Mines Limited for (Barplats) its

benefit with respect to this project. Sound Mining accepts no liability whatsoever for any loss or damage

(including consequential or economic loss or damage) arising as a result of reliance on the information

presented herein for any party other than Barplats.

Validity of Current Information

This document has been prepared as at the date stated on the cover page. Given the nature of this

document and the opinions expressed within, developments after the date of this document are likely. This

document takes no account of such potential future developments, therefore Sound Mining recommends that

Barplats seeks advice from Sound Mining in the future to ascertain whether any such events have occurred

or updated information has become available and should be considered.

Responsibility

Sound Mining has exercised reasonable care in accordance with standards normally exercised within our

profession in the completion of this document. Sound Mining has also relied on some information provided

by Barplats. Although Sound Mining has exercised reasonable care in reviewing this supplied data, Sound

Mining makes no representation or warranty with respect to the accuracy or veracity of the data that it has

relied upon.

Neither Sound Mining nor the authors of this report are qualified to provide extensive comment on the legal

aspects associated with ownership and other rights pertaining to Barplats. Sound Mining did not apply any

legal due diligence to confirm such title. Similarly, neither Sound Mining nor the authors of this report are

qualified to provide extensive comment on the environmental issues associated with the Project, as

discussed in Section 4.

Reliance on Information Received

Sound Mining compiled this report based on a review of reports and information supplied by Barplats.

Neither Sound Mining nor its employees have any financial interest in the Zandfontein Tailings Retreatment

Project other than the provision of technical consulting services to Barplats. Sound Mining has assumed that

all of the information and technical documents received and reviewed in this report are accurate and

complete in all material aspects. While Sound Mining carefully reviewed this information, Sound Mining has

not conducted an extensive independent investigation to verify its accuracy and completeness. The

information and conclusions contained herein are based on the information available to Sound Mining at the

time of preparation of this report.

Barplats agrees that neither it nor its associates will make any claim against Sound Mining to recover any

loss or damage suffered as a result of Sound Mining’s reliance on the information provided by Barplats for

use in the preparation of this report. Furthermore, Barplats has also indemnified Sound Mining against any

claim arising out of the assignment to prepare this report, except where the claim arises as a result of any

proven willful misconduct or negligence on the part of Sound Mining. This indemnity is also applied to any

consequential extension of work through queries, questions, public hearings or additional work required

arising from Sound Mining’s performance of the engagement. Sound Mining reserves the right to, but will not

be obligated to, revise this report and conclusions thereto if additional information becomes known to Sound

Mining subsequent to the date of this report.

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GLOSSARY OF TERMS, ABBREVIATIONS, UNITS

Units Description

% percent

m micrometre

° degree

°C centigrade degree

cm centimetre

cm2 square centimetre

g gram

g/t gram per tonne

ha hectare

hr hour

kg/ℓ kilogram per litre

km kilometres

kN/m3 kilonewton per cubic metre

kPa kilopascal

ktpd kilo tonnes per day

ktpm kilo tonnes per month

kV kilovolt

kW kilowatt

m metre

M million

m/s metre per second

m3 cubic metre

mamsl metre above mean sea level

mins minutes

Mℓ/day million litres per day

mm millimetres

Mt million tonnes

MVA mega volt ampere

oz ounce

t/m3 tonnes per cubic metre

tph tonnes per hour

tpm tonnes per month

USD United States Dollar

ZAR South African Rand

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Abbreviation Description

(Fe,Cu)S2 Chalcopyrite

(Ni,Fe)S2 Pentlandite

(Pt,Pd)S Cooperite

(Pt,Pd,Ni)S Braggite

95TH Perc 95th Percentile

Ag Silver

AMCU Association of Mineworkers and Construction Union

AMIS African Mineral Standards

Au Gold

Barplats Barplats Mines Limited

BEE Black Economic Empowerment

BIC Bushveld Igneous Complex

BIL Barplats Investments Limited

BRC Bottom Reef Contact

Capex Capital Expenditure

CIF Cost, Insurance and Freight

CIM Canadian Institute of Mining, Metallurgy and Petroleum

Co Cobalt

COG Cut-off Grade

CoV Coefficient of Variation

Cr Chrome

Cr2O3 Chromium Oxide

CRM Crocodile River Mine

CRP Chrome Recovery Plant

Cu Copper

CZ Critical Zone

DMR Department of Mineral Resources

DWAF Department of Water Affairs

Eastplats Eastern Platinum Limited

EBIT Earnings Before Interest and Tax

EIA Environmental Impact Assessment

EMP Environmental Management Plan

EMPr Environmental Management Program

ENVASS ENVASS Environmental Assurance Pty Ltd

Eskom South African National Power Utility

Fe Iron

Fe2S2 Pyrrhotite

FEL Front End Loader

FeO Iron Oxide

FeS2 Pyrite

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Abbreviation Description

FoM Free on Mine

FoS Factor of Safety

Fraser Alexander Fraser Alexander (Pty) Ltd

FS Feasibility Study

GNR Government Notice Regulation

GPS Global Positioning System

HDSAs Historically Disadvantaged South Africans

ICP OES Inductively Coupled Plasma – Optical Emission Spectrometry

Implats Impala Platinum Holdings Limited

IRR Internal Rate of Return

ITR Independent Technical Report

JSE Johannesburg Stock Exchange

LCZ Lower Critical Zone

LG Lower Group Chromitite Layers

LGS Lebowa Granite Suite

LIMS Laboratory Information Management System

LoM Life of Mine

LZ Lower Zone

MetQuip MetQuip (Pty) Ltd

MG Middle Group Chromitite Layers

MHSA Mine Health and Safety Act No 29 of 1996

MPRDA Mineral and Petroleum Resources Development Act

MPRDA Mineral and Petroleum Resources Royalty Act

MR Merensky Reef

MWP Mining Work Programme

MZ Main Zone

NEMA National Environmental Management Act

Ni Nickel

NPV Net Present Value

NUM National Union of Mineworkers

OK Ordinary Kriging

Opex Operating Expenditure

Pb Lead

Pd Palladium

PDC Process Design Criteria

PFP Pegmatoidal Feldspathic Pyroxenite

PGEs Platinum Group Elements

PGMs Platinum Group Metals

PLC Programmable Logic Controller

Pt Platinum

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Abbreviation Description

QAQC Quality Assurance and Quality Control

QP Qualified Person

Rand Mines Rand Mines Limited

RD Relative Density

RGS Rashoop Granophyre Suite

Rh Rhodium

RLS Rustenburg Layered Suite

ROM Run of Mine

Ru(Os,Ir)S2 Laurite

SAMREC Mineral Resource Statement in compliance with the South African Code for the Reporting of Exploration Results, Mineral Resources and Mineral Reserves

SANS South African National Accreditation System

SCADA Supervisory Control and Data Acquisition

SG Specific Gravity

SLP Social and Labour Plan

Sound Mining Sound Mining Solution (Pty) Ltd

SRK SRK Consulting (SA) Pty Ltd

Std Dev Standard Deviation

the Plant Processing Facility

the Project Zandfontein UG2 Tailings Storage Facility

TRC Top Reef Contact

TSF Tailing Storage Facility

TSX Toronto Stock Exchange

UASA United Association of South Africa

UCZ Upper Critical Zone

UG Upper Group Chromitite Layers

UG2 UG2 Chromitite Layer

USCS United Soil Classification System

UZ Upper Zone

V Vanadium

WSP Work Skills Plan

XRF X Ray Fluorescence

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1. SUMMARY

1.1. Introduction and Terms of Reference

Barplats Mines Limited (Barplats) engaged Sound Mining Solution Pty Ltd (Sound

Mining) to prepare an Independent Technical Report (ITR) on its plans to re-mine

and retreat the Zandfontein Tailings Storage Facility (TSF) to recover chrome (the

Project), which resulted from mining of the UG2 at the Crocodile River Mine

(CRM). It is understood by Sound Mining that the ITR will be used by the parent

company, Eastern Platinum Limited (Eastplats) and its wholly owned subsidiary

Barplats, to meet the reporting requirements of the Canadian Securities

Exchange.

This ITR complies with Canadian National Instrument NI 43-101 (the Standards

of Disclosure for Mineral Projects, NI 43-101F1 as well as the Mineral Resource

and Mineral Reserve classifications adopted by the Canadian Institute for Mining

(CIM).

Site visits were undertaken to CRM by the Qualified Person (QP) and the

technical specialists that assisted with the technical reviews during August 2017

and detailed discussions were held with CRM technical and management

personnel on site. Sound Mining has based its reviews on information largely

provided by Barplats. This information included a Mineral Resource Estimate for

the TSF that was completed by SRK Consulting (SA) Pty Ltd (SRK).

Neither Sound Mining, nor the authors of this ITR, have or have had previously,

any material interest in Eastplats or the mineral properties in which Eastplats has

an interest. Sound Mining’s relationship with Eastplats is solely one of

professional association between client and independent consultant. This ITR is

prepared in return for professional fees based upon agreed commercial rates and

the payment of these fees is not contingent on the results of this ITR.

1.2. Property Description, Title Status and Land Tenure

CRM is located on the western limb of the Bushveld Igneous Complex (BIC),

some 7 km south of Brits in the North West Province in South Africa. The terrain

is generally flat with an elevation of some 1,151 mamsl. The servitudes on site

include road and Eskom power lines.

Barplats has a Mining Right, an approved Environmental Management Plan

(EMP) and the necessary Water Use License. Re-mining of the TSF in terms of

the National Environmental Waste Management Act, 2008 (Act No. 59 of 2008)

[as amended], is authorized in the EMP as issued in 2001.

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1.3. Encumbrances, Environmental Liabilities and Permits

Barplats is not materially obligated financially or otherwise through contracts or

agreements at this stage. CRM does however, use the services of several

contracting companies to perform various functions including transportation,

housing services and security.

An Environmental Impact Assessment (EIA), EMP and Environmental

Management Program (EMPr) was approved on 30 January 2001. Barplats used

external specialists ENVASS Environmental Assurance Pty Ltd (ENVASS) to

audit and monitor compliance with the EMPr. This included an evaluation of the

environmental liability of Zandfontein, Maroelabult and Crocette. The latest

evaluation report indicates that the CRM should have a R75 million provision for

its environmental rehabilitation. CRM have arranged with Lombard Insurance to

issue financial guarantees to the Department of Mineral Resources (DMR) for this

amount. The guarantees are partially secured by cash and partially by mine

houses belonging to CRM.

1.4. History

The CRM operation was originally listed on the Johannesburg Stock Exchange

(JSE), in 1987. Barplats took control of CRM in 1991 and is in turn, currently

controlled as shown in Figure 1.

Figure 1: Barplats Organisational Chart

Mining operations on the UG2 of CRM started in the 1980s and although

interrupted periodically, continued until 2013. The material contained in the TSF

was derived from processing of UG2 for Platinum Group Metals (PGMs).

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A tailings retreatment plant was commissioned in 2007, and construction of the

existing Chrome Recovery Plant (CRP) was completed in 2008. Previous

production history indicates that the planned processing recovery and yields can

be realistically achieved.

1.5. Geology

The mining operations is situated adjacent to the Brits Graben structure located in

the western limb of the BIC. The BIC contains the world’s largest mineral

resources of Platinum Group Elements (PGEs), Chromium Oxide (Cr2O3) and

Vanadium (V) being exploited at numerous operations. Barplats mines the UG2,

which typically consists of a single chromitite layer.

Although currently on care and maintenance, CRM has exploited the UG2

Chromitite Layer (UG2) and it is the tailings from this material that comprise the

mineral resource on the TSF for the Project. A geological model of the TSF at

Barplats was developed in 2017 and has been used for mine planning.

1.6. Exploration, Drilling and Data Integrity

In October 2016 an exploration programme was conducted by Barplats to

quantify the three PGEs (3E PGEs), Gold (Au) and Cr2O3 resources in the TSF. A

total of 44 auger drillholes were drilled in the TSF with a total of 246 primary

samples being taken and submitted to the ISO 17025 accredited Set Point

Laboratories (Set Point) for chemical analyses.

During 2016, a total of 358.5 m was drilled from 44 auger drillholes in order to

evaluate the 3E PGEs, Au and Cr2O3 mineralisation. All the auger drillholes were

vertically inclined and collared with an azimuth of 0°. The holes were drilled

through the TSF and stopped once soil or clay was intercepted. This marked the

base of the TSF. The drillhole spacing applied a 200 m by 200 m grid to ensure

that the TSF was sufficiently covered and samples were taken at 1.5 m intervals.

Sound Mining received and reviewed the 44 Auger drillholes full dataset and

corresponding tailing assays (246). The data was imported using Micromine©

2016.1 software and validated to ensure that there were no errors identified within

the dataset.

The Quality Assurance and Quality Control (QAQC) methods and procedures

used with respect to data collection were acceptable and conducted in

accordance with best practice requirements. The distribution of the drillholes and

the result received demonstrate low variability in the grades within Domain 101

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(Old compartment) and Domain 102 (New compartment). A high degree of

precision and accuracy has been demonstrated by the independent exercise.

The TSF contains both Measured and Indicated Mineral Resources and a

Feasibility Study (FS) has been completed for the Project. It is noted that only a

portion of the TSF’s Mineral Resource is to be exploited by the Project.

1.7. Mineral Processing and Metallurgical Testing

A chromite recovery spiral plant was refurbished and re-commissioned in 2006. It

produced a 42% to 44% chemical and metallurgical chrome product from the

primary rougher tailings prior to secondary milling.

A report on internal spiral test work conducted indicated that this configuration

would optimise revenue over three other process flow streams tested. The

budgeted mass recovery to the spiral products is based on the test work

performed. The test work exceeded the required chromite product grade

specifications and support the efficiencies of the CRP as designed in the FS.

1.8. Mineral Resources and Mineral Reserves

The ITR has been prepared on information available up to and including

23 August 2017. The Mineral Resources and Mineral Reserves reflected in this

report are based on the Mineral Resource Report prepared by SRK and dated

1 August 2017 and on the FS completed by Barplats.

The Project’s Mineral Resources as at 31 July 2017 amount to 13.68 Mt at

20.72% Cr2O3. 12.48 Mt are in the measured Mineral Resource Category at

20.85% Cr2O3 and 1.19 Mt are in the Indicated Mineral Resource Category at

19.31% Cr2O3.

The Mineral Resource estimate is considered robust, and no critical flaws were

identified. In addition, Sound Mining supports the presented classifications.

Sound Mining has independently reviewed and restated the Mineral Reserves for

CRM utilising a modelled mining plan and a schedule together with appropriate

modifying factors. Sound Mining generated a discounted cash flow model to

justify the mineral reserves as estimated herein. The Proven and Probable

Mineral Reserves on the TSF at CRM as at September 2017 total some 6.42 Mt

at 22.36% Cr2O3. 6.25 Mt are in the Proved Mineral Reserve Category at 22.42%

Cr2O3 and 0.18 Mt are in the Probable Mineral Reserve category at 20.28%

Cr2O3.

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1.9. Mining and Recovery Methods and Project Infrastructure

The TSF is calculated to comprise a physical volume of just over 8,365,000 m3 of

tailings material or about 13.68 Mt (dry). A total of 6.42 Mt is planned to be moved

both mechanically and hydraulically to feed 240 ktpm to a modified and upgraded

CRP. A yield of around 15% is anticipated, which translates to a re-deposition

rate of about 208 ktpm. These tailings will be replaced into new paddocks on the

same footprint of the TSF to be mined.

A TSF operator will be contracted to do the mining while CRM personnel will

operate the CRP. A mechanical cutting machine will be used for the harder,

coarser material near the edges of the TSF while track mounted high pressure

monitor guns operating at a 40 bar water pressure will be utilised to mobilise a

slurry to a collection sump via a system of drains or launders for onward pumping

to the CRP.

The feed preparation and water reticulation infrastructure will be located at the

TSF with the redesigned gravity separation chrome recovery circuit retained

within CRM’s existing concentrator complex. Screens located at the TSF will

separate a +3 mm oversize fraction for re-crushing, re-milling or discarding as

necessary. Quality control processes are included in the FS because both grade

and particle size will need to be controlled for an economically efficient feed to the

CRP.

1.10. Marketing, Costs and Economic Analysis

Barplats does not have an off-take agreement for chromite, but the prevailing

market conditions support the sale of chromite profitability for the immediate

future. Sound Mining is of the opinion that Barplats will be able to get the chrome

cost efficiently into the Chinese market, where demand is the highest. Chrome

prices were adjusted as the metals are sold as a 40% concentrate, and therefore

only attract a percentage of the metal value.

Minimal capital is required for the mining operation because the appointed mining

contractor will supply all the mining equipment. The bulk of the capital is required

for the CRP and TSF construction. The mining cost was based on the anticipated

or forecast contract rates of the likely mining contractor and the processing and

overhead costs were determined using quotations and a bill of quantities

available at CRM. The cost estimates for the project included a contingency

based on the degree of uncertainty of the estimate.

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The capital and operating budget in the FS for the Project were used together

with the anticipated revenue forecast in a discounted cash flow model which

allowed the declaration of a mineral reserve.

Average total cost of production after capital, operating cost and royalties,

excluding further exploration drilling, corporate overheads and financing costs is

estimated to be ZAR 110.03/(RoM) t processed. Total capital expenditure for the

Project has been estimated at ZAR 219 M.

The Net Present Value (NPV) of the project, discounted at 13% per annum, is

estimated to be ZAR 42.2 M with an annualised internal rate of return (IRR) of

24% over a 33 month period.The project is forecast to generate a positive cash

flow in month 10 and reach break-even in month 25. Positive cash flows

averaging ZAR 12.9 M/month after payment of royalty are forecast over the

remaining LoM. At a FoM price of ZAR 870.79/t for 40% chrome concentrate

the project would be likely to achieve a cash margin of 10% and an operating

margin of 14%.

1.11. Adjacent Properties

There are numerous mines on the BIC with CRM being the most easterly on the

western limb. Nearby properties include Elandsfontein mine and Lonmin’s

operating Marikana mine, which is approximately 15 km apart. Samancor

operates chrome mines in close vicinity to CRM.

1.12. Interpretations and Conclusions

A technical review of the data used in the Mineral Resource estimation has

shown the quality of the data to be adequate for the intended purpose. The

historical drill results have limited QAQC monitoring as does the database in

which the data is stored.

Sound Mining found no fatal flaws in the modifying factors applied in the FS, and

accordingly this ITR presents a Mineral Reserve of 6.42 Mt at 22.36% Cr2O3

which is based on robust modifying factors. However the three material risks in

the opinion of Sound Mining are:

Chrome price fluctuation;

Politically motivated unrest, illegal squatting; and

Failure of TSF wall.

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1.13. Recommendations

As currently envisaged, the retreatment project has been required to use 20.5%,

which is a high cut-off grade (COG), to compensate for the significant drop-off in

yield anticipated at grades below about 19%. The LoM based on the current COG

is thus limited to some 33 months at a production rate of 240 ktpm, while cash

flow modelling suggests break-even may only occur in month 25.

The recovery of PGMs from the TSF should therefore be evaluated with a view to

lowering the COG and thus allowing a greater part of the available resource to be

treated over a longer LoM.

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2. INTRODUCTION

This ITR covering the FS work completed to date on recovering chrome from the

TSF, is prepared on behalf of Barplats for Eastplats, a Canadian registered

company which is listed both on the Toronto Stock Exchange (TSX) and on the

JSE. Barplats is incorporated in South Africa and is the owner and operator of

CRM and a wholly owned subsidiary of Eastplats. Eastplats’s website can be

accessed on www.eastplats.com.

2.1. Terms of Reference

This ITR has been prepared to comply with disclosure and reporting requirements

set forth in the TSX Corporate Finance Manual, Canadian National Instrument

43-101, Companion Policy 43-101CP, Form 43-101F1, the Standards of

Disclosure for Mineral Projects‟ of June 2011 (the Instrument) and the Mineral

Resource and Reserve classifications adopted by the Council of the Canadian

Institute of Mining (CIM).

The main activities undertaken for the ITR on the Project include the following:

A review of existing data and information.

Site visits and technical discussions.

A review of Mineral Resource estimation.

Estimation and classification of Mineral Reserve, including data validation.

A review of the Economic Model.

Compilation of a NI 43-101 and NI 43-101F1 compliant ITR.

All monetary figures expressed in this report are in South African Rands (ZAR)

unless otherwise stated. All technical measurements are reported in metric units,

unless otherwise stated.

2.2. Personal Inspection

A site visit was made during the period 15 to 23 August 2017 to CRM by Mr

Vaughn Duke Pr.Eng., PMP, MBA, BSc. Mining Engineering (Hons), as a

Qualified Person (QP) as that term is defined in NI 43-101.

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2.3. Sources of Information

Sound Mining has based its review of the property on information provided by

Barplats, along with technical reports by specialist consultants, and other relevant

published and unpublished data. These data and information are summarised as

follows:

Applications for prospecting and mining rights.

Information regarding drilling and assaying methods.

Mineral Resource estimation parameters.

Competent Persons Report.

Mine planning layouts and designs.

Ground stability reports.

Production schedules.

Metal accounting data and methods.

Process throughputs and recoveries.

Environmental reports, rehabilitation data and costs.

Financial model.

Relevant contracts.

Sound Mining’s specialists have endeavoured, by making all reasonable

enquiries, to confirm the authenticity and completeness of the technical data upon

which the ITR is based. A final draft of the ITR was also provided to Barplats for

the purpose of identifying any material errors or omissions prior to lodgement.

2.4. Independence

This ITR has been prepared by Sound Mining, which is an independent mining

consultancy. Its consultants have extensive experience in preparing Competent

Persons, Technical Reports and Valuation Reports for mining and exploration

companies. Sound Mining’s specialists writing this report have, collectively, more

than 50 years of experience in the assessment and evaluation of chrome mining

and exploration projects worldwide and are members in good standing of

appropriate professional institutions.

Neither Sound Mining nor its staff or subcontractors have, or have had, any

interest in these projects capable of affecting their ability to give an unbiased

opinion and, have not received, and will not receive, any pecuniary or other

benefits in connection with this assignment, other than normal consulting fees.

Neither Sound Mining nor any of its personnel involved in the preparation of this

ITR have any material interest in either Barplats or in any of the properties

described herein.

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Sound Mining was remunerated a fixed fee amount for the preparation of this

report, with no part of the fee contingent on the conclusions reached or the

content of this report. Except for these fees, Sound Mining has not received and

will not receive any pecuniary or other benefit whether direct or indirect for or in

connection with the preparation of this report.

The Mineral Resources for the Project were independently estimated, classified

and signed off by Mr A. S. Page of SRK (Pr.Sci Nat, MGSSA). The remainder of

the ITR is signed off by Mr. V Duke of Sound Mining.

Sound Mining reserves the right to, but will not be obliged to, revise this report or

sections therein, and conclusions thereto, if additional information becomes

known to Sound Mining subsequent to the date of this report.

2.5. Qualifications and Experience

Sound Mining has independently compiled this ITR as an independent review and

sign off. Mr. V Duke has the relevant and appropriate experience and

independence to appraise the assets. Mr V Duke is considered a QP, having

more than five years’ relevant experience in the assessment and evaluation of

the types of exploration and mining properties discussed in this report. Mr. V

Duke, was assisted by Kayleigh Cooper, John Ruddy and Richard Phillips, but

remains responsible for the overall report.

Vaughn Glenn Duke is a Senior Mining Engineer with over thirty years’

experience in the mining industry. His experience includes Executive

Management, Mining Engineering, Technical Evaluation, Financial Evaluation,

Due Diligence and Project Management. He has worked in various commodities

including precious metals, uranium, manganese, coal and base metals. He has

experience within South Africa, Ghana, Mozambique, Portugal, Namibia, Canada,

Zimbabwe, Sierra Leone, Mali, Sudan, UK, USA, Liberia, DRC, Botswana, China

and Zambia.

Kayleigh Cooper is a Geologist with nine years’ experience in the mining industry.

Her experience includes 3D Geological Modelling and Database Management,

Mineral Resource Estimation and Geostatistical Analysis, Mineral Exploration and

field mapping, Prospecting and Mining Work programme applications, Geological,

Environmental and Quality Assurance Reviews and operational experience.

Kayleigh has worked in various commodities including platinum, iron, manganese

gold, coal, fluorspar, rare earth elements, copper, nickel, uranium and bauxite.

She has extensive experience within South Africa, Zambia and Mozambique.

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John Ruddy is a mining engineer with 44 years’ experience in the mining industry.

His experience includes financial modelling, financial evaluation, mining

engineering and due diligence reviews. John has worked in various commodities

including coal diamonds, precious and base metals and industrial minerals. He

has covered Southern Africa, West Africa and East Africa.

Richard Phillips is a metallurgist with over 40 years’ experience in production and

project management. He held senior positions at Anglo American Platinum

Corporation and is a specialist in South African Chrome and Platinum Group

Metals. Richard has a NHD (Extraction Metallurgy) and a Bachelor of Arts

(Economics; Geography). He is a Fellow of the SAIMM.

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3. RELIANCE ON OTHER EXPERTS

Sound Mining has assumed that all of the information and technical documents

reviewed and listed in the “References” section of this report are accurate and

complete in all material aspects. While Sound Mining carefully reviewed all of this

information, Sound Mining has not concluded any extensive independent

investigation to verify their accuracy and completeness. The information and

conclusions contained herein are based on information available to Sound Mining

at the time of preparation of this report. Some of this information was based on

work done by employees and South African Companies that worked under the

direction of Barplats (Table 1).

Table 1: Reliance on Other Experts

Specialists Section

Mr. A Page Mineral Resource Estimate (Section 7 to 12, 14)

Dr B Shi Mineral Reserve Estimate (Section 15)

Mr A Lubbe, Marketing (Section 19)

Mr J Coetzee Metallurgy (Section 13)

Mr J Kapp Infrastructure (Section 18)

Mrs H Hanson Survey and Data (Section 23 and 24)

Mr M Hlapolosa Social and Community (Section 20)

Mr D Barnard Permitting (Section 20)

Mr M Gandela Environmental (Section 20)

Fraser Alexander (Pty) Ltd Mining Costs (Section 21 and 22)

Sound Mining has relied upon Mr. A. S. Page (Pr. Sci. Nat South Africa Reg. No

400022/07), BSc (Hons). Mr A Page has independently estimated the Mineral

Resources for the Project. Mr A Page is considered a QP, having more than five

years’ relevant experience in the assessment and evaluation of the types of

exploration and mining properties discussed in this report. Qualified Persons’

Certificates are presented in Appendix 1.

Sound Mining has viewed details regarding the mining rights that collectively

comprise the CRM. Sound Mining has not independently verified, nor is it

qualified to verify, the legal status of these concessions. The present status of

tenements listed in this report is based on information and copies of documents

provided by Barplats. Similarly, neither Sound Mining nor the authors of this

report are qualified to provide comment on environmental issues associated with

the Project.

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Barplats has reviewed draft copies of this report for factual errors. Any changes

made as a result of these reviews did not involve any alteration to the conclusions

made. Hence the statements and opinions expressed in this document are given

in good faith and in the belief that such statements and opinions are not false and

misleading at the date of this report.

Sound Mining reserves the right to, but will not be obligated to, revise this report

and conclusions thereto if additional information becomes known to Sound Mining

subsequent to the date of this report.

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4. PROPERTY DESCRIPTION AND LOCATION

4.1. Property Description and Property Location

The Project is located at CRM on the Western Limb of the BIC, a large layered

igneous province, world renowned for its platinum group elements and chrome

content. CRM covers an area of 2,777.65 ha, which comprises Krokodildrift in the

west, Zandfontein in the centre, and Maroelabult in the east. Krokodildrift and

Maroelabult are on opposite sides of the Crocodile River, while Zandfontein is

intersected by the river which meanders in a northerly direction. It is located 7 km

south of the town of Brits and approximately 70 km north-northwest of

Johannesburg or some 65 km to the east of Rustenburg, in the North West

Province of South Africa (Figure 2).

4.2. Legal Tenure for the TSF

Barplats operates under the legislative framework provided by the Mineral and

Petroleum Resources Development Act, No 28 of 2002 (MPRDA).

On 22 June 2013 Barplats issued a notice in terms of Section 52 of the

MPRDA to the DMR of the decision to cease operation due to the prevailing

economic conditions. If a decision is taken to proceed with the re-mining of

the TSF, a formal notification needs to be sent to the DMR informing them of

CRM’s intention to commence with operations. A revised Mining Work

Programme (MWP) and Social and Labour Plan (SLP) would need to be

lodged. The MWP and SLP are discussed later in this document.

The TSF and area is situated on Portions 98, 99 and 206 of the farm Zandfontein

447 JQ (Figure 3). These properties are owned by Barplats and held by Title

deeds no: T61839/1987, T63566/1987 and T18043/2015 respectively. The

combined extent of Portions 98, 99 and 206 is 135.8741 ha.

A list of the mining rights owned by Barplats are shown in Figure 2.

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Figure 2: Barplats Locality Plan and Mining Rights over the TSF

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Figure 3: Surface Rights Covering the TSF

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Table 2: Legal Tenure Details

Farm Parent Farm and Farm Portions DMR Ref Area (ha)

Status Expiry Date

Zandfontein 447 JQ (Zand)

Portion 8, 9,11,13, 21, RE 22, 23,24,60 (portions of portion 6), RE 36 (a portion of portion 1), portions 56 and 57 (portions of portion 17), RE 97, portion 98, RE 99 and 206 (portions of portion 5), RE 113 (a portion of portion 36), portions 120, 143, 151, 153, 154, 157, 158, 159, 160, 161, 162, 178, 195 (portions of portion 2), RE 133, portion 134 (a portion of portion 133), portion 166, portion 207 (a portion of portion 113)

NW 30/5/1/2/2/151 MR and

NW 30/5/1/2/2/151 MR Ext 2418.7547 Valid 19/06/2038

De Kroon 444 JQ (Maroela)

Remainders of portions 48 and 50, portions 49, 51, 52, 119, 121, 122 and 123, portions 165, 166, 167, 168 (portions of portion 47) and portion 199 (a portion of portion 48), remainders of portions 40, 128,278, 344.Portions 157,159, 161, 3, RE10, RE 12, RE 13, RE 14, RE 15, 16, RE 18, 19, 20, 23, RE 24, 25, 26, 27, 28, RE 29, RE 31, 33, RE 34, 35, 36 , 37, 38, 39, RE 40, 41, 44, 45, RE 55, 57, 58, 62, 63, 64, 65, 66, 67, 68, 69, 70, RE 71, 72, 72, 75, 77, 80, 81, 82, 83, 84, RE 86, RE 87, 88, 95, RE 96, 97, RE 98, 107, 108, RE 109, 110, 111, 112, RE 113, 116, 1171, 124, RE 125, 126, RE 127, 128, 130, RE 133, 134, 137, 139, 145, 149, RE 151, RE 152, 153, 156, 158, RE 172, RE 173, 185, 189, 190, 192, 194, 202, RE 203, RE 204, 206, 208, 213, RE 218, 219, RE 220, 221, 222, 223, 224, 225, 226, 227, 228, 231, 234, 235, 237, 240, 241, 242, 243, 244, 245, 246, 247, 248,249,250, 251, 252, 253, 254, 255, RE 256, 259, 260, 261, 262, 263, 265, 266, 287, 288, 307, 314, 314, RE 316, 317, 327, 329, 330, 337, 338, 344, RE, RE 1, 2, 5, 6

Hartebeesfontein 447 JQ Portion 247

Krokodildrift 446 JQ RE 8, RE 13, RE 17, RE 123, RE 124, 125, RE 137, 138, RE 140, RE 141, RE 142, 145, RE 146, RE 147, 200, 236, 240, 243, RE 265, 267, 268, RE 311, RE 312, 315, RE 352, 353, 452, 456, 457, 458, 459, 463, 464, 465, 466, 472, 535, 536, 537, 545, 546, 547, 549, 551, RE 559, 576, 577

Elandsfontein 44 JQ Portion of RE 6, portion of RE 10, portion of RE 22, portion of RE 64

De Kroon 444 JQ (Maroela)

Portion 157, 159 and 161

NW 30/5/1/2/2/78 MR 65.1209

Renewal Application Submitted - Licence

NW 30/5/1/2/2/78 MR on 30 August 2016

13/12/2016 Zandfontein 447 JQ (Zand)

Portion 19

Krokodildrift 446 JQ (Crocette)

Portion 126, 127, 128, 129, 130, 131, 132, 133, 134, 139, 329 and 417 NW 30/5/1/2/2/307 MR 155.67225 Valid 30/03/2018

Zandfontein 447 JQ (Zand Ext)

The remaining extent of portion 18, portions 16, 20, 55, 58, 59, 61, 135, 144, 145 , 155 and 156 NW 30/5/1/2/2/332 MR 110.8741 Valid 14/08/2018

De Kroon 444 JQ (Maroela Ext)

Portions 115 and 160 NW 30/5/1/2/2/363 MR 27.23 Valid 28/01/2019

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4.3. Royalties

The MPRDA covers royalties on revenues derived from mineral production in

South Africa. It distinguishes between refined minerals that have been refined

beyond a condition specified by the Act, and unrefined minerals which have

undergone limited beneficiation as specified by the Act. The royalty is determined

by multiplying the gross sales value of the extractor, in respect of that mineral

resource, in a specified year, by the percentage determined by the royalty

formula. Both direct operating expenditure and capital expenditure incurred is

deductible for the determination of Earnings Before Interest and Tax (EBIT). The

quantum of the revenue royalty on all minerals is dependent on the profitability of

the company based on the following formula. For unrefined mineral resources the

formula is:

Royalty Rate (%) = 0.5 + [EBIT / (Gross Sales (unrefined) × 9)] × 100

Chrome Product is deemed unrefined mineral resource and the minimum royalty

is 0.5%. The maximum rate of royalty for unrefined minerals is 7%.

4.4. Environmental Liabilities, Legislative and Permitting Requirements

The TSF is covered in the Zandfontein EMP. Although in care and maintenance,

CRM is still required to comply with its EMPs, and therefore employs ENVASS to

conduct annual evaluations of its rehabilitation closure costs. CRM would then

increase its guarantees to the DMR as required. The ENVASS evaluation usually

includes Zandfontein, Maroelabult, Crocette. The latest evaluation report

indicates that the mine should have R75 million provision for its environmental

rehabilitation. The mine did not deposit this money in a trust fund, instead it has

arranged with Lombard Insurance to issue financial guarantees to DMR for this

amount. The guarantees are partially secured by cash and partially by mine

houses belonging to CRM. A number of government approvals have already

been granted including a mining licence (i.e. NW 30/5/1/2/2/151 MR) granted on

June 2008, which will effectively cover the project to June 2038.

4.5. Other Significant Factors and Risks

There are no other significant factors or risks to the Project.

4.6. Material Agreements

Barplats are currently not party to any agreements that are likely to place a

material obligation on the company. There are however numerous smaller

contracts that relate to the ongoing care and maintenance activities at CRM.

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5. ACCESSIBILITY, CLIMATE, LOCAL RESOURCES,

INFRASTRUCTURE AND PHYSIOLOGY

5.1. Accessibility

CRM is easily accessible by a number of tar roads, including the N4 National

Road that traverses the area from east to west. The R511 major road runs north

to south and is located immediately east of the Project.

5.2. Climate

The climate in the vicinity of CRM is typically warm to hot in summer, with dry,

mild, generally frost-free winters. The local area can be described as sub-humid

with a mean annual rainfall of 540 mm per annum as measured at the Brits

weather station. Rainfall is almost exclusively restricted to the summer months

between October and March. These rains occur mainly in the form of

thunderstorms. Winds are generally mild and blow predominantly from the north-

west. Winter is cool and dry. The climate is favourable to year-round mine

operations. The average daily temperature in June is 19 °C, and in January

29 °C. There are occasional short excursions to -2 °C and occasional maximum

temperatures of 44.5 °C are experienced. The climate is suited to year-round

mining operations.

5.3. Physiology

The local landforms formed in response to rocks of the BIC that have been

eroded to form a relatively flat surface that is covered with turf and grasslands

with acacia trees.

The average land elevation in the Project area is 1,151 mamsl. Land rises

gradually to the south of the mine, and then rises steeply to the Magaliesberg

Mountain range with an elevation of some 1,829 mamsl. The elevations of the

TSF range from 1,159 to 1,190 mamsl.

The dominant soils in the broader CRM area are black clayey vertisol soils, which

are generally known as “black turf”. The soils have a high clay content, which

means that the soils do not drain easily. Cracking during the drying process

causes surface soil material to fall down the cracks, causing subsoil and topsoil to

mix. Accordingly, there is usually no distinction between topsoil and subsoil in the

Arcadia profiles.

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5.4. Local Resources and Infrastructure

The town of Brits, to which the mine is adjacent, is well developed with many

businesses offering mine support services. Local infrastructure in terms of

airports, road, rail, power and water is excellent, with a knowledgeable, skilled

local labour force. Highway N4 which traverses the northern part of South Africa

from Mozambique to Botswana via Nelspruit, Pretoria and Rustenburg crosses

the southern portion of the property.

Mining services and human resources are available in Brits, Rustenburg and the

surrounding areas, which all occur within a well-established mining area. Drilling

contractors, services and consultants are also available from Johannesburg and

the greater Gauteng area. The region has good infrastructure, with major roads,

rail, water and power. Chromite mining, heavy agriculture and light industry all

occur around the town of Brits. A ferrochrome mine and smelter operate nearby,

and several platinum mines are in operation. There is intensive agriculture around

CRM, which includes crops such as tomatoes, potatoes, and cabbages as well as

commercial flower growers to the east, west and south.

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6. HISTORY

The CRM operation was originally listed on the JSE, in 1987. In November 1988,

Rand Mines Limited (Rand Mines) acquired a controlling interest in Lefkochrysos

through its subsidiary Barplats. Impala Platinum Holdings Limited (Implats)

acquired 38% of Barplats in 1991, but a sharp drop in metal prices resulted in the

mine closing later in the same year. Implats increased its stake in Barplats to

83% in 1998. CRM was re-opened in 2000 following further exploration and study

work. A consortium of investors acquired a majority shareholding in 2004 and the

concentrator in 2005 (Photograph 1).

Photograph 1: Photo of Barplats Metallurgical Complex

Eastplats then acquired a 69% stake in Barplats Investments Limited (BIL) in

2006 and later increased its interest by a further 5% to 74% to share ownership

with a black economic empowerment partner, the Gubevu Consortium (26%).

Tailings derived from mining and processing for PGMs at CRM were re-treated

for the first time during this period and a CRP was commissioned a little later in

2008. The TSF was originally designed and constructed in 1988 by

Fraser Alexander (Pty) Ltd (Fraser Alexander). It was decommissioned in 1991,

re-commissioned in 2000 and again decommissioned in 2003, before being

utilised between 2005 and 2013 when CRM went into Care and Maintenance.

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The current ownership structure is presented as Figure 4.

Figure 4: Ownership Structure

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6.1. Historical Exploration Work

Previous exploration was used to inform a 2015 unpublished mineral resource

estimate by SRK but recent exploration work has been completed on the TSF for

new data for the 2017 mineral resource estimate covered by this ITR.

6.2. Historical Mineral Resource Estimates

The recent Mineral Resource Statement (August 2017) of the mineral resource

estimate for the TSF is the first to be presented in a NI 43-101 compliant report.

6.3. Historical Operations

The average quantity treated from 2009 to 2013 (133,206 ktpm), following

commissioning of the CRP in 2008 is shown in Graph 1. The throughput, which

include run of mine and sludge from underground operations together with feed

from re-mining of the TSF, reduced over the period. This was reportedly due to

poor plant availabilities and low mining rates as finer material was sourced from

the TSF.

Graph 1: Monthly CRP Throughput

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Graph 2 and Graph 3 present the chrome recovery over the same period to 2013.

Graph 2: Overall CRP Recovery efficiency

Efficiencies also dropped over the period due to low plant availabilities and

difficult mining conditions (vegetation and hard material).

Graph 3: Chrome Recovery from Hydraulic Mining of the TSF

Better recoveries were recorded with the coarser higher grade TSF material.

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7. GEOLOGICAL SETTING AND MINERALISATION

7.1. Regional Geology

The mining operations at Barplats are situated on the western limb of the BIC.

The BIC is a 2.05 billion year old layered igneous intrusion underlying an area of

approximately 65,000 km2. Figure 5 shows the lateral extent of the BIC where the

area of coverage extends from Zeerust in the west to Burgersfort to the east,

covering the northern part of South Africa

The mafic rocks of the BIC display a maximum vertical thickness of approximately

8 km with some individual layers being traced for over 150 km along strike. The

BIC constitutes the most voluminous preserved mafic intrusion with the world’s

largest ore reserves of PGEs, Cr2O3 and V being exploited at numerous

operations.

The BIC (as well as the suite of rocks encompassed by the Bushveld event) can

be categorised into three subdivisions, namely, into the mafic rocks of the

Rustenburg Layered Suite (RLS), the Lebowa Granite Suite (LGS) and the

Rashoop Granophyre Suite (RGS) (Figure 5).

The units contained within the RLS comprise of dunite and pyroxenite through

norite, gabbro, anorthosite to magnetite and apatite rich diorites. A subdivision

has been proposed by using traditional zonal stratigraphy which comprises of a

noritic Marginal Zone, and ultramafic Lower Zone (LZ), and ultramafic to mafic

Critical Zone (CZ), a gabbronoritic Main Zone (MZ) and a ferrogabbroic Upper

Zone (UZ).

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Figure 5: Simplified Geological Map Indicating the Extent of the BIC

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7.2. Local Geology

Barplats is underlain by the CZ stratigraphy. The CZ is noted for carrying massive

deposits of chromite within the Lower (LG), Middle (MG) and Upper (UG) Group

chromitite layers and the worlds largest platinum bearing ore bodies the

Merensky Reef (MR) and UG2.

The Lower Critical Zone (LCZ) is an 800 m thick pyroxenitic cumulate with up to

seven chromitite layers (LG1-LG7). Nearly all of the LG layers contain minor

disseminated chromite.

The Upper Critical Zone (UCZ) of the RLS strikes east-west and contains both

the MR and UG2 which outcrop on the area. The MR intercepted in this part of

the western limb comprises a thick feldspathic pyroxenite unit of up to 14 m thick

and is considered to be relatively uneconomic. The UG2, which typically consists

of a single chromitite layer, has an average vertical thickness of 1.4 m. It is

composed of two sub-units called the C1 and C2 units, which are separated by a

1 cm to 8 cm wide pyroxenite parting. The higher grade mineralisation occurs at

the base of the C1 and the C2 units, however over the bulk of the lease area at

Barplats only the C1 unit is present.

Barplats mines the UG2 as it outcrops at surface, continuing down to depths in

excess of 2,000 m with an average dip of 17°. The host rocks that bound the UG2

are the overlying feldspathic pyroxenite and the underlying pegmatoidal

feldspathic pyroxenite with the norite below it. In Barplats’ Maroelabult section the

UG2 varies in thickness from 1.4 m to 1.5 m, whereas in the Zandfontein section,

it is thinner and varies from 1.3 m to 1.4 m thick. A generalised stratigraphic

column for the UG2 intercepted at Barplats is shown below in Figure 6.

The Project area is covered by black clay soil (turf), which varies in depth from

3.5 m to 30 m.

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Figure 6: A generalised Stratigraphic Column of the UG2 Chromitite Seam

7.3. Mineralisation

Common features of the UG2 are the undulating nature of the Bottom Reef

Contact (BRC), the presence of mafic/ultramafic pegmatites and potholes. The

chromatitic leader hangingwall layers are generally absent or have coalesced

with the main band to form a virtually homogenous chromitite. A very thin

chromitite stringer (approximately 1 mm thick) is seen to occur at varying heights

above the top of the chromitite in the immediate hanging wall.

The footwall is typically a Pegmatoidal Feldspathic Pyroxenite (PFP) but where

the BRC transgresses through the PFP the footwall is a norite. The Top Reef

Contact (TRC) is generally sharp and stable. The UG2 is predominantly impure

chromitite with interstitial silicate, comprising of pyroxene (bronzite) and feldspar

(anorthosite).

The UG2 is bottom and middle loaded with PGMs and the associated

disseminated sulphides are concentrated in the lower part of the reef (Figure 7).

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Figure 7: A Generalised Cross Section of the UG2 intercepted at CRM

The 3E PGEs and Au concentration of the UG2 at Barplats varies from 2.5 g/t to

6.6 g/t. The major PGMs are Laurite (Ru(Os,Ir)S2) and Platinum (Pt), Palladium

(Pd) Sulphide (Cooperite (Pt,Pd)S and Braggite (Pt,Pd,Ni)S). At Barplats, Pt

makes up 62.6% of the 3E PGEs and Pd 26.2%, Rhodium (Rh) 10.4% and Au

0.8%. The Pt to Pd ratio of the UG2 at Barplats is 2.38.

The UG2 is Pd and Rh enriched relative to the Merensky Reef. 9% of the PGMs

are associated with Chromite; 46% of the PGMs are associated with the silicates

and 45% of the PGMs are associated with the base metal sulphides. The base

metal sulphides that occur in the UG2 are the following, listed in decreasing order

of abundance Pyrrhotite (Fe2S2), Pentlandite (Ni,Fe)S2, Chalcopyrite (Fe,Cu)S2

and Pyrite (FeS2). The Cu content averages about 0.05% and Ni averages about

0.1%. The relative density of the UG2 in the western BIC ranges between

3.50 t/m3 and 3.90 t/m3; the average relative density is 3.85 t/m3. Potholes

commonly occur in the UG2 (pothole losses commonly vary from 10-20%) and

mafic and ultramafic pegmatites are also present.

At Barplats the 3E PGEs and Au content averages 4.29 g/t, at an average

thickness of 140 cm; this gives an average of 600 cmg/t.

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7.4. Structure

The UG2 is disrupted by major faulting forming a graben structure known as the

Brits Graben. The Brits Graben, is a prominent geological structure striking in a

south-east to north-west direction across the western limb of the BIC. The graben

and associated major faults result in Barplats mining area being split into three

sections, namely the Crocette section in the west, the Zandfontein and

Kareespruit section in the centre and the Maroelabult section in the east (Figure

8). The Zandfontein section has significant faulting with some of the faults having

differential throws caused by a scissors effect. The major graben-bounding faults

trend roughly NNW and dip steeply inward in the southern portion, but appear to

shallow and have smaller displacements in the northern portion. The UG2 reef

strikes roughly east-west and dips at approximately 15° to the north, outside of

the graben but strikes roughly SW-NE within the graben and the dips are steeper,

increasing to approximately 18° towards the north.

Figure 8: Location of Barplats Mining Area Against Major Faults

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In the Barplats lease area, the Brits Graben appears to have acted as a keystone

block during uplift of the Johannesburg Dome. The displacements on these faults

step up westwards, from the Kommandonek fault to the Bokfontein fault and

create the Krokodildrift and Zandfontein sections of the lease area. The eastern

boundary of the graben is less distinct and consists of a series of subparallel,

north-northwest striking, widely spaced, and steeply westward dipping faults (e.g.

Hartebeespoort fault, Zilkaatsnek fault and possibly others such as the De Kroon

fault and faults further to the east).

The graben is further complicated by a few NE-SW trending faults that appear to

cut older dykes and faults in places. The trend of Kareespruit fault is distinctly

different to most of the other graben bounding faults and does not appear to be

related to them, so it is unlikely to have evolved contemporaneously with the

graben. Strata within the graben are further cut by subsidiary, northwest striking

normal faults which generally have throws of less than 0.5 m. The larger

subsidiary faults divide the graben into compartments which form boundaries

between the blocks of UG2 ore. There are also subsidiary faults which were

subdivided into secondary faults (2 m to 50 m displacement) and tertiary faults

(5 cm to 2 m displacement).

Numerous dykes of mainly Pilanesberg age cut across the graben and some

Karoo age dykes also occur in the area. In places the dykes follow the major and

subsidiary fault planes, and in other places they appear to cut the graben without

following any pre-established structures. Large Pilanesburg dykes occur in the

Maroelabult sections. The other structures, such as the Kareespruit fault, are

oblique to most of the major structures and appear to cut the Pilanesberg dyke

set, suggesting that they are of a younger age.

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8. ZANDFONTEIN UG2 TSF

The tailings have been deposited in the TSF from 1980 until 2013, when the mine

went on Care and Maintenance. The material in the TSF was primarily derived

from the processing of UG2 Chromitite ore. The tailings deposited in the TSF,

originated as fines after milling and extracting the PGEs concentrates. Therefore

the Cr2O3, PGEs and Au mineralisation that is now being targeted in the tailings,

originates from within the UG2 chromitite seam itself. Some of the tailings were

later reprocessed at Barplats to extract a limited amount of the Cr2O3 (an

estimated at 1%-2% was processed) and PGEs (estimated at a grade of 0.2 g/t)

and then re-deposited in the new front compartment of the tailings dam

(Figure 9). The tailings also contain silicate material and minor amounts of base

sulphide minerals or their oxidized products.

The average Cr2O3 and FeO contents (derived from 246 tailings samples) for the

the Project are; 20.72% and 15.65% respectively. The average of Cr to Fe ratio

on the TSF in Domain 101 is 1.35 and in Domain 102 1.28. The chromium oxide

present in the tailings is in the form of chromite grains that have been liberated

during the crushing and milling of the chromitite ore. The Au is expected to be

present as very fine grained particles that were released after the oxidation of the

primary sulphide minerals. It is assumed that the major silicate minerals present

are pyroxene (enstatite/bronzite composition) and plagioclase feldspar

(anorthite); these occur with chromite, the second major constituent. The PGEs

are pre-dominantly associated with the silicate fraction and are expected to

consist of Fe-Pt alloys, and the PGMs that are associated with Pt-Pd sulphides

(cooperite and braggite) and Ru,Os,Ir sulphide (laurite) that were originally

interstitial to the chromite grains and also a very minor portion of small platinum

group minerals or alloys that are contained within the chromitite grains.

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Figure 9: TSF Domain 101 and Domain 102

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9. EXPLORATION

SRK was contracted by Barplats in early 2017 to do a Mineral Resource Estimate

based on a sampling campaign conducted by Barplats and the most recent

survey results, and to issue a Mineral Resource Statement in compliance with the

South African Code for the Reporting of Exploration Results, Mineral Resources

and Mineral Reserves 2007 Edition, as amended July 2009 (the SAMREC Code),

as well as Canadian listing compliant funder the National Instrument 43-101 for

the Project.

In October 2016 an exploration programme commenced to quantify the 3E PGEs,

Au and Cr2O3 resources in the TSF at the Barplats, this was completed in

December 2016. The drilling was done by contractors and supervised by

Barplats. A total of 44 holes were drilled in the TSF with a total of 246 primary

samples being taken and submitted to the ISO 17025 accredited Set Point

Laboratories for chemical analyses.

The detailed description regarding the drilling methodology, sample preparation,

sample analysis and data verification is contained in the “Mineral Resource

Estimate for the Barplats Zandfontein UG2 Tailings Storage Facility” Report

prepared by SRK.

9.1. Sound Mining Observations

Sound Mining received and reviewed the full dataset of 44 Auger drillholes and

corresponding tailing assays (246). The dataset was checked for incorrect collars,

overlapping samples and data gaps. No errors were found.

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10. DRILLING

A drilling programme for evaluation sampling comprising 44 auger drillholes,

(a total of 358.5 m) was undertaken in order to evaluate the 3E PGEs, Au and

Cr2O3 mineralisation for resource estimation purposes. All the auger drillholes

drilled were vertically inclined and collared with an azimuth of 0°. The holes were

drilled through the TSF and stopped in the soil or clay that occurs at the base of

the TSF.

However, there were a number of holes that intersected a hard impervious layer

that could not be drilled through and therefore were stopped short of the TSF

base.

10.1. Auger Drilling Methodology

The drilling was continually monitored by Barplats. The material in the TSF was

wet at the base, with the moisture content increasing with depth. The tailings

recovery was deemed to be more than acceptable (above 98%) with most holes

having achieving a 100% recovery.

The tailings material recovered from the auger drilling was homogenous and the

depths, type of material, grain size and colour were recorded for each sample

length of 1.5 m.

The holes were planned as close to a 200 m by 200 m grid as practical, to ensure

that the drilling plan sufficiently covered the TSF (Figure 10). The collars of the

auger holes were staked out before drilling commenced and then the positions

were resurveyed on completion of the drilling. The upper surface of the TSF was

surveyed using a local GPS base station for use in volume calculations. In

addition to these measurements, a more recent Lidar survey was completed by

Lombard Du Preez land surveyors and town planners.

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Figure 10: 2016 Exploration Drill Plan Showing the Auger Drillholes

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10.2. TSF Auger Hole Sampling Results

The holes in the TSF ranged in depth from 1.5 m to 15 m with an average length

of 8.15 m; a total of 358.5 m was drilled during the 2016 drilling programme. The

average grade of the length composited drillhole values for all of the TSF holes in

Domain 101, are the following; 3E PGEs 1.213 g/t, Au 0.008 g/t, Cr2O3 21.27%,

FeO 15.97% and Cr:Fe 1.35 and for Domain 102 they are the following; 3E PGEs

1.127 g/t, Au 0.006 g/t, Cr2O3 19.6%, FeO 15.19% and Cr:Fe 1.28. The results of

this drilling programme are incorporated in this Mineral Resource estimate.

10.2.1. Sound Mining Observations

The drilling density of 200 m by 200 m was sufficient to cover the full extent of the

TSF for the purposes of a Mineral Resource Estimation. Sound Mining believes

that the data collection methods used during the 2016 Exploration Auger Drilling

Programme are acceptable and conducted in accordance with best practice

requirements and the sampled data is considered to be representative for the use

in Mineral Resource estimation. Sound Mining agrees that the distribution of the

drillholes and the result received were able to demonstrate the low variability in

the grades in both Domain 101 and 102.

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11. SAMPLE PREPARATION, ANALYSES AND SECURITY

11.1. Sampling Procedure

The samples were removed by hand from in-between the auger spirals and the

spiral cleaned thoroughly in water and thereafter wiped down with a wet cloth

prior to each sample being collected. The tailings sample is collected from the

spiral into a rectangular stainless steel container, which is placed under the end

of the core barrel where the spiral is removed. A sample bag is placed on the bit

end of the rod to collect the sample when the inner spiral is removed, and when

the spiral is replaced this sample is added to the rest of the sample collected from

the spiral in the container. Both these containers are also wiped clean with a wet

cloth, before each sample is collected. Each one and a half meter of the hole was

sampled separately.

Barplats were responsible for the sampling and insertion of CRMs and duplicate

samples and preparing the samples for dispatch to the laboratory. There were

246 primary tailings samples taken at 1.5 m intervals and split into two fractions

using cone and quartering. The first sample was used by the laboratory for the

analysis and the second sample was retained for reference purposes. The auger

samples were bagged and sent in to Set Point in Isando, Johannesburg for

sample preparation and analysis.

Barplats supervised the transport of all the samples to their secure sample

storage facility at the old training centre to store the control samples. The

samples were then transported by Barplats to Set Point. Electronic assay request

lists in Excel format were sent by Barplats to Set Point. On delivery all the

samples are checked manually by Set Point against a printed copy of assay

request list. The Barplats sample ticket numbers are entered digitally into the Set

Point Laboratory Information Management System (LIMS) system.

Barplats implemented the necessary control throughout the sampling, chain of

custody, sample preparation and assay procedure and SRK and Sound Mining

are satisfied that it complies with internationally accepted practise.

11.2. Laboratory

Set Point is ISO 17025 accredited for Au, Pt, Pd and Rh analyses by Pb

collection fire assay pre-concentration followed by Inductively Coupled Plasma –

Optical Emission Spectrometry (ICP OES) finish, base metals by X Ray

Fluorescence (XRF) on pressed pellets, and gas pycnometer density

determination. Set Point is also accredited for XRF on fused discs to determine

the Cr2O3, FeO% in the samples.

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The analytical procedures followed entail:

11.2.1. Au, Pt, Pd Determination by Pd Collection ICP-OES

Au, Pt, Pd are collected by Lead (Pb) collection fire assay using Silver (Ag) as a

co-collector to facilitate easier handling of prills, as well as to minimise losses

during the cupellation process. Twenty five grams of sample are mixed with

200 g of fire assay flux and a measured amount of silver nitrate solution. The

mixture is loaded into a furnace and left for at least 55 minutes. The resulting melt

is poured into moulds and left to solidify. During cooling of the melt, a lead button

settles to the bottom of the mould and is separated from the slag. This button is

then cupelled for 60 minutes to remove the lead and a prill, containing the silver

added as a carrier, Au and the PGEs of interest, is left. This prill is digested using

Hydrochloric and Nitric acid and made up to a 5 ml volume. The resulting

solutions are analysed for Au, Pt, and Pd by ICP-OES.

Rh is collected by lead fire assay using Pd as a co-collector to facilitate easier

handling of the prills, as well as to minimise losses during the cupellation process.

Palladium solution is added to each crucible mixture. After cooling, the lead

button is removed, cleaned of adhering slag. The lead buttons are placed into

pre-heated cupels. The resulting oxidised lead is absorbed into the cupel and the

carrier Pd and Rh remains behind on the surface of the cupel in the form of a prill.

This prill is digested using Hydrochloric and Nitric acid made up to a 5 ml volume.

The resulting solutions are analysed for Rh, by ICP-OES.

11.2.2. Determination of Major Elements by Fused Disc XRF

All the samples from the holes drilled in the TSF were assayed by Set Point, by

XRF for the percentage Cr2O3 and FeO. XRF analysis was done on the primary

samples taken from the 44 drillholes. Set Point did XRF analysis to determine the

percentage of Cr2O3, and FeO. The XRF analysis is done on a fused disc. An

ignited sample mass of 1.1 g is fused with 9.9 g flux (lithium-tetra-borate) and

fused in a clean platinum dish. The fusion melt is poured into a clean platinum

mould and allowed to solidify. The solidified disc is analysed by calibrated XRF

spectrometer using the program provided for Cr2O3 and FeO by the manufacturer

of the equipment.

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11.2.3. Relative Density Measurements

Helium Gas pycnometry is the analytical technique used at Set Point to measure

RD on soils or pulp (already milled) material. The sample is introduced into an

automated pre-calibrated helium pycnometer in a built-for-purpose sample cup.

The analysis is started and using pre-set analysis conditions, the density/relative

density results are automatically calculated. 10 cm3 cups are used for the

pycnometer, so the mass taken is generally around 7g to 10 g.

11.3. Dry Bulk Density Measurements

Samples for bulk density measurements were taken by SRK by collecting fixed

volumes of tailings and submitting the samples to Set Point for mass

measurements and the calculation of the moisture content contained in the

dumps. SRK determined the dry bulk density of special samples taken from the

tailings in the TSF in order to calculate the tonnage of the resource. The

measurements were taken at 21 different localities spread evenly across the

upper surface of both compartments of the TSF and next to auger exploration

holes that were drilled during the current programme. SRK managed to determine

the dry bulk density at depths from 0m to 1.5 m.

The average moisture content determined for the entire TSF was 12.4%, which

corresponds with a weighted average bulk dry density for both Domain 101 and

Domain 102 of approximately 1.659.

This corresponds well with the actual RD values of 1.705 obtained for the bulk dry

density of sample ZK3 that had a 12.3% moisture content and 1.541 for sample

ZK32 that had an 11.8% moisture content (Table 3).

Domain 101 of the TSF, has an average moisture content of 11.36% and Domain

102, 13.72%. If one considers a fixed volume of tailings; the moisture content has

to be accounted for and removed by drying, before the dry mass can be

determined. SRK determined the two formulas for Domain 101 and Domain 102

for the linear regression lines which correlate the moisture content with dry bulk

density, using the 21 measurements taken by SRK on the TSF, in Domain 101

and Domain 102).

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Table 3: SRK fixed Volume Dry Bulk Density Measurements for Domain 101 and

102

Sample No. Moisture

% Wet Bulk Density

(t/m3)

Dry Bulk Density (t/m

3)

Domain 101 (Old)

ZK10 11.30 1.910 1.694

ZK12 6.10 2.063 1.937

ZK16 8.30 2.211 2.027

ZK18 4.10 2.372 2.274

ZK20 9.00 2.285 2.079

ZK24 10.70 1.723 1.540

ZK28 22.70 1.641 1.269

ZK29 9.10 2.046 1.860

ZK32 11.80 1.746 1.541

ZK34 15.20 1.926 1.633

ZK27 8.40 2.145 1.966

Average 13.35 2.372 1.709

Domain 102 (New)

ZK1 11.70 2.086 1.842

ZK2 8.50 1.907 1.745

ZK3 12.31 1.945 1.705

ZK5 23.17 1.951 1.499

ZK7 16.06 1.920 1.612

ZK9 11.25 1.846 1.638

ZK19 11.01 1.896 1.687

ZK37 16.20 1.918 1.608

ZK40 23.80 1.906 1.453

ZK43 29.70 1.817 1.278

Average 16.36 1.919 1.607

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11.4. Quality Assurance and Quality Control

11.4.1. Certified Reference Material

Barplats inserted aliquots of a selected independent Certified Reference Material,

(AMIS 0321) which was repeatedly analysed and the results of their analysis are

presented in Table 4 below.

Table 4: AMIS 0321 Certification

Element

Certified Value Measured Value No of

Samples

Within 1 SD Outside 2 SD

Mean Std Dev Mean Std Dev No of

Samples %

No of Samples

%

Pt 0.27 0.015 0.268 0.015 37 31 84 0 0

Pd 0.48 0.03 0.469 0.018 37 31 84 0 0

Au 0.054 0.007 0.059 0.011 37 24 64 10 27

FeO 18.17 0.105 18.001 0.066 5 14 6 17 35

Cr2O3 17.31 0.14 17.354 0.11 37 35 89 1 3

Graphs produced by Sound Mining of AMIS 0321 are presented in Graph 4 to

Graph 8. The reported values received back from the laboratory are similar to the

certified values for AMIS 0321; indicating that there is no under or over reporting

of values for Pt, Pd and Cr2O3. Poorer results were obtained for Au where the

measured mean is slightly higher than the certified mean.

Graph 4: AMIS 0321 Certified Reference Material Results - Cr2O3

17

17.1

17.2

17.3

17.4

17.5

17.6

17.7

17.8

1 6 11 16 21 26 31 36

Gra

de (

%)

Analysis Sequence

Cr-2sd Cr-1sd Cr+1sd Cr+2sd CV Cr2O3

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Graph 5: AMIS 0321 Certified Reference Material Results - Pt

Graph 6: AMIS 0321 Certified Reference Material Results - Pd

0.22

0.23

0.24

0.25

0.26

0.27

0.28

0.29

0.3

0.31

1 6 11 16 21 26 31 36

Gra

de (

g/t

)

Analysis Sequence

Pt-2sd Pt-1sd Pt+1sd Pt+2sd CV Pt

`

0.4

0.42

0.44

0.46

0.48

0.5

0.52

0.54

0.56

1 6 11 16 21 26 31 36

Gra

de (

g/t

)

Analysis Sequence

Pd-2sd Pd-1sd Pd+1sd Pd+2sd CV Pd

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Graph 7: AMIS 0321 Certified Reference Material Results - Au

Graph 8: AMIS 0321 Certified Reference Material Results - Rh

11.4.2. Blanks

A commercially available blank material (AMIS 0025) was submitted to the

laboratory as an independent blank. The material is coarse pyroxenite and was

subjected to the same milling as the rest of the tailing samples. This blank

material is certified only for Pt, Pd, and Au, and may therefore not be regarded as

a blank for Cr2O3 and FeO. No significant Pt, Pd, or Au contamination was

detected in the 39 aliquots analysed.

0.03

0.04

0.05

0.06

0.07

0.08

0.09

0.1

1 6 11 16 21 26 31 36

Gra

de (

g/t

)

Analysis Sequence

Au-2sd Au-1sd Au+1sd Au+2sd CV Au

0.04

0.05

0.06

0.07

0.08

0.09

0.1

0.11

1 6 11 16 21 26 31 36

Gra

de (

g/t

)

Analysis Sequence

Rh-2sd Rh+2sd CV Rh

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11.4.3. Field Duplicates

Duplicates were derived from the cone and quartered the tailings samples and

were inserted back as independent field duplicates at the end of each hole. The

similarity in the assay results obtained for the original samples, and the duplicate

samples split off from them, indicate that the tailings composition is very

homogenous. The results of Cr2O3, Pt, Pd, Rh, and FeO, show a high degree of

correlation (correlation coefficient >0.9 and slope of regression line close to 1).

The results obtained for Au indicate an abundance close to or less than the

analytical detection limit and as result, the duplicate analyses cannot be regarded

as meaningful. This is summarised in Table 5.

Table 5: Summary Statistics of independent field duplicates

Element No of

Samples Correlation Coefficient

Slope RMSE

(%) T-test Results

Pt 13 0.994 1.007 3.12 P > , no bias

Pd 13 0.991 1.053 4.16 P > , no bias

Rh 13 0.962 1.034 6.65 P > , no bias

Cr2O3 13 0.993 0.993 3.25 P > , no bias

FeO 12 0.979 0.997 5.03 P > , no bias

11.5. Sound Mining Observations

Sound Mining has verified the results of the independent QAQC programme

implemented by SRK. The following observations were made:

No significant evidence of PGEs contamination was detected during

analysis and during crushing and milling, this was evident from the results

obtained for the blanks inserted;

Set Point Laboratory achieves consistent reporting of the independent

CRMs, and the in-house analyses of different CRMs, these analyses also

indicate a satisfactory level of accuracy.

Samples analysed for Cr2O3 reflect a high degree of accuracy and

precision;

A satisfactory degree of precision has been demonstrated by the

independent QAQC programme.

The results could therefore be used with confidence in Mineral Resource

estimation for Cr2O3, Pt and Pd.

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12. DATA VERIFICATION

Sound Mining used the following methodology to review and verify the work

conducted by SRK:

The auger drillhole collar positions for the tailings were plotted and

checked against SRKs study.

Sound Mining reviewed the drilling and sampling procedures as discussed

by SRK.

Data validation was done using drillhole database checks were done to

identify errors in missing sample and overlapping intervals.

The drillhole database was recreated and visual inspections of the block

model were done on cross section at regular intervals to spot check the

corresponding grades of the drillhole database against the block model.

The QAQC results of the independent programme were verified against

SRKs analysis.

12.1. Sound Mining Observations

Sound Mining received and reviewed the full dataset of 44 Auger drillholes and

corresponding tailing assays (246). The data was imported using Micromine©

2016.1 software and validated using an in-built validation function. No errors were

identified in the dataset. The dataset was used to recreate a 3D drillhole

database and was found to be highly comparable to SRK.

The drilling density of 200 m by 200 m was sufficient to cover the full extent of the

TSF. Sound Mining confirms that the data collection methods used during the

2016 Exploration Programme are acceptable and conducted in accordance with

best practice requirements. The distribution of the drillholes and the result

received were able to demonstrate the low variability in the grades in both

Domain 101 and 102.

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13. MINERAL PROCESSING AND METALLURGICAL TESTING

Chrome recovery from the TSF using spirals will be a function of particle size and

density. Coarse heavier silica particles will report to the concentrate while fine

liberated chrome particles will be washed in the spiral concentrator as fines and

report to the tailings stream returning to the TSF. Different yields and recoveries

of chrome and metallurgical grade chrome product will be achieved depending on

the Cr2O3 grade and particle size distribution of the solids settled on the TSF.

Various technical studies and test work were therefore undertaken to determine

the most suitable process route for the Project in terms of:

A variation in feed grade;

The likely yield;

The overall recovery;

The grade of the final product; and,

Changes to the spiral configuration.

PC Metallurgical Equipment cc, trading as MetQuip (pty) Ltd (MetQuip) in South

Africa, have extensive experience in the processing of chrome and were

accordingly commissioned to assist CRM personnel with test work using a pilot

plant installed at the CRM concentrator adjacent to the existing CRP. The spiral

plant was operated by CRM staff under the supervision of MetQuip.

Amongst other existing installations, MetQuip has recently completed the design

and construction of a similar CRP elsewhere in the Limpopo Province for a

slightly lower throughput. It is performing to design specifications.

13.1. Pilot Plant Flowsheet Description

TSF material was pumped via a drive pump to a de-sliming cluster of cyclones.

The flow rate to the cluster was controlled to give a fixed inlet pressure, and the

discharge density was maintained at 1.3 kg/ℓ by introducing water. If the density

fell to below 1.3 kg/ℓ material was added to the sump. A close circuit was

maintained and sampling of the feed, tails and product occurred at the same time.

All samples were assayed for Cr2O3 and SiO2 by MetChem Laboratory, a SANS

accredited laboratory.

The selected pilot plant flowsheet is presented in Figure 11.

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Figure 11: Pilot Plant Flowsheet

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13.2. Sample Selection and Compositing

A representative bulk sample was composited from Domain 101 and 102 on the

TSF.

A total of six sample areas were prepared for the test work. These were selected

from coarse (ODC) and fine (ODF) material on the ‘Old Dam’ and coarse (NDC)

and fine (NDF) material from the ‘New Dam’ of the TSF (Figure 12).

Figure 12: Sampling Point on TSF

13.3. Test Work Results

A metallurgical grade chrome in excess of 40% Cr2O3 was produced. The chrome

recovery exceeded 30% and a yield of more than 14% was achieved.

Table 6 presents the results from the test work.

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Table 6: Pilot Plant Test Work Results

Type Spirals Feed

Grade (%)

Product Grade

(%)

Tail Grade

(%)

Chrome Recovery

(%)

Product Yield (%)

Pilot All New 17.14 40.10 13.47 32.24 13.78

Pilot All New 18.96 39.90 12.98 46.75 22.21

Pilot All New 17.92 39.80 13.44 37.75 17.00

Pilot All New 15.49 39.40 13.78 16.98 6.67

Pilot Old Cleaners 17.10 39.00 14.30 25.85 11.34

Pilot Old Cleaners 18.90 38.50 15.60 29.35 14.41

Pilot Old Cleaners 18.10 39.00 16.90 11.70 5.43

Pilot Old Cleaners 16.00 38.40 15.10 9.27 3.86

Laboratory MetQuip 28.20 40.14 16.50 70.45 49.49

Laboratory MetQuip 19.59 40.99 15.92 30.63 14.64

Laboratory MetQuip 23.58 42.42 14.86 56.92 31.64

Laboratory MetQuip 18.64 30.87 15.87 30.58 18.47

Pilot All New 19.23 39.59 16.29 25.98 12.62

Pilot All New 18.77 36.76 16.23 24.23 12.37

Pilot All New 20.25 39.14 15.52 38.71 20.03

Pilot All New 19.84 39.06 15.41 36.88 18.73

Pilot All New 26.37 41.97 16.05 63.37 39.81

Pilot All New 26.37 40.00 16.05 65.36 43.09

Pilot Xtra Roughers 42.80 17.17 62.92 40.50 46.21

Pilot Xtra Roughers 27.55 40.00 17.17 66.01 45.47

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The results from the test work were plotted and found to correlate as shown in

Graph 9 .

Graph 9: Calculation Production Yield- Regression Curve (Yield vs Feed Grade)

There appears to be a good correlation between feed grade and yield. The

correlation improves with higher grade coarser material correlation. Relatively

lower yields were recorded for fine material from New Dam. MetQuip proposed a

seven stage process after having completed the test work.

13.4. Sound Mining Observations

A large mass of tailings material was tested in the pilot plant. These results when

considered together with the information from the previous CRP operations,

which produced metallurgical grade chrome from the TSF, provide comfort in that

the predicted yield is likely to be achieved at the head grade associated with a

Cut-off of 20.5% Cr2O3.

It is Sound Mining’s experience from exposure to other similar chrome

retreatment operations that typical yields of between 12% and15% metallurgical

grade chrome is being achieved from a head grade of approximately 20% Cr2O3.

While Graph 9 illustrates a correlation between head grade and yield,

Sound Mining’s experience from similar operations reveal that this relationship is

generally not linear and that the yield usually reduces dramatically as the feed

grades drop below about 20%.

y = 3.3176x - 0.4685 R² = 0.9404

0%

10%

20%

30%

40%

50%

60%

0% 5% 10% 15% 20% 25% 30%

Yie

ld

Feed Grade

Calc Prod Yield

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14. MINERAL RESOURCE ESTIMATES

14.1. Resource Estimation Process

The mineral resource estimation work was completed by Mr A. S. Page, Principal

Geologist Pr. Sci. Nat South Africa Reg. No 400022/07, who qualifies as a

“Competent Person” in terms of the NI 43-101. The effective date of the Mineral

Resource Statement is the 1st of August 2017.

The database used to estimate the TSF’s PGEs, Au and Cr2O3 Mineral

Resources was compiled by Barplats and validated by SRK and reviewed by

Sound Mining.

The procedures and methodology used by SRK to generate the Mineral

Resource Estimation were verified as follows:

SRK constructed wireframes for the boundaries of the PGEs, Au and Cr2O3

mineralisation.

Definition of the tailings volumes were confirmed by Sound Mining.

Data conditioning was applied to the relevant dataset (compositing and

capping analysis) for geostatistical analysis and variography, this analysis was

reviewed by Sound Mining.

The resultant block model and grade interpolation was reviewed by Sound

Mining.

The Mineral Resource Estimate classification and validation was confirmed by

Sound mining.

SRK assessed the “reasonable prospects for economic extraction” and these

assumptions were reviewed by Sound Mining.

In addition to the drilling database, the contracted survey company, Neutrico

supplied SRK with contours determined from the surveying of the upper surface

of the TSF. Barplats has supplied this wireframe surface to Sound Mining.

14.1.1. Construction of Wireframe Models

The area in which the PGEs and Cr2O3 tailings occur were differentiated and the

solid wireframe defined, using ore body volume modelling from the actual survey

information supplied by Neutrico. The volume between the upper surface as

accurately measured by SRM incorporating the collars of all the auger holes, and

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the base of the TSF as modelled by SRK from the actual end depths of all 44 of

the exploration auger holes drilled; was determined by SRK.

14.1.1.1. Tailings Volumes

Domain 101 and Domain 102 of the TSF were modelled independently and

therefore geostatistical analysis was undertaken independently for the two

Domains. The statistical analysis showed that both Domains of the TSF

demonstrate normal distributions for 3E PGEs, Au and Cr2O3. The 3E PGEs, Au

and Cr2O3 grade distributions of Domain 101 and Domain 102 of the TSF are

shown in Table 7 and Table 8.

Table 7: PGEs, Au and Cr2O3 Grade Frequency Distribution for Domain 101

Domain 101

No. Samples

Mean Grade

Min Grade

Max Grade

Variance Std Dev CoV 95

th

Percentile

3E PGEs 129 1.263 0.520 2.030 0.075 0.273 0.216 1.740

Pt 129 0.776 0.270 1.240 0.030 0.173 0.223 1.070

Pd 129 0.318 0.130 0.540 0.005 0.071 0.224 0.460

Rh 129 0.168 0.070 0.300 0.002 0.044 0.260 0.260

Au 129 0.008 0.000 0.070 0.000062 0.008 0.950 0.020

Cr2O3 129 21.69 6.380 30.60 21.089 4.592 0.212 28.300

FeO 129 16.20 5.800 21.30 8.101 2.846 0.176 20.000 The PGE, Au and Cr2O3 grade value are weighted by sample length

The FeO value are only indicative

CoV: Coefficient of Variation

Table 8: PGEs, Au and Cr2O3 Grade Frequency Distribution of Domain 102

Domain 102

No. Samples

Mean Grade

Min Grade

Max Grade

Variance Std Dev CoV 95

th

Percentile

3E PGEs 143 1.167 0.390 2.050 0.046 0.213 0.183 1.470

Pt 143 0.705 0.240 1.210 0.017 0.131 0.186 0.890

Pd 143 0.293 0.090 0.520 0.003 0.052 0.179 0.370

Rh 143 0.169 0.060 0.340 0.001 0.036 0.215 0.230

Au 143 0.006 0.005 0.020 0.000007 0.003 0.425 0.010

Cr2O3 143 19.71 6.67 28.00 10.754 3.279 0.193 24.80

FeO 143 15.23 7.50 19.7 3.217 1.794 0.118 18.30 The PGEs, Au and Cr2O3 grade value are weighted by sample length

The FeO value are only indicative

CoV: Coefficient of Variation

The primary mineralised wireframe as determined by SRK together with the

exploration auger drillholes for the TSF is shown in Figure 13 and Figure 14. The

volume between the upper surface and base of the TSF (Derived from the end of

depth of the auger drillholes) were reviewed by Sound Mining and found to be an

accurate representation of the data.

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Figure 13: TSF Mineralised Wireframe as Determined by SRK

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Figure 14: TSF Mineralised Wireframe (Plan View)

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14.1.1.2. Variography

The experimental semi-variograms and the final semi-variogram models for both

Domains 101 and 102 were calculated, examined and modelled in CAE Studio.

For all the semi-variograms a lag angle tolerance of 90°. Directional semi-

variograms and down-hole variograms were examined and modelled. The semi-

variograms for Domains 101 and 102 on the 1.5 m sample length data showed

fairly good structure in all cases. The experimental semi-variograms were

oriented such that the X and Y axes approximated the long and short axis of the

tailings deposit in both Domain 101 and Domain 102.

The volumes in Domain 101 show low nuggets and give ranges of approximately

6 m for structures in the Z (down-hole) direction while the volumes in Domain 102

show low nuggets and give ranges of approximately 8 m for structures in the Z

(down-hole) direction. However, the layered method was used and the vertical

spacing of both Domains was set at 1.5 m. The semi-variograms stabilise at the

population variance at ranges of greater than 300 m on strike and 200 m on dip in

the TSF. The directional variograms for Domain 101 and Domain 102 (Table 9

and Table 10) show the two major directions of continuity of the mineralisation.

The 146.5° east of north direction is along the strike direction (longer range) of

the TSF compartments and the 56.5° direction is in the dip direction (shorter

range).

Table 9: Modelled Semi-Variogram Parameters for the Tailing in Domain 101

Domain 101

Element

Rotation (CAE Studio)

Structure1

Nugget C(0)

Range (m)

Sill (C1) Total Sill Z Y X Strike Dip

Down Hole

3E PGEs 56.5 0 0 0.034 502 269 2.25 0.049 0.083

Pt 56.5 0 0 0.014 460 240 2.25 0.22 0.036

Pd 56.5 0 0 0.00197 591 280 2.25 0.00370 0.00567

Rh 34 0 0 0.00094 508 205 2.25 0.00111 0.00205

Au 34 0 0 0.0000680 531 177 2.25 0.00019 0.0009

Cr2O3 56.5 0 0 5.659 524 257 2.25 13.669 19.328

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Table 10: Modelled Semi-Variogram Parameters for the Tailing in Domain 102

Domain 102

Element

Rotation (CAE Studio)

Structure1

Nugget C(0)

Range (m)

Sill (C1) Total Sill Z Y X Strike Dip

Down Hole

3E PGEs 56.5 0 0 0.041 298 350 2.25 0.013 0.054

Pt 56.5 0 0 0.015 309 199 2.25 0.006 0.021

Pd 56.5 0 0 0.00260 207 310 2.25 0.00053 0.00313

Rh 79 0 0 0.00106 204 161 2.25 0.00048 0.00154

Au 79 0 0 0.0000036 630 144 2.25 0.0000026 0.0000062

Cr2O3 34 0 0 6.525 243 200 2.25 6.516 13.041

14.1.2. Sound Mining Observation

The block model constructed by SRK was reviewed by Sound Mining and

confirmed to be acceptable for the purpose of a Mineral Resource Estimation.

The block model definition and extents were analyses and no errors were

identified.

There were sufficient samples to be able to characterise the grade population of

Domain 101 and sufficient samples (129) for Domain 102 to adequately by

creating semi-variograms.

14.2. Mineral Resource Statement

Ordinary Kriging (OK) was used as the primary estimation method for grade

interpolation into the block model. The OK estimate was constrained to the

outline of the original compartments of Domains 101 and 102 of the TSF as

defined by the individual wireframe solids.

The Mineral Resource classification for the TSF is stated in Table 11 below.

Figure 15 shows the Mineral Resource Classification for the TSF

Table 11: SRK Mineral Resource Statement for the TSF as at 1st August 2017

Classification Tonnage

(Mt)

3E PGEs (g/t)

Pt (g/t)

Pd (g/t)

Rh (g/t)

Au (g/t)

Cr2O3 (%)

3E PGEs (kOz)

Au (kOz)

Cr2O3 (Mt)

Measured 12.49 1.22 0.75 0.31 0.17 0.01 20.85 492.00 3.18 2.60

Indicated 1.19 1.14 0.69 0.29 0.17 0.01 19.31 430.52 0.22 0.20

Total 13.68 1.22 0.74 0.31 0.17 0.01 20.72 535.52 3.40 2.84

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Figure 15: SRK Mineral Resource Classification for the TSF

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The total Resource for the TSF is 13.68 Mt containing 535,520 oz of 3E PGEs at

an average grade of 1.218 g/t and 3 404 oz of Au at an average grade of

0.008 g/t and 2.834 Mt of Cr2O3 at an average grade of 20.72%.

The Resource Estimate for the TSF has a high level of confidence, with 91.29%

of the estimate falling into the Measured classification category and 8.71% falling

into the Indicated classification category.

The 3E PGEs, Au and Cr2O3 grade distributions estimated into the block model is

shown for the TSF in Figure 16 to Figure 18. Sound Mining conducted visual

inspections by superimposing the drillhole grades on the grade model and it was

found that it was highly comparable with the block model values (Figure 19 and

Figure 20).

The “reasonable prospects for economic extraction” of the TSF provided by SRK

were reviewed and deemed acceptable by Sound Mining.

14.2.1. Sound Mining Comments

Sound Mining agrees with SRK that the current drilling information is sufficiently

reliable to interpret with confidence the boundaries of the tailings of Domain 101

and Domain 102 (this includes the limits of the contained PGEs, Au and Cr2O3

resource) and that the assay data is sufficiently reliable to support Mineral

Resource Estimate dated 1st August 2017.

SRK followed the drilling and sampling procedures in accordance with best

practices and which was verified by an independent QAQC programme.

Sound Mining was able to recreate and validated the drillhole database used by

SRK in support of the Mineral Resource Estimate. The Mineral Resource

Statement prepared and presented in this Technical Report, is in compliance with

the National Instrument 43-101 Standards of Disclosure for Mineral Projects.

Sound Mining considers the overall estimates are consistent with the source data

and sufficiently represent the grade distribution seen with in the TSF. The

geostatistical analysis returned sufficiently robust results in the tailings volumes in

the TSF to allow for a kriged estimation to be undertaken for Domain 101 and

Domain 102 of the TSF.

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Figure 16: 3E PGEs Grade Distribution of the TSF

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Figure 17: Au Grade Distribution of the TSF

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Figure 18: Cr2O3 Grade Distribution of the TSF

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Figure 19: 3E PGEs Grade Distribution (Cross Section)

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Figure 20: Cr2O3 Grade Distribution (Cross Section)

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15. MINERAL RESERVE ESTIMATE

The Mineral Reserves have been prepared in accordance with the classification

criteria of the Canadian Securities Administrators' National Instrument 43-101 –

Standards of Disclosure for Mineral Projects (NI 43-101). The Mineral Reserve

calculation was completed under the supervision of Vaughn Duke, Pr. Eng of

Sound Mining, who is a Qualified Person as defined under NI 43-101.

In order to declare a mineral reserve it is necessary to develop a plan with

revenue and cost forecasts to confirm that the operation will be viable. Suitable

software was used in conjunction with the latest geological block model of the

TSF to generate a mining plan with operational sequencing and a production

schedule (i.e. a revenue forecast). All of the various assumptions and estimates

that were applied as part of the process are presented in Table 15, with the more

important being highlighted below:

A cut-off grade of 20.5%, based on test work and economic modelling, was

applied.

A mining recovery of 95% was applied (i.e. 3% planned losses and 2%

unplanned losses). These were determined from previous performance

observations and measurements.

A processing recovery and yield based on the results of pilot test work was

applied (Graph 9).

A processing capacity of 240 ktpm based on the designed CRP capacity

was targeted.

A product price, based on benchmarked metrics (Section 19), was used.

The mine design and processing capacity informed the capital forecast and

operating cost estimates, which were derived as part of the FS performed by

Barplats.

15.1. Mineral Reserve Tabulation

Discounted financial modelling of the forecast cash flows, which have taken into

account all of the modifying factors, demonstrates that a 40% chrome

concentrate can be economically produced over a mine life of approximately 33

months and accordingly a Mineral Reserve Estimate for the TSF at CRM is

presented in Table 12 and illustrated in Figure 21.

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Table 12: Mineral Reserve Estimation as at 1 September 2017

Category Quantity

(Mt) Grade

(%) Cr2O3 Content

(Mt) Cr2O3

Proved Mineral Reserve 6.25 22.42 1.40

Probable Mineral Reserve 0.18 20.28 0.04

Total Mineral Reserve 6.42 22.36 1.44

Notes to Table 12

The cut-off grade of 20.5% results in a Mineral reserve of 6.42 Mt from the total Mineral

resource of 13.68 Mt;

The Mineral Reserves constitute the feed to the CRP over 33 months and are stated as

at 1 September, 2017;

The Mineral Reserves are stated at a price of ZAR 870.79/t for 40% chrome concentrate

FOM;

Although stated separately, the mineral resources are inclusive of mineral reserves;

There are no inferred mineral resources included in the mineral resource statement, nor

do they play a part in the mineral reserve determination;

The PGEs are excluded in the mineral reserve estimate as they are not being recovered

as part of the Project;

Grade measurements reported as a percent (%) rounded to two decimal places, and

quantity measurements reported in metric units (Mt) rounded to two decimal place;

The FS is to the prescribed level of accuracy. The capital and operating costs are

supported by quotations and zero based costing techniques; and

The Mineral Reserve estimates contained herein may be subject to legal, political,

environmental or other risks that could materially affect the potential development of such

Mineral Reserves.

Mineral resources that are not included within the Mineral Reserves do not have

demonstrated economic viability.

The Mineral Reserve estimates are for Barplats's entire interest.

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Figure 21 : Plan View of TSF showing Reserved Categories

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15.2. Sound Mining Observations

The overall operation uses tried and tested technology that occurs elsewhere in

South Africa. As such, the levels of technical uncertainty are considered to be

low. However, a cut-off grade of 20.5% has been used to ensure an acceptable

yield. This in turn, has had the effect of the Project only planning to feed 6.42 Mt

of the overall mineral resource of 13.68Mt to the CRP. The forecast production

lasts for 33 months but payback is only achieved in month 25, places the Project

at risk to variations in the price (Figure 43).

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16. MINING METHOD

16.1. Introduction

This section of the ITR covers the mining and deposition components of the

production process. It also considers the environmental management implications

of mining the TSF.

16.2. Mining

Barplats employees worked with Fraser Alexander to:

confirm an overarching depletion strategy;

determine an appropriate mining methodology;

agree on the mining operations; and

complete the planning and cost estimates for the FS.

16.2.1. Overarching Depletion Strategy

Barplats’ preference is not to establish a new TSF and so the strategy is for the

tailings from the plant to be placed back onto the footprint of the existing TSF

while it is being exploited. The TSF has been divided into six areas (Figure 22) as

part of a strategy to exploit the total volume of tailings material.

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Figure 22 : Proposed Mining Area for TSF

The FS, however conservatively considers only half of this volume (i.e.6.42 Mt). A

cut-off grade of 20.5% was determined, rendering the areas marked in white in

Figure 23, as uneconomical.

Only mining areas 2, 3A, 3B and 3C will be targeted to excavate the 6.42 Mt and

achieve optimal yield of the Chrome from the TSF. Areas 1A and 1B contains

chrome with an average grade below the 20.5% cut-off.

The un-economical material in area A (Figure 23) will be mined from the south-

western corner and dumped onto the north-eastern uneconomical area (Area B in

Figure 23). The economical areas form Area 2 (Figure 22) will be deposited on

top of the economic area 1B in Figure 22 to create space for the re-deposition of

tailings from area 3A before the start of processing operations. Cognisance will

be taken of the size of the material for the purpose of re-mining. Area 2 will then

be prepared with the correct infrastructure for re-deposition. It will have enough

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space to accommodate the total volume of Area 3A and some of Area 3B, if

needed.

Hydraulic mining and Mechanical loading of material on the north-western section

(Area 3A and 3B) will start simultaneously and follow the sequence shown in

Figure 22. The associated tailings from the plant following processing will be

re-deposited using the cyclone method into the newly prepared Area 2

(Figure 23).

Figure 23: Grade plot Cr2O3

Work will start on preparing Area 3A and 3B to facilitate further re-deposition

capacity as soon as sufficient space becomes available. Tailings will continue to

be deposited in Area 2 (i.e. to starter wall level) until construction of the wall in

Area 3A and 3B is completed.

Area 3C and the high grade area in Area 1 will be targeted last with the tailings

from these areas deposited back into Area 3A and 3B.

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Figure 24 Shows mining sequence. All the area in dark blue is designated to be

mechanically mined at 120 ktpm (203 tph) and all the other areas are to be mined

hydraulically at 120 ktpm.

Mechanical loading is necessary in the coarse area of the TSF where material is

chemically bonded in layers, which is not able to be hydraulically broken down to

the minus 3mm fraction, which is the maximum plant feed size.

Figure 24: Mining sequence

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Figure 25 Presents contours of the coarseness of the material (i.e. >75µm)

Figure 25: contours of the coarseness (µm)

Table 13 presents the sequence of activities and quantities involved.

Table 13: Depletion Summary

Phase Activity Quantities / Infrastructure

1 Move Area 2 to Area 1A and 1B 1,783,909 m³

1 Pre-construction works Starter walls, penstock and drains

1 Time estimation 7 months

1 Pre-construction works in Area 3A Construct during Phase 1

2 Hydraulically mine and clean Area 3A 1,089,733 m³

2 Time estimation 7 months

2 Pre-construction works in Area 3B Construct during Phase 2

3 Hydraulically mine and clean Area 3B 902,710 m³

3 Time estimation 5 months

3 Pre-construction works in Area 3C and 1A Construct during Phase 3

4 Start hydraulic mining in Area 3C and 1A 1,578,534 m³

4 Time estimation 11 months

Total Volume In situ 4,474,438 m³

Total Volume Excavated (5% Loss) 4,250,716 m³

Total Quantity to Plant 6,435,348 t

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16.2.2. Mining Methodology

Modelling was used to determine the most suitable technique for mining the TSF.

The methodology involves continual and simultaneous cleaning, construction,

hydraulic mining and deposition activities.

Certain areas need to be excavated using mechanised equipment (i.e. coarser

harder material) while other sections of the TSF can be mined hydraulically (i.e.

finer softer material).

16.2.2.1. Mechanised Operations

Coarse material will be excavated, using a dry mechanised mining method. Four

tests where done on the coarse fraction area of the TSF to determine both the

mining rate as well as the size distribution of the material post mining using a

reclaiming unit (Photograph 2) with picks on a rotating drum.

Photograph 2: Mechanical Cutting Machine

It was found that on a closed setting, with two passes, a mining rate of 344 tph

can be maintained with a 50% passing the minus 3 mm fraction (Figure 26).

Tests were conducted using a 7 mm screen.

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Figure 26: Schematic Showing Mechanical Loader Settings

The settings used on the mechanical loader and number of passes done with

their respective results are shown in Table 14.

Table 14: Mechanical Loader Cutting Depth Settings

No. Configuration Pass Depth (mm)

Distance (m)

Time (mins)

Mining Rate (tph)

% + 28mm

% +7-28mm

% -7mm

5 Front End Loader

(FEL) 38 28 34

4 Open Setting 1 350 20 50 1905 4 36 59

3 Closed Setting 2 300 10 42 609 13 51 36

2 Closed Setting 1 250 20 90 756 1 34 64

1 Closed Setting 2 250 10 54 344 1 38 61

The mechanically mined material will be trucked to a scalping screen, which will

dry screen the vegetation from the material, after which it will pass through a

roller crusher that will ensure that all the material is screened to minus 28 mm

(Figure 27).

The material will be pulped and pumped with a jet pump at a planned rate of

203 tph, to the central pumping station with a 3mm wet screen where it will be

mixed with the hydraulically mined material.

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At the central pumping station, the oversize material (+3 mm), from the test work,

indicated to be approximately 50% of the mechanically mined material (100 tph),

will pass through a scrubber in closed circuit with the 3mm screen.

Figure 27: Jet Pump System

The grizzly feeder screen will be set at 40mm and a roller crusher set at 10 mm to

protect the booster pump which will transfer the slurry through HDPE pipes to the

main slurry pump station.

The engineering design is specified to ensure a constant throughput in the plant.

The trucks will be limited to a travelling distance of maximum 250 m to achieve

the design specifications of the plant. The jet pump unit will therefore be moved

closer to the advancing face during planned shutdown periods.

16.2.2.2. Hydraulic Operations

Hydraulic mining involves the material being hydraulically sluiced from the

planned sections or blocks of the TSF and transferred in a slurry form to a

collection sump via a system of drains or launders. A pump station is then used to

pump the slurry to the plant.

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The hydraulic sluicing is achieved by using track mounted high pressure water

monitor guns (one operating and one on standby) to generate a slurry from the

material, which has a specific gravity (SG) of 3.6 t/m3. The resulting slurry density

is expected to fluctuate from 1.35 t/m3 to 1.80 t/m3. Water is moved through a

series of pumps to increase the pressure of the water to approximately 275 kPa

before it is directed through a network of pipes to the high-pressure monitor units

on top of the TSF.

The slurry will flow through a launder system to a launder collection sump

(on-dam catchment area) and collection barge vertical spindle pump (Figure 28).

Figure 28: Typical Cross Section from Main Catchment to Vibrating Screen

A series of 110 kW satellite spindle pumps will be positioned to assist the flow.

Static screens (+50 mm) will be used at the satellite pumps to remove debris and

vegetation. The 12 m deep catchment area and launder will be created using an

excavator. A floating “tripod” barge will be installed in the catchment area to

include a vertical spindle pump for onward transfer of the slurry to the main slurry

pump station.

Following completion of an upper bench, a second catchment sump will need to

be established. Two vertical spindle pumps will be used on a barge system to

feed the main transfer slurry pump station. The final cut will follow the same

sequence of launder and mining the final footprint from the higher contour levels

towards the lower contour levels.

The two satellite pumps will be placed inside the final cut catchment area as a

sump and feed the main pump station with slurry. The collection sump, together

with the high wall will act to safe guard against flooding of the pump station by

collecting runoff water and barricading between the sump and pump station

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16.2.2.3. Sound Mining Observations

Fraser Alexander are experienced in re-mining operations on various TSF

operations. The selection of FA as a sub-contractor for re-mining is supported.

The plant and equipment specified for extraction at the TSF is simple and robust.

The screen at the TSF plant has apertures of 3 mm. The +3 mm material on the

TSF is in the form of a hard, composite chrome silicate. Metso, a local supplier of

attritioning equipment, together with BPL has planned a test work program with

Mintek to reduce the hard composite particle size to minus 3 mm. This work has

not yet commenced and if equipment is required, provision must be made for this

study work in the capital and operating cost budgets.

16.2.2.4. Mining Operations

The planning and design work considered a throughput target of 240 ktpm, which

equates to approximately 8 ktpd or 406 tph of dry material for a continuous

(i.e. 24/7) operation with an overall slurry production availability of 90% assumed.

Three teams (shifts) have been planned with a fourth team on an “off shift”

system:

Shift One: (06:00 – 14:00) – Morning shift

Shift Two: (14:00 - 22:00) – Afternoon shift

Shift Three: (22:00 – 06:00) – Night shift

Shift Four: Off

The off shift will rest for five days where-after, the teams will rotate. The off shift

will start on night shift, night shift will move to afternoon shift and afternoon shift

will move to the morning shift. The morning shift will then start on their five day off

shift.

The plan is for the mining operations (i.e. feed to the plant) to be managed as a

separate business unit. A suitably experienced contracting company will be

appointed to take responsibility for the supply, installation, operation and

maintenance of the following:

Site clearance;

Mining Infrastructure;

Fine material mining unit;

Coarse material mining unit; and

Storm Water Control.

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The contractor will be required to supply the stipulated tonnages and grading to

the process plant within the stipulated density range.

An upfront clear and grub operation will remove vegetation and any other

unwanted material to prevent blockages and to minimise delays in the slurry flow

system. While a significant amount of natural regrowth is observed, there is little

evidence of foreign waste, building rubble or organic waste on the TSF. The

vegetation will be removed in a structured and logical sequence as the operation

progresses. It will be either stockpiled or pushed over the edge of the crest of the

outer wall of the TSF. This will be governed by the 50 m FEL travel distance

constraint.

A 10 m high starter wall will be constructed for each area and an elevated blanket

filter drain system will be placed on the inside toe of this starter wall. A self-

decanting penstock system will be positioned in the centre of the area from where

an outlet pipe will decant into the surrounding drainage trench.

Operations will commence with the mechanical excavation of the launder

catchment pit and the installation of a barge pumping system to cater for the

natural ground slope. The decant barge system will be used till the level is high

enough for the water to decant freely. This will take place on the upper level

(bench). The necessary pipe work and a high-pressure manifold system will be

installed on the TSF while the barge system is being established. This will be

done in the section where mining is taking place and sequentially as the mining

plan dictate.

Further pipe work will then be connected downstream from the decant system to

feed into the vibrating screen. A permanent penstock decant tower will be

installed for the total foot print and life after this project. Monitor mining will start

as soon as the barge-launder system and connecting pipes have been

commissioned.

These units will be utilised to mobilise 120 ktpm (i.e. ~4.0 ktpd dry) from the finer

fraction of the dam, and a FEL will be used to typically excavate some 120 ktpm

of the coarser material from the outer area of the dam. The fine and coarse

material from both of these types of mining units will be delivered onto the main

transfer pump station’s vibrating screen and mixed before transfer into the

conditioning tank for diluting to a slurry density of 1.38 t/m3. The requirement is to

feed the slurry to the series of spirals in the plant at a consistent density and

volume. Area 3 will be mined by cutting the main launder and progressively

working to the southwest edge of Area 2.

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Fine material will be moved using monitors. This process will make use of two

monitor guns, one operational and one on stand-by. The general launder slope

will be maintained (1:80 to 1:120) and when the cut becomes too shallow (to

maintain gravity flow) a step ‘down’ will occur. Satellite pumps will be used at

these step-down intervals to transfer the slurry from the lower elevation to the

adjacent higher elevation and so facilitate continuation of the free draining

process.

The coarse material will be moved mechanically and loaded into a jet pump

system where it will be pumped, screened and blended with the finer material.

This coarse material is planned to be primarily sourced from the outer perimeter

of the TSF. A mobile re-claimer (mechanised cutter) will be used to excavate the

harder material.

Portable rechargeable lighting towers will be used for the night shift. Mining

operations will be stopped whenever lightning is detected closer than 30 km from

the mine. This may also occur during heavy downpours when working conditions

are likely to become unsafe.

The outer crest wall of the TSF will be maintained to accommodate a 1:50 year or

24-hour storm water holding capacity within the TSF. Storm water will however,

not be stored on top of the TSF but allowed to flow off in a controlled manner.

The surface topography is such that storm water not contained within the surface

paddocks will flow towards barge sump system. The holding capacity of the

catchment sump has been designed accordingly. The satellite pumps will move

storm water to the main slurry pump station from where it will be pumped back to

the plant. Excess water will be pumped to a return water dam for re-use. Rain

water can also bypass the plant via the solution trench to the return water dam

during heavy rain storms. Solids will remain in the catchment. A spillway in the

catchment will be used to discharge excessive storm water during the final cut.

The mining contractor will also be responsible for the mechanical and electrical

maintenance of all engineering equipment within the TSF fence line. This would

include the following infrastructure:

satellite vertical spindle pump stations;

water barge system;

booster pump station;

main slurry pump station with vibrating screen;

lighting and associated cabling; and

electrical distribution for the lighting and vertical spindle pumps.

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A suitably qualified engineer will be appointed to cover the legal responsibility

associated with the mining and plant operations. This person will oversee the

maintenance program, all artisans, the quality, standards and the scheduling of

all maintenance. Major overhauls of equipment are planned to be done off site.

Critical spares will be kept on site.

Planning provides for two barges to be operating with one standby or in the

process of being relocated. This is anticipated to increase the onsite availability to

98%.

16.2.2.5. Grade Control

The high-grade Chrome is located on the outer walls of the tailings facility and

therefore it is planned to concentrate mining on the higher grade (> 20.5%).

The block model will be used with the following additional trends as guidance

when selecting the material to be directed to CRP:

The moisture increases towards the centre of the dam.

The moisture content also increases towards the base of the dam.

The Cr2O3 grade increases towards the centre of the dam.

Coarser material is mainly situated on the edges of the TSF.

Ongoing feedback from sampling at the CRP will also assist in the overall grade

control effort.

The TSF feed stream will be sampled at the receiving tank by means of a linear

moving cutter sampler and this will be used as the CRP head grade sample.

Sampling in the CRP will by automatic samplers at feed belts or the pulp streams.

There is a comprehensive laboratory situated in the plant which is convenient for

sample preparation and assay. The TSF production will not be measured

separately; this will be back-calculated from the feed and concentrate streams. The

quantity of actual concentrate production will be determined by a monthly survey

of physical stock on the ground with dispatched chrome and the monthly opening

stock taken into account.

16.2.2.6. Planning Aspects

Table 15 presents the design criteria and assumptions used to inform the

planning process.

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Table 15: Design criteria

Design Criteria / Planning Assumption Value / Comment

Available information

Lidar DTM survey Given by client

DTM NGL survey Given by Client/SRK

Block model Given by Client/SRK

Tailings Storage Facility (TSF)

Tailings facility area 86 ha

Estimated total volume 8,377,803 m³

Dry in-situ bulk density of TSF 1.56 t/m³

Estimated quantity of dry tailings available for reclamation 1,368 kt

Portion reclaimed after losses (Planned and Unplanned) 95%

Dry mining rate 240 ktpm

Life of project 3 to 5 years

Yield/grade 22.5%

Mining Assumptions and General Slurry Characteristics

Method Mechanical and hydraulic mining

Excavation rate 257 ktpm

Mining rate (feed to plant) 240 ktpm

Overall project availability 84%

Contractor operational availability 98%

Dry mining rate (Incl. 84% availability (±10%)) 391 tph

Feed Solids SG 3.3 t/m3

Slurry density to supply to main slurry pump station. 1.35 t/m³ to 1.80 t/m³

Slurry flow rates based on SG of 3.3 at an RD of 1.5 647 m3/h

Minimum flow rate (Pipe Velocity) to prevent settling within pipe* 3.2 m/s

Deposition

Method Cyclone

Deposition rate 208 ktpm

Rate of rise 3.5 m/yr

Specific Gravity 3.6 t/m³

Underflow density 2.45 t/m³

Overflow density 1.35 t/m³

Feed density 1.45 t/m³

Pressure 1 to 1.5 kPa

Underflow split 25%

Overflow split 75%

Process Water Requirements (For HP Water Monitoring Supply)

HP Water requirements 577 m³/h

Designed HP Pump manifold 40 bar

Designed HP@ monitor guns 25 bar

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The design, sequencing and scheduling was accomplished by using data from

the geological block model and survey information with the design criteria to

determine a suitable exploitation strategy. A key design principle was to try and

keep the grade and size mix delivered to the plant as even as possible.

The designed layout and scheduling assumes a constant flow to the plant and

takes cognisance of a 20% variation in the pulp density which will fluctuate. The

need to use the existing footprint has limited flexibility in terms of selective mining

and as a consequence, complete blocks, or sections, of the TSF have been

committed to the mining plan at a time.

Figure 29 presents a general arrangement of the mining plan. Ongoing tactical

planning will be dynamic and may change as the operations progress.

Figure 29: Mining plan

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Figure 29 illustrates that the fine material is mainly deposited in the blocks

coloured in Green and will be mined hydraulically with monitors. The coarse

material is deposited in the blue coloured blocks and will be moved mechanically.

A provision of three months has been included in the FS to cater for operational

readiness prior to steady state production. Operators will be trained on-site to

gain exposure to the site specific conditions during the daylight hours only and on

completion of the operational readiness phase, mining will progress into a

continuous operation. The high-pressure pumps and slurry delivery process will

need to operate at full capacity for the operational readiness phase.

16.3. Deposition

Sound Mining also reviewed the study work completed in the FS for the re-

deposition, or placement, of tailings from the plant into the space created on the

TSF. The review considered both the design and operational issues related to

deposition.

16.3.1. Design Considerations

The “on-wall” cyclone deposition method is preferred and was selected for

inclusion in the deposition design because it can be operated at a much higher

rate of rise which reduces the need for additional space.

The South African standard, SANS 10286, “Code of practice for Mine Residue”

was used as a guideline to design the re-deposition of tailings onto the TSF. The

following aspects were considered together with the relevant design criteria in

Table 15 in determining the size and lay-out of the space requirement on the TSF

(Figure 30):

The quantity of tailings to be re-deposited to understand the space

required.

The deposition rate to fix the footprint required for an acceptable rate of

rise.

The geotechnical behaviour of the tailings material as determined by the

anticipated tailings material characteristics and deposition method to

ensure structural stability.

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Figure 30: Design for the Re-deposition of tailings on the TSF

16.3.1.1. Quantity of Tailings

The production schedule is presented in Table 15:

Area 2

Area 3B

Area 1A

Area 1B

Area 3A

Area 3C

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Table 16: Production Schedule

Month Description

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17

Hydraulic Mining (kt) - - - - - - - 130.0 125.8 130.0 125.8 130.0 130.0 117.5 130.0 125.8 130.0

Planned Losses Ore* (kt) - - - - - - - 3.6 3.5 3.6 3.5 3.6 3.6 3.3 3.6 3.5 3.6

Unplanned Losses Ore** (kt) - - - - - - - 2.4 2.4 2.4 2.4 2.4 2.4 2.2 2.4 2.4 2.4

Feed to CRP (kt) - - - - - - - 124.0 120.0 124.0 120.0 124.0 124.0 112.0 124.0 120.0 124.0

Mechanical Loading (kt) - - - - - - - 130.0 125.8 130.0 125.8 130.0 130.0 117.5 130.0 125.8 130.0

Planned Losses Waste (kt) - - - - - - - 3.6 3.5 3.6 3.5 3.6 3.6 3.3 3.6 3.5 3.6

Unplanned Losses Waste (kt) - - - - - - - 2.4 2.4 2.4 2.4 2.4 2.4 2.2 2.4 2.4 2.4

Feed to CRP (kt) - - - - - - - 124.0 120.0 124.0 120.0 124.0 124.0 112.0 124.0 120.0 124.0

Re-Mining Quantity (kt) 240.0 240.0 300.0 300.0 300.0 300.0 300.0 240.0 240.0 190.0 - - - - - - -

Total Feed to CRP (kt) - - - - - - - 248.0 240.0 248.0 240.0 248.0 248.0 224.0 248.0 240.0 248.0

Total Content to CRP (kt) - - - - - - - 39.49 41.15 48.78 57.5 60.8 60.2 54.3 59.6 57.7 59.2

Average Grade of Content (%) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 15.9 17.1 19.7 24.0 24.5 24.3 24.2 24.0 24.0 23.9

Month Description

18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 Totals

Hydraulic Mining (kt) 125.8 130.0 130.0 125.8 130.0 125.8 130.0 130.0 121.7 140.4 188.8 145.3 125.8 130.0 130.0 125.8 3,410.97

Planned Losses Ore* (kt) 3.5 3.6 3.6 3.5 3.6 3.5 3.6 3.6 3.4 3.9 5.2 4.0 3.5 3.6 3.6 3.5 94.73

Unplanned Losses Ore** (kt) 2.4 2.4 2.4 2.4 2.4 2.4 2.4 2.4 2.3 2.6 3.5 2.7 2.4 2.4 2.4 2.4 63.77

Feed to CRP (kt) 120.0 124.0 124.0 120.0 124.0 120.0 124.0 124.0 116.0 133.9 180.0 138.6 120.0 124.0 124.0 120.0 3,252.47

Mechanical Loading (kt) 125.8 130.0 130.0 125.8 130.0 125.8 130.0 130.0 121.7 130.0 125.8 130.0 125.8 130.0 130.0 125.8 3,322.39

Planned Losses Waste (kt) 3.5 3.6 3.6 3.5 3.6 3.5 3.6 3.6 3.4 3.6 3.5 3.6 3.5 3.6 3.6 3.5 92.27

Unplanned Losses Waste (kt) 2.4 2.4 2.4 2.4 2.4 2.4 2.4 2.4 2.3 2.4 2.4 2.4 2.4 2.4 2.4 2.4 62.12

Feed to CRP (kt) 120.0 124.0 124.0 120.0 124.0 120.0 124.0 124.0 116.0 124.0 120.0 124.0 120.0 124.0 124.0 120.0 3,168.00

Re-Mining Quantity (kt) - - - - - - - - - - - - - - - - 2,649.97

Total Feed to CRP (kt) 240.0 248.0 248.0 240.0 248.0 240.0 248.0 248.0 232.0 257.9 300.0 262.6 240.0 248.0 248.0 240.0 6,420.47

Total Content to CRP (kt) 56.8 58.3 60.1 59.1 58.8 55.9 56.7 55.6 52.8 59.4 69.1 57.3 51.4 53.1 53.0 50.9 1,447.02

Average Grade of Content (%) 23.7 23.5 24.2 24.6 23.7 23.3 22.9 22.4 22.8 23.0 23.0 21.8 21.4 21.4 21.4 21.2

*Planned Losses: 3%

**Unplanned Losses: 2%

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A comparison between the original mining schedule completed by the mine and a

revised production schedule constructed by Sound Mining is shown in Graph 10.

The graph shows a close correlation between the original and revised mining

schedules although areas containing content below 20.5% was left out of the

Sound Mining schedule to extract 6.42 Mt.

Graph 10: Comparison between FS and Revised Mining Schedule

The quantity produced from the different mining methods is shown in Graph 11.

The initial seven months of production will be spent to remove the material

containing less than 20.5% Chromite in Area 2 and dumping it on top of Area 1A.

The hydraulic and mechanical mining will only start after the seventh month. The

project will maintain steady state production of approximately 240 ktpm from both

mining methods for another 28 months.

Graph 11: Combined Production Quantity

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Hydraulic Mining Mechanical Loading Low Grade Removal

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Both mining methods will produce at rate of 120 ktpm during steady state.

The areas containing the highest Cr2O3 content was targeted first for extraction.

The spread in plant feed grade over the life of the project is shown in Graph 12.

The head grade starts at approximately 16% and increases to approximately 24%

until month 33.

Graph 12: Average Cr2O3 Grade

After Month 33 the progressive head grade drops below 23% and mining

activities will stop (Graph 13).

Graph 13: Progressive Average Cr2O3 Grade

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29

Mo

nth

30

Mo

nth

31

Mo

nth

32

Mo

nth

33

Cr 2

O3 G

rade

Average Grade of Content

0%

3%

5%

8%

10%

13%

15%

18%

20%

23%

25%

Mo

nth

1

Mo

nth

2

Mo

nth

3

Mo

nth

4

Mo

nth

5

Mo

nth

6

Mo

nth

7

Mo

nth

8

Mo

nth

9

Mo

nth

10

Mo

nth

11

Mo

nth

12

Mo

nth

13

Month

14

Mo

nth

15

Mo

nth

16

Mo

nth

17

Mo

nth

18

Mo

nth

19

Mo

nth

20

Mo

nth

21

Mo

nth

22

Mo

nth

23

Mo

nth

24

Mo

nth

25

Mo

nth

26

Mo

nth

27

Mo

nth

28

Mo

nth

29

Mo

nth

30

Mo

nth

31

Mo

nth

32

Mo

nth

33

Cr 2

O3 G

rade

Progressive Grade (%)

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16.3.1.2. Capacity Analysis

An airspace model was developed using the contour mapping of July 2017. It was

built with an overall slope of 1:3 in benches of 9 m every 7 m vertical rise above

starter wall level. The modelling was completed using Model Maker (a DTM

software package). The resulting capacity, elevation and area relationships for

the modelled dam are indicated in a co-axial plot in Graph 14 to Graph 16 below.

Graph 14: Stage curve - Height vs Rate of Rise

Graph 15: Stage curve - Height vs Volume

1150

1155

1160

1165

1170

1175

1180

1185

1190

0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0 40.0

Heig

ht (m

)

Rate of rise (m/y)

Total Area 2 Area 1a Area 3

1150

1155

1160

1165

1170

1175

1180

1185

1190

0 1 2 3 4 5 6

Heig

ht (m

)

Time (years)

Total Area 2 Area 3 Area 1a

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Graph 16: Stage curve - Height vs Area

16.3.1.3. Stability Assessment

Various geotechnical investigations were completed in the past by SRK and

Metago. The TSF is generally underlain by norites and pyroxenites belonging to

the RLS of the BIC. Sub-soils throughout the major part of the site comprise a

surficial horizon of hill wash in the form of pale grey or orange silty or clayey

sand. Underlying the hill wash is a layer of dense colluvial gravel that is

ferruginised to varying degrees. The norites and pyroxenites that occur below the

colluvium are in the form or residual clay-silts or clayey silts. The SRK report also

indicates underlain materials of calcrete and quartz silty clay. The material

classifies in terms of the United Soil Classification System (USCS) as a gravely

clay with sand (Table 17).

Table 17: Generalised Stratigraphic Column

Depth (m)

Description

0 – 0.5 Hill wash/clay

0.5 – 1.5 Clayey sand with calcrete

1.5 - 3 Quartz sandy clay

3 -15 Sandy silt and calcrete

15 - 30 Partially weathered pyroxenite and norites

1150

1155

1160

1165

1170

1175

1180

1185

1190

0 50000 100000 150000 200000 250000 300000 350000 400000

Heig

ht (m

)

Volume (m3)

Total Area 2 Area 3 Area 1a

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The soil strength parameters used in this analysis are tabulated in Table 18

below. They are based on anticipated tailings characteristics and test pit sampling

records:

Table 18: Material Strength Properties

Material Dry Density

(KN/m3)

Friction Angle (°)

Cohesion (kPa)

Tailings - Underflow 21 36 0

Tailings - Overflow 16.1 31 0

Starter Wall 20 25 0

Hill Wash/Clay 19 22 0

Foundation – Weathered Norite 19.97 25 0

The safety factor for a typical cross section when the facility reaches its final

height is 1.48

Computer modelling (i.e. the Bishop Simplified method) was used for the stability

analysis in the FS. The required overall slope angle of between 1:2.5 and 1:3 will

be achieved by using appropriate horizontal benches. Chrome tailings; naturally

stack at an angle of approximately 32°. These benches can be flattened if

required for rehabilitation and vegetation purposes. Ideally, a balanced geometric

shape having similar side lengths and a centrally located penstock is the

preferred; unfortunately, site characteristics mostly govern the shape of the dam.

16.3.2. Operational Considerations

The main operational task will be to ensure that the underflow is deposited in

sufficient quantity and within a prescribed profile. The overflow will be discharged

into the basin. Key performance criteria for the management of the deposition

operation are:

Minimal open-ending (emergency and contingency only)

Create sufficient underflow (target 25% by volume)

Keep the crest of the wall on each lift level

Ensure the outer slope conforms to the prescribed wall profile

Do not bury pipes, valves or cyclones

Avoid the overflow eroding the toe of the underflow slope

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Sufficient cyclones will be placed along the wall to ensure optimal efficiency.

Each cyclone will move back and forth to cover an allocated a 27 m section of the

wall. A distribution pipe will be placed along the line of the main filter drain with

the cyclones positioned directly above the filter drain. The cyclones at the starter

wall will be positioned over the upstream toe filter drain.

The initial tailings will be used to cover the blanket filter drain with underflow

before the overflow inundates the drain and cyclones. The advancing cyclone

method will be used for the wall development - first deposit a mound (+/-500 mm

high) in front of the cyclone. A plank can be placed across the front of the stand

to prevent burying the stand in underflow. When this mound has formed and dried

(while depositing through other cyclones), push the cyclone onto the mound so

that the underflow will now deposit just in front of the mound, and so advance the

mound to the same height or raising is another 500 mm to create a 1 m lift. The

advance procedure is then repeated, thus advancing the mound along the crest

of the wall, working to a string line to keep the crest level and straight.

16.4. Sound Mining Observations

Barplats have built in two main safety factors into their production plan to ensure

that the of volume (36 ktpm) and product specification in the market.

A cut-off grade of 20.5% vs a model prediction of 19%. This ensures that

even if the chrome price reduces by 10% to USD138/t, Barplats will still be

profitable and able to deliver product to its customers.

A 40% metallurgical product grade. During pilot test work, Barplats found

that it could consistently produce a product with a grade of +40%, and

hence it opted to use this grade for the purpose of the FS.

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17. RECOVERY METHOD

The CRP will remain within the existing processing complex. Its design is based

on tried and tested technology and comprises the use of spiral concentrators

(spirals), which are generally standard throughout the South African chrome

industry. Minor design improvements will be incorporated using lessons learned

from the test work. Wherever possible, existing equipment will be retained to

reduce capital expenditure. The old spirals will, however, all be replaced with

modern spirals to improve recovery and yield. The existing spiral structure will be

retained with a few structural modifications. Existing sumps, pumps and pipelines

will be upgraded and repositioned to cater for the increase in throughput to

240 ktpm. All steel modifications will be approved by a professional engineer.

Instrumentation will be minimal.

17.1. Engineering Design Philosophy and Design Criteria

CRM’s engineering design philosophy was to ensure a robust design with a

proactive maintenance strategy. The FS design reflects:

A robust process flowsheet, with surge capacity, a chrome recovery circuit

and residue pumping system;

Tried and tested operational ready equipment;

Ease of maintenance, given the abrasive nature of chrome ore;

A control philosophy that allows an efficient continuous operation with optimal

throughput;

The design accommodates a throughput of 240 ktpm or 407 tph as contemplated

in the FS, with a potential 20% variation. The volume pumped will remain

constant, but the pulp density will be allowed to fluctuate. Table 19 presents the

process design criteria.

Table 19: Process Design Criteria (PDC)

Design Criteria Value / Comment

Throughput 240 ktpm

Feed grade (Cr2O3) >20%

Product Grade (Cr2O3) >40% Cr2O3, < 3% SiO2

Yield 15%

Plant Availability 85%

Plant Utilization 95%

Feed rate 407 tph

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In addition to the above, the design takes cognisance of the following operating

requirements:

Metal accounting samplers will comply with international best practice;

All pump boxes, sampler boxes, pipelines, and similar will support a wet,

settled slurry density of 5.0 t/m3.

All process pump boxes will be installed above ground level.

All slurry sumps will be sized to have a residence time of 90 seconds and

minimum valley angles of 45° on the lateral and 60° on the rear.

There will be adequate, safe access to operating equipment, and spiral nests

will be provided for CRP personnel.

Ergonomically acceptable and corrosion resistant, galvanized walkways with

kick plates, hand railings and 2 m of head room will be provided.

Hard piped, high pressure flushing water facilities and drain points will be

provided on all slurry pipelines and pumps, and generally., for handling

spillage.

Standard pipelines will be sized to ensure adequate slurry velocities for the

full suspension of solids at all times. The minimum slurry velocities will be

maintained between 2.7 m/s and 2.9 m/s. The chrome concentrates will be

moved at a minimum velocity of 3.2 m/s.

The pump gland service water supply lines will be automated and fitted with

check valves, sight glasses and pressure relief valves.

The potential for blockages and spillage will be low to minimise maintenance

and to maximise overall plant availability.

The layout makes maximum use of gravity and will seek to ensure that

optimum even slurry splits on the distributors are achieved.

All flow and density measuring equipment installations will allow effective and

efficient calibration at regular intervals. Design and instrument layouts will be

approved by the relevant vendors.

17.2. Process Flowsheet

The availability of the CRP will be dependent of the operational availability of the

hydraulic mining equipment on the TSF and "visa versa", and therefore a facility

to bypass the recovery circuit is not in the design (Figure 31).

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Figure 31: Process Flowsheet

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Slurry from the TSF will report to a spiral feed tank (TK100), where process

water will be added through a density control circuit to reduce the pulp relative

density from an average of 1.35 kg/ℓ to 1.29 kg/ℓ as required for the cluster

cyclone feed.

This density may vary between 1.25 kg/ℓ and 1.45 kg/ℓ. The higher figure was

used for the dilution water requirement, and the lower figure was used for the

maximum pumped volume requirement in the design.

The CRP feed and tailings lines will be equipped with a densitometer and flow

meter for mass integration capability to control the feed.

The design of the cluster cyclones will result in a relatively fine underflow (i.e.

cutting at approximately 45 m). The underflow from the cluster cyclones will be

controlled to a density of 1.70 kg/ℓ gravitated directly to the rougher spiral feed

tank (TK300) ahead of the spiral banks. The overflow from the cluster cyclone

will gravitate into tank (TK200) and will be pumped to the tailings thickener.

The CRP will consist of twenty five banks of spirals. Spiral clusters will be

arranged in a pattern so as to ensure an optimum even feed distribution between

the spirals. The rougher and scavenger spirals will be vertically stacked above

one another, making use of gravity feed to each section below. All of the spirals

will have adjustable cutters that will allow for the production concentrate and a

tailings stream on all stages.

There will be an automatic isolation valve on each discharge of the eight-way

pressure distributor so that a single nest may be taken off-line at a time without

affecting the rest of the CRP. This will include the process water take-off of the

ring main manifold for each specific bank in order to facilitate maintenance, or if

the average volumetric flow rate is too low.

The rougher spirals comprise three banks of ten spirals with five turns each.

They will be fed at a pulp density of 1.7 kg/ℓ.

The scavenger and re-scavenger spirals will be similar to the rougher spirals. The

four banks of cleaner spirals with three turns will be fed at a pulp density of

1.6 kg/ℓ.

The re-cleaner and re-re-cleaner spirals will also be of the three turn, double start

type, and will consist of one and three quarter turns each. They will be fed at a

pulp density of 1.5 kg/ℓ. At each stage, the concentrate will be processed for

further cleaning, whilst the tailings will be split off into a central discard pipe

reporting to spiral tails sump (TK 400).

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Diluting water will be added to the feed of each spiral stage via a ring type

manifold and each spiral will have its own manual control valve. Concentrate

from the re-re- cleaner spiral bank will gravitate to the final cleaner feed sump

(TK 600) and report to the hydrosizer for final cleaning. The tailings stream will

gravitate to the cleaner feed tank (TK 500).

The oversize from the hydrosizer will be pumped to a spiral receiving tank. The

under flow will report to the distributor from where product will go to its own sump

with control water added prior to being pumped to the metallurgical concentrate

stockpile de-watering cyclone. Make-up water to the chrome product sumps will

be evenly split between manual water addition to the respective product

launders, and level control water added directly to the sumps.

17.3. Chrome Plant Tailings Disposal

The de-sliming cyclone overflow will gravitate, via a vacuum box, to the thickener

feed box where it will be combined with the various spiral tails. All spiral tails from

the plant will be pumped to the tailings thickener feed box.

Slurry will be pumped at a fixed volume to the thickener. The underflow will be

pumped directly to de-watering cyclone ahead of the residue transfer station. A

densitometer and flow meter will be installed on this line with mass integration

capabilities to allow for proper control of this stream. This stream can be

delivered back to the TSF at a density of between 1.35 kg/ℓ and 1.40 kg/ℓ.

17.4. Concentrate Stockpiling Facility

From the distributor, the concentrates will be pumped to one of two overhead

de-watering cyclones from where the underflow will drop directly onto a concrete

stockpile area. The overflow of the de-watering cyclone will be returned via

pumping to the sumps of origin or the process water tank.

Drainage from the metallurgical grade stockpiles will gravitate to the lowest

point, preferably central between the two stockpiles with a retaining wall to cater

for two days stockpile run off and will be pumped via a sump and spillage pump

arrangement to the spiral process water tank.

17.5. Dispatch Facility

Access for external road transportation to the area is through an existing security

check point and all vehicles entering the area will be weighed.

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17.6. Water Requirements

The CRP will require significant amounts of water and so a separate water circuit

with sufficient pumping capacity has been provided for. Potable water will be

used for gland service water and process water will be used for the spiral dilution

water.

Water will be supplied from a process water tank that will cater for one and half

times the volumetric water requirement. The bottom of the tank will be sloped to

allow for periodic cleaning. The water feed from the tank will have a self-

cleaning inline strainer upstream of the supply pumps to remove foreign

objects that could impact performance. Make-up water to the chrome product

sumps will be split 50/50 between the manual water addition to the respective

product launders and the automatic modulating water makeup directly into the

sumps.

17.7. Spillage handling

Spillage will be contained within a bunded concrete area that slopes to a sump

with a 6 mm slotted wedge-wire screen. Provision has been made for a standby

spillage sump. A vertical spindle spillage pump will be used to transfer spillage to

the chrome tails thickener feed sump.

17.8. Control instrumentation

Suitable monitoring instrumentation will be installed and integrated into a

dedicated control room with a stand-alone Programmable Logic Controller (PLC)

Supervisory Control and Data Acquisition (SCADA) system to manage

production.

17.9. Sound Mining Observations

The yield in the PDC at 20% is 25% higher than typically achieved; in this case it

would be a conservative number, allowing for some over-design in the proposed

CRP.

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18. PROJECT INFRASTRUCTURE

The buildings at CRM appear to be well constructed. The offices and change

houses are extensive and well equipped.

A large workshop is available to the Project and comprises twelve service bays,

six offices, toilets, a conference room with a steam wash bay for four vehicles and

two overhead cranes (15 t and 5 t capacities).

There is a store with a 20 t overhead crane and off-loading facilities. It also has a

well secured outside storage area.

The general surface area is fenced and security is outsourced with adequate

access controls in place. The roads are hard-capped and in good condition. A

computerised weighbridge is also operational. Drainage and storm water handling

is in good order.

18.1. Mining and Deposition Infrastructure:

A low pressure barge system, and make up water system is needed at the TSF’s

return water dam. A high pressure water suction pump will also be installed

upstream. Provision has been included for power at the TSF and for the following:

Starter Walls: Starter walls will be constructed for each of the phases to

accommodate the initial high rate of rise. They will be built to tie in with the

natural contours and the average height of these walls will be between 10 m and

12 m. Waste rock comprised of calcrete, quartz and norite from the underground

works and surrounding areas will be used as building material. The wall will be

5 m wide at the top with the side slopes constructed at a 1:2 slope.

Under Drainage: A 6 m wide filter drainage system will be established at the

perimeter of each starter wall section. It will be placed on an elevated platform on

the inside toe of the starter walls. This filter drain will be linked to outlet pipes

feeding a solution trench and return water dam. The under-drainage system will

facilitate the removal of inter particle water, increase the consolidation rate and

contribute to structural stability.

Solution Collection Trench: A concrete lined solution trench will be positioned

around the perimeter of the TSF to collect seepage and for discharging water into

the return water dam.

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Access Road: An access road will be provided to cater for light vehicle travel

and the delivery of equipment to operations on the TSF. It will be designed to

prevent water from ponding.

Penstock Decant System: Each deposition area will require a dedicated

penstock decanting system (penstock towers and a gravity outfall pipe). This

decanting system will consist of two single intake penstocks at different

elevations that will be used to decant water as the dam rises rapidly during

commissioning. These will have to be sealed once the dam has risen to the next

intake tower. The permanent penstock has two intakes and will be centrally

positioned in the dam. Water from the penstock outlet pipe will be discharge

directly towards the silt trap and return water dam via a solution trench. These

penstock towers will be sleeved as they rise.

Due to the natural ground slope, during the commissioning phase of Area 2, a

decant barge pumping system will be used until the water elevation is at a height

suitable for decanting from the penstocks

Catwalks and Access to Penstocks: Provision has been made for the

construction of a wooden walkway (catwalk) as access to each penstock intake

structure. These catwalks and penstock structures will be constructed during the

construction phase and may be shortened during the operation with the

introduction of pool wall constructed of tailings material.

Slurry Delivery: The infrastructure on the tailings dam, associated with the slurry

delivery and tailings placement is determined by the selected deposition method.

Two feed delivery lines will come from the main plant where it be divided into

different ring main systems on each of the areas of deposition. This will be

controlled by proper change over valve stations. The ring mains will have a

cyclone take-off point for deposition, roughly every 27 m. See drawings for layout

details.

Storm Water Cut-off Trench: The separation of dirty and clean water is a legal

requirement. The construction of a storm water cut-off trench, to meet with the

flow and separation requirements is included in the design. This trench needs to

be excavated upstream of the tailings dam footprint. The trench will catch the run-

off water from the east and south of the tailing facility and will be diverted and

channelled towards the west and north of the dam into the natural catchment

area away from the tailings dam.

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18.2. Electrical Infrastructure and Supply

The operation will be supplied from the national grid which is owned and operated

by the South African National Power Utility (Eskom). Stand-by power is available

from a 2.0 MVA 6.6kV diesel generator. There are various main sub-stations

strategically located on surface. All of the electrical equipment and machinery

appears to have been properly installed and well maintained.

23 MVA is available to CRM. The Project will require 3 MVA at the TSF and there

is more than enough capacity for the CRP. Capacity for 1 MVA is already

available at the TSF (Figure 32) and funding has been provided for the necessary

upgrade to 3 MVA.

Figure 32: Proposed Single Line Electrical Reticulation

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18.3. Water Reticulation

Water is supplied from the Crocodile River (1 Mℓ/day) and sourced from the

Zandfontein underground mining area (4 Mℓ/day). This is more than the Project’s

make-up water requirement of 4.3 Mℓ/day. CRM have also submitted an

application to the Department of Water Affairs (DWAF) in South Africa to increase

the supply from the river to 5 Mℓ/day. This will reduce the Project’s reliance on

water from underground only, and ensure a constant feed for the treatment of the

product. Water balances were performed for the rainy and dry seasons in order to

calculate the raw water and bleed stream requirements during these periods.

CRM has five fresh water dams on the property. Used water is pumped to settling

dams for solids settle. The cleaner water is then pumped through a water

treatment plant back to the fresh water dams. Any excess clean water is pumped

back to the Tailings Return Water Dam for re-use.

Water draining from the TSF will report to the Tailings Return Water Dam for use

in mining process (Figure 33). Excess water will be sent to the plant as process

water.

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Figure 33: Water Balance Diagram

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18.4. Maintenance Strategy

Maintenance strategy will conform to Preventative, Predictive and Breakdown

maintenance. The system utilises suitable software (i.e. Axapta).

Preventative maintenance also known as scheduled maintenance. This strategy

includes routine and scheduled maintenance. Detailed maintenance schedules

will be completed for all equipment and updated during the life of the plant.

Weekly and monthly maintenance shutdowns will be scheduled to coincide with

the tailings storage facility planned maintenance schedules.

Predictive maintenance also known as condition based maintenance. This

strategy includes the collection of measurements of a wide variety of different

machinery parameters over a period of time. From the data collected it will be

possible to identify trends, predict possible failures and plan repairs in advance.

18.5. Sound Mining Observations

The existing processing complex has adequate electrical capacity for the CRP.

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19. MARKET STUDIES AND CONTRACTS

19.1. Demand

Chrome ore demand is directly linked to stainless steel production worldwide, but

with the rest of the world growing at a rate of 1% to 3%, the significant growth is

associated with China (Figure 34).

Figure 34: China GDP Real Annual Growth

China had a very buoyant growth rate in the order of 8%, but it has reduced to a

more sustainable rate with 6% expected going forward. Linked to this growth rate,

is the annual growth of 3% in stainless steel production (Figure 35). China

consumes some 11 Mtpa of the total world production of approximately 31 Mtpa.

Figure 35: Global Stainless Steel Output in 2010-2016

0

5000

10000

15000

20000

25000

30000

35000

40000

45000

50000

2010 2011 2012 2013 2014 2015 2016

Quantity

(10 K

t)

Year

Others North America Europe Asia

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Figure 36 presents a 2% growth forecast in chrome sales over the period of the

project. It compares well with the 3% growth in stainless steel sales, which is

considered to be a conservative expectation going forward.

Figure 36: 2017-2022 Chrome Ore Market Research Report

19.2. Supply

South Africa’s BIC contains some 70% of world’s total chrome reserves

(Figure 37).

Figure 37: Global Chrome Ore Reserve Distribution

951.5

964.3

1020.6

1055.2

1070

1110.7

1146.8

1173

1204.9

1240.7

1245.3

1250.3

0

200

400

600

800

1000

1200

1400

2011

2012

2013

2014

2015

2016

2017E

2018E

2019E

2020E

2021E

2022E

Period

74%

8%

1% 12%

2% 3%

South Africa Kazakstan India Zimbabwe Turkey Others

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Figure 38 shows that South Africa currently produces only 56% of world supply.

Figure 38: Global Chrome Ore Output Distributions

From Figure 39 it is evident that, at some 31 Mtpa, global chrome ore production

grows at a similar rate as demand, of circa 2% annually.

Figure 39: Global Chrome Ore Production and Growth Rate in 2011-2016

56%

14%

12%

3%

6%

9%

S. Africa Kazakstan India Oman Turkey Others

2011 2012 2013 2014 2015 2016

Output(Unit:10KT) 2980.2 2950.4 3060.5 3000 3090 3141.9

Growth YOY+/-% 8.82% -1.00% 3.73% -1.98% 3.00% 1.70%

-4.00%

-2.00%

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

2850

2900

2950

3000

3050

3100

3150

3200

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Recent world ore inventories at 2.5 Mt sit at approximately four weeks of supply,

and remain very tightly balanced (Figure 40).

Figure 40: Chrome Ore Stocks in 2013-2017

The imbalance in supply and demand at the end of 2016 resulted in the price

escalating to USD 400/metric tonne CIF China for 42% concentrate in December

2016 (Figure 41). This normalised quickly following an inventory build-up.

Figure 41: South African Chrome Ore 42% Conc. From 2012 to 2017

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Taking cognisance of the forecasted balanced supply and demand in the next

four years, Barplats is very confident of a price range of USD 150/metric tonne to

USD 170/metric tonne for 42% Concentrate CIF China for the project period and

Barplats used USD 153 in the real term discounted cash flow model.

19.3. Export Logistics and Procedures

The export logistical options for the chromite concentrate have been identified as

either bulk commodity or containerised shipping through the South African ports

of Richards Bay or Durban.

A recent survey undertaken as part of the ITR has indicated that very competitive

logistics costs can be derived through a containerised shipping option out of the

port of Durban. Logistical dispatch from the mine to Durban for containerised

shipping at the port warehouses can be achieved in approximately 30 days.

It is expected that the marketing of the chrome concentrates will be undertaken

through a trading contract with an established international commodities trading

company.

19.4. Sound Mining Observations

Sound Mining notes the envisaged term sheet in Table 20 from the results of the

chromite ore assaying.

Table 20: Chrome Quality

Element Typical Grade

Cr2O3 (min) 40.00%*

Cr:Fe (min) 1.27:1

SiO2 (max) 6%

MgO (max) 15%

Al2O3 (max) 17%

P (max) 0.015%

S (max) 0.015%

*42% applied as a basis in the financial model and concentrate below 39.5% would be rejected.

Metallurgical grade chrome as supplied to China is generally sold CIF 42%

Cr2O3; less than 3% SiO2. A target grade of 42% Cr2O3 should be the target and

if 40% is achieved on occasion, this can be blended to achieve a higher grade.

Lower grade Cr2O3 will cost more to transport per unit chrome and will attract

penalties.

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Accordingly, Barplats preference to use a price of USD 153/metric tonne, which is

at the lower end of the forecasted price range over the relatively short duration of

the project, is appropriately conservative.

Sound Mining believes that there could be upside potential in the Project. This

potential would need to be properly considered with further study work. This

would involve dropping the selected chrome cut-off grade and including the

recovery of PGMs.

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20. ENVIRONMENTAL STUDIES, PERMITTING AND SOCIAL

OR COMMUNITY IMPACT

The review work comprised of the following activities in the performance of this

ITR:

a discussion with Barplats regarding the current environmental and social

compliance status (including management practices) at CRM; and

a review of all relevant documentation, inclusive of licences, internal and

external audits, where available.

20.1. Safety Health and Environmental Study

The Mine Health and Safety Act No 29 of 1996 (MHSA) was developed under the

auspices of a tripartite relationship between State, Employer and Employee

organisations. The result is a large emphasis on employee participation regarding

Health and Safety matters. A full EIA, which was accepted by the DMR, also

exists at CRM. It inter alia covers the following safety, health, and environmental

issues.

20.1.1. Storm water Management

There is an existing storm water management plan for the mine. The guiding

principle of the storm water management plan is the separation of clean and dirty

storm water runoff. The existing storm water infrastructures are designed for

optimal reuse of dirty water. All access and haul roads will be constructed or

shaped so as to also act as diversion berms and canals. The runoff at all dirty

areas will be contained by dirty water berms and excess water will be drained by

canals to discharge dirty storm water into the planned dirty water ponds. Dirty

water collection berms will be constructed downslope of all “dirty areas” where

pollution of water resources is likely to occur. Clean water cut-off canals will also

be constructed upslope of dirty areas to convey unpolluted water to its nearest

outfall.

The FS includes adequate provision for the containment and reuse of

contaminated storm water from the mining area. Contaminated storm water

should be used as process water for the mine where possible.

Storm water infrastructure will be maintained on a regular basis to ensure

efficiency and persistency. Routine inspections will include dam wall

embankments and spillway inspections, dam seepage control inspections,

vegetation overgrowth, sediment settlement and regular water quality monitoring

programmes. With respect to Regulation 704 (Best Practice Guideline – G1:

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Storm Water Management – August 2006), storm water facilities and clean and

dirty diversion berms are required to prevent contamination of surface water and

the containment of contaminated water.

20.1.2. Dam Wall Integrity

The TSF was designed and constructed in 1988 by Fraser Alexander. In 1991 the

tailings dam was decommissioned and in 2000 the TSF was re-commissioned by

Barplats and was again decommissioned in 2003 where after it was re-

commissioned again by Barplats in 2005 until 2013 when the mine went into care

and maintenance.

It has proved resilient but when subject to re-mining, and as the outer slope is

developed, problems related to wind and water erosion may develop. These

problems are addressed by stabilizing the surface against wind and water erosion

by establishing vegetation on the wall benches as part of the operation.

Without the rehabilitation, the run-off from the benches will cause excessive

erosion of the uniformly non-cohesive underflow, despite the profile, leading to

siltation, a loss of retention capacity and concomitant overtopping. This

overtopping of a bench would have domino effect on lower benches which could

ultimately fail leading to potential spillage downstream of the TSF. Figure 42

illustrates the probable zone of influence if the TSF were to fail. The tailings

would essentially flow down gradient following the steepest path and would be

directed by obstructions and water courses.

Specialist consultants were appointed to perform a risk assessment and flow

slide analysis to better understand slope stability and the probability of failure at

the TSF. The probability of the failure was found to be 1: 85,614, which is

acceptable when compared to the industry’s recommended probability of failure

ranges between 1: 15,000 (unlikely) and 1: 150,000 (highly unlikely).

The FS has never-the-less, afforded the stability of the TSF the appropriate

attention in the design, construction and operational phases of the Project. The

planned concurrent rehabilitation will result in well-established stable slopes. An

operating manual for the mining operation will be drafted and used to explain the

mining plans, procedures, risk assessments and standards to all employees.

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Figure 42: Zone of Influence of failure of the TSF

20.1.3. Air Quality Monitoring and Dust Suppression

Section 28(1) of the National Environmental Management Act 107 of 1998

(NEMA) places a general duty of care on any person who causes pollution, to

take reasonable measures to prevent such pollution from occurring. Air quality

monitoring is considered to be a measure to exercise this duty of care, since it will

establish the type and volumes of emissions emanating from activities

undertaken on the site. Once this is known, measures can be taken to mitigate air

pollution. According to Government Notice 827 (NEMAQA, Act 39 of 2004), dust

monitoring is done in accordance with ASTM D1739-98(2010) Standard Test

Method for Collection and Measurement of Dust fall (Settle-able Particulate

Matter) and the South African National Standards 1929:2011 (Ambient Air Quality

– limits for common pollution).

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20.1.4. Surface Water, Groundwater and Water Quality Monitoring

The river catchment is characterised by a sprawling urban and industrial area

between Johannesburg and Pretoria, an extensive irrigation downstream of the

nearby Hartbeespoort Dam and large mining developments north of the

Magaliesberg (NWRS, 2012). The bulk of the urban water requirements for this

area are supplied by Rand Water, with the Vaal River System as its source.

Substantial volumes of return flows generated in the urban centres, enter the

Crocodile River, resulting in a surplus of water which offers a resource that can

be used to support development downstream of the catchment. Both the quantity

and quality of water in the river are a challenge to the requirements for the

ecological Reserve. Bio-monitoring assessments occur in summer (wet season)

and winter (dry season). There is currently no discharge into the river with little

difference between the up and downstream water quality and are in-line with

requirements.

Information from 335 boreholes and data from the National Groundwater Archive

was used together with a digital terrain model to establish the general flow of

local groundwater. The results indicate that the groundwater flows north-east and

north-west at Zandfontein on either side of the river. No significantly increased

concentrations can be observed north (i.e. downhill) of the TSF. The WULA

proposed that the impacts on the ground water are unlikely to be significant,

either in terms of quality or quantity. It listed potential sources of water

contamination, all of which can be managed in terms of generally accepted

practices. Make up water will be sourced from ground water and the river at

CRM. Current environmental planning assumes a zero-effluent discharge.

The South African National Standard (SANS) for domestic use (241:2011) is used

for the assessment of the water quality. This classification system is published by

the Water Research Commission and compiled in collaboration with DWAF and

the Department of Health. (SANS 1 & 2). There is an established surface water

quality monitoring programme in existence at CRM. It has been done in

accordance with the requirements of DWAF and an Exemption 218B that was

issued on 31 May 2001 to allow CRM to extract 140 m3 per day for make-up

water. The permit also allowed for a maximum discharge of 25 m3 per day of

purified effluent into the river. Barplats’ water uses are now authorized through a

Water Use License issued on 17 June 2017 in terms of the Chapter 4 of the National

Water Act, 1998 (Act no 36 of 1998).

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20.2. Social and Community Impact

CRM is located within the Local Municipality of Madibeng, which is one of five

local municipalities included in the Bojanala Platinum District Municipality (DC37).

The population of the Madibeng municipal area is about 33,800 (Census 2001). A

number of informal settlements have developed on private land in the vicinity of

CRM. There is a need for increased provision of basic housing and related

services. Brits serves as a base for providing a full range of urban amenities,

including world class medical, educational, financial, retail and commercial

services.

This section of the ITR covers the social impact of the Project on communities

within a certain reach of CRM (~25 km) or vice versa (Impact of communities on

the project). The following issues have been reviewed:

20.2.1. Soils, Land Use and Land Capability

The agricultural potential of the black turf soils is recognized as being high, and

most of the land in the area is arable. The soils can be used for both crop and

pasture production, and approximately 70% of the land in the area has been

cultivated at some stage to produce cotton, sunflowers, maize, citrus fruit and

various vegetables.

20.2.2. Archaeology, Cultural and Historical Sites

There are no historical sites, archaeological findings or graveyards within the vicinity

of the TSF.

20.2.3. Vegetation, Flora and Fauna

CRM falls within the savannah biome, and vegetation in the mine area is

classified as Norite Black Turfveld. The vegetation comprises a thornveld

component dominated by Acacia species and a grass component dominated by

Cymbopogon species. The lack of any unique habitat features (e.g. unusual soils

or rocky outcrops) makes it unlikely that any rare or endangered species occur on

the site. Furthermore, plant and animal habitats have been extensively

transformed by cultivation of land in the area. There are a number of plant

species that are protected under the National Forests Act but none occur on the

TSF. The TSF is not material in terms of conservation.

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20.2.4. Social Labour Plan (SLP)

CRM’s existing five-year SLP expires at the end of 2017 financial year. A new 5-

year SLP proposal will be submitted to the DMR for approval by the end of

November 2017. It will guide CRM policy with respect to “Local Economic

Development” where small, micro and medium enterprises receive access to do

business with CRM and “Preferential Procurement” where local broad-based

black economic empowerment companies are given preferential procurement

opportunities. CRM’s intentions regarding learnerships, adult basic education

training, portable skills training, and internships will also form part of the SLP.

Suitable projects will be agreed post a workshop with the following community

stakeholders:

Nearby Farmers;

Madibeng Municipality;

Khulusa School;

Brits – Elandsrand;

Oukasie;

Damonsville;

Lethlabile;

Mmakau;

Mothutlung; and

Bapong (including Majakaneng), Sonop, Bokfontein and Checkersville.

The new plan will be effective from 01 January 2018. Progress in terms of the

SLP will be monitored and managed through the Stakeholder Forum.

20.3. Recruitment and Training

The Project will need 92 additional staff on CRM’s payroll (Table 21) and

sufficient financial provision has been included in the FS.

Unemployment forums will be consulted by CRM when recruiting new staff. Local

residents and previously retrenched employees with relevant experience will be

given preference on about 63 low level vacancies that have been identified for the

purpose. Barplats will advertise normally for vacancies not filled. CRM have a

clear recruitment plan in place with suitable employment equity targets. The

recruitment process can take up to two months, which will include mandatory

training.

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Table 21: Labour Complement

Department Category No. of Employee Grade

Security

Supervisor 1 C5

Guards Weighbridge 6 A2

Guards Tailings Dam 9 A2

Plant 3 A2

Subtotal 19 -

Logistics

Supervisor 1 C5

Logistics Clerk 1 B4

Snr Attendant 4 B2

Samplers 12 B1

Subtotal 18 -

Quality Control

QC Leader 4 C3

QC Attendant 8 B1

Subtotal 12 -

Metallurgy

Plant Manager 1 D4

Plant Foreman 1 C5

Plant Metallurgist 1 C3

Shift Foreman 5 C3

Operators 5 B5

Metals Accountant 1 C2

Attendants 20 B1

Subtotal 34 -

Engineering

Engineering Supervisor 1 C5

Artisan 4 C2

Engineering Helper 3 A3

Subtotal 8 -

Total 92 -

In essence, a training needs analysis informs a Work Skills Plan (WSP) which is

a requirement of the Skills Development Act. Suitable classroom facilities

(Engagement Centre) are available and specialist service providers (i.e. external

trainers) will be engaged to present the courses onsite.

20.4. Industrial Relations

CRM are party to a collective agreement that covers the recognition of trade

unions (i.e. National Union of Mineworkers (NUM) and United Association of

South Africa (UASA)) and aspects related to such recognition. The appointed

mining contractor will convene and run their own labour consultation forum.

Disciplinary and grievance procedures will be revised for the Project. The

agreement also provides for negotiations around conditions of services and

regular meetings with labour.

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20.5. Environmental Provisions

Sections 41 to 47 of the MPRDA address current legislative closure

requirements. Section 41(1) requires that an applicant for a prospecting right,

mining right or mining permit must, before the Minister approves the EMP in

terms of Section 39(4), make the prescribed “financial provision” for the

rehabilitation or management of negative environmental impacts.

The TSF is covered in the existing EMP at CRM and accordingly the existing

liabilities stemming from the TSF are provided for in the closure plan. An annual

compliance audit of the TSF is undertaken by ENVASS, to update the estimate of

the mine closure liability. The latest evaluation report indicates that the CRM

should have a R75 million provision for its environmental rehabilitation. CRM

have arranged with Lombard Insurance to issue financial guarantees to the DMR

for this amount. The guarantees are partially secured by cash and partially by

mine houses belonging to CRM.

20.6. Sound Mining Observations

Standards, procedures, code of practices and legal documents are in place to

ensure the safe running of the TSF. CRM have a safety program, risk assessment

procedure and a medical surveillance program to minimize the risk of losses to its

employees, assets and environment. All people entering the mine are required to

undergo induction, occupation related training and assessments to ensure the

company work achieve zero harm.

Previous engagements with relevant stakeholders revealed a number of minor

concerns which range from the quality of water resources to security, noise and

air quality. While it is noted above that these issues are addressed using

recognized and accepted management practices, community liaison and effective

environmental management is essential for the smooth running of the operation.

CRM has a safety, health and environmental department that audit compliance

with company standards. Regular meetings are held where issues relating to

safety, health and environmental risks are reported and discussed.

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21. CAPITAL AND OPERATING COSTS

21.1. Operating Expenditure

21.1.1. Introduction

The financial evaluation based on production, revenue, costs and global

assumptions has established that the project presents a positive NPV measured

at the company’s required rate of return.

The following were considered when compiling the cash flow model:

Establish cash flows in real terms,

Project future cash flows,

Using a discount rate, discount future cash flows to the present valuation

date, and

Perform sensitivity analysis.

21.1.2. Accuracy of Estimate

The methodology used in preparing the plant and infrastructure base costs,

based on the scope, results in an estimate with an accuracy of 15% quoted as

(-5%, +10%)

21.1.3. Methodology / Basis of Estimate

Operating costs have been generated from a zero basis and have been

benchmarked where appropriate against operating costs previously achieved at

the mine. Mining and treatment costs relating to the project have been sourced

from supplier quotes, while current actual labour costs have been used to

establish labour costs for the project.

All operating costs are denominated in South African Rand (ZAR). The Base Date

applied to the operating cost estimate is 1st September 2017 and all values have

been expressed in Real August 2017 money terms. Any values shown in United

States Dollars (USD) have been converted at a rate of USD 1.00 = ZAR 12.75.

21.1.4. Owner Operating Costs

Total operating costs are shown in Table 22. Owner’s operating costs take into

account both current care and maintenance costs and costs specifically

associated with the project.

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The owner’s operating costs include the following:

Labour: A total labour complement of 175 employees was used in

calculating labour cost provided in the model. Labour costed in accordance

to current operational requirements and personnel required specifically for

the project. The current operations cost is carried under overheads.

Maintenance: Costs have been provided in the model for

scheduled/planned plant maintenance.

Utilities: A detail calculation indicating electricity required for the project

and current operations (care and maintenance) was made. Eskom tariffs

for both high and low seasons were applied in determining the electricity

costs. This cost relates to a variable portion of the utilities based on

consumption.

21.1.5. Contractor’s Operating Costs

The total contractor operating cost per month is estimated at ZAR 2.1 M or

ZAR 8.76/RoM t, excluding critical spares and electrical maintenance. The latter

will be charged at cost plus 10%. A summary of the forecast monthly cost is

presented in Table 22 below.

Table 22: Summary of Contractor Operating Costs

Description ZAR 000’s

/ month Comments

Salaries 279 Manager, superintendents

Wages 655 FEL operators 41 employees, shift allowances, overtime

Consumables 51 PDS system, gaskets, hoses

P & G / Admin 60 Office maintenance, training, surveyor

Plant 1,058 Trach guns, LDV, diesel

Total 2,103

21.1.6. Operating Cost Summary

The level of detail undertaken in estimating the operating costs is considered

appropriate to ensure a 90% probability that the estimated costs will not be

exceeded.

A total operating cost of ZAR 458 M is included in the cash flow model. The

operating cost profile, on a unit cost per ton is tabulated below:

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Table 23: Operating Cost Summary

Description RoM

(t) Sales

(t)

Forecast LoM Production 6,420,469 901,248

Description ZAR / RoM t

ZAR / Sales t

Amount ZAR 000’s

Mining – Production 8.76 62.43 56,269

Mining – Wst for Construction 8.76 25.77 23,224

Treatment 19.32 137.65 124,054

Deposition 3.47 24.70 22,257

Overhead 31.16 221.99 200,067

Reclaimer - Rental 1.42 10.10 9,100

Contingency 3.52 25.05 22,581

Total 71.26 503.23 457,553

21.1.7. Sound Mining Observations

Given that the greater part of the mining operating cost is incurred by the mining

contractor, and thus defined in some detail in the mining contract, it is considered

likely that this component of operating cost has been accurately reflected in the

estimate.

The mining contractor likely to be appointed has considerable recent experience

in similar chrome recovery operations, which provides reasonable assurance that

planned mining efficiencies can be achieved.

Metallurgical operating costs were calculated from first principles and represent

well established technology and processes. It is also noted that the overhead

component of operating cost makes provision for current actual costs for Care

and Maintenance which will be absorbed into the project.

Sound Mining therefore considers that the overall operating cost estimate to be

reasonable and likely to fall within the range of accuracy quoted.

It is noted that no allowance has been made for spare parts other than pump

accessories.

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21.2. Capital Expenditure

21.2.1. Introduction

Capital costs of ZAR 219 M including contingency have been allowed for the

project. The capital costs include both owner’s costs and contractor’s costs.

Contractor’s costs constitute the majority of the capital costs and will be incurred

within the first six months of the project, while owner’s costs will be incurred at the

pre-production phase of the project. Building starter walls and moving materials

account for the major part of the tailings dam capital expenditure (Phase I). A

contingency of 10% has been applied to the direct project capital cost.

Capital expenditure has been expressed in the cash flow model in real August

2017 money values, with no escalation applied.

21.2.2. Accuracy of Estimate

The capital expenditure estimate has been determined at a 90% confidence level.

The majority of the costs were sourced from supplier quotes.

21.2.3. Methodology / Basis of Estimate

The methodology followed to determine a capital cost estimate for the chrome

recovery project to an accuracy of 90%, was firstly to clearly define and scope the

hydraulic mining strategy, mechanical mining phase followed by gravity

separation equipment and mechanical equipment list. The capital cost estimates

are based on determining total equipment, labour and consumables required.

The Base Date applied to the capital estimate is 1st September 2017 and all

values are expressed in Real August 2017 money terms. The Base Currency is

the ZAR. Where values have been expressed in USD an exchange rate of USD

1.00 = ZAR 12.75 has been applied.

21.2.4. Owner Capital Expenditure

The capital estimate is almost entirely ZAR denominated and majority of the cost

estimates have been sourced from supplier quotations and were based on actual

cost where operations/activities are similar (Table 24).

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Table 24 Summary of Owner’s Capex (excluding contingency)

Item Total BP 2017

Concentrator ZAR 000's

Replace tailings feed line 4,289

Tie in slurry line to Chrome plant and Tank 574

Upgrade tailings pumps 5,284

Upgrade tailings sump and connection pipes 538

Replace civils at Tailings pumps 161

Upgrade SCADA software and license 1,544

Upgrade Tailings MCC and Variable speed drives 6,289

Associated steel work in Tailings section 299

Motor replacements 1,468

Pump accessories 193

Valves and hydraulic power packs 1,999

Chrome plant pumps and return water pumps 1,620

Power line at TSF and associated works 1,373

Roads 742

Sewerage works 12

Crawls re certification and repairs 123

Mobile vehicles 0

Eskom TSF supply and HT Reticulation 1,497

Transformer MCC repairs 100

Compressed air 0

Crane hiring 276

Surge tank 1,000

Plant - Engineering 30,809

Gravity separation Equipment 13,116

Installation and Steelwork 1,183

Piping 897

Pumps 458

Densitometers 338

Samplers 1,960

Cranage 350

Repair Bridge 470

Plant - Spirals 18,772

Oversized Handling System 1,000

Security Equipment 648

IT network 10

ISO Accreditation 90

Bulldozer (topsoil) 60

Robot system at Bridge 19

Computers for Plant & Weighbridge 70

IT Capex 897

Total Owner's Capex 51,478

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Owner’s costs include:

Plant spirals: New equipment will be installed to ensure optimal

performance. This includes spirals, distribution boxes and cyclones.

Densitometers for measurement will be installed.

Plant refurbishment by engineering team: The plant has been stopped due

to the company being under care and maintenance. The refurbishment of

pumps prior to starting the tailings dam project was necessitated. The

electrical system requires upgrading and the SCADA system needs to be

reallocated with densitometers and other equipment to be connected

21.2.5. Contractor Capital Expenditure

The final capital cost for mining and deposition was estimated at ZAR 147 M,

which accounts for some 74% of the total capital cost, excluding contingency, of

ZAR 199 M. Table 25 below gives a breakdown of Contractor Total Capital cost.

Table 25: Summary of Contractor Capex (excl contingency)

Description RoM

(t) Sales

(t)

Forecast LoM Production 6,420,469 901,248

Description ZAR / RoM t

ZAR / Sales t

Amount ZAR 000’s

Slurry System 2.76 19.68 17,736

Jet Pumps 0.29 2.09 1,886

HP System 0.39 2.80 2,524

LP System 0.07 0.52 472

Infrastructure 0.35 2.52 2,273

Mining (Hydro Mining Infrastructure) 3.88 27.62 24,891

Preliminary and General 4.41 31.69 28,288

General Earthworks Tailings Dam 9.05 64.49 58,119

Drains 1.46 10.40 9,377

Storm and Dirty Water Trenches 1.73 12.33 11,115

Fence - - -

Lights - - -

Penstocks and Inlets 0.74 5.28 4,757

Reticulation 1.67 11.89 10,715

Tailings Dam 19.06 135.78 122 371

Total 22.94 163.40 147,262

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21.2.6. Capital Expenditure Summary

The level of detail included in the capital cost estimate is considered to be

appropriate to ensure 80% probability that the estimated capital costs will not be

exceeded. Table 26 presents the summary of the forecast of total direct capital

expenditure for the project.

Table 26: Capital Expenditure Summary

21.2.7. Sound Mining Observations

Sound Mining notes that bulk of the major costs in the capital expenditure

estimate is based on recent enquiries and quotations rather than factored or

benchmarked values. Both metallurgical and engineering capital requirements

were determined from engineering drawings and Process Flow Diagrams.

Equipment lists were determined. Quotations were then sourced from vendors

and reviewed.

The equipment specified in the capital estimate is clearly defined and supports an

established rather than an innovative or experimental process. In addition, the

quantities set out in the tailings component of the estimate represent only limited

uncertainty in scope.

In view of this relatively limited risk in quantities, timing and rates for a significant

part of the budget, Sound Mining would consider the capital estimate to fall within

the range of accuracy stated.

A provision should be made for a scrubber or similar attritioning piece of

equipment at the Fraser Alexander pumping station, to deal with +3mm material.

Test work to determine the equipment and PFD is still underway.

Description RoM

(t) Sales

(t)

Forecast LoM Production 6,420,469 901,248

Description ZAR / RoM t

ZAR / Sales t

Amount ZAR 000’s

Mining (Hydro Mining Infrastructure) 3.88 27.62 24,891

Tailings Dam 19.06 135.78 122,371

Oversized handling System 0.16 1.11 1,000

Plant - Spirals 2.92 20.83 18,772

Plant - Engineering 4.80 34.19 30,809

IT Capex 0.14 1.00 897

Total (excl contingency) 30.95 220.52 198,740

Contingency 3.10 22.05 19,874

Total (incl contingency) 34.04 242.57 218,614

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22. ECONOMIC ANALYSIS

22.1. Introduction

A financial model has been developed to evaluate the overall economics of

the project using the discounted cash flow method of investment appraisal. All

inputs to the model are in real September 2017 money terms, with no

escalation applied to revenue, capital or operating costs.

The Base Currency used in the model is the ZAR. All USD denominated

inputs have been converted to ZAR at a rate of USD 1.00 = ZAR 12.75.

22.2. Revenue

Revenue is based on an assumed Free on Mine (FoM) price of ZAR 870.79/t

received for a 40% chrome concentrate.

This value has been determined from a Cost Insurance and Freight (CIF) China

price of USD 153/t for a 42% chrome concentrate.

The value for a 42% concentrate is first adjusted to USD 146/t for the 40%

concentrate which would be produced at Zandfontein. The adjusted CIF value is

then converted to an equivalent FoM price by deducting the various percentage

based commissions and fees followed by the USD based freight charges. The

result is then converted to ZAR, after which the various local ZAR based logistics

costs are deducted to arrive at a notional FoM value in ZAR. At an exchange rate

of ZAR 12.75 = USD 1.00, the notional FoM price for a 40% concentrate would

amount to ZAR 870.79/t.

22.3. Discounted Cash Flow Analysis

NPV of the project, discounted at 13% per annum, is estimated to be

ZAR 42.2 M with an annualised internal rate of return (IRR) of 24%.

The maximum monthly negative cash flow of ZAR (27.5) M occurs between

months 3 and 7, with the maximum indebtedness of some ZAR (212.2) M

arising in month 9 (Graph 17). The project is forecast to generate a positive

cash flow in month 10 and reach break-even in month 25. Positive cash flows

averaging ZAR 12.9 M/month after payment of royalty are forecast over the

remaining LoM.

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Graph 17: Monthly and Cumulative Real Cash Flow

At a FoM price of ZAR 870.79/t for 40% chrome concentrate the project would

be likely to achieve a cash margin of 10% and an operating margin of 14%.

Figure 43 shows that the project is significantly more sensitive to Revenue

than to Operating Cost or Capital Expenditure, with a breakeven Revenue

(i.e., NPV = 0) forecast at approximately ZAR 810/t.

Figure 43: Sensitivity of Cash Flow to Revenue, Capex, Opex

Driver

NPV of Project Cash Flow

Revenue 80% 90% 100% 110% 120%

(ZAR M) (81.9) (19.9) 42.2 104.2 166.2

Capex 80% 90% 100% 110% 120%

(ZAR M) 83.6 62.9 42.2 21.5 0.8

Opex 80% 90% 100% 110% 120%

(ZAR M) 116.4 79.3 42.2 5.1 (32.0)

(250)

(200)

(150)

(100)

(50)

0

50

100

Mth 1 Mth 4 Mth 7 Mth 10 Mth 13 Mth 16 Mth 19 Mth 22 Mth 25 Mth 28 Mth 31

Cash F

low

(R

eal) Z

AR

M

Monthly Cash Flow Cumulative Cash Flow

(100)

(50)

0

50

100

150

200

80% 90% 100% 110% 120%

NP

V @

13%

pa R

eal Z

AR

M

Change in Variable

Rev Capex Opex

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22.4. Sound Mining Observations

Sound Mining has reviewed the calculation used in the cash flow model and does

not believe the notional FoM price used to be unreasonable. Both the CIF price

(USD 153/t) and the Rate of Exchange applied may be considered somewhat

optimistic, but not unreasonably so, (current CIF China rates are in the region of

USD 210/t to USD 220/t) and the various charges applied in the calculation are in

line with current rates. Sound Mining however cautions that there may some risk

in relying on the conversion from CIF to FoM rates as local market conditions

may result in a disconnect between the notional FoM value and prices actually

paid by traders or smelters for local delivery.

The NPV and IRR arising from the cash flow model confirm the viability of the

project at the notional FoM price used. Sound Mining’s observations under

revenue, capital expenditure and operating cost suggest the key inputs to each of

these categories to be reasonable.

While the cash flow model suggests positive monthly cash flows of ZAR 12.9 M

per month may be anticipated at the forecast grades and recoveries used in the

model, it should be noted that breakeven is forecast in month 25 of a projected 33

month LoM.

Given the project’s sensitivity to revenue, consideration should be given to basing

the project’s forecast selling price on that reflected in current local mine sales

agreements, rather than a notional price calculated from the CIF China value.

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23. ADJACENT PROPERTIES

The property is bounded to the east by Xstrata’s Eland mine and to the west be

properties held by Impala Platinum, Anglo Platinum and Lonmin.

To the north west of CRM are the operating mines of Eastern Platinum Mine,

Western Platinum Mine, Tharisa Minerals, Karee Platinum Mine, Rustenburg

Platinum Mines and Impala Platinum Mine. To the east is the property of

Elandsfontein. Samancor operate several chrome mines in close vicinity to CRM.

Sylvania Platinum scavenge chrome and PGMs from the Samancor TSFs.

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24. OTHER RELEVANT DATA AND INFORMATION

24.1. Legislative Framework

The South African Government has an extensive legal framework within which

mining, environmental and social aspects are managed. Included within the

framework are international treaties and protocols, and national acts, regulations,

standards, and guidelines which address international, national, provincial and

local management areas. South African statutory legislation and requirements

relevant to the projects and considered as part of this assessment included:

Mineral and Petroleum Resources Development Act (Act 28 of 2002)

(MPRDA);

Mineral and Petroleum Resources Development Amendment Act 49 of

2008;

Mineral and Petroleum Resources Development Draft Amendment Bill

(2013);

Broad-Based Socio-Economic Charter (and associated amendments,

2010);

Promotion of Beneficiation Bill;

Mineral and Petroleum Resources Royalty Act (Act 28 of 2008) (MPRRA);

National Environmental Management Act (Act 107 of 1998) (NEMA);

National Environmental Management: Air Quality Act (Act 39 of 2004)

(NEM:AQA);

National Environmental Management: Waste Act (Act 59 of 2008)

(NEM:WA);

National Environmental Management: Protected Areas Act (Act 57 of 2003)

(NEM:PAA);

Environment Conservation Act (Act 73 of 1989) (ECA) (Section 25 – Noise

Regulations);

National Heritage Resources Act (Act 25 of 1999) (NHRA);

National Forests Act (Act 30 of 1998) (NFA);

National Water Act (Act 36 of 1998) (NWA);

Hazardous Substances Act (Act 15 of 1973) (HAS); and

Mine Health and Safety Act (Act 29 of 1996) and amendments (MHSA).

The most important of these are summarised in the subsections to follow.

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24.1.1. Mineral and Petroleum Resources Development Act (Act 28 of 2002)

(MPRDA)

Types of rights and permits applicable to the mining industry in South Africa, as

provided for in the MPRDA and amendments, are detailed in Table 27.

Table 27: Types of Rights Applicable in South Africa

Licence Type Purpose Duration Requirements Conditions

Reconnaissance Permission

Exploration at the reconnaissance

stage. 1 year

Financial ability; technical ability

and work programme.

Holder does not have the exclusive right to

apply for a New Order Prospecting

Right (NOPR).

New Order Prospecting

Right (NOPR)

Exploration at target definition

stage.

Up to 5 years initially

Financial ability; technical ability;

economic programme; work programme and environmental

plan.

Payment of Prospecting fees.

Holder has the exclusive right to apply for NOMR.

Retention Permit

Hold onto legal rights between

prospecting and mining stages.

3 years initially

Prospecting stage complete;

feasibility study complete and Environmental

Management Plan (EMP) complete.

Project not currently feasible.

May not result in exclusion of

competition, unfair competition or

hoarding of rights. May not be

transferred, ceded, leased, sold, mortgaged or

encumbered in any way.

New Order Mining Right

(NOMR)

Development and production stage.

30 years initially Renewable for

further periods of 30 years.

Effective for life of mine (LoM).

Financial ability; technical ability;

prospecting complete; economic

programme; work programme;

social plan; labour plan and

completed EMP.

Payment of royalties (from 2010).

Compliance with Mining Charter and

Codes of Good Practice on broad

based BEE.

Mining Permit Small-scale

mining.

2 years initially Renewable for 3 further periods of 1 year at a time.

Life of project must be <2 years;

areas must be <5ha and

completed EMP.

Payment of royalties (from 2010). May not

be leased or sold.

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The South African government enacted the MPRDA on the 1st May 2004. It

defines the State’s legislation on mineral rights and mineral transactions in South

Africa. The Act emphasises that the government did not accept the existence of

the historic dual State and private ownership of mineral rights in South Africa and,

as such, the Act legislated that ownership of all mineral and petroleum resources

in South Africa now vests in the State. Additional objectives of the Act include the

promotion of economic growth, the development of resources to expand

opportunities for the historically disadvantaged, and the socio-economic

development of the areas in which mining and prospecting companies are

operating. It also provides for security of tenure relating to prospecting,

exploration, mining and production.

A further objective of the Act was to advance Black Economic Empowerment

(BEE) within South Africa’s minerals industry, by encouraging mineral exploration

and mining companies to enter into equity partnerships with BEE companies. The

Act also makes provision for the implementation of social responsibility

procedures and programmes by coal resource companies.

The Act incorporated a "use-it or lose-it" principle, that has been applied to

companies or individuals who owned mineral rights or the rights to prospect and

mine prior to 2004 (Old Order Rights). These Old Order Rights were required to

be transferred within specified timeframes, under the provisions of the Act, into

New Order Rights to prospect and mine.

Once the State has granted the conversion of the Old Order Rights to New Order

Rights, or has granted a New Order Right for new applications submitted after the

implementation of the MPRDA, a Notarial Agreement between the State and the

holder of the New Order Right is entered into. This Agreement sets out all the

conditions associated with the New Order Right. New Order Rights can be

suspended or cancelled by the Minister if, upon notice of a breach from the

Minister of its obligations to comply with the MPRDA, or the conditions prescribed

as part of its New Order Right, a breaching entity fails to rectify such a breach.

In addition, in terms of the MPRDA, mining and exploration companies have to

comply with additional responsibilities relating to environmental management and

to environmental damage, degradation or pollution, resulting from their

prospecting or exploration activities.

Section 37 of the MPRDA establishes the framework for the inclusion of

environmental management principles, with Section 39 establishing

environmental management programme and EMP requirements. Requirements

for the contents of exploration, scoping, EIA, EMPs and EMP reports are

provided in Government Notice Regulations (GNRs) 49, 50, 51 and 52.

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Sections 41 to 47 of the MPRDA address legislative closure requirements. GNR

527 of the MPRDA addresses the financial provision for mine rehabilitation and

closure and requires that the quantum of financial provision, to be approved by

the Minister, must be based on the requirements of the approved EMP and

include a detailed itemisation of all actual costs required for:

premature closure regarding;

the rehabilitation of the surface of the area;

the prevention and management of pollution of the atmosphere;

the prevention and management of pollution of water and the soil; and

the prevention of leakage of water and minerals between subsurface

formations and the surface.

decommissioning and final closure of the operation; and

post closure management of residual and latent environmental impacts.

GNR527 establishes the requirements for the SLP.

Amongst other aims, the MPRDA strives to transform the mining and production

industries. The Act requires the submission of the SLP as a prerequisite for the

granting of mining or production rights. The SLP requires applicants for mining

and production rights to develop and implement comprehensive Human

Resources Development Programmes including Employment Equity Plans, Local

Economic Development Programmes and processes to protect jobs and manage

downscaling and/or closure (DMR).

Monitoring and performance assessments, and waste management principles

inclusive of pollution control and waste management, and the management of

mine residue stockpiles and deposits are also included within the scope of

GNR527.

Blasting permits are required for any blasting activities as defined within the

MPRDA.

24.1.2. Broad-Based Socio-Economic Charter (2004)

Promulgation of the Broad-based Socio-Economic Charter for the South African

Mining Industry (also known as the Mining Charter) marked the end of protracted

debates and varying interpretations of the legislation’s requirements, paving the

way for the full implementation of the MPRDA.

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All mining and prospecting companies are required to comply with the provisions

of the Mining Charter. The objectives of the Mining Charter are to:

promote equitable access to the State’s resources by all the people of

South Africa. It required that every mining company achieved a 15% level

of ownership of its mining assets by historically disadvantaged South

Africans (HDSAs) by the 1st May 2009, and a level of 26% ownership by

the 1st May 2014;

substantially and meaningfully expand opportunities for HDSAs, including

women, to enter the mining and minerals industry and to benefit from the

exploitation of the nation’s resources. In terms of this requirement, 40% of

management roles were to be held by HDSAs by 2010;

expand the skills base of HDSAs to serve the community;

promote employment and advance the social and economic welfare of

mining communities, and the major areas from which labour is drawn to

carry out exploration or mining; and

promote the beneficiation of South Africa’s mineral commodities, whereby

the companies which have facilitated downstream, value-adding activities

for products they mine, could achieve an “offset” against the HDSA equity

participation requirement.

Most mining companies are already implementing their own empowerment

strategies. These strategies demonstrate their best endeavours to consider the

issues and a willingness to accommodate the requirements when they are finally

defined. Compliance with the Mining Charter is measured using a designated

scorecard, which provides a practical framework against which the Minister can

assess whether a company actually measures up to what was intended in the

MPRDA and the Mining Charter.

24.1.3. Amendment of the Broad-Based Socio-Economic Empowerment Charter

(2010)

The Amendment of the Broad-based Socio-Economic Empowerment Charter for

the South African Mining and Minerals Industry (the Charter Amendment) was

released in September 2010. It was unsurprising that it retained the minimum

target of 26% HDSA ownership of mining assets by 2014. However, an offsetting

of HDSA ownership by as much as 11% is now possible depending on the extent

of a company’s beneficiation strategies.

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BEE procurement targets in the Amendment are as follows:

a minimum of 40% of capital goods will have to be sourced from BEE

entities by 2014; and

70% of services and 50% of consumer goods will have to be purchased

from BEE entities by 2014.

In addition, multinational suppliers of capital goods will have to contribute 0.5% a

year of their annual income from South African mining firms towards a socio-

economic development fund.

HDSA targets for employment equity are also further refined and a minimum of

40% HDSA demographic representation is stipulated for executive management,

senior management, core and critical skills, middle management and junior

management by 2014.

Specific annual targets are noted for human resources development, since a

percentage of the annual payroll (excluding the mandatory skills levy) will have to

be spent on skills development activities and be reflective of South Africa’s

demographics. Skills expenditure, as a percentage of payroll, increases by 0.5%

each year, with an initial target of 3% of payroll in 2010, rising to 5% by 2014.

The expenditure is intended to support South African-based research and

development initiatives focused on solutions in sectors such as exploration,

mining, processing, technology efficiency in the use of water and energy in

mining, beneficiation and environmental conservation and rehabilitation.

The Charter Amendment also supports SLPs by insisting on:

an ethnographic community consultative and collaborative process prior to

the start of a mining project; and

a community development needs analysis, together with mining

communities, of projects to be implemented in support of Integrated

Development Plans, the spend of which should be proportionate to the size

of the mining investment.

The Charter Amendment also calls for an upgrade of hostels to family units, a

one-person-per-room occupancy rate, and support for home ownership options –

all of which should be implemented by 2014.

Environmental management and an improvement in the industry’s health and

safety performance are also highlighted, and best-practices in these areas are

specifically mentioned.

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The Charter Amendment also calls for annual reporting by mining companies on

their levels of compliance with the Mining Charter, and notes that noncompliance

with the Charter and the MPRDA will result in mining companies being in breach

of the MPRDA.

24.2. Risk Assessment

Extracts of the risk assessment performed in the FS are available in Appendix 2.

Sound Mining wishes to highlight three significant risks or uncertainties that could

reasonably be expected to affect the reliability or confidence in the projected

economic outcomes.

As the cash flow analysis has indicated that the project is significantly

more sensitive to revenue than to either capital or operating cost, price

volatility is considered both a risk and uncertainty. As the forecast FoM

revenue is linked, even if not wholly dependent, on a USD denominated

market price, volatility may be expected to arise from both market

conditions, which could be considered to be dependent on fundamental

supply and demand relationships, and ZAR exchange rate related

volatility, which may often be driven by non-market related events or

sentiment.

The negotiation of long-term sales contracts with both smelters and traders

for a significant portion of forecast production is considered an effective

means of mitigating the impact of price volatility.

The Risk section of the ITR notes the potentially severe impact on not only

the viability of the retreatment project but also the risk to areas adjacent to

the project which may arise from issues relating to the structural integrity of

the TSF and potential environmental impacts. Although serious breaches

may be considered unlikely, the potential impact may be severe, and

warrant continuous management and operational monitoring and

evaluation, with appropriate remedial action where necessary.

Although on-going implementation of the Mine’s Social and Labour Plan

commitments is likely to support good community relations, non-mining

related issues linked to events at the nearby Marikana operation may

increase community-related uncertainty entirely beyond the control of the

Mine.

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25. INTERPRETATION DATA AND INFORMATION

A technical review of the data used in the Mineral Resource estimation has

shown the quality of the data to be adequate for the intended purpose. The

historical drill results have limited QAQC monitoring as does the database in

which the data is stored.

Sound Mining found no fatal flaws in the modifying factors applied in the FS, and

accordingly this ITR presents a Mineral Reserve of 6.42 Mt at 22.36% Cr2O3

which is based on robust modifying factors. However the three material risks in

the opinion of Sound Mining are:

Chrome price fluctuation;

Politically motivated unrest, illegal squatting; and

Failure of TSF wall.

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26. RECOMMENDATION

As currently envisaged, the retreatment project has been required to use a high

COG to compensate for the significant drop-off in yield experienced at grades

below about 19%. The LoM based on the current COG is thus limited to some 33

months at a production rate of 240 ktpm, while cash flow modelling suggests

break-even may only occur in month 25.

The recovery of PGMs from the TSF should therefore be evaluated with a view to

lowering the COG and thus allowing a greater part of the available resource to be

treated over a longer LoM.

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27. REFERENCES

1. Bankable Feasibility Study for Chrome Recovery Plant Treating Tailings

Material at Eastern Platinum Mine Facilities, Prepared by: JA Coetzee,

Reviewed by: H Hanson, July 2017 -(BFS Folder)

2. Mineral Resource Estimate for Barplats Zandfontein UG2 Tailings Storage

Facility, SRK Consulting, 1st August 2017 - (Mineral Resource Folder)

3. Tailing Storage Facility Project Ore Reserve, Dr Bielin Shi, August 2017-

(Mineral Reserve Folder)

4. Mining Rights – (Locality Plan Folder):

BML 78 MR.pdf

BML 151 MR.pdf

BML 307 MR.pdf

BML 332 MR.pdf

BML 363 MR.pdf

Map CRM Mineral Rights.pdf

CRM Farm & Portions Boundaries.pdf

5. SLA Folder: Corporate Organization Chart.doc and 2016 List of SLA.xlsx

6. Historical Chrome Production.xlsx

7. PGM and Chrome Model (019).xlxs

8. CRM’s EMP report (approved January 2001) (SRK, 2000) (Engineers, 2007).

9. TSF Risk Assessment, SRK Consulting (South Africa) (Pty) Ltd

10. Metago Report - Oct 2006

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Alan Page

SRK Consulting (South Africa) Pty Ltd 265 Oxford Rd,

Illovo 2196,

Johannesburg,

South Africa.

Consent of Qualified Person

RE: The Zandfontein UG2 Tailings Retreatment Project �WKH�³Project´�

I am a qualified person within the meaning of National Instrument 43-���� ³6WDQGDUGV�RI�'LVFORVXUH� IRU�0LQHUDO�3URMHFWV´��DQG�DP�UHVSRQVLEOH�IRU�SUHSDULQJ�WKH�Mineral Resource Estimate as presented in the report titled ³Mineral Resource Estimate for Barplats Zandfontein UG2 Tailings Storage Facility �5HSRUW�1R���������´��ZLWK�DQ�HIIHFWLYH�GDWH�RI August 1, 2017.

I understand that, this Mineral Resource Estimate has been referred to, and presented as part of the ³,QGHSHQGent Technical Report Zandfontein Tailings Retreatment Project to 5HFRYHU� &KURPH� IRU� (DVWHUQ� 3ODWLQXP� /LPLWHG� �5HSRUW� 1R�� 606���������´� ZLWK� DQ�HIIHFWLYH�GDWH�RI�6HSWHPEHU����������WKH�³Report´����

I consent to the public filing of the Report. I further confirm that I have read the Report, and confirm that it fairly and accurately represents the information in the Report or part thereof that I am responsible for, and I consent to the use and public filing of the Report.

Yours truly,

____________________

Signature

Alan Page

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Appendix 2: Risk Assessment

In compliance with the Mine Health and Safety Act (Act No. 29 of 1996) and

relevant South African legislation, the mine has implemented a Risk Management

Policy and procedure. The Management team was tasked to assess the project

risk to ensure the integrity of the Barplats risk management and internal controls,

as well as maintaining and monitoring the organisations systems of internal

control.

The ultimate outputs of any business risk identification exercise are to:

Identify and prioritise business risks that have the highest potential to

impact (positively or negatively) on the achievement of the company’s

strategic objectives.

Provide a valuable tool and reference source for management,

assisting them with identifying and/or managing strategic risks including

financial, operational, compliance and reputational risks.

Provide an initial risk profile, which will usually form the basis for ongoing

review that will assist with:

The determination of the proposed focus of a detailed risk management

approach (i.e. risk management plan) for the organisation.

The development and rollout of controls and an action planning process to

address an appropriate risk response strategy for significant risks

The risk categories were aligned to the functional areas of Barplats. The

purpose of the risk categories is to identify those risks that directly affect and/or

impede business ability to achieve strategic and business objectives.

Risk Categorisation

During the risk assessment workshop, risks were categorised according to

pre-defined “Risk Focus Areas”. The focus areas for the workshop are the

following and was discussed at the workshop:

Strategic, Commercial and Reputational

Strategic and commercial risks pose threats to the commercial success of a

company. They usually arise from poor business decisions or their incorrect

execution, tend to be longer term in nature and affect business development

and growth.

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Reputational risk, on the other hand, is related to the trustworthiness of a

business and arises from events that undermine public trust in an

organisation’s brand, services and products as a result of internal or external

threats. The workshop focused on the following risk categories:

strategic and Governance;

growth and Diversification; and

business Development, Marketing and Sales.

Organisational and Operational Risk

These risks arise from inadequate or failed internal activities. They may

include poor customer service provided by outsourced providers, decreased

efficiency and quality in outsourced processes, and financial and reputational

loss. Or, they may arise from external events. They affect the efficiency and

effectiveness of day-to-day operations and may, if severe or ongoing, affect

one or more of the other risk categories. The workshop focused on the

following risk categories:

operations;

human resources; and

information technology.

Financial Risk

There are many kinds of risk associated with the effective financial operation

of a company including exposure to commodity prices, foreign currencies and

interest rates, the risk of bad debt, fraud and difficulty in raising finance. The

workshop focused on the following risk categories:

Finance Risk; and

Capital Requirements.

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Compliance and Regulatory Risk

These are risks that expose a company to compliance issues or external

litigation. They include legal risk and result from violations or non-conformance

with contracts, laws, rules, regulations, prescribed practices, internal policies

and procedures or ethical standards. The workshop focused on the following

risk categories:

Regulatory Compliance; and

Health, Safety and Environment.

Risk Assessment

In any risk assessment exercise, it is essential that risks are not only

identified, but also rated and ranked (prioritised). This is done by rating risks

based on the likelihood (probability) of occurrence and the impact, should that

risk materialise.

For the purpose of this exercise, the workshop considered inherent risks, i.e.

the risk to the organisation in the absence of any actions management might

have taken to alter either the specific risk’s likelihood or impact. The residual

risk was not assessed during this workshop and can only be determined once

risk responses have been developed and evaluated.

Likelihood and Severity Rating

When voting on the likelihood of a risk materialising, the workshop considered

the possibility that the given event or risk will occur, in the absence of any

actions management might have taken to mitigate the risk or reduce the

probability of the risk materialising.

The likelihood of occurrence will be assessed as follows:

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Table A2-1: Impact / Severity Rating Table

Impact Type Minor Moderate Substantial Major Catastrophic

11 12 13 14 15 16 17 18 19 20

Safety & Health

Event but no injuries (Near misses)

Injuries but no lost time

Lost time injuries without perm disability

Lost time injuries with perm disability

Fatalities

1 person exposed

More than 1 person

FAL MTI 1 person More than 1

person 1 person

More than 1 person

One or two person/s

More than 2 persons

Gross Loss Rands Less than R500,000

Less R1 mil

Less R1.5 mil

Less R2 mil

Less R3 mil

Less R4 mil

Less R10 mil

Less R20 mil

Less R30 mil

>R40 mil

Operation Interruptions

Several Hrs production interruption in some

working places

Several Hrs production interruption in most

working places

> One day production interruption

> 5 days production interruption

> 10 days production interruption

Reputation Local public awareness Local public concern Some adverse media

attention Significant adverse media

attention Serious public / Media

outcry

Environmental Low reversible impact on

local area Moderate reversible impact

on local area Moderate reversible impact

on region Serious but reversible

impact on region Serious reversible impact. national press coverage

Governmental & Legal

Some relationship concerns

Some relationship concerns.

Tolerable legal fines

Significant relationship concerns.

significant legal fines

Substantial breakdown in relations.

Severe legal fines

Severe breakdown in relations. Temporary loss

of permits / license

HR & IR Some unresolved

grievance Significant unresolved

grievances One-day work stoppage > 5-day work stoppage

Prolonged industrial action impacting more than half of

operation

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Table A2-2: Likelihood Rating Table

Almost Certain 4.75-5 Known to have occurred regularly within the organisation.

Likely 4.25-4.5 Likely to occur once or twice per year.

Possible 3.75-4 Likely to occur once or twice per 5 years.

Unlikely 3.25-3.5 Likely to occur once or twice per 10 years

Rare 2.75-3 Conceivable in extreme circumstances only. If it did occur it would be a once-in-a lifetime

Table 2A-3: Risk Rating

Minor Moderate Substantial Major Catastrophic

11.0 12.0 13.0 14.0 15.0 16.0 17.0 18.0 19.0 20.0 Risk Rating

5.0 55 60 65 70 75 80 85 90 95 100 Extreme

4.5 50 54 59 63 68 72 77 81 86 90 High

4.0 44 48 52 56 60 64 68 72 76 80 Moderate

3.5 39 42 46 49 53 56 60 63 67 70 Low

3.0 33 36 39 42 45 48 51 54 57 60

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Top Risks

The table below, records the detailed results for the top 10 inherent risks.

Table 2A-4: Top 10 Inherent Risks

Rating Risk Area Potential Hazard Likelihood Impact Risk Rating Sound Mining Comment

1 Strategic Chrome price fluctuation 4.8 18.0 86 Based on recent fluctuations in Chrome Prices. No off-take agreement

2 Compliance Politically motivated unrest, illegal squatting

4.5 18.0 81 Political unrest evident in the area

3 Operational Failure of TSF wall 3.8 19 72 Mitigating plans in place

4 Compliance Social and labour plans, mining charter non implementation

4.5 16.0 72 Uncertainty remains around Mining charter

5 Strategic High re-mining complexity 4.0 17.0 68

6 Financial Volatile currency environment 4.3 16.0 68

7 Strategic Community expectation too high 3.8 18.0 68

8 Strategic Not realising forecast production 3.8 17.0 65

9 Financial Operating cost – incorrect estimates 3.8 17.0 65

10 Financial Capital cost – incorrect estimates 3.8 17.0 65

Two extremely high risks remain and these need to be mitigated and managed so as to ensure they become tolerable.