ni 43-101 f1 technical report on the feasibility of the ...€¦ · toowong qld 4066, australia...

Toowong QLD 4066, Australia

“NI 43-101 F1 Technical Report on the Feasibility of the Nyngan Scandium Project”

EFFECTIVE DATE: October 10, 2014

Document Number: 14013-0000-PS-RPT-001

Prepared for: EMC Metals Corp., Sparks, Nevada

Compiled by: Larpro Pty Ltd., Brisbane, Australia

Based on: Documents and sources listed in Item 27 of this report

Endorsed by

Qualified Persons:

Dr. Nigel Ricketts, MAusIMM CP (Metallurgy)

Mr. Stuart Hutchin, B Sc, Geology, MAusIMM, MAIG

Mr. Max Rangott, B Sc, FAusIMM

ISSUE DATE: October 24, 2014

Technical Report on the Nyngan Scandium Project

October 2014

NI 43-101 F1 Technical Report on the Nyngan Scandium Project of 11

REVISION CONTROL

Rev # Date Description of Change Originator

A 10-10-14 First Draft N. Ricketts

B 17-10-14 Issued for use N. Ricketts

0 23-10-14 Issued for publication N. Ricketts

Distribution

Copy No. Recipient


October 2014


Contents

1 Summary ......................................................................................................................... 1

1.1 Cautionary Preliminary Economic Assessment (PEA) Statement ............................ 1

1.2 Introduction-Basis of Technical Report ..................................................................... 1

1.3 PEA Financial Highlights .......................................................................................... 2

1.4 Project Location ........................................................................................................ 3

1.5 Project Description ................................................................................................... 4

1.6 Geology and Mineralization ...................................................................................... 4

1.7 Current Mineral Resources ....................................................................................... 5

1.8 Mining ....................................................................................................................... 5

1.9 Feed Handling .......................................................................................................... 5

1.10 Test work and Process Modelling ............................................................................. 6

1.11 Process Flow Sheet and Technology Selection ....................................................... 6

1.12 Key Project Parameters ............................................................................................ 7

1.13 Capital Cost Estimate ............................................................................................... 7

1.14 Operating Cost Estimate .......................................................................................... 8

1.15 Sensitivities ............................................................................................................... 8

1.16 Report Conclusions and Recommendations ............................................................ 9

1.17 Recommendations – Next Steps ............................................................................ 10

2 Introduction .................................................................................................................... 11

2.1 Terms of Reference and Purpose of Report ........................................................... 11

3 Reliance on Other Experts ............................................................................................. 13

3.1 Effective Date and Certificates ............................................................................... 16

3.2 Certificate of Qualified Person – Nigel Jeffrie Ricketts, Member & (CP) Metallurgy,

AusIMM ............................................................................................................................. 17

3.3 Certificate of Qualified Person – Stuart Hutchin, B Sc (Applied Geology) Member,

MAusIMM, MAIG ............................................................................................................... 18


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3.4 Certificate of Qualified Person – Maxel Rangott, Fellow, AusIMM ......................... 19

4 Property Description and Location ................................................................................. 20

4.1 Property Location ................................................................................................... 20

4.2 Mineral Titles .......................................................................................................... 21

5 Accessibility, Climate, Local Resources, Infrastructure and Physiography ................... 23

5.1 Topography, Elevation and Vegetation .................................................................. 23

5.2 Climate and Length of Operating Season .............................................................. 23

5.3 Access to Property ................................................................................................. 23

5.4 Surface Rights ........................................................................................................ 24

5.5 Local Resources and Infrastructure ........................................................................ 24

5.5.1 Access Roads and Transportation .................................................................. 24

5.5.2 Power Supply .................................................................................................. 24

5.5.3 Town of Nyngan .............................................................................................. 24

5.5.4 Water Supply ................................................................................................... 25

5.5.5 Port .................................................................................................................. 25

5.5.6 Buildings and Ancillary Facilities ..................................................................... 25

5.5.7 Manpower ........................................................................................................ 25

6 History ............................................................................................................................ 27

6.1 Origins of the Name ‘Gilgai’ .................................................................................... 27

6.2 Past Exploration and Development ........................................................................ 27

7 Geological Setting and Mineralization ........................................................................... 30

8 Deposit Type .................................................................................................................. 31

8.1 Mineralization ......................................................................................................... 31

9 Exploration ..................................................................................................................... 33

9.1 Surveys and Investigations ..................................................................................... 33

9.2 Interpretation of the Exploration Information .......................................................... 33

9.3 Statement ............................................................................................................... 33

10 Drilling ........................................................................................................................ 34


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10.1 Overview ................................................................................................................. 34

10.2 Drilling Programmes ............................................................................................... 34

10.3 Sample Collection ................................................................................................... 35

10.4 Sample Recovery Methods .................................................................................... 35

10.5 Interpretation .......................................................................................................... 36

10.6 Establishing Higher Grades .................................................................................... 36

10.7 Relevant Samples .................................................................................................. 36

11 Sample verification ..................................................................................................... 38

12 Data Verification ......................................................................................................... 41

12.1 Quality Control Measures and Procedures ............................................................. 41

12.2 Limitations .............................................................................................................. 41

13 Mineral Process and Metallurgical Testing ................................................................ 42

13.1 Proposed Flow Sheet ............................................................................................. 42

13.2 Sample Selection and Delivery ............................................................................... 42

13.3 Acid Bake Test Work .............................................................................................. 43

13.4 Solvent Extraction Test Work ................................................................................. 43

13.5 Scandium Oxide Precipitation Test Work ............................................................... 44

13.6 High Pressure Acid Leach Test Work ..................................................................... 45

13.7 Flotation Test Work ................................................................................................ 46

13.8 Ion exchange Test Work ......................................................................................... 46

13.9 Future Test Work .................................................................................................... 47

14 Mineral Resource Statements .................................................................................... 49

14.1 Resource Calculations ............................................................................................ 49

14.2 Significant Assay Results ....................................................................................... 54

15 Reserve Estimates ..................................................................................................... 55

16 Mining Methods .......................................................................................................... 56

16.1 Geologic Modelling ................................................................................................. 56

16.2 Block Model Design for Pit Optimisation ................................................................ 56


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16.3 Optimization Parameters ........................................................................................ 57

16.4 Overburden Removal ............................................................................................. 60

16.5 Mining and Hauling to Plant .................................................................................... 60

17 Recovery Methods ..................................................................................................... 61

17.1 Process Description ................................................................................................ 61

17.1.1 Feed preparation (Area 1000) ......................................................................... 61

17.1.2 Feed thickening (Area 1700) ........................................................................... 61

17.1.3 High pressure acid leaching (Area 2100) ........................................................ 62

17.1.4 CCD circuit (Area 3000) .................................................................................. 62

17.1.5 Partial neutralization (Area 4000) .................................................................... 62

17.1.6 Solvent extraction (Area 5000) ........................................................................ 63

17.1.7 Scandium oxide recovery (Area 6000) ............................................................ 63

17.1.8 Final neutralization and tailings (Area 7000) ................................................... 63

17.1.9 Water management ......................................................................................... 64

17.1.10 Reagents ..................................................................................................... 64

17.1.11 Services ....................................................................................................... 66

17.2 Process Design Criteria .......................................................................................... 66

17.3 Process Flow Sheet ................................................................................................ 67

17.4 Plant layout ............................................................................................................. 68

17.5 Power Requirement ................................................................................................ 72

18 Project Infrastructure .................................................................................................. 73

18.1 Power Supply and Distribution ............................................................................... 73

18.1.1 Power Source .................................................................................................. 73

18.1.2 Switch room ..................................................................................................... 73

18.2 Control System ....................................................................................................... 74

18.3 Communications ..................................................................................................... 74

18.4 Roads ..................................................................................................................... 74

18.5 Water ...................................................................................................................... 74


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18.6 Site levee ................................................................................................................ 75

18.7 Dams and Ponds .................................................................................................... 75

18.8 Plant security .......................................................................................................... 75

18.9 Accommodation ...................................................................................................... 76

19 Market Studies and Contracts .................................................................................... 77

19.1 Current Global Market Size .................................................................................... 77

19.2 Scandium Products Defined ................................................................................... 77

19.3 Scandium Market Pricing ........................................................................................ 77

19.4 Market Supply – Scandium Sources ...................................................................... 79

19.5 Scandium Applications ........................................................................................... 81

19.6 Scandium Markets .................................................................................................. 81

19.7 PEA Scandium Pricing Assumptions ...................................................................... 82

20 Environmental Studies, Permitting and Social or Community Impact ........................ 83

20.1 Summary of Results of Environmental Studies ...................................................... 83

20.2 Environmental Management Plans ......................................................................... 83

20.2.1 Waste and Tailings Disposal ........................................................................... 84

20.2.2 Site Monitoring ................................................................................................ 84

20.2.3 Water Management during Operational Life ................................................... 84

20.3 Project Permitting Requirements ............................................................................ 84

20.4 Social and Community Relationships ..................................................................... 85

20.5 Mine Closure Requirements ................................................................................... 85

21 Capital and Operating Costs ...................................................................................... 87

21.1 Introduction ............................................................................................................. 87

21.2 Capital Cost Estimate ............................................................................................. 87

21.2.1 Summary of the Capital Estimate .................................................................... 87

21.2.2 Basis of Estimate – General ............................................................................ 88

21.2.3 Estimating Accuracy ........................................................................................ 88

21.2.4 Base Currency and Estimate Base Date ......................................................... 88


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21.2.5 Pre Stripping Cost Detail ................................................................................. 88

21.2.6 Initial Pricing and Quantity Development-Plant Cost ....................................... 89

21.2.7 Process Plant Mechanical Equipment ............................................................. 89

21.2.8 Process Plant Discipline Pricing ...................................................................... 90

21.2.9 Freight and Start-up Costs .............................................................................. 92

21.2.10 Craneage ..................................................................................................... 93

21.2.11 Freight Costs ............................................................................................... 93

21.2.12 Vendor Representatives .............................................................................. 93

21.2.13 Spare parts .................................................................................................. 93

21.2.14 First Fills ...................................................................................................... 93

21.2.15 Engineering, Procurement and Construction Management (EPCM) ........... 93

21.2.16 Contingency ................................................................................................. 94

21.2.17 Owner’s Costs and Working Capital ............................................................ 94

21.3 Project Operating Cost ........................................................................................... 95

21.3.1 Operating Cost Summary ................................................................................ 95

21.3.2 Stripping and Mining Cost ............................................................................... 97

21.3.3 Process Plant Operating Costs ....................................................................... 97

22 Economic Analysis ................................................................................................... 102

22.1 Cash Flow Model – Financial Summary ............................................................... 102

22.2 Capital Cost Summary .......................................................................................... 103

22.3 Operating Cost Summary ..................................................................................... 104

22.4 Project Scope................................................................................................... 105

22.5 100% Basis Presentation ..................................................................................... 106

22.6 Basis of Revenue Estimates ........................................................................... 106

22.7 Cost and Product Price Escalation ................................................................. 107

22.8 Currency Exchange Rate Assumptions ......................................................... 107

22.9 Mine Closure and Salvage Costs ................................................................... 107

22.10 Taxes and Royalties ........................................................................................ 107


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22.11 Sensitivities to Key Variables ............................................................................ 109

23 Adjacent Properties .................................................................................................. 111

24 Other relevant data and information ......................................................................... 112

25 Interpretation and Conclusions ................................................................................ 113

26 Recommendations ................................................................................................... 116

26.1 Next steps ............................................................................................................. 116

26.2 Areas Recommended for Technical Improvements ............................................. 116

26.2.1 Batch versus continuous autoclaves ............................................................. 116

26.2.2 Solvent extraction .......................................................................................... 117

26.2.3 Feed preparation ........................................................................................... 117

26.2.4 HPAL Leaching ............................................................................................. 117

26.2.5 Slurry rheology .............................................................................................. 118

26.2.6 Tailings .......................................................................................................... 118

26.2.7 Scandium oxalate precipitation ..................................................................... 118

27 References ............................................................................................................... 119


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List of Figures Figure 4.1 Location of Nyngan Scandium Property .............................................................. 20

Figure 16.1 Pit Shell – Year 10 ............................................................................................ 59

Figure 16.2 Pit Shell – Year 20 ............................................................................................ 59

Figure 17.1 Simplified process flow sheet ........................................................................... 69

Figure 17.2 Proposed plant layout ....................................................................................... 70

Figure 17.3 Preliminary sketch of autoclave layout ............................................................. 71

Figure 21.1 Operating cost summary by area ...................................................................... 96

Figure 21.2 Split of Operating Costs .................................................................................... 98

List of Tables Table 1.1 Key PEA Financial Results and Parameters .......................................................... 3

Table 1.2 Nyngan Scandium Project NI 43-101 Resources Summary .................................. 5

Table 1.3 Key PEA Operating Parameters ............................................................................ 7

Table 1.4 PEA Capital Cost Summary ................................................................................... 8

Table 1.5 PEA Operating Cost Summary .............................................................................. 9

Table 1.6 NPV/IRR Sensitivities to Assumptions Change ..................................................... 9

Table 2.1 Definition of Terms ............................................................................................... 12

Table 6.1 Select Lachlan Assay Results ........................................................................... 28

Table 6.2 Significant results from Anaconda assay data ..................................................... 29

Table 10.1 Table of Significant Drill Results ......................................................................... 37

Table 11.1 Analysis of Crushed and Blended Head Samples .............................................. 39

Table 14.1 Calculated Densities .......................................................................................... 50

Table 14.2 Resource Grade ................................................................................................. 50

Table 14.3 Density Calculations .......................................................................................... 51

Table 14.4 Nyngan Property – Total Resource Calculation ................................................. 52

Table 14.5 Nyngan Property – All Categories - Resource Calculation Sheet ...................... 53

Table 16.1 Whittle Optimization Parameters ....................................................................... 58

Table 17.1 Summarised Process Design Criteria ................................................................ 67

Table 17.2 Electrical Load - Processing Plant ..................................................................... 72

Table 19.1 USGS Historic Published Pricing for Various Scandium Products ..................... 79

Table 21.1 Summary of initial capital costs .......................................................................... 87

Table 21.2 Summary - Mechanical Equipment Capital Cost Detail ..................................... 89

Table 21.3 Summary – Infrastructure Capital Cost .............................................................. 92

Table 21.4 Summary – Freight/Start-up Capital Cost .......................................................... 93

Table 21.5 Summary – Owner’s Capital Cost ...................................................................... 94


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Table 21.6 Operating Cost Summary .................................................................................. 96

Table 21.7 Summary of Consumables Costs .................................................................... 100

Table 21.8 Maintenance Cost Derivation ........................................................................... 100

Table 22.1 Project Financial Returns Summary ................................................................ 103

Table 22.2 Nyngan Capital Cost Summary ........................................................................ 104

Table 22.3 Key Operating Costs Summary ....................................................................... 105

Table 22.4 Sensitivity to Product Price .............................................................................. 109

Table 22.5 Financial Parameters Sensitivity ...................................................................... 109

Table 22.6 Sensitivity to Operating Parameters ................................................................ 110


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NI 43-101 F1 Technical Report on the Nyngan Scandium Project Page 1 of 120

1 Summary

1.1 Cautionary Preliminary Economic Assessment (PEA) Statement This PEA is preliminary in nature and should not be considered to be a pre-feasibility or feasibility study, as the economics and technical viability of the Project have not been demonstrated at this time. While this PEA does not consider or include any Inferred Mineral Resources, and includes only Measured and Indicated Resources, it remains a preliminary analysis that is not sufficient to enable Project Resources to be categorized as Mineral Reserves. Furthermore, there is no certainty that the PEA will be realized.

1.2 Introduction-Basis of Technical Report This NI 43-101 Technical Report on the Nyngan Scandium Project in New South Wales,

Australia, has been independently prepared for EMC Metals Corp. (“EMC”), a Canadian

TSX-listed mining company (TSX:EMC.To), headquartered in Sparks, Nevada, USA.

This Technical Report has been independently prepared for EMC as an NI 43-101 F1

compliant Technical Report by Larpro Pty Ltd, of Brisbane, Australia.

This Technical Report represents new engineering and economic disclosures on the Nyngan

Scandium Project, but it does not represent an update or change to the existing measured

and indicated resource (M&I Resource), already established on the Nyngan property in 2010.

This new Technical Report does rely on the existing 2010 resource report, and on other

reports done for EMC management, in particular:

• NI 43-101 Technical Report on the Nyngan Gilgai Scandium Project, Jervois Mining

Limited, Nyngan, New South Wales, Australia,, Max Rangott, QP, Rangott Mineral

Exploration Pty Ltd, of Orange, NSW, Australia, Effective Date- February 9, 2010.

• Nyngan Scandium Project Study, prepared for EMC management by SNC-Lavalin of

Brisbane, Australia, February 2012.

• Scandium Recovery From Gilgai Laterite Ores by Acid Curing, Baking, Leaching,

Solvent Extraction, and Precipitation, prepared for EMC management by Roberts &

Schaefer Company, of Sandy, Utah, July 2010.

In addition to these historic management reports on the project, and the NI 43-101 Technical

Report on Resources for the property, EMC has commissioned a number of metallurgical


October 2014


test work programs with various independent groups, the results of which were all

considered in this Technical Report.

This Technical Report represents a Preliminary Economic Assessment (“PEA”) on the

overall project economics of the Nyngan Scandium Project, and was designed to a +/-30%

standard of accuracy.

This PEA is the first study to apply a high pressure acid leach (HPAL) circuit to the front end

of the Nyngan Project processing flow sheet. Prior studies were based on higher

temperature, atmospheric systems that EMC referred to as acid-baking techniques. HPAL is

the more common technique for lateritic resource processing, and there is a large body of

experience and knowledge with this process solution, which tends to be more efficient in

minimizing acid and achieving high recoveries, ultimately improving production costs.

The earlier process flow sheets were modified to utilize HPAL by engineers from Larpro.

This included a new mechanical equipment list, new process design parameters and a new

operating and capital cost estimate. The basis for the HPAL design was metallurgical test

work conducted by EMC Metals at SGS Laboratories, combined with test work on solvent

extraction and scandium recovery conducted by Hazen Research and CSIRO.

This NI 43-101 Technical Report has been developed in accordance with internationally

accepted guidelines for such Technical Reports and attempts to accomplish the following

objectives:

• Define the preliminary economic viability of the Nyngan Scandium Project, and

present a single investment option for consideration,

• Obtain a reasonable certainty of process, production, revenue, scope, time and cost,

• Develop a document that will support further study and development decisions by the

Project sponsors, and support further funding for those advanced studies, and

• Establish a baseline for both Project execution and operations.

1.3 PEA Financial Highlights A summary of the key financial results from the PEA is presented in Table 1.1 below. NOTE:

all dollar-based figures are expressed in US dollars (US$) unless otherwise noted, and all

tonnes references and abbreviations are intended to be metric tonnes, throughout the

Report.


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Table 1.1 Key PEA Financial Results and Parameters

Summary NI 43-101Nyngan Project PEA

Key Project Parameters Result

Capital Cost Estimate (US$ M) $77.4

Resource Grade Assumption (ppm) 371Resource Processed (tpy) 75,000

Mill Recovery Assumption (%) 84.3%Oxide Production (kg per year) 35,975

Scandia Product Grade 97-99.0%

Annual Cash Operating Cost (US$ M) $22.9Unit Cash Cost (US$/kg Oxide) $636

Oxide Price Assumption (US$/kg) $2,000Annual Revenue (US$ millions) $72.0Annual EBITDA (US$ millions) $47.7

NPV (10%i) (After Tax) $175.6NPV (8%i) (After Tax) $217.8

IRR (%) (After Tax) 40.6%

Payback (years) 2.5

This PEA is preliminary in nature and should not be considered to be a pre-feasibility or feasibility study, as the economics and technical viability of the Project have not been demonstrated at this time.

1.4 Project Location The Nyngan project site is located approximately 450 km northwest of Sydney, NSW,

Australia and approximately 20 km due west from the town of Nyngan, a rural town of

approximately 2900 people. The deposit is located 5 km south of Miandetta, off the Barrier

Highway that connects the town of Nyngan to the town of Cobar. The property is situated in

flat countryside and is classified as agricultural land, used predominantly for wheat farming

and livestock grazing.

Mining has historically been and continues to be a feature of the local economy, with the

Tritton copper mine, owned and operated by Straits Resources, located approximately 45

km to the northwest of Nyngan. The Girilambone copper mine and processing plant

operated in the area for many years before closure.


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1.5 Project Description The Nyngan Scandium Project is envisioned as a small, surface mining operation,

recovering 75,000 tonnes per year of limonite mineralization at an average strip ratio of

under 3:1 (overburden/resource), yielding a head grade to a processing plant of 371ppm

scandium. The processing plant will size the input material, apply high pressure acid

leaching (HPAL) using sulfuric acid, and then recover the liberated scandium from solution

using solvent extraction (SX), oxalate precipitation and calcination, to generate a finished

scandium oxide product. The output of the plant is established at 35,975 kilograms (kg) per

year, at grades between 97% and 99%, as Sc2O3.

1.6 Geology and Mineralization The area is dominated by Cainozoic alluvial plains from the Darling River Basin with minor

colluviums and outcrop. The region is situated on the shallow southern margin of the Surat

Basin, known as the Coonamble Embayment.

The Gilgai intrusive complex underlays the Nyngan property, covered by 8 to 50 meters of

alluvial material, is thought to be the source of the scandium, nickel, cobalt and precious

metals in the regolith. The area exhibits varying degrees of laterization.

The Gilgai complex is an Alaskan type ultramafic complex, made up of a range of rock types

including hornblende monazite, hornblendite, pyroxenite, olivine pyroxenite to dunite

peridotites and is believed to be Ordovician age. The intrusives are included within the

“Fifield Platinum Province”. Tertiary laterization of the Gilgai complex has produced the fairly

standard laterite profile outlined below:

• Hematitic clay

• Limonitic clay

• Saprolitic clay

• Weathered bedrock

• Fresh bedrock


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1.7 Current Mineral Resources An NI 43-101 Technical Report on Resources established a measured and indicated

resource on the Nyngan property in 2010, summarized as follows:

Table 1.2 Nyngan Scandium Project NI 43-101 Resources Summary

Nyngan Project OverburdenNI 43-101 Resource Summary Tonnes Grade Cut-Off Sc Ratio

Category (ppm Sc) (ppm Sc) (t/t)

Measured Resource 2,718,000 274 100 0.81:1Indicated Resource 9,294,000 258 100 1.40:1

Total Resource 12,012,000 261 100 1.10:1

NI 43-101 Technical Report on the Nyngan Gilgai Scandium Project, Jervois MiningLimited, Nyngan, New South Wales, Australia, dated March 2010, (Rangott Mineral Exploration Pty Ltd).

Note: Mineral resources that are not mineral reserves do not have demonstrated economic viability.

The 20-year Project plan will utilize approximately 1.5 million tonnes of limonite resource

from the total measured and indicated categories, albeit at a grade higher than the average

resource grade shown in Table 1.2 (above) for limonite and saprolite over the entire

resource.

1.8 Mining Open cut mining will employ a hydraulic excavator to remove overburden and expose the top

of the mineralization. A dozer will be then used to rip the limonite layer to an excavator

manageable size, for excavator digging and short truck haulage to the run-of-mine (ROM)

stockpile area. At the low level of mill feed required, it is proposed to employ campaign

mining, approximately 3 to 4 times annually. Resource stockpiles will be covered with

tarpaulins to prevent wind and rain contamination, and will be recovered to the ROM pad or

the feed preparation circuit with a front end loader. In-pit roads will be developed as required.

1.9 Feed Handling Project mineralization consists of scandium-rich laterites, containing both limonite and

saprolite clays. This PEA contemplates using the top layer limonite only in this initial

development program. The materials handling characteristics of the mill feed will require

further evaluation to support detailed engineering design for optimal particle sizing in HPAL

circuits, and for material handling systems. The PEA work adopted designs that are typical

of nickel laterite processing operations.


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1.10 Test work and Process Modelling The test work for the development of the flow sheet was conducted across a number of

organisations, and over a number of years:

• High pressure acid leaching test work was conducted at SGS Lakefield on limonite,

saprolite and combinations of the two. SGS also examined leaching of residue from

acid bake leaching work.

• Hazen Research conducted extensive test work on an acid-bake roasting process

followed by water leaching. While not relevant to this PEA, Hazen did produce

process solutions for subsequent solvent extraction and scandium recovery test

work. This included a continuous solvent extraction pilot plant campaign, and work on

the precipitation of scandium from solution using oxalic acid.

• CSIRO also conducted test work on the acid bake process. They also conducted

solvent extraction test work on a range of organic extractants, and examined the

oxalate precipitation process.

Extensive use was made of Larpro’s METSIM process software modelling capability.

METSIM was applied as a tool to validate various process variants and options, all based on

actual independent test work results EMC was able to provide from prior studies. The final

METSIM result was a fully convergent model, with various recycle and bleed streams

considered and quantified, and included a mass and energy balance for the process. From

these quantities, a mechanical equipment list compliant with the mass balance was

produced as the basis for capital cost estimation. The model also provided reagent and

consumable quantities that were used as the basis for the operating cost determination.

1.11 Process Flow Sheet and Technology Selection The process flow sheet is based on high pressure acid leaching of the limonite component of

the mineralization in two batch autoclaves. The flow sheet built around this process was:

• Feed preparation

• High pressure acid leaching in autoclaves

• Pressure reduction via a water splash condenser and flash vessel

• Counter current decantation of the leach residue

• Solvent extraction of the leach solution with a primary amine

• Scandium oxalate precipitation by adding oxalic acid

• Purification and calcination of the oxalate to produce scandium oxide

• Tailings neutralization and disposal in a conventional tailings dam


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• Reagent storage and utilities

1.12 Key Project Parameters A selection of the important financial modelling assumptions and inputs that drive project

economics are shown in Table 1.3, below:

Table 1.3 Key PEA Operating Parameters

Nyngan Project NI 43-101Key Operating Parameters PEA

and Assumptions ResultGeneral

Life of Mine (years) 20Head Grade Assumption (g/t) 371

Price/kg (US$) $2,000Product Grade 97-99.0%CapEx (US$M) $77.4

Production AssumptionsProcess Plant Thruput - tpy 75,000Process Plant Thruput - tpd 240

Initial Production Year 2017Sc2O3 Production - Kg/year 35,975Opex/tonne Resource (US$) $305

Cost/kg Sc2O3 (US$) $636Mill Recovery 84.3%

Mill Availability 85.6%

Cash Modeling AssumptionsCapEx in discount year # 1

Production in discount year # 2WC and Sustaining CapEx yes

Contingency 20.0%Escallation of Costs or Prices none

Initial Discount Year 2016Tax Rate 30%

A$/US$ Exchange Rate Assumed $0.90

1.13 Capital Cost Estimate The capital cost estimate for the Project is US$77.4M. This includes US$11.9M in

contingency. The capital cost estimate is provided at an accuracy of +/- 30% with over 70%

of the mechanical equipment cost provided from budget quotes and the remainder from

database information. A summary of the capital cost estimate is shown in Table 1.4, below:


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Table 1.4 PEA Capital Cost Summary

Nyngan Project NI 43-101 PEA ResultCapital Cost Summary A$ Cost US$ Cost

(Both A$ and US$) (M) (M)

Pre-Stripping Cost $1.7 $1.6

Direct Mechanical CostsProcess Plant Mechanicals $40.8 $36.7

Plant infrastructure $13.1 $11.8Freight and Start-Up Costs $2.3 $2.1

Sub Total Mechanicals $56.2 $50.6

EPCM (18%-Mechanicals) $10.1 $9.1Contingency (20%-inc EPCM) $13.3 $11.9

Owners Costs $1.4 $1.3Working Capital $3.3 $3.0

Total Capital Cost $86.0 $77.4

1.14 Operating Cost Estimate The annual operating cost estimate for the Project is US$636/kg Sc2O3. The operating cost

estimate is provided at an accuracy of +/- 25%, with all reagents and consumables provided

from direct vendor quotes. The largest component of operating costs is reagents, with 55%

of that as sulfuric acid. A summary of annual operating costs is shown in Table 1.5.

1.15 Sensitivities The project financial returns are most sensitive to the selling price assumptions for scandium

product. The project profitability will be dependent upon a successfully designed and

implemented flow sheet to manage costs, and an effective marketing effort to realize product

prices as assumed in the PEA of US$2,000/kg. This pricing is consistent with marketing

research conducted by EMC, and published information from sources such as the US

Geological Survey.


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Table 1.5 PEA Operating Cost Summary

Nyngan Project NI 43-101 PEA ResultOpEx Mine/Process Expense Annual Unit Cost Per

(US$ millions) US$M Cost kg Oxide

Mining Costs $1.4 $38.78Processing Cost

Labor Cost $3.9 $108.13Utilities $0.8 $21.96

Reagents $13.0 $361.53Lab Costs $0.2 $6.95

Consumables $1.0 $27.10Total Processing Costs $18.9 $525.67

Marketing & Insurance $0.7 $18.76Maintenance Spend $1.3 $37.02

Mobile Equipment Cost $0.6 $15.28

Annual Cash Operating Cost $22.9 $635.51

Table 1.6 NPV/IRR Sensitivities to Assumptions Change

Sensitivity to NPV (10%)Financial Parameters ($US M) IRR (%)

PEA RESULT $175.6 40.6%

Operating Cost SensitivityCost Increase (10%) $163.9 38.6%Cost Decrease (10%) $187.4 42.5%

Price SensitivityLower Realized Product Price (10%) $139.3 34.5%Higher Realized Product Price (10%) $212.0 46.6%

Capital Cost SensitivityHigher Capital Cost (10%) $169.6 37.0%Lower Capital Cost (10%) $181.6 44.9%

Fx SensitivityUS$/A$ @ $1.00 $162.6 38.3%US$/A$ @ $0.80 $188.7 42.8%

1.16 Report Conclusions and Recommendations This PEA consolidates a significant amount of metallurgical test work and prior study on the

Nyngan Scandium Project. The work examines a conventional process flow sheet utilizing


October 2014


the HPAL leaching process with test work showing expected good metallurgical recoveries

of scandium from the laterite mineralization at the Nyngan Project site. The metallurgical

assumptions are supported by small scale, independent test work that is consistent with

known outcomes in other laterite resources. Combined with the capital cost estimate, the

economic modelling of the Project appears to exhibit good financial outcomes that

encourage more detailed study and engineering work.

This PEA is preliminary in nature and should not be considered to be a pre-feasibility or feasibility study, as the economics and technical viability of the Project have not been demonstrated at this time. While this PEA does not consider or include any Inferred Mineral Resources, and includes only Measured and Indicated Resources, it remains a preliminary analysis that is not sufficient to enable Project Resources to be categorized as Mineral Reserves. Furthermore, there is no certainty that the PEA will be realized.

The financial outcomes are such that the recommendation is made to proceed to a Pre-

Feasibility Study, once certain key process variants have been confirmed with additional test

work. The project will then require more detailed engineering design, in particular around the

autoclave and pressure vessel choices. This engineering design work with a selected

autoclave manufacturer or autoclave design firm, combined with additional test work on

reactive chemistry and potential enhancements to the HPAL process/technique, will provide

a higher level of confidence in the capital cost and performance of the HPAL circuit. The

remainder of the scandium processing circuit is quite small in volume, conventional in nature,

and provides little capital cost risk.

1.17 Recommendations – Next Steps A range of technical activities should be considered as valuable in fine-tuning the flow sheet

for the Project, and is recommended, including:

• Additional confirmatory test work is recommended to examine process variants that

would be likely to reduce capital and operating costs. A comparative study between

batch and continuous autoclave systems should be commissioned. Alternative

reagents and process techniques in the solvent extraction area should be

considered.

• Additional test work is recommended to develop engineering parameters around the

materials handling properties of the laterite resource as it relates to optimum sizing

for best leach kinetics. Studies on the pumping and settling properties of process

slurries would better define system design and environmental solutions as well.

• Study and review of process variants that might improve the construction materials

requirements, and treatment of effluent streams by utilizing alternative reagents.


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2 Introduction

This Technical Report is focussed on determining the viability of extracting scandium as

scandium oxide (Sc2O3) from the Nyngan property resource. The Nyngan Scandium Project

is located some 25 km due west from the town of Nyngan in New South Wales,

approximately 500 km northwest of Sydney, Australia. The property is situated 5 km south of

Miandetta, off the Barrier Highway that connects the town of Nyngan to the town of Cobar.

The location is characterized by flat countryside, and is classified as agricultural land, used

mainly for wheat farming and livestock grazing.

2.1 Terms of Reference and Purpose of Report This Technical Report has been compiled by Larpro Pty Ltd from the sections prepared and

signed off by the three Qualified Persons (QPs - identified below) at the request of EMC

Metals Corp., in order to prepare a Canadian National Instrument NI 43-101 compliant

Preliminary Economic Assessment Technical Report on the Nyngan Scandium Project,

Nyngan, NSW, Australia. The qualified persons are:

• QP: Dr Nigel Ricketts responsible for report sections: 1,2,3,13,17 to 22, and 24 to 27.

• QP: Maxel Rangott responsible for report sections: 1, 4 to 12, 14 and 23.

• QP: Stuart Hutchin responsible for report sections: 1, 15 and 16.

This document provides a Preliminary Economic Assessment on the Nyngan Scandium

Project (also referred to a “Nyngan”), prepared according to NI 43-101 guidelines. Form NI

43-101F1 was used as the format for this report.

The intent of Sections 6 to 9 of this Technical Report is to provide the reader with a

comprehensive review of the historical exploration activities conducted at the Nyngan

Scandium Resource and a current estimate of the resource, based on resource drilling of 78

holes totalling 2,954 meters.


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Table 2.1 Definition of Terms

Term Definition

Mineral Resource A concentration or occurrence of material of intrinsic economic interest in or on the Earth’s crust in such a form, quantity and quality that there are reasonable prospects for eventual economic extraction. The location, quantity, grade, geological characteristics and continuity of a mineral resource are known, estimated or interpreted from specific geological evidence and knowledge. Mineral Resources are sub-divided, in order of increasing geological confidence, into Inferred, Indicated and Measured categories.

Indicated Mineral Resource An Indicated Mineral Resource is that part of a Mineral Resource for which quantity, grade or quality, densities, shape and physical characteristics, can be estimated with a level of confidence sufficient to allow the appropriate application of technical and economic parameters, to support mine planning and evaluation of the economic viability of the deposit. The estimate is based on detailed and reliable exploration and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that are spaced closely enough for geological and grade continuity to be reasonably assumed.

Measured Mineral Resource A Measured Mineral Resource is that part of a Mineral Resource for which quantity, grade or quality, densities, shape and physical characteristics are so well established that they can be estimated with confidence sufficient to allow the appropriate application of technical and economic parameters, to support production planning and evaluation of the economic viability of the deposit. The estimate is based on detailed and reliable exploration and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that are spaced closely enough to confirm both geological and grade continuity.

Mineral Reserve A Mineral Reserve is the economically mineable part of a Measured or Indicated Mineral Resource demonstrated by at least a Preliminary Feasibility Study. This study must include adequate information on mining, processing, metallurgical, economic and other relevant factors that demonstrate at the time of reporting, that economic extraction can be justified. A Mineral Reserve includes diluting materials and allowances for losses that may occur when the material is mined. Ore Reserves are sub-divided in order of increasing confidence into Probable Ore Reserves and Proved Ore Reserves.

Probable Mineral Reserve The economically mineable part of an Indicated and, in some cases Measured Mineral Resource demonstrated by at least a Preliminary Feasibility Study. This Study must include adequate information on mining, processing, metallurgical, economic, and other relevant factors that demonstrate, at the time of reporting, that economic extraction can be justified.

Proven Mineral Reserve The economically mineable part of a Measured Mineral Resource demonstrated by at least a Preliminary Feasibility Study. This Study must include adequate information on mining, processing, metallurgical, economic, and other relevant factors that demonstrate, at the time of reporting, that economic extraction can be justified.

Assay The chemical analysis of mineral samples to determine the metal content.


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3 Reliance on Other Experts

The QP authors of this Preliminary Economic Assessment Report have assumed and relied

upon the fact that all of the information and existing technical documents listed in the

References section of this Report are accurate and complete in all material respects. While

all information contributed to this Technical Report has been carefully reviewed, its accuracy

and completeness cannot be guaranteed. The QP authors reserve the right to revise this

Preliminary Economic Assessment Report and conclusions should additional information

become known subsequent to the date of this Report.

A draft copy of this Preliminary Economic Assessment Report has been reviewed for factual

errors by all QPs and the QPs have in certain instances relied on EMC Metals Corp. data

and knowledge of the property in this regard. Refer to sections 3.1 to 3.3 below for the

individual certificates of the qualified persons, Nigel Ricketts, Maxel Rangott and Stuart

Hutchin.

While compiling the information on economic models, metallurgical test work results, mining

grades and parameters, infrastructure requirements and environmental information, the QP

authors relied upon various sources, specifically as follows:

EMC Metals Corp. provided its cash flow model on the Nyngan project to the QPs,

provided guidance concerning corporate tax rates, R&D tax credits, mineral royalties,

and spot/ long-term scandium product pricing information provided by their potential

customers involved in various end uses for scandium.

QP Nigel Ricketts has relied upon publically available information concerning

average A$/US$ foreign exchange rates over recent periods and long-term exhibited

trends, plus consensus financial industry predictions on future exchange rates over

the next 4 years in reviewing financial model parameters.

The mass balance used by Larpro to establish preliminary plant flow sheets was

generated using METSIM simulation software and was subsequently used for

equipment sizing for the process plant. The inputs to this model were based on

recorded parameters observed by Hazen Research, CSIRO and SGS Lakefield

during their bench and pilot scale test work. Recovery information and product purity

were also sourced from this test work. Where test work was lacking, typical industry

parameters from nickel laterite processing experience were used.

QP Nigel Ricketts has relied on the February 2012 SNC-Lavalin Nyngan Scandium

Project Study Report for some of the equipment specification. The Larpro activities


October 2014


were essentially an update to the SNC-Lavalin work replacing an acid-bake front end

process with high pressure acid leaching. The HPAL section was fully developed by

Larpro but some of the components utilized in the downstream scandium recovery

circuit were developed and priced by SNC-Lavalin and only reviewed by Larpro

engineers.

QP Nigel Ricketts has relied on information provided by EMC Metals on water and

power negotiations with regulatory authorities and on negotiations with government

agencies

Cash flow models relied upon mine modeling work conducted by Mining One

regarding average realized grades, operating costs and stripping units and costs.

• QP Nigel Ricketts has relied on the environmental work and status of the EIS

process for the Project, as undertaken by R.W. Corkery of Orange, NSW, Australia

for EMC Metals Corp. and the lack of discovery of any serious archaeological or

social limitations to property development for mining or mineral processing.

Whilst the resource established by the March 2010 Technical Report has not changed, the

reliance by Maxel Rangott, the QP for the resource definition, remains regarding historical

data for the Nyngan Scandium Project provided by the previous owners of the project,

Jervois Mining Limited. Mr. Rangott has relied on that basic data to support the statements

and opinions presented in this technical report on resources. In the opinion of this QP,

• The historical data is present in sufficient detail, is credible and verifiable in the field

and is an accurate representation of the scandium resource,

• The historic documentation available for the Nyngan resource is extensive in most

areas and is of good quality,

• There are no material gaps in the drilling and assay information for the project,

• Sufficient information is available to prepare this report, and

• Any statements in the March 2010 Technical Report related to deficiency of

information are directed at information, which in the opinion of the author/s either has

been lost of the period of inactivity and ownerships transfers, is stored in non-sorted

corporate files cases, or it was gathered by previous workers.

This Preliminary Economic Assessment Report includes technical information, which

requires subsequent calculations to derive subtotals, totals and weighted averages. Such

calculations inherently involve a degree of rounding and consequently can introduce a

margin of error. Where these rounding errors occur, QP Maxel Rangott does not consider

them to be material.


October 2014


The author/s and QPs have specifically relied upon the work of others in Sections 2 through

9. The information contained in these sections has been derived in part from:

NSW Government data Systems (Minview and Digs)

http://imagery.maps.nsw.gov.au

http://www.minerals.nsw.gov.autasmap/jsp/Viewer.jsp?cmd=login

Department of Lands, Dubbo Office, contact: Craig Ferguson

http://www.legislation.nsw.gov.au/maintop/scanact/inforce/NONE/0

Bogan Shire Council, Nyngan, Contact: Josh Loxley

Manager Engineering Services, Bogan Shire Council, Nyngan, Contact: Keith Dawe

Various Online technical reports from previous license owners

Mr. Rangott, as QP for the resource sections of the Preliminary Economic Assessment

Report and the prior NI 43-101 Technical Report on resources for the Nyngan Scandium

Project, dated March 2010, specifically also relied upon:

The author/s of the original information in the JORC compliant “Report on Gilgai

Scandium Project Air Core Drilling and Resource Calculations EL 6009 Nyngan NSW

for Jervois Mining Limited Volumes 1-3, July 2006”.

The authors of that JORC Resource Report were Anthony Jannink, a consultant for

Douglas McKenna and Partners Pty Ltd and Duncan Pursell of Jervois Mining

Limited.

Final report EL 0076 (1967) Nyngan area by Anaconda Australia Limited

Exploration reports on EL 2965 Nyngan/Miandetta area (1988-1990) by Lachlan

Resources NL and Platinum Search NL

First to Third (and final) Annual Reports EL 5589 Nyngan Area (to 11/7/2002) by

Anaconda (NSW) Pty Ltd

First to Seventh (and final) Annual Exploration Reports El 4756 Cobar Area by

Platsearch NL

Drill interval samples, as prepared and assayed by Australian Laboratory Services

Pty Ltd in Orange, NSW.

http://imagery.maps.nsw.gov.au/

http://www.minerals.nsw.gov.autasmap/jsp/Viewer.jsp?cmd=login

http://www.legislation.nsw.gov.au/maintop/scanact/inforce/NONE/0


October 2014


3.1 Effective Date and Certificates The effective date of publication of this technical report is October 10, 2014.

“ORIGINAL SIGNED AND SEALED BY AUTHOR”

_________________________________________

Nigel Ricketts, MAusIMM CP (Metallurgy) Technical Director, Altrius Engineering Services, Mt Crosby, Queensland, Australia


_________________________________________

Stuart Hutchin, MAusIMM, MAIG Geology Manager, Mining One Consultants, Melbourne, Victoria, Australia


_________________________________________

Maxel Rangott, FAusIMM Director, Rangott Mineral Exploration, Orange, New South Wales, Australia

Following are signed and dated Certificates of Qualifications of the persons responsible for

the report.


October 2014


3.2 Certificate of Qualified Person – Nigel Jeffrie Ricketts, Member & (CP) Metallurgy, AusIMM

I, Nigel Jeffrie Ricketts, of 453 George Holt Drive, Mt Crosby, QLD, Australia do hereby certify that:

a) I am a metallurgist recognised as a Chartered Professional by the Australasian Institute of Mining and Metallurgy (AusIMM), employed as Technical Director of Altrius Engineering Services and have been so employed since August 2014. I have recent and relevant experience with metallurgical test work, process development and engineering design of process plants designed to process nickel and scandium-bearing laterites during previous employment as Consulting Manager with AMEC Minproc Pty Ltd.

b) This certificate applies to the Preliminary Economic Assessment Report, titled “NI 43-101 F1 Technical Report on the Feasibility of the Nyngan Scandium Project” with a date of October 10, 2014.

c) I undertook undergraduate studies in Metallurgy from the South Australian Institute of Technology, graduating in 1985. I also was awarded a PhD from the Department of Chemical Engineering of Monash University in Melbourne, Australia in 1992. I am a current member of the Australasian Institute of Mining and Metallurgy (Member Number 106413) and have been awarded the status of Chartered Professional (CP) in the field of Metallurgy from the AusIMM. I have read the current definition of a “Qualified Person” as set out in NI 43-101 and state that by virtue of my education, membership in professional associations and past relevant work experience, I fulfil the requirements to be a “Qualified Person” for the purposes of NI 43-101.

d) I have conducted a site visit to the Nyngan site on September 16, 2014, in conjunction with issuance of this report.

e) I am responsible for Sections 2-3, 13, 17-22, and 24-27. I contributed in the areas covered by these sections in the Summary, Section 1 as well.

f) I am independent of the issuer, as defined by the test in section 1.5 of NI 43-101.

g) I have had no prior involvement with the property that is the subject of this Preliminary Economic Assessment Report

h) I have read NI 43-101 and Form NI 43-101F1 and all sections of the Technical Report for which I am responsible and those sections have been prepared in compliance therewith

i) As of the date of this certificate, to the best of my knowledge, information and belief, the sections referenced above contain all scientific and technical information that is required to be disclosed to make the Preliminary Economic Assessment Report not misleading.

Effective Date: 10 October 2014

Signed:


October 2014


3.3 Certificate of Qualified Person – Stuart Hutchin, B Sc (Applied Geology) Member, MAusIMM, MAIG

I, Stuart Hutchin, B Sc, Level 9, 50 Market Street, Melbourne, Victoria, Australia, do hereby

certify that:

a) I am employed as a Geology Manager for Mining One consultants of, Melbourne, Victoria, Australia, specializing in geological consulting and exploration contracting for a wide variety of clients, and have been so employed since 2011.

b) This certificate applies to the technical report titled “NI 43-101 F1 Technical Report on the Feasibility of the Nyngan Scandium Project” (“the Report”), with a date of October 10, 2014.

c) I graduated with a Bachelor of Science degree in Applied Geology from the University of South Australia, Australia. I am a current member of the Australasian Institute of Mining and Metallurgy and Australian Institute of Geoscientists. I have read the current definition of a “Qualified Person” (“QP”) as set out in NI 43-101, and state by virtue of my education, membership in professional associations, and past relevant work experience, which spans over 17 years in the field of geology and mineral exploration with multiple companies and projects, I fulfill the requirements to be a QP for the purposes of NI 43-101.

d) I have conducted a personal site visit to the Nyngan project site, on December 15, 2011, but I have not conducted a site visit to the subject property in conjunction with this Report within the last 6 months.

e) I am responsible for Sections 15 and 16 of this Report. I contributed in the areas covered by these Sections in the Summary, Section 1, as well.

f) I am independent of the issuer, as defined by the test in section 1.5 of NI 43-101. g) I have had no prior involvement with the property that is the subject of this Technical

Report. h) I have read NI 43-101 and Form 43-101F1 and all of the Sections of the Technical

Report for which I am responsible, and those sections have been prepared in compliance therewith.

i) As of the date of this certificate, to the best of my knowledge, information and belief, the sections referenced above contain all scientific and technical information that is required to be disclosed to make the Technical Report not misleading.

Effective Date: October 10, 2014 Signed:


October 2014


3.4 Certificate of Qualified Person – Maxel Rangott, Fellow, AusIMM I, Maxel Franz Rangott, B Sc, 3 Barrett Street, Orange, NSW, Australia, do hereby certify

that:

a) I am employed as Director of Rangott Mineral Exploration Pty. Ltd., of Orange, NSW, Australia, specializing in geological consulting and exploration contracting for a wide variety of clients, and have been so employed since 1987.

b) This certificate applies to the technical report titled “NI 43-101F1 Technical Report on the Feasibility of the Nyngan Scandium Project” (“the Report”), with a date of October 10, 2014.

c) I graduated with a Bachelor of Science degree from the University of Sydney, NSW, Australia. I am a current Member & Fellow of the Australasian Institute of Mining and Metallurgy, a Member of the Mineral Industry Consultants Association, and a Member of the Australian Institute of Geoscientists. I have read the current definition of a “Qualified Person” (“QP”) as set out in NI 43-101, and state that by virtue of my education, membership in professional associations, and past relevant work experience, I fulfill the requirements to be a QP for the purposes of NI 43-101.

d) I have personally visited the Nyngan project site on numerous occasions over the last 10 years, but have not done so in conjunction with the issuance of this Report, within the last 6 months.

e) I am responsible for Sections 4-12, 14, and 23. I contributed in the areas covered by these Sections in the Summary, Section 1, as well. I was assisted by Dr. Sanja Van Huett on these Sections, who was the original Report author of these Sections,

f) I am independent of the issuer, as defined by the test in section 1.5 of NI 43-101. g) I have had prior involvement with the property that is the subject of this Technical

Report, in that I was the QP on the March 2010 property resource report titled, “NI 43-101 Technical Report on the Nyngan Gilgai Scandium Project, Jervois Mining Limited, Nyngan, New South Wales, Australia”. The resources established in that 2010 report are unchanged in this latest NI 43-101 Technical Report, dated October 10, 2014.

h) I have read NI 43-101 and Form 43-101F1 and all of the Sections of the Technical Report for which I am responsible, and those sections have been prepared in compliance therewith.

i) As of the date of this certificate, to the best of my knowledge, information and belief, the sections referenced above contain all scientific and technical information that is required to be disclosed to make the Technical Report not misleading.

Effective Date: October 10, 2014 Signed:


October 2014


4 Property Description and Location

4.1 Property Location The Nyngan scandium deposit lies 20 km almost due west of the town of Nyngan,

approximately 450 km northwest of Sydney. By public road the property is 5 km south of

Miandetta, off the Barrier Highway that connects Nyngan to Cobar as shown schematically in

Figure 4.1.

Figure 4.1 Location of Nyngan Scandium Property


October 2014


The drive from the town of Nyngan to the property takes approximately 20 minutes. The area

can be reached via the paved Barrier Highway which allows year round access but access to

the site itself is along clay farm tracks making access in wet conditions difficult. Several of

the Crown roads in the area are in the process of being closed or offered for sale, and one in

particular would make a superior choice to provide access to the property with minimum

impact on local land owners. Discussions on this asset are currently underway.

The resource site is located at geographic coordinates MGA zone 55, GDA 94, Latitude -

31.5987, Longitude 146.9827, Map Sheets 1:250k – Cobar (SH/55-14) and 1:100k

Hermidale (8234).

4.2 Mineral Titles The scandium resource is held under the mineral title – Exploration License (EL) 6009

(Block Number 3132, units d, e, j, k and Block no. 3133, unit f) and EL 6096 (Block 3132,

unit p, and Block 3133, units l, m, r and s). An Assessment Lease Application is currently

pending over the area of these two ELs and over a third area, EL 6095, located 25km to the

south-southwest.

The Exploration Licenses allow the license holder to conduct exploration on private land

(with landowner consents and signed compensation agreements in place) and public lands

not including wildlife reserves, heritage areas or National Parks. The scandium resource is

fully enclosed on private agricultural land.

As of the writing of this report, Jervois Mining Limited (“Jervois”) holds legal title to both the

surface and mineral rights on the Nyngan project. These legal rights and all project rights are

subject to a binding Settlement Agreement between Jervois and EMC, dated February 5,

2013, in which 100% of all rights to the EL’s, freehold land and project rights were

transferred to EMC in return for certain cash payments and royalty rights retained by Jervois.

Final payments were made in June 2014, and transfer documents have been drawn,

executed and lodged with the applicable NSW State agencies for transfer to EMC. The

transfer process is expected to be finalized by the end of 2014.

The local administrative body with property taxation jurisdiction is the Bogan Shire Council,

Nyngan NSW. Annual property rates, subject to annual assessment, are A$828, a payable

to the Bogan Shire Council Offices on or before August 31st each year.

Additionally, the exploration tenement holder is required to submit Interim and Annual

Exploration Progress Report to the Department of Industry and Investment, NSW, outlining

all work done on the tenements in the form of exploration or R&D/mineral test work to


October 2014


advance the property to development. The report must include expenditure details, along

with results of the work, and must meet the minimum annual expenditure established for

each EL. The combined minimum for the two ELs at Nyngan is approximately A$65,000 per

year. For 2014, the Annual Report has been filed for EL 6096 (June) and EL 6009 is being

drafted for submission in October.

The freehold property boundaries are defined by standard land survey techniques

undertaken by the Lands Department and currently presented in the form of Cadastral

Deposited Plans (DP) and Lots. The land associated with the project rights under transfer to

EMC is DP 752879, Lots 6 and 7 (Appendix 2, Lots 6 and 7 - Nyngan).

The combined area of the tenements covering the Nyngan scandium resource is 29.25

square km (of which approximately 14.6 square km is EL 6096 and 14.6 square km is the

southern area of EL 6009.) The main resource area (at cut-off 100ppm Sc) covers

approximately 0.5 square km.


October 2014


5 Accessibility, Climate, Local Resources, Infrastructure and Physiography

5.1 Topography, Elevation and Vegetation The topography is mildly undulating to flat elevated plateaus at an average elevation of 173

m above sea level. The area is overlain with alluvial red clays which display ‘Gilgai-type’

swelling characteristics.

The area is predominantly dry eucalypt and native pine woodland. Large areas of original

woodlands have been permanently altered through the removal of pine for timber, the

grazing of shrubs by livestock and the invasion of woody weeds.

5.2 Climate and Length of Operating Season The Nyngan area climate is generally described as sub-arid. The highest mean summer

temperatures of 34°C usually occur in January. Winter mean minimum temperatures of 16°C

typically are recorded in July. In summer, temperatures can reach 40°C, while winter low

temperatures can occasionally reach 0°C during night time. These extremes are relatively

rare, and would pose no limitations for mining or processing operations.

The mean maximum (summer) rainfall of 51 mm occurs in January and the mean (winter)

rainfall minimum of 27 mm in September. Nyngan is generally under a sub-tropical to tropical

influence from the north of the continent. The operating season for a mining operation can

be all year round, provided all-weather gravel roads with appropriate drainage are

constructed for access.

5.3 Access to Property

The town of Nyngan (NSW) lies on the Mitchell Highway, northwest of Dubbo, which is the

largest regional community in proximity. To reach EMC’s Nyngan property from the town of

Nyngan, the most direct route is via the Barrier Highway, which intersects the Mitchell

Highway at the western end of the town of Nyngan. The community of Miandetta lies

approximately 25 km from Nyngan, along the Barrier Highway. At Miandetta, the highway

intersects Gilgai Road. The EMC property is approximately 5 km south west on the Gilgai

Road (paved), accessible through private roads and Crown roads, which are all weather

roads but not paved. The property is not visible from the Gilgai Road.


October 2014


5.4 Surface Rights

EMC has purchased approximately 800 acres of land (freehold) which encompasses most of

the scandium resource on the property. The surface rights are managed by Hetherington

Exploitation and Mining Title Services Pty. Ltd., Sydney, NSW on behalf of EMC. At time of

this Report EMC is in process of formal legal transfer on the freehold rights from the former

owner Jervois, as per the 2013 Settlement Agreement (obligations completed and land

transfer initiated in June 2014).

5.5 Local Resources and Infrastructure

5.5.1 Access Roads and Transportation

The township of Nyngan is accessed by the Barrier and Mitchell Highways, both paved all-

weather inter-State two lane highways. There is a single track rail line used for hauling grain

and sulfide concentrates from mines at Cobar that runs through Nyngan to the eastern

seaboard ports. A branch of this rail line runs past the Nyngan property, approximately 5 km

from the resource area.

5.5.2 Power Supply

The closest major electricity substation is located in the regional city of Dubbo, NSW,

approximately 170 km from the Nyngan property. A high voltage power line (132 kV) runs

parallel to the Barrier Highway from Nyngan to Cobar, and passes within 3 km of the

resource area. Domestic power lines also run along the Gilgai Road.

The largest solar farm in Australia is currently under construction and nearing completion in

the area as well. The owner and operator, AGL (ASX Ticker:AGK) is finalizing construction

of a 102 MW fixed (non-tracking) solar photovoltaic installation directly adjacent to the

Barrier Highway approximately 10 km from Nyngan and 20 km from the Nyngan property.

The installation will generate 360,000 MWh of electric power per year, and include a

transformer station to tie directly into the existing 132 kV Nyngan-Cobar high voltage

transmission line. The facility is scheduled to begin producing electricity for the NSW

electrical grid in June 2015.

5.5.3 Town of Nyngan

The town of Nyngan has a population estimate of 2,900, and has a regional hospital, primary

through tertiary school systems and several restaurants and hotels, although rooms are not

plentiful. The town hosts the local governmental offices of the Bogan Shire, and caters to the

road traffic travelling between Cobar and Dubbo. It is estimated that approximately one third


October 2014


of the population either works or services mining projects in the area. The primary regional

industry is agriculture, with wheat the predominant crop.

The AGL solar construction project has brought over 300 local jobs to the community, and

required the company to construct a mess/accommodation facility to support the project

during construction and commissioning.

Travel times by car from the town of Nyngan to both Dubbo and Cobar are each about 1.5

hours. Dubbo’s population is about 40,000, is considered the crossroads of NSW, and

supports a regional population of over 130,000. Cobar is slightly larger than Nyngan (pop.

estimate 3,700) and is both an historic and current mining community with zinc and copper

mining that began in the 1880s.

5.5.4 Water Supply

The project requires almost 200 mega-liters (ML) of water per annum. This water can be

sourced from two possible areas;

1. Underground water from the Lachlan Fold Belt or,

2. From an existing storage reservoir (Burrendong Dam on the Macquarie River).

EMC plans to apply for an allocation from this storage. Water is released and flows to the

township of Nyngan via the Macquarie River, an irrigation channel and finally into the Bogan

River near Nyngan. A pumping station then pumps the water via two existing parallel

pipelines which supply Cobar some 120 km away. These pipelines follow the Barrier

Highway and are within 5 km of the Nyngan Project. A modest off-take would be required to

provide water to the project.

5.5.5 Port

The nearest port facility is at Newcastle, NSW, located approximately 500 km from the

property via the paved State highway system, capable of transporting heavy equipment to

site, and supporting continuous all-weather transport of process inputs for the project.

5.5.6 Buildings and Ancillary Facilities

There are currently no buildings or ancillary facilities on the site.

5.5.7 Manpower

Adequate skilled labor for technical and hourly staff is available in Nyngan, Cobar and other

regional communities. The Nyngan community has the room and infrastructure in place to

expand to meet the demands of growing local business, although at present there is not a

ready supply of housing available for rent or purchase. The major solar project under

construction will involve as many as 300 construction staff, and the constructor is presently


October 2014


planning to set up mess/accommodation facilities in the town to house and feed staff. A

mining project such as EMC is contemplating would likely require a similar solution, on a

much smaller scale during construction, and the solar project facility may represent a timing

opportunity for EMC to use established facilities after completion of that project.


October 2014


6 History

6.1 Origins of the Name ‘Gilgai’ The Nyngan scandium property had been commonly also known as the Gilgai scandium

property, as it was referred to during numerous drilling phases and owners through the

1970’s, 1980’s and 1990’s. The word is Aboriginal in origin, and means ‘small water hole’.

Gilgais form where heavily clayed soils swell and crack, creating shallow depressions that

capture and retain water in small pools. Gilgais are further encouraged by areas with

pronounced wet and dry seasons, and were important water sources for native Australians,

range animals, and early pastoral farmers and grazers.

The naming of the prospect, according to M. Rangott, came from the Parish of Gilgai,

County of Flinders, as the prospect lies within that Parish. The name was later applied by

geologists and exploration groups to one of the significant local buried geologic formations,

known as the Gilgai Complex, an Alaskan-type intrusive that is host to nickel, cobalt,

platinum and scandium.

EMC refers to the property as either the Nyngan scandium property or the Nyngan

Scandium Project, reserving the Gilgai name as a title for the broad geologic formation

associated with the property and the scandium resource.

6.2 Past Exploration and Development The first systematic exploration in the region was by Selection Trust in the late 1970’s,

targeting base metal and gold mineralization. Work included mapping, rock chip sampling

and the drilling of seven percussion drill holes. The results returned were not deemed

encouraging by Selection Trust, however values of up to 1.16% nickel were reported.

North Broken Hill Ltd. took up a number of tenements in the late 1970’s and early 1980’s

initially to look for tin, but later for ultramafic sulfide mineralization. To the south of the

Nyngan property, in the Honeybugle area, they conducted regional exploration including the

drilling of 52 auger holes (287m) on Pangee Road and at the Pangee Road Pits.

Lachlan Resources N.L., as manager of the "Platsearch Group" explored for PGE

mineralization in the late 1980's, relinquishing the ground in 1993. Airborne and ground

magnetic surveys were used to locate and delineate the intrusive “Alaskan-style” ultramafic

complexes considered to be prospective for PGE mineralization, modelled initially on the

platinum bearing Tout (Syerston) intrusive complex near Fifield, then on the Kars Complex

near Condobolin. Broad-spaced rotary air-blast (RAB) drilling identified a platiniferous zone


October 2014


at the western end of the large Gilgai complex. A follow-up program included detailed ground

magnetic surveys and RAB drilling at 25m x 50m spacing over an area of 400m x 500m. A

total of 134 RAB holes for a cumulative 6,779m were drilled. Two inclined diamond holes

were also completed, each 250m deep. Assay results from the diamond drilling program

showed peak values of 1.53 g/t Pt, and revealed an iron-rich phase with abundant magnetite

and minor sulfides including pyrite, pyrrhotite, and chalcopyrite. Neutron Activation Scans for

Jervois Mining by Becquerel on five samples of DDH1 core included three samples from the

iron-rich phase. These samples assayed 108, 104 and 110 g/t scandium as shown in Table

6.1.

Table 6.1 Select Lachlan Assay Results

Select Sample Assays From Lachlan RAB Drill ProgramSample Number Depth (m) Pt (ppm) Sc (ppm) Rock Type

27132 109-110 0.34 55.1 Dunite/Olivine Pyroxenite (minor veins)27142 119-120 1.09 65.4 Olivine Pyroxenite (minor veins)27229 296-207 <0.05 108 Magnetite Pyroxenite (pegmatite veins)27262 239-240 0.11 104 Magnetite Pyroxenite (pegmatite veins)27264 241-242 0.06 110 Magnetite Pyroxenite (pegmatite veins)

Anaconda Minerals acquired exploration title to the area in 1999, and concentrated on

searching for nickel/cobalt enrichment in laterites overlying serpentinite. Anaconda

completed some 31 km of ground magnetic traversing and drilled 54 reverse circulation (RC)

holes, totalling 2,302 meters. Further work was planned by Anaconda but was not carried

out, and the property was relinquished in 2001. Significant results are itemized in Table 6.2.

Jervois Mining Limited was conducting exploration in the general area at about the same

time as Anaconda, and obtained the sample pulps form Anaconda’s RC drill program in

2003, after Anaconda relinquished the exploration area. Jervois further analyzed the drill

samples for other minerals, including scandium. These initial assay results confirmed

significant scandium enrichment in the Gilgai laterites.

During 2006, Jervois completed an RC program on the property, drilling 64 holes for a total

of 2,638 meters. This drilling result allowed a resource to be generated, compliant with both

NI 43-101 and the JORC Code, which was completed by Douglas McKenna and Partners

during 2010.


October 2014


Table 6.2 Significant results from Anaconda assay data

Select Anaconda Drill Hole Results in Area of Nyngan Property

GDA E GDA NHole ID (m) (m) Ni% Co% Mg%

WLRC 002 503213 6516003 11 24 13 0.95 0.03 14.4

WLRC 006 503163 6515988 13 21 7 0.72 0.041 7.13

WLRC 007 504813 6513538 30 43 13 0.71 0.044 7.56WLRC 009 505013 6513588 38 40 2 0.55 0.028 5.12

WLRC 012 504713 6513523 30 48 18 0.56 0.02 7.66

WLRC 013 504613 6513508 36 55 19 1.12 0.097 3.71

WLRC 014 504513 6513473 35 44 9 0.7 0.035 11.5

WLRC 015 504413 6513448 37 53 16 0.98 0.066 7.22

WLRC 017 505713 6512183 22 32 10 0.51 0.03 5.48

WLRC 030 503713 6515183 16 27 11 0.9 0.102 6.03

WLRC 034 504313 6514383 38 52 14 0.73 0.034 5.84

WLRC 035 504213 6514383 37 50 13 0.64 0.027 9.7

DILRC001 499686 6502770 25 27 2 0.17 0.136 1.4

DILRC002 499680 6502679 27 53 26 0.3 0.074 2.1

DILRC003 499660 6502579 15 24 9 0.12 0.145 6

DILRC006 499608 6502272 36 39 3 0.25 0.107 4.2

DILRC012 499723 6502981 52 63 11 0.14 0.095 1.4

From (m)

To (m)

Intercept (m)

In February 2010, EMC Metals entered into a joint venture earn-in agreement with Jervois to

deliver a feasibility study on the Nyngan Scandium Project, within two years. At the two year

anniversary (February 2012) a dispute developed between the parties which ultimately

concluded in a private and binding settlement in early 2013. The terms of the settlement

required EMC to pay Jervois a cash sum over an 18 month period through June 2014, in

return for the transfer of 100% of the Nyngan Scandium Project, including the land and

mineral license rights, to EMC Metals. EMC was also required, as part of the settlement, to

pay Jervois an NSR royalty of 1.7% on scandium produced during the first 12 years of

production, and to accept assignment of an existing NSR royalty (technically a net profits

interest) on the property that Jervois had signed to obtain the property years earlier.

As of the writing of this report (October 2014), all payments due on the settlement

agreement between the parties have been made, and formal transfer of exploration

tenements and freehold land rights associated with the Nyngan scandium property is

underway and progressing with the State of NSW.


October 2014


7 Geological Setting and Mineralization

The area is dominated by Cainozoic alluvial plains derived from the Darling River Basin with

minor colluvium and outcrop. The region is situated on the shallow southern margin of the

Surat Basin, known as the Coonamble Embayment. There is evidence of varying degrees of

laterization in the area.

The western-most north-south structural zone of the Lachlan Fold Belt is known as the

Girilambone Structural Zone. It is composed of Cambrian-Ordovician metasediments and

minor basic volcanics known as the Girilambone Group, intruded by numerous mafic and

ultramafic bodies of similar age and by middle Silurian granite and volcanics.

The northern part of the project area covers the south-west limb of a north-south trending

arcuate belt of serpentinised ultramafics known as the West Lynn Serpentinite and a small

block of ultramafics to the south-west called the Miandetta intrusion. Thin section analysis

has interpreted the West Lynn Serpentinite as being derived from the alteration of a medium

grained dunite. The linear nature of the West Lynn ultramafic unit suggests an Alpine-type

origin, supported by the low levels of PGEs determined by assays. The Miandetta intrusion

may be a dismembered portion of the West Lynn Serpentinite.

In the south, the Gilgai and Honeybugle intrusive complexes are Alaskan-type complexes

made up of a range from hornblende monzonite, hornblendite, pyroxenite and olivine

pyroxenite to dunite-peridotites. The intrusives are included within the ‘Fifield Platinum

Province’. The Gilgai complex is covered by 8 to 50 meters of Tertiary to Recent age alluvial

material, with alluvium detected to 85m depth near the northern margin of the complex.

Scandium levels appear to be highest in the pyroxenite and olivine pyroxenite phases of the

complexes, so these rock styles are the main bedrock sources for the scandium

mineralization in the laterites. The highest scandium grades occur in the limonitic laterite

units, overlaying or close to the pyroxenite source rocks.


October 2014


8 Deposit Type

The Nyngan scandium resource is located within a limonitic and saprolitic Tertiary laterite,

with a fairly typical laterite profile developed at the prospect:

• Haematitic clay,

• Limonitic clay,

• Saprolitic clay,

• Weathered bedrock,

• Fresh bedrock.

The resource is centered over the more mafic phases of the zoned Gilgai ultramafic complex.

Weathering persists to 60m depth in the northern flanks of the complex.

8.1 Mineralization A geological interpretation plan was prepared, based on bedrock intersections in both recent

and previous drilling. Because of the weathered nature of the drill cuttings, the geological

plan must be considered interpretive. The igneous rock types which have been encountered

are;

• Pyroxenite,

• Olivine Pyroxenite,

• Hornblende Pyroxenite,

• Hornblendite,

• Magnetite Pyroxenite,

• Dunite and

• Monzonite.

There is a suggestion of a layered trend of the complex in a NW-SE direction (this is

supported by the magnetic pattern). These trends reflect a broadly concentric zonation of

lithologies (mafic lithologies in the centre becoming intermediate in moving out from the

“core”) in the complex. There also appears to be a zone of stronger alteration in the (south)

centre of the zone where abundant magnetite and mica (phlogopite) occur. Jervois assisted

an Australian National University (CRC-LEME) student, Augustine Alorbi, with his Honours

thesis titled ‘The Geology and Geochemistry of the Miandetta Area near Nyngan, NSW’

dated June 2006.

An abstract of Mr. Alorbi’s work states;

“This study focuses on understanding the Geology and Geochemistry of the

Miandetta area, near Nyngan New South Wales. The regolith of the Miandetta


October 2014


region is extensive, deep and complex and by understanding the nature and

origin of this material it is possible to establish whether contained elements are

laterally transported or indicating underlying mineralization.

Drill samples were assessed to understand the degree of geochemical dispersion

of elements related to the underlying mineralization through the in situ and

transported cover. In order to achieve this, the cover was logged and mapped so

as to determine the physical nature of the surficial and buried regolith. This

involved logging eleven holes in detail and interpreting over nine holes that had

been previously logged by Dr K.G. McQueen. Having established the physical

nature of the regolith cover through the bedrock mapping and drill holes

information combined with the regolith-landform mapping, construction of a

schematic cross section of the Miandetta area helped to interpret the geological

history and landscape evolution of the area. Different components of the cover

were analysed by geochemical and mineralogical means (ICP-OES and XRD).

Results from the different methods of analysis all highlighted the variation in

cover type. XRD results showed a decrease in quartz content between the sandy

and clayey units and the geochemistry showed differences in element

abundances suggesting that the different cover types have different provenances.

The geochemical study also indicated that there was some dispersion of

elements related to mineralization vertically up the profile. The sequential

extraction shows that most of the target and pathfinder elements of interest in the

Miandetta terrain are in the strongly bound state and biogeochemistry suggested

that the plants were taking significant amounts of metal from the ground”.


October 2014


9 Exploration

9.1 Surveys and Investigations Previous drilling on the Nyngan property searching for platinum, outlined in Section 4.2,

revealed a large buried laterite body over 1000 x 500 meters in area. The laterite at the

Nyngan resource, which is covered by a minimum of 15 meters of Quaternary alluvials, had

been outlined in the late 1980s by previous explorers searching for platinum. 134 RAB holes

(totalling 6779m) and two diamond drill holes (each 250m deep) were drilled on the prospect.

Between 1999 and 2001, two traverses of RC drill holes were drilled by Anaconda Minerals,

specifically exploring for nickel on the Nyngan property. Jervois made the initial discovery of

the presence of scandium from the assay results of five multi-element Neutron Activation

Scans, taken from the diamond core samples. Jervois subsequently obtained sample pulps

from the RC holes and had those analyzed for scandium. The re-analysis of results of those

RC holes indicated that there was significant enrichment of scandium on the Nyngan

property.

In September 2005, as part of a regional air core drilling programme, Jervois drilled 5 holes

(Na49 to Na53 inclusive) along an east-west fence line through the centre of the laterite

body. Results from this drilling confirmed that a major resource of scandium was present at

Nyngan.

These 5 new RC holes were geologically logged (1 meter intervals), weighed and magnetic

susceptibility readings taken. Chip tray samples were prepared for each drill hole. All

intervals below the alluvial overburden were sampled and dispatched for assay (except for

two holes Na55 and Na89 which penetrated monzonite and sediments respectively). All

sample residue, except alluvium, was transported to a secure, locked shed in Nyngan and

stored for use in future metallurgical test work.

9.2 Interpretation of the Exploration Information Table 10.1 shows all the significant scandium assay values by section and includes other

previous holes that contribute to the resource figures. The drill intercepts include all

lithologies and where the width is shown in brackets it indicates that there is internal waste

(i.e. contains intervals with less than 100 ppm Sc) within the intercept.

9.3 Statement Surveys and investigations carried out during 2006 and subsequently have been carried out

by Jervois Mining Limited.


October 2014


10 Drilling

10.1 Overview While the Nyngan property has been drilled by numerous prior owners since the early 1980s,

the target was never for scandium, and consequently none of the early holes were assayed

for scandium. Jervois Mining initiated the scandium interest at Nyngan by re-assaying old

Anaconda pulps in 2003, which served to identify the presence of scandium on the property.

Resource tonnages were subsequently established based on drill work commissioned by

Jervois Mining in 2006 (69 holes). A second program in 2008 (9 holes) was not included in

any revised resource work, serving only to provide material for test work.

10.2 Drilling Programmes The primarily 2006 air core drilling program was performed by Competitive Drilling Services

Pty. Ltd. of Blayney NSW. The rig used was a Schramm 450, hole diameter 3½ inches

(89mm) and the compressor had a capacity of 350psi and 600cfm. Drilling commenced on

16th January 2006 and was completed on 9th February 2006 with a break of 6 days

between 20th January and 27th January due to compressor breakdown. The program

entailed 2,638 meters in 69 holes in 19 days of drilling (ie a drill rate of 3.6 holes and 139

meters per day). Most of the delays encountered were caused by blockages in the

head/take-off tube especially in gravel overburden. Except for occasional hard hematite

(hole Na85 was abandoned due to hard hematitic ground), the laterite zone generally

allowed good drilling and recovery. A hammer bit (4¾” = 121mm diameter) was used in one

hole (Na100) due to hard ground.

After the completion of each hole, the hole was capped with a blast hole plug about 1 meter

down from the collar and backfilled. The hole’s position was surveyed using a Garmin

GPS12 XL instrument and a marker pin with drill hole number was placed in the collar

location. At the end of the drilling program, on 16th and 17th February 2006, Consulting

Surveyors, Langford and Rowe of Dubbo completed a controlled survey of the drill hole

collars using a Leica Differential (RTK and static) system.

A subsequent 9-hole program was completed in 2008, in order to obtain sample material for

research and development. The assay results from this second program were not

subsequently included in any resource estimates, although the assay results were consistent

with the resource defined by the earlier (2006) program.


October 2014


All air core drilling was vertical – the lithotype intersection lengths are close to true

‘stratigraphic’ widths.

10.3 Sample Collection Drill hole samples were collected through a cyclone mounted to the drilling rig, and captured

in large plastic bags. All of the 1 meter intervals were geologically logged by sieving material

from the bags. The bags were individually weighed, and magnetic susceptibility readings

taken on the bulk bags. Reference chip samples were taken for each drill hole. Samples of

1-2 kg were collected for analysis from each (large, one meter) bulk bag using a metal scoop

by hand, into smaller plastic bags. The air was expelled from the bags, the tops folded down

several times, and sealed with heavy-duty staples. All intervals below the alluvial overburden

were sampled and dispatched for assay, except for two holes NA55 and NA89. These holes

penetrated monzonite and sediments respectively. In hole NA55, a bedrock sample was

collected every 4 meters, and no samples were collected from NA89.

The small plastic sample bags were packed into labelled larger plastic bags and transported

to the Company’s shed in Nyngan at the end of each day, and locked inside until the end of

the drilling program. Shortly after the end of the program, all of the smaller sample bags

were loaded on to pallets, shrink-wrapped and sent to the Australian Laboratory Services Pty.

Ltd.’s (‘ALS’) facility in Orange by commercial road transport, a distance of 315km by road.

Approximately a week after the completion of the drilling program, concurrently with

rehabilitation of the drill sites, all of the bulk samples, except those of alluvium or

metasediments, were transported to a locked shed owned by Jervois, for long-term secure

storage.

At a later date, Jervois personnel retrieved a limited number of the stored one meter bulk

samples, and using a riffle splitter, split off new samples for analysis, to check against those

samples collected by scoop. The scandium assay values for the split samples corresponded

closely to those of the scooped samples sent earlier for assay to ALS in Orange.

Those bulk samples have been retrieved by EMC Metals and are now in a secure storage

facility managed and controlled by Rangott Mineral Exploration Pty Ltd, in Orange, NSW.

10.4 Sample Recovery Methods Some sample recovery risk is inherent in all air drilling techniques, but the combination of

available reverse-circulation drill tools, high air flows and a competent drill operator, resulted

in acceptable recoveries. The weights of the bulk samples were generally in the range 11-15

kg, with occasional much lower and higher weights.


October 2014


In damp or wet stratigraphy (particularly the leached saprolite), sample weights often

dropped below 10 kg, possibly due to returns sticking to the internal walls of the rod string

and the pipe work leading to the cyclone, to the walls of the cyclone, or possibly in the drill

hole behind the bit. The main effect of this was likely some ‘smearing’ (contamination) of

assay values across subsequent sample intervals. However, it is considered that this is

unlikely to have had a material effect on the overall grade of each lithology in the resource

model.

10.5 Interpretation Table 10.1 shows all the significant assay results for scandium by Section and includes

some earlier holes that contribute to the resource figures. Results do not include any assays

from the 2008 program.

The drill intercepts include all lithologies and where the width is shown in brackets it

indicates that there is internal waste (i.e. contains intervals with less than 100 ppm Sc) within

the intercept.

10.6 Establishing Higher Grades The laterite in which the resource is located has the higher scandium grades within the

limonite and saprolite intervals. These intervals vary in thickness laterally and the grade also

varies. Ground water and below surface topography are suggested as significant in

determining the grade of scandium. All resource calculations are stated with a 100ppm lower

cut off.

10.7 Relevant Samples Refer to the table of significant intervals (Table 10.1). All widths are considered true as the

holes were drilled vertically.


October 2014


Table 10.1 Table of Significant Drill Results

Nyngan Scandium Property - Resource Dill Results (68 hole Results)Hole From To Width Sc Grade Section Hole From To Width Sc Grade Section

Number m m m ppm CDA Number m m m ppm CDANA-52A 22 30 8 348 499200E NA-101 16 40 24 260 499550ENA-54 19 45 26 184 NA-100 14 32 18 248

NA-99 13 34 21 219NA-72 17 21 4 179 499300E NA-98 14 40 26 236NA-64 15 31 16 350 NA-97 15 31 16 235NA-63 15 53 38 248NA-56 24 49 -14 174 NA-67 15 28 13 252 499600E

NA-68 14 41 27 183NA-114 18 25 7 268 499350E NA-96C 16 40 24 193NA-115 14 24 10 346 NA-69 14 34 20 182NA-116 14 23 9 242 NA-49 16 42 26 242NA-121 14 28 14 412 NA-66 13 40 27 389NA-120 14 40 26 366 NA-60 15 53 38 262NA-113 15 17 2 235 499400E GILRC003 15 25 10 385 499650ENA-71 12 33 21 257NA-51 12 24 12 495 NA-83 14 19 5 211 499700ENA-118 14 33 19 401 GILRC002 14 55 -30 197NA-119 13 40 27 267 GILRC001 11 22 11 176NA-62 13 50 37 279 GILRC013 14 48 -28 330NA-57 49 65 16 240 GILRC012 34 61 27 383

NA-77 20 47 27 248NA-112 17 29 12 168 499450ENA-111 16 29 13 287 NA-82 15 20 5 227 499800ENA-110 14 40 26 299 NA-81 13 42 29 177NA-109 14 35 21 186 NA-80 31 62 31 359NA-108 14 27 13 257 NA-79 22 53 -27 285NA-107 14 28 14 274 NA-78 18 46 -16 194NA-106 16 24 8 169NA-117 15 36 21 342 NA-84 14 28 14 290 499900E

NA-85 17 20 3 201NA-103 18 26 8 294 499500E NA-86 28 53 25 410NA-75 14 35 21 251 NA-87 41 58 17 191NA-104 13 40 27 268NA-74 13 40 27 277 NA-93 20 30 10 212 500000ENA-105 15 35 20 173 NA-92 24 32 8 147NA-70 16 35 19 357 NA-91 44 60 16 202NA-50 18 30 12 261NA-65 16 39 23 316 NA-95 26 42 16 126 500100ENA-61 16 34 18 259NA-58 31 51 20 246


October 2014


11 Sample verification

To the best of the knowledge of Maxel Rangott, the Qualified Person, the samples delivered

to Hazen Research and other testing facilities were bulk samples taken from the original

sample bags which contained drill cuttings for each meter from the drilling program. Some

samples were entirely limonite others were entirely saprolite and some were a combination

of the two hosting clays. Prior to dispatch of the samples to Hazen Research the bags were

stored in a locked, secure building in Nyngan.

Hazen Research received two shipments of laterite material from EMC Metals in 2010. The

first was a set of five small samples, three limonite and two saprolite samples, weighing from

1.4 to 8.6 kg each, which were used in the laboratory scale program. The second shipment

included 741 kg of limonite and 371 kg of saprolite for pilot scale test work.

The limonite and saprolite samples were separately dried and homogenized. Prior to

crushing, 51 kg of limonite and 29 kg of saprolite were pulled and saved as library samples.

Each sample type was then stage crushed to 100% passing 50 mesh (297 micron) and re-

blended. A 10 kg split of each crushed mineralisation type was pulled as a library sample for

further analysis work if needed.

Representative head samples from each lithology were analyzed by inductively coupled

plasma–optical emission spectrometry (ICP-OES). Table 11.1 lists the analytical results. The

limonite sample contained 0.0347 wt% Sc (347 ppm), and the saprolite sample contained

0.0258 wt% Sc (258 ppm).

The first five samples were individually homogenized. Representative splits of each of the

five samples were removed for analysis and testing. Chemical analysis included semi-

quantitative x-ray fluorescence (XRF) scan performed at Hazen Research. This is a useful

tool for quickly screening multiple samples for the presence of elements (including scandium)

and trends in samples, although the results are not quantitative. This was followed by

quantitative analyses for four constituents of interest; scandium, cerium, lanthanum and

phosphorus.

Quantitative analysis of the five samples was performed by an outside laboratory (Huffman

Laboratories, Inc) as a quality control measure, as well as within Hazen Research. The

Huffman analysis included a four acid digestion followed by inductively coupled plasma

atomic emission spectroscopy (ICP-AES) and inductively coupled plasma-mass

spectrometry (ICP-MS) scans. The Huffman results for scandium were coupled with values

provided by EMC at the inception of the project and are in good agreement.


October 2014


Table 11.1 Analysis of Crushed and Blended Head Samples

Element Limonite Saprolite( wt%) ( wt%)

Al Aluminium 9.93 4.41

As Arsenic <0.005 <0.005

Ba Barium 0.042 0.072

Bi Bismuth <0.01 <0.01

Ca Calcium 0.12 1.75

Ce Cerium 0.0129 0.0101

Cr Chromium 0.104 0.148

Cu Copper 0.004 0.004

Fe Iron 27.7 16.8

K Potassium 0.099 0.192

La Lanthanum <0.0025 0.004

Mg Magnesium 0.298 3.16

Mn Manganese 0.51 0.603

Mo Molybdenum <0.001 <0.001

Na Sodium 0.279 0.775

Ni Nickel 0.027 0.124

P Phosphorous 0.035 0.021

Pb Lead <0.005 <0.005

Re Rhenium <0.0005 <0.0005

S Sulphur 0.05 <0.05

Sb Antimony <0.005 <0.005

Sc Scandium 0.0347 0.0258

Sr Strontium 0.007 0.016

Ti Titanium 0.743 0.283

V Vanadium 0.0587 0.0151

Y Yttrium 0.0007 0.0058

Zn Zinc 0.007 0.03


October 2014


Analyses performed by Hazen Research were carried out using four acid digestion followed

by a multi element ICP-AES scan. After substituting some internal standard elements (for

example, Hazen has historically used scandium as an internal standard to adjust instrument

drift) good agreement was obtained for the quantitative analysis, and all subsequent

analytical work was performed at Hazen.

The second shipment consisted of both bagged and loose mineralization in steel drums. The

entire shipment was relocated to poly drums in bags or loose as received. Because they

have been referenced in METCON reports, one bag labelled Batch 3 Gilgai limonite (Report

M1256A) and one bag labelled Batch 2 Gilgai saprolite (Report M1641A) were pulled for

laboratory studies. Each bag was separately blended, and splits were removed for head

samples, which were quantitatively analyzed at Hazen. Results are shown in Table 11.1.

The results were compared with prior analysis reported by METCON and determined to be

in good agreement.

A second split of the Batch 3 limonite was ground and screened to 100% passing 50 mesh,

297 micron and used for the extraction test work.


October 2014


12 Data Verification

12.1 Quality Control Measures and Procedures It is considered by Maxel Rangott (Principal for Rangott Mineral Exploration Pty Ltd, ‘RME”),

the Qualified Person, that confidence can be placed in the resource figures quoted in Table

14.4. The analysis of the samples was conducted by ALS Chemex, applying methods that

Jervois has been using with confidence for some years after various check analyses in other

laboratories. ALS included standards, blanks and duplicates during the laboratory analysis

and provided certificates to verify this practice. There were no anomalies reported from this

control measure. Assay checks had been done previously on laterite samples

(predominantly from Jervois’ nickel/cobalt laterite deposits at Young, NSW), comparing ALS

Laboratories values and Becquerel Laboratories Neutron Activation assays at Lucas Heights,

NSW, and in Canada. Those assay results compared favorably.

The drilling program and sampling techniques on the Jervois 2006 (and 2008) drill program

holes were supervised by RME personnel, including the recording of sample recoveries

captured on the drill log sheets. The densities of the four lithologies have been carefully

analyzed and compared with the Jervois measured density figures for other laterite projects.

The results compare closely.

The drill hole locations were surveyed using a Garmin GPS12 XL instrument and a marker

pin inscribed with the drill hole number was placed in the collar. At the end of the drilling

program, Consulting Surveyors completed a controlled survey of the drill hole collars using a

Differential GPS system.

12.2 Limitations The database and information prepared on behalf of Jervois Mining Limited by RME, and

verified by Maxel Rangott, the Qualified Person, relies on the industry professionalism of

information supplied by Anthony Jannink of Douglas McKenna and Partners, Duncan Pursell

of Jervois Mining Limited and ALS Chemex Australia. No discrepancies were noted in the

source data, indicating that Jervois Mining Limited employed significant internal QA/QC

while compiling it.

The data has been assembled with utmost care for accurate transfer and data entry by the

parties involved. However, it was not possible for Max Rangott to verify all of the data.


October 2014


13 Mineral Process and Metallurgical Testing

13.1 Proposed Flow Sheet The proposed flow sheet for scandium oxide recovery from the Nyngan laterite deposit is:

• Open pit mining

• Mill feed de-agglomeration in a scrubber and ball mill

• High pressure acid leaching in two batch autoclaves

• Solid-liquid separation

• Solvent extraction of scandium using a primary amine

• Stripping of the amine with hydrochloric acid solution

• Precipitation of scandium oxalate by oxalic acid addition

• Calcination of the scandium oxalate to produce scandium oxide

13.2 Sample Selection and Delivery Dr Nigel Ricketts was provided a number of metallurgical test work reports for review by

EMC Metals Corporation to examine the relevance of the metallurgical test work conducted

to date to the proposed flow sheet. To the best of his knowledge, the samples delivered to

Hazen Research and other test facilities that were used in the test work programs were bulk

samples taken from the original sample bags which contained drill cuttings for each meter of

the drilling program. Some samples were entirely limonitic whilst others were entirely

saprolitic and some were a combination of the two hosting clays. Prior to dispatch of the

samples to Hazen Research, the bags were stored in a locked, secure building in Nyngan.

Hazen Research received two shipments of laterite material from EMC Metals in 2010. The

first was a set of five small samples, three limonite and two saprolite samples, weighing from

1.4 to 8.6 kg each, which were used in the laboratory scale program. The second shipment

included 741kg of limonite and 371kg of saprolite for pilot scale test work.

The limonite and saprolite samples were separately dried and homogenised. Prior to

crushing, 51kg of limonite and 29kg of saprolite were extracted and saved as library samples.

Each sample type was then crushed to 100% passing 50 mesh (297μm) and re-blended. A

10kg split of each crushed sample type was saved as a library sample for further analysis

work is needed.


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Representative head samples from each lithology were analysed by inductively coupled

plasma-optical emission spectrometry (ICP-OES). The results are shown in Table 10.1 with

the limonite sample containing 347ppm scandium and the saprolite sample 258ppm.

The five small samples were individually homogenised and representative splits of each of

the samples removed for analysis and testing. Semi-quantitative XRF scans were performed

at Hazen Research, followed by quantitative analysis of minor elements not considered

reliable in the XRF scan, namely scandium, cerium, lanthanum and phosphorus. These were

checked by an outside laboratory (Huffman Laboratories, Inc.) as a quality control measure.

The second shipment consisted of bagged and loose material in steel drums. Samples

referenced in Metcon reports labelled as Batch 3 Gilgai limonite and Batch 2 Gilgai saprolite

were used for laboratory studies. The results from these samples are shown in Table 11.1. A

second batch of Batch 3 limonite was also used in some of the extraction work.

13.3 Acid Bake Test Work A substantial body of test work has been conducted on the acid bake process by CSIRO and

Hazen Research for recovery of scandium into solution. Whilst this process route has

subsequently been rejected by EMC Metals due in part to the high sulfuric acid requirement

and gas scrubbing requirements, it is of note because this process has been used to

produce leach solutions for the majority of the solvent extraction and subsequent scandium

oxide recovery test work.

While the acid bake process can achieve similar leach recoveries and produce leach

solutions of similar scandium tenor, there is a substantial difference in the solution chemistry

between the two processes. In particular, the levels of iron and aluminium in solution are

much lower in the HPAL process route. This should result in less onerous requirements on

the subsequent solvent extraction and precipitation processes for HPAL leach solutions.

13.4 Solvent Extraction Test Work The solvent extraction test work has been conducted by a number of testing laboratories in

the final development of the process.

CSIRO reported in March 2010 (DMR-3370) on a range of process technology

developments for the Nyngan scandium mineralization including acid baking, flotation of

clays, solvent extraction and precipitation. The CSIRO report examined a number of

potential solvent extraction reagents including the primary amine system currently costed in

this study. This amine is selective for scandium over iron at a low pH that is consistent with

HPAL leach solutions and it was shown that stripping of the amine with hydrochloric acid


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solutions was simple and effective. Extraction and stripping kinetics were consistent with

those required for an industrial operation.

The CSIRO work was somewhat limited though as it only examined extractants for the pH

range that was consistent with the acid bake approach. Further analysis of the results with

an HPAL solution as the feed to solvent extraction reinforces the current choice of primary

amine due to improved extraction of scandium at low pH values along with improved

selectivity over iron.

A comprehensive bench and pilot scale test program was reported by Hazen Research in

June 2011. This work involved the use of the primary amine of interest. The feed solution

was produced from the acid bake process and analysed at about 58 mg/L of scandium.

Bench scale shake-out tests were used to developed extraction and stripping isotherms that

were used to determine the pilot plant configuration. The bench scale tests were also used

to determine the preferred continuous phase and organic/aqueous ratios in the mixers.

The pilot plant operated as a 3-stage extract, single stage wash and 3-stage strip circuit,

identical in configuration to the current circuit reported on in Section 13.1. The addition of an

isodecanol modifier improved the phase disengagement times.

The scandium extraction using this configuration exceeded 99% and the scandium

concentration after solvent extraction achieved 890 mg/L. Using a higher concentration of

organic phase, extractions in the pilot plant achieved 97% and the solution tenor increased

to 2200 mg/L.

13.5 Scandium Oxide Precipitation Test Work CSIRO have reported in their report DMR-3370 in March 2010 that precipitation of scandium

from solution using oxalic acid was effective for producing a scandium oxide product and

their test work produced scandium oxide of 97.45%. In this work, CSIRO conducted the final

work by neutralizing with ammonia solution to pH 1 before adding oxalic acid.

In January 2012, Hazen Research published the results of the scandium precipitation work

which was focussed on improving the scandium recovery from solvent extraction strip liquor

with oxalic acid. Hazen conducted a series of precipitation tests on the strip liquors from the

solvent extraction pilot plant trials, which contained scandium from 0.22 g/L to 1.7 g/L with

significant iron and other impurities. It is important to note that the iron levels in the Hazen

work were appreciably higher than the HPAL liquors proposed in this work (up to 15 g/L

compared to 1.15 g/L proposed).


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In a single stage process, Hazen was able to produce calcined scandium oxide of greater

than 97% purity. A two-stage process was also examined that could produce 98-99.5%

scandium oxide purity, but with significant recovery loss requiring a recycle stream.

The process adopted in this work was the alternative process developed by Hazen which

has a hot wash cycle after calcination. This process produced 97.4% scandium oxide

product with 97.7% scandium recovery. The HPAL solution feed offers the promise of lower

iron levels in particular.

Further work on improving product purity was proposed but not further developed. The oxalic

acid to scandium ratio was found to be a critical parameter. Further development of the

precipitation parameters are likely to result in further improvements in the process.

13.6 High Pressure Acid Leach Test Work The previous work on the acid bake route is largely superfluous in consideration of the

process description and flow sheet development outlined in this report. The high pressure

acid leaching (HPAL) route is an alternative to the acid bake route for preparation of

scandium-bearing leach solution. It has the advantage of reducing the iron and aluminium in

the leach solution within the leaching autoclave, making downstream solvent extraction and

scandium recovery easier. Sulfuric acid consumption is also lower using the HPAL process.

EMC Metals provided the results of HPAL test work conducted by SGS Canada. The first of

the reports was dated January 19, 2012 and the second June 14, 2013. The earlier report

looked at both HPAL leaching of limonite and re-leaching of acid bake residue using

samples from the acid bake test program at Hazen Research. The second report examined

only HPAL leaching of limonite and saprolite mineral samples from Nyngan.

Test work at SGS demonstrated that high pressure acid leaching of limonite samples from

Nyngan resulted in leach recovery of up to 87% at 270°C with a 90 minutes residence time,

using a sulfuric acid consumption of 300 kg per tonne of feed. Sixteen tests were conducted

at 2 litre scale.

The comparison work for two stage acid baking provided 85% scandium recovery but with

an acid consumption of around 1000 kg per tonne of feed, although with acid recycling, SGS

believed that ultimately an acid consumption of around 460 kg per tonne of mill feed could

be achieved.

HPAL leaching tests on the acid bake residue showed that 60-70% of the residual scandium

could be recovered but requiring an additional 250 kg/t of sulphuric acid in the HPAL process,

to give a combined scandium recovery of acid bake-HPAL leaching of the residue of 90%.


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SGS examined scandium recovery from solution in a series of 5 tests. Only the first of these

was conducted using HPAL liquor, the rest were conducted with acid bake solution provided

from the Hazen Research test program. The scouting type of work examined hydrolysis,

oxalate precipitation and fluoride precipitation. The work is not relevant to the flow sheet

developed for this current phase of work.

SGS also examined scandium recovery using ion exchange with iminodiacetic resin and

achieved 79% scandium recovery and successfully stripped the resins.

This preliminary phase of HPAL work led to the June 2013 series of work. In this work, both

limonite and saprolite samples were leached and it is relevant that the samples were used

“as is” and not subject to size reduction. The particle size of the limonite was screen sized

and found to be 80% passing 167μm. The saprolite was finer at 80% passing 22μm.

A series of 6 HPAL tests were conducted on limonite, saprolite or a combination of the two.

The final test HPAL6 on limonite is particularly relevant as it was conducted at the best

conditions from the previous work. In this test, 87% recovery of scandium was achieved after

60 minutes to achieve a solution tenor of around 80 mg/L of scandium with an acid

consumption of 265 kg/tonne of limonite.

Whilst further test work is required on samples of mineralised blends that are representative

of a mine plan and with further definition of leach variables, it is the opinion of Dr Nigel

Ricketts that the HPAL process has been proven to be technically viable for production of a

scandium-bearing leach liquor for subsequent upgrading and eventual scandium oxide

recovery.

13.7 Flotation Test Work Whilst not a part of the current process under consideration in this report, CSIRO examined

the possibility of upgrading the mill feed by flotation of either the clay minerals or the goethite

matrix containing the scandium. Neither method was successful.

ArrMaz Custom Chemicals also conducted flotation trials and supplied samples to Hazen

research for analysis. The results of these trials also showed poor results in scandium

upgrading using flotation.

13.8 Ion exchange Test Work Whilst not a part of the current process under consideration in this report, Hazen Research

has conducted a body of work for EMC Metals on ion exchange for the recovery of scandium

as a replacement for solvent extraction. This has included some resin-in-pulp studies on the


October 2014


water leach after the acid bake approach. Ion exchange results are promising and further

work on this process variant is on-going.

13.9 Future Test Work The following test work is recommended for inclusion into subsequent engineering study

work to reduce the technical risk in the flow sheet development and to examine options to

simplify the circuit and to further enhance financial outcomes:

• Mill feed physical handling properties should be investigated by a suitably qualified

organization such as TUNRA.

• Samples of limonite that represent the first years of production from the high grade

corner of the deposit should be examined to determine their leaching characteristics.

The leach response of all elements participating in the leach reactions should be

measured.

• Further examination of likely water quality and the seasonality of water quality should

be examined for its effect on the process.

• Laser particle sizing should be used to determine the particle size of the limonite

rather than the simple screening analysis used by the laboratories to date.

• De-agglomeration (scrubbing) and screening test work should be conducted to

determine the potential for upgrading the feed to leaching and rejection of barren or

low grade coarse material.

• Viscosity and settling characteristics of all slurry streams around the proposed

process plant should be determine, in particular final neutralized slurry

• The effect of raffinate recycle on in-situ leaching within the Leach Feed Storage Tank

should be examined for acid consuming species such as magnesium as well as for

scandium.

• Further HPAL work should be conducted using a number of variables including

temperature, slurry density, the effect of chlorides and residence time, using feed

solution chemistry provided by the METSIM model

• The possibility of using finely ground saprolite instead of lime should be examined for

the partial neutralization before solvent extraction.

• The need for partial neutralization before solvent extraction needs to be examined as

indications are that it may not be necessary (i.e. conduct some extraction test work at

higher feed solution acidities)

• The replacement of ammonium hydroxide for partial neutralization by sodium

hydroxide or magnesium hydroxide should be considered to eliminate the need for

ammonia on site


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• Further work on different wash solutions for improving the quality of the scandium

oxide product should be examined.

• The choice of organic extractant should be re-visited to determine if a higher quality

product can be produced with a different extraction reagent.

• Solvent extraction tests should be conducted with the new solution chemistry from

the updated METSIM model.

• Solvent extraction stripping tests should be re-examined in light of the increased

organic loading of scandium to determine whether a lower strength hydrochloric acid

solution can be used, with and without added sodium chloride as an alternative to

sodium hydroxide.

• Re-cycle and re-acidification of the scandium strip solution needs to be examined in

further detail to minimize hydrochloric acid loss.

• A systematic examination of solvent extraction modifiers should be conducted to

determine which modifier provides the best phase disengagement behavior in both

the short term and in longer term contact trials.

• Filtration testing on the pressure acid leach residue should be conducted so that

filtration as an alternative to the CCD circuit can be examined.


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14 Mineral Resource Statements

14.1 Resource Calculations Intersection Lengths (for each regolith type) and their grades were obtained from the figures

entered on the 2006 drill-out program log sheets (drill holes NA54 to NA121). The 2006

holes drilled across the deposit were at two spacings - 50 meters and 100 meters. Selection

of the area drilled at 50 meter spacings was based on low overburden thickness, scandium

values for earlier holes obtained using a Niton portable analyser (which subsequently proved

to be unreliable), and the visual quality of the limonite horizon of the regolith - information

obtained from prior drill chip samples and drill logs.

Classification of the regolith mineralization types, selection of the density and grade data and

calculation of the resource figures were carried out by Mr Anthony Jannink, M. Arts, 1964

(Cambridge), FAusIMM, a very experienced geologist who had evaluated a number of

lateritic nickel-cobalt deposits in Australia, and who in 2006 was a director of Jervois.

The 50 meter spaced drilling program (25 meter sphere of influence for each hole) is

considered to be sufficiently close spaced to justify the resources in that area to be classed

as ‘Measured’ under the NI 43-101 guidelines. The remaining 100 meter spaced drilling

resources have been labeled ‘Indicated’ and have a 50 meter zone of influence. No further

resources outside this drilled pattern were considered for the resource calculation.

The resources have been calculated by plan polygonal methods for each of the four

resource lithologies - haematite, limonite, saprolite and weathered bedrock. To be included

in the resource calculations, the sample intervals for each regolith category had to exceed

100ppm scandium in grade, and be at least 2 meters in thickness. The density figures used

(Table 14.3) are based on corresponding weights of the samples produced from the drill

holes and the assumed hole volume of 0.006207167 cubic meters per meter of hole drilled.

Guidance has also been taken from the experience of Jervois with other NSW laterites,

especially at their Young and Port Macquarie projects. At Young, densities were measured

from diamond drill core and are shown as a comparison to those calculated for the Nyngan

resource.

Samples that were obviously too large or too small or were wet/damp/contaminated were

excluded from the calculations. The calculated density figures are shown on the following

table and their weighted averages shown at the foot of the table. To obtain the lithotype

densities adjustments were made by making moisture content corrections. The figures given

in the table are those from the Jervois Young laterite deposits. In recent metallurgical test


October 2014


work at Metcon, Brookvale, NSW, the 15% figure for limonitic regolith was confirmed in the

laboratory.

The resultant calculated densities compared with the figures used at the nickel/cobalt laterite

at Young are shown in Table 14.1.

Table 14.1 Calculated Densities

Resource Hematite Limonite Saprolite Bedrock

Nyngan (Sc) 2.02 1.63 1.41 1.75Young (Ni/Co) 2 1.7 1.8 2.1

The figures used for the Nyngan lithologies were believed to be conservative. Overburden

figures quoted in this report are indicative and not based on mine plan design. The

resources were calculated by plan polygonal methods for each of the four regolith categories

- haematitic, limonitic, saprolitic and bedrock. The volume of each block is the polygonal

area times the drilled thickness for that category (see Plans NY-111, 112, 113 and 148).

The overburden volume was calculated as the polygonal plan area for each drill hole times

the depth to top of mineralization. Internal waste was treated in the same way – polygonal

plan area times the distance between upper and lower Mineralization boundaries. Using the

above parameters, the resource figures in Table 14.1 were calculated. These resources are

further defined in Tables 14.4 and 14.5, where the figures are given for all the elements

assayed for each of the lithology categories.

The resource to be first exploited will be the limonite measured resource of 1.5 million

tonnes at 330 ppm scandium. This resource unit is the shallowest (overburden of 12-15

meters) and richest. The plans show the location of the measured and indicated categories.

Table 14.2 Resource Grade

Nyngan Project OverburdenNI 43-101 Resource Summary Tonnes Grade Cut-Off Sc Ratio

Category (ppm Sc) (ppm Sc) (t/t)

Measured Resource 2,718,000 274 100 0.81:1Indicated Resource 9,294,000 258 100 1.40:1

Total Resource 12,012,000 261 100 1.10:1

NI 43-101 Technical Report on the Nyngan Gilgai Scandium Project, Jervois MiningLimited, Nyngan, New South Wales, Australia, dated March 2010, (Rangott Mineral Exploration Pty Ltd).


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Table 14.3 Density Calculations


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Table 14.4 Nyngan Property – Total Resource Calculation


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Table 14.5 Nyngan Property – All Categories - Resource Calculation Sheet


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14.2 Significant Assay Results Table 10.1 of this report shows all of the significant scandium intersections by Section and

includes some holes drilled by prior explorers which contribute to the resource figures. The

figures do not include those from a confirmatory drilling program carried out in 2008. The drill

intercepts include all lithologies and are true widths.

Fifteen elements were analyzed by ALS Chemex using the following methods:

• ME-ICP61s - up to 27 Elements by four acid ICP-AES

• PGM-MS23 - Pt, Pd, Au by 30g charge fire assay with ICP-MS finish


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15 Reserve Estimates

No Mineral Reserve is claimed for the Nyngan Scandium Project.


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16 Mining Methods

The tertiary laterization of the Nyngan Gilgai Complex has produced a fairly standard laterite

profile as outlined below:

• Hematitic clay,

• Limonitic clay,

• Saprolitic clay,

• Weathered bedrock,

• Fresh bedrock.

The scandium-bearing material is essentially found in the limonitic and saprolitic clays,

although it is believed that there may be minor amounts of the scandium mineralization

contained in the bedrock. Weathering can extend up to 65 meters into the bedrock. The

hematitic clay carries little to no grade and averages 12 meters in thickness. Therefore, the

initial mining operation requires the stripping of the waste overlaying the scandium-bearing

clays.

16.1 Geologic Modelling

The deposit consists of scandium and platinum distributed within the weathered profile

developed over a mafic to ultramafic bedrock sequence. The economic mineralization is

confined to the hematitic clay, limonitic clay, saprolitic clay and weathered bedrock domains.

Given the metals have been mobilized through the weathered profile, enrichment has

occurred leading to economic accumulations of scandium. Given the emplacement method

of the mineralization, the mineralized zones tend to have near horizontal orientations

however zones consistently pinch and swell depending on local lithological, hydrological and

weathered profile conditions. Based on the high quality of the geology logging data and

confirmation of collar locations, the geological interpretation is deemed to be sound and

spatially valid.

16.2 Block Model Design for Pit Optimisation

The existing 2010 project resource estimate utilized a traditional polygonal technique,

whereby polygons were drawn around each drill hole to define the zone of influence of each

hole. The assay interval for each mineralized domain within each polygon was then used to

assign the average grade for each individual domain polygon. The weighted average sum of

all polygons for each zone was then calculated to provide a resource figure.


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There is a preference to use three dimensional modelling software packages, such as

Gemcom SurpacTM, to develop source block models for pit optimizations, rather than to use

polygonal models for this purpose. As a result, the data from the 2010 polygonal model data

was incorporated into a Gemcom SurpacTM block model. Resource data was coded into the

model using DTM surfaces representing the base of the alluvium, hematitic clay, limonitic

clay, saprolitic clay and weathered bedrock surfaces. These surfaces were constructed

using the geology logging information found within the resource database. Grades from the

polygonal estimate were assigned to blocks within the Gemcom SurpacTM block model for

each of the mineralized domains. Specific density information was also coded to the block

model using the DTM surfaces.

The results of the block model conformed closely to the volume estimates of the resource

using the polygonal estimate, validating the compatibility of the data to the two techniques.

The Gemcom SurpacTM block model technique was then able to be directly used by

Gemcom’s WhittleTM mine planning optimization software as the basis for all open pit

optimization studies.

16.3 Optimization Parameters

The parameters used to inform the optimization process were sourced from a combination of

industry average values and estimates supplied by EMC Metals.

• The mining costs used were A$5 per tonne which is in line with similarly sized

operations elsewhere in Australia,

• The sale price of scandium oxide was set at US$2,000/kg as proposed by EMC

Metals Corp,

• The processing rate correlates with a small to medium tonnage operation,

• The wall angles assumed for the pit design have an overall slope of 30°, which is

commonly adopted for this type of operation, given the shallow nature of the pit

design this angle is deemed suitable, and

• The mining recovery is assumed at 95% which is reasonable given the significant

width and continuity of the mineralized envelopes.

One consideration during mining of these zones is that grade control processes will need to

ensure that the upper and lower contacts on each domain are adequately defined to limit

dilution. The mill recovery figure is derived from actual metallurgical test work observations

and therefore is deemed to be realistic. The optimization parameters used are shown in

Table 16.1.


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Table 16.1 Whittle Optimization Parameters


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Figure 16.1 Pit Shell – Year 10

Figure 16.2 Pit Shell – Year 20


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16.4 Overburden Removal Although minor gravels exist throughout the resource, all drilling to date indicates that the

resource will not require drilling and blasting. Shallow ripping using small equipment will

produce material that can be handled by truck and loader. In addition, some further size

reduction will be required before the material enters the process plant.

16.5 Mining and Hauling to Plant The process plant has been designed to treat approximately 250 tonnes per day. Therefore,

the mining operation will be quite small by industry standards. At this daily rate, it is desirable

to campaign mine and stockpile the mined material several times during the year, rather than

attempt to maintain a very small mining fleet throughout the year. It is envisaged that 25,000-

30,000 tonnes of scandium-bearing material will be mined during each campaign. Because

of the clay content of this material, the stockpile will be covered by tarpaulins to prevent the

ingress of rain and also to allow the material to drain and consequently reduce its moisture

content.

No geotechnical investigations have been conducted. All pit designs have been based

around 30° slope angles. The risk of instability of pit slopes is minimized because of the

relative shallow depth of the pit. However, a geotechnical study will be undertaken prior to

the commencement of operations at the Project.


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17 Recovery Methods

Limonite from the open cut mine is crushed to minus 30mm using a roll sizer and de-

agglomerated in a trommel scrubber to which raffinate and process water are added. The

drum scrubber discharge is directed to a screen and any +10mm material is discarded as

coarse rejects. The -10mm is directed to a ball mill operating in closed circuit with a screen

which directs material with a size of 80% passing 300µm to a pre-leach thickener. The

thickened slurry is stored before being leached with sulphuric acid in batch autoclaves. The

leach slurry is thickened and washed in a counter-current decant (CCD) circuit and the final

CCD overflow passes into solvent extraction. An organic phase is contacted with the

pregnant solution and is enriched in scandium. The organic phase is stripped of absorbed

scandium with a hydrochloric acid solution strip. Scandium is recovered from the strip

solution using oxalate precipitation. The scandium oxalate is calcined to produce scandium

oxide product which is packaged for sale.

17.1 Process Description

17.1.1 Feed preparation (Area 1000)

Scandium-bearing laterite will be recovered from the Nyngan mine using open pit mining

techniques and trucked to a run of mine (ROM) ore stockpile.

Material will be reclaimed from the ROM stockpile using a front end loader and added to a

feed bin. An apron feeder then feeds a roll sizer that produces a product of 100% less than

30mm. The crushed mill feed is then conveyed to a trommel scrubber to de-agglomerate the

limonite. The +10mm oversize from the scrubber is rejected to a coarse rejects bin. The -

10mm material is directed to the ball mill discharge sump.

The ball mill will operate in closed circuit with a wet preparation screen being fed from the

ball mill discharge sump pumps. The +300μm oversize from the screen is directed back to

the ball mill feed chute. The underflow from the screen is the leach feed and is pumped to

the leach feed thickener.

Acidic raffinate is added to the drum scrubber and ball mill feed chute. This requires that the

grinding media in the ball mill is ceramic, not steel. All of the feed preparation equipment is

required to be made of materials or coated to be able to withstand acidic conditions.

17.1.2 Feed thickening (Area 1700)

The Leach Feed Thickener will thicken the slurry to 37% solids with the aid of flocculant

addition and the underflow of the thickener will be pumped to one of two, 250 m3 Leach


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Feed Slurry Storage Tanks. Superheated water from the flash down of the autoclaves will be

used to pre-heat the slurry in the tank to 80°C via the use of a spiral heat exchanger. Leach

Feed Thickener overflow is re-used in the trommel.

17.1.3 High pressure acid leaching (Area 2100)

The heated leach slurry will be used to feed one of two batch, mechanically agitated,

titanium-lined autoclaves operating in parallel. Slurry will be added and the pressure of the

autoclave will be increased by adding high pressure steam until the pressure has reached

6,300 kPa and the temperature has reached 212°C. Once the autoclave has reached 212°C

in the heat up cycle, the required amount of 98% sulphuric acid is added. The heat of mixing

of the acid raises the temperature to near the final leach temperature of 270°C.

Leaching continues for 60 minutes in the agitated autoclave. At the end of the leach cycle,

the pressure is relieved via the operation of a valve in the gas space above the slurry and

the autoclave pressure vents to a blast spool and then to a high pressure steam condenser.

Water is added to the condenser and this hot water is then stored in a superheated water

tank stored under pressure at 170°C before being used for a variety of heating tasks around

the plant. The autoclaves are depressurised in this manner until the pressure has reach 860

kPa.

Final depressurisation is achieved by opening the discharge valve near the bottom of the

autoclave, emptying the slurry into the flash vessel. A small heel will remain in the leach

autoclave. Once the transfer of slurry to the flash vessel is complete, the flash vessel is

vented to the atmosphere via a vent scrubber.

17.1.4 CCD circuit (Area 3000)

The leach slurry is thickened to 45% solids and washed of scandium-bearing liquor in a 6-

stage CCD circuit to reduce soluble losses of scandium in the leach residue. The six

thickeners in the circuit operate in a conventional manner producing a final leach residue

which is then subject to neutralization before tailings disposal and a clarified solution from

CCD-1 for feed into solvent extraction. Some of the raffinate from solvent extraction is

returned back into CCD-6 along with vent scrubber bottoms.

17.1.5 Partial neutralization (Area 4000)

The pregnant leach solution (PLS) from CCD-1 overflow is recombined with recycled

gypsum solids and then reacted with milk of lime to bring the pH up to a value of 0.5 prior to

solvent extraction. The two pre-neutralization tanks have the added function of cooling the

slurry before solvent extraction.


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The partially neutralized slurry is then thickened and filtered on a belt filter to produce a clear

solution to feed into solvent extraction. The PLS is further cooled to 45°C before being

added to the PLS Storage Tank.

The belt filter product is largely gypsum and is stockpiled before being added back into the

tailings stream.

17.1.6 Solvent extraction (Area 5000)

Scandium is extracted from the pregnant leach solution by contact with an organic extractant

dispersed in a solvent kerosene product. When contacted together, the scandium transfers

from the aqueous phase to the organic phase. Three stages of counter-current extraction

using mixer-settler units are required. The solution that is stripped of scandium (raffinate) is

passed through activated carbon columns to remove any entrained organic phase and then

returned to various areas of the feed preparation and CCD circuits.

The loaded organic is scrubbed with a water-acid-sodium sulphate solution to wash the

organic phase. It is then subjected to stripping of scandium with 3 molar hydrochloric acid

solution in three counter current mixer–settlers.

The loaded strip liquor (LSL) is then passed through a dual-media filter to remove any

entrained organic phase before passing into scandium recovery. The stripped organic

extractant is regenerated with sulfuric acid solution and then returned to the extraction circuit.

17.1.7 Scandium oxide recovery (Area 6000)

Scandium is recovered from the LSL by reacting with oxalic acid. Before precipitation, the pH

is adjusted to 1.3 with ammonium hydroxide solution. Oxalic acid is added in the three

Oxalate Precipitation Tanks at a temperature of 65ºC. The resultant slurry is settled in a

settling tank before being added to the Oxalate Filter. After washing with water, the filter

cake is an impure scandium oxalate product. The scandium oxalate is converted to

scandium oxide by calcining at 900°C.

The scandium oxide calcine is then re-leached with demineralised water in the Scandium

Oxide Soak Tank and filtered and dried. The dried product is then manually added into steel

drums as final product.

17.1.8 Final neutralization and tailings (Area 7000)

The underflow from CCD6 Thickener becomes the final residue to tailings disposal. Before

disposal, the leach residue is reacted with milk of lime in two stages. The first stage

neutralizes the slurry to pH 6 and the second stage to 8.5. The neutralized slurry is then

thickened to 40% thickener underflow density before being pumped to a lined tailings


October 2014


storage facility. Decant water from this facility is returned to the circuit or is pumped to a

lined evaporation pond.

A lined evaporation pond is provided for evaporation of excess process water, or other saline

waters.

17.1.9 Water management

The feed water supply to the plant is raw water from the pipeline that services both Nyngan

and Cobar townships. This is near-potable water and the pipeline passes within 5 km of the

proposed process plant location and is pumped to raw water tanks on site.

The autoclaves are heated by steam, requiring the installation of a steam boiler. The batch

nature of the autoclaves means that the boiler duty needs to deal with intermittent steam

load. The raw water for the boiler requires demineralization in a reverse osmosis (RO) water

treatment plant. The brine from the RO plant is directed to the evaporation pond.

RO water is also used as feed to a package potable water facility which consists of filtration,

ultraviolet sterilisation and chlorination prior to storage in a potable water storage tanks. It

will then be distributed around site in a pressurised ring main.

Dedicated electric and diesel back-up fire water pumps supply water from the raw water tank

to the firewater mains throughout the plant site.

17.1.10 Reagents

A number of reagents are required for the process plant. These will all arrive by road

transport.

17.1.10.1 Reagent storage

Bulk reagent supplies will be delivered to site in a mixture of bulk tanker, drums, bulka bag

and transport containers. Reagents will be separated according to storage requirements,

chemical properties and potential hazards. All acidic reagents will be stored in bunded

facilities with acid-resistant concrete floors. Special consideration will be given to storing of

the organic chemicals for solvent extraction in a dedicated facility with spark-proof motors for

any pumping requirements.

17.1.10.2 Sulfuric acid

Sulfuric acid is the most significant consumable in the flow sheet. It will be trucked to site

from a coastal location in B-double trucks. It will be supplied as 98% strength and will be

offloaded from the trucks into a storage vessel of carbon steel. It will be pumped to the

autoclaves at the 98% level. The site plan allows for 10 days of storage on site.


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17.1.10.3 Hydrochloric acid

Hydrochloric acid is used in the stripping circuit of the solvent extraction plant. It will be

delivered to site in bulk transport at 33% concentration and be discharged to a storage tank

of 10 days capacity.

17.1.10.4 Lime

Quicklime will be delivered to site in either 1 tonne bulka bags or bulk transport. The lime will

be slaked in a vendor supplied package utilising tailings decant solution. The 20% w/w milk

of lime slurry will be continuously circulated via a ring main to Partial Neutralization, Final

Neutralization and the Ammonia Recovery Lime Reactor.

17.1.10.5 Flocculant

Space for up to three different flocculants has been allowed for in the plant design. A number

of thickeners and CCD thickeners are present in the design. Each flocculant will be supplied

in 25kg bags and be made into working solutions using vendor package jet-wet dosing

systems.

17.1.10.6 Extractant

A primary amine extractant will be used for extracting scandium from solution. It will be

supplied in 1 m3 IBC containers and will be used at 100% strength

17.1.10.7 Modifier

Exxal 10 will be used as the organic extractant modified to improve the disengagement of

the organic and aqueous phases in solvent extraction. It is likely that it will be supplied in

200L drums and will be added to the organic make-up circuit at 10% of the organic phase.

17.1.10.8 Diluent

The primary amine extractant will be diluted into Shellsol D70 diluent. The diluent will be

delivered in 1 m3 IBC containers and will be delivered at 100% strength to the organic make-

up circuit.

17.1.10.9 Oxalic acid

Oxalic acid (C2O4H2) will be used to precipitate scandium from solution. Oxalic acid is a

white powder and will be delivered in bulka bags. The bulka bags will be emptied into a

mixing tank and demineralised water will be used for make up the solution to the desired

concentration. The arrangement will consist of a mixing and storage tank.

17.1.10.10 Sodium hydroxide

Sodium hydroxide (NaOH) will be used to react with HCl in the solvent extraction stripping

circuit to achieve the desired acid to chloride ratio in the strip solution. It will be delivered in


October 2014


bulka bags. The bulka bags will be emptied into a mixing tank and demineralised water will

be used to make up the solution to the desired concentration. The arrangement will consist

of a mixing and storage tank.

17.1.10.11 Sodium sulfate

Sodium sulfate (Na2SO4) will be used as an additive to the solvent extraction organic wash

and regeneration solutions in the solvent extraction stripping circuit. It will be delivered in

bulka bags. The bulka bags will be emptied into a mixing tank and demineralised water will

be used to make up the solution to the desired concentration. The arrangement will consist

of a mixing and storage tank.

17.1.11 Services

17.1.11.1 Plant air and instrument air

A rotary screw compressor (duty and standby) will supply plant air and instrument air via air

dryers to dedicated air receivers. All compressed air on site will be instrument grade.

17.1.11.2 LPG storage and distribution

Liquefied petroleum gas (LPG) will be delivered to site in bulk and transferred to a storage

tank on site. LPG will be used predominantly to run the steam boiler.

17.2 Process Design Criteria Based on the metallurgical test work conducted to date, a Process Design Criteria for the

operation was developed. The process plant is planned to be located just to the west of the

mine site. It is planned that mining will be conducted on a contract campaign basis and that

a stockpile of mill feed will exist at both the mine location and at the process plant site.

The process plant is planned to be operated 24 hours per day, 365 days per year as shown

in Table 17.1 which shows a summary of the key process design parameters.


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Table 17.1 Summarised Process Design Criteria

Process Design Criteria Metric Rate

Operating Days per Calendar Year days/year 365

Operating Hours per Day hours/day 24

Hours per Year hours/year 8,760

Crushing tlant Availability % 33

Crushing tlant hperating Hours per Year hours/year 2,891

Crushing tlant Ceed Rate tonnes/hour 25.9

Plant Availability % 85.6

Plant Operating Hours per Year hours/year 7,500

Plant Feed Rate dry tonnes/hour 10

Feed Source type limonite

Feed Head Grade ppm Sc 371

Autoclave Availability % 85.6

Autoclave Operating Hours per Year hours/year 7,500

Autoclave Feed rate dry tonnes/hour 10

Autoclave Operating Temperature ºC 270

Batch Leach Time minutes 60

Batch Leach Cycle Time minutes <120

Solvent Extraction Configuration type 3E-1W-3S

Solvent Extraction Reagent type Primary amine

Scandium Precipitant type Oxalic acid

Final Product Purity % Sc2O3 97-99%

Recovery to Final Product % 84.4

Final Product Production Rate kg/annum 37,975

17.3 Process Flow Sheet A simplified process flow sheet in shown in Figure 17.1. The plant is configured into the

following WBS structure:

Area 1000 Feed preparation

Area 2000 High pressure acid leaching

Area 3000 CCD circuit

Area 4000 Solvent extraction

Area 5000 Partial neutralization

Area 6000 Scandium oxide recovery


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Area 7000 Final neutralization and tailings

Area 8000 Reagents

Area 9000 Services

17.4 Plant layout The plant layout has been conducted to a preliminary nature and is shown in Figure 17.2.

The vessels have been sized according to scale as per the detailed mechanical equipment

list developed by Larpro for the project.

Preliminary sketches of the elevations of larger process equipment were developed for

estimating of structural steelwork and concrete quantities, although full engineering drawings

have not been developed. This sketch is shown in Figure 17.3.

The use of buildings has been kept to a minimum. The autoclaves, CCD circuit and SX

circuit are all located within acid resistant concrete bunds but have no roof over them. The

scandium recovery circuit is enclosed in a building to minimise contamination from dust.

The flammable reagents largely associated with the solvent extraction circuit are located in a

dedicated bunded area away from the main plant. The acids are located together in a

bunded area with an acid resistant concrete floor.

LP gas supply is located close to the boiler. Raw water supply will enter the site from the

north, and is expected to be located within the easement created by the entrance road from

the Barrier Highway.

The CCD thickeners have been designed to be all at the same level on steel supports.

The autoclaves will be mounted vertically. A steel support structure around the autoclaves

and pressure let down vessels has been included for ease of maintenance, particularly any

high pressure valves.


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Figure 17.1 Simplified process flow sheet


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Figure 17.2 Proposed plant layout


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Figure 17.3 Preliminary sketch of autoclave layout


October 2014


17.5 Power Requirement Based on the mechanical equipment list and efficiency factors, the power requirement for the

process plant is 1.53 MW with a continuous average usage of 0.91 MW. The process plant is

very close to power infrastructure due in part to proximity to the 102 MW solar power plant

being built nearby by AGL and First Solar. Both high voltage (132kV Nyngan-Cobar line) and

medium voltage power lines pass close by to the project site.

The power load is split between the following areas:

Table 17.2 Electrical Load - Processing Plant

Electrical Load by Plant Process Area

AREA Process DescriptionkW

Absorbed kW Total1000 Plant Feed Preparation 162 1902000 HPAL 169 2833000 CCD 71 1184000 Partial Neutralization 43 775000 Solvent Extraction 45 626000 Scandium Recovery 41 487000 Tailings 76 1988000 Reagents and Lime 57 669000 Water and Air Services 246 487

Total 910 1529


October 2014


18 Project Infrastructure

18.1 Power Supply and Distribution This section describes the proposed electrical installation for the Project. The calculated

electrical load is provided in Table 17.2. This has been calculated from the mechanical

equipment list and has been moderated with factors that deal with utilisation estimates for

the various equipment. The leaching is a batch, intermittent process, so some of the

electrical load will be variable.

18.1.1 Power Source

Power to the site will be provided from connection to the 33kV overhead line which runs past

the site, some 3.5km to the north of the proposed process plant site. This line is owned by

Essential Energy. It is proposed to install a branch off this line running along the main

access road to the process plant. The installation of a 33kV/415V, 3MVA transformer will be

installed at the plant site close to the processing plant.

The electrical supply authority may agree to provide the overhead line and transformer as

part of a supply arrangement. In this case, the connection point will be the 415V terminals of

the transformer. This would reduce the capital cost but the supply rate is likely to be higher

to recover the cost of the installation. This is an item for negotiation during the next phase of

the project.

Supply is enhanced due to the installation of the 112 MW solar power station being

constructed close to the plant site. This will increase the power supply in the region and may

result in improved electrical supply options.

18.1.2 Switch room

A single main switch room will be located relatively central to the main process plant to

minimise the length of cable runs. There is no single large electrical load motor or furnace

that requires location in of the switch room in any particular location. The switch room and

control room are designed to be individual buildings. The switch room can be supplied as a

single module transportable building as can the control room. The switch room will need to

be located at permitted distance from the flammable liquid reagent area.

The switch room would contain:

• Motor control center

• 415V DB

• Control system cabinet


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• Variable speed drives

• Halon gas fire suppression system

18.2 Control System The proposed control system will be a PLC based system with an operator interface unit

such as the Allen Bradley Panel View. A single PLC should have the capacity to control the

entire plant, although this should be reviewed in the next phase of study. The operation of a

number of pressure vessels will require a series of interlocks and safety features that may

require a higher level of control strategy and equipment.

18.3 Communications Communications to the plant site will be provided by the installation of a buried fibre optic

cable extending from the Barrier Highway (neat Gilgai Road turnoff) to the site adjacent to

the main access road. This cable will terminate in the administration building and will provide

connection to Telstra’s WAN for telephone and internet services.

A fibre optic cable will also connect the administration building to the control room. This will

provide communications for telephone, internet, fire alarms and the control system.

18.4 Roads The access road from the Barrier Highway to the plant side will be 6 meters wide and

approximately 5.7 km long. The road will be built as an all-weather gravel type road. It is

likely that the road will be slightly elevated compared to the surrounding terrain due to the

propensity of flooding during periods of heavy rain. It is likely that a “Crown Road” easement

will be acquired for the road. The road will be used for accessing the plant by operating and

maintenance personnel, supply of reagents and consumables and transport of product. It is

planned that the plant personnel will be housed in existing accommodation in Nyngan and

will drive the approximately 20km to and from site every day.

A mine haul road will be constructed for the short distance from the mine to the process

plant site. Plant roads are to be built within the plant boundary and will be all weather gravel

roads.

18.5 Water Water will be provided to the site from the Cobar water service pipeline adjacent to the

Barrier Highway, some 5km from the raw water storage tank at the processing facility. This is

near-potable dam water from the Lake Burrendong Dam, situated between Dubbo and

Orange.


October 2014


Cobar Shire Council receives bulk water supply from the Cobar Water Board. Cobar's raw

water comes from Burrendong Dam via the Macquarie River and Albert Priest Channel,

plus the ground catchment area around the Cobar storages. Water from the Macquarie River

is diverted at Warren via a 73km open channel (The Albert Priest Channel) to the Nyngan

Weir Pools. From here it is pumped via a pipeline 130km to the Fort Bourke Hill filtration

plant. It is this pipeline that will provide water for the Nyngan Scandium Project.

A 200mm diameter HDPE pipe is planned to be installed and buried alongside the new

access road to fill a site based water storage tank of 600 m3. This is a lined steel commercial

water tank. It has been assumed that there is enough pressure in the supply line to deliver

water to the site.

18.6 Site levee Local authorities have requested that a levee be constructed around the site. The area

around Nyngan has been subjected to flooding at times from overflow of the Bogan River. A

levee around the site will avoid ingress of flood waters into the plant site and possible

contamination of flood water with chemicals used in the process plant. The design

parameters of the levee have yet to be negotiated.

18.7 Dams and Ponds The site will incorporate the use of an evaporation pond, a tailings storage dam and a

sediment pond to capture any surface run-off and effluents from the plant site. The

chemicals will also be stored in bunded compounds so that any spills are contained.

The dams and ponds will have dam walls constructed from soil dug up from the body of the

dam and then will be lined with an impervious membrane. Leak detection underneath the

membrane will be used to ensure the integrity of the liner is maintained.

18.8 Plant security A security fence will be built around the process plant. The process plant utilises a number of

high pressure vessels and corrosive liquids and access to site will need to be strictly

monitored and stringent induction of site visitors will need to be conducted. The security

fence will also need to be high enough to keep out grazing stock and kangaroos from

entering the plant site.

The scandium oxide product is a high unit value product valued at around US$2000 per kg.

A one tonne shipment of product is therefore worth US$2 million. However, no special

security requirements are planned for shipping as the product would be very difficult to sell

on the black market and the material from Nyngan is likely to have a chemical signature that


October 2014


will be specific to the Nyngan operation and would be easy to trace. Road transport of

product in sealed steel drums to shipping facilities in a coastal location like Newcastle or

Brisbane is envisaged. Air freight of the product from Dubbo is also a possibility.

A security gate is planned for the south west corner of the plant site as part of the

administration complex. This will comprise the main office, reception, crib room, ablution

facilities and an on-site laboratory. These buildings are planned to be established as

transportable buildings.

18.9 Accommodation Whilst the permanent workforce is small, the availability of rental accommodation in Nyngan

is quite low. It is likely that a small construction camp will be required during construction of

the plant. At the time of construction, the Nyngan solar power project will have been

completed and the large accommodation camp created for this project will no longer be used.

This provides an opportunity for purchase of a part of an accommodation camp that is

already set up in close proximity to the project.


October 2014


19 Market Studies and Contracts

19.1 Current Global Market Size Various independent specialty metals authorities quote global market scandium volumes that

range from 2 to 10 tonnes per year. The source of these estimates most likely comes from

an annual US Geological Survey (USGS) statistical summary for scandium that has pegged

the annual consumption figure at “less than 10 tons” for many years. EMC believes the

current scandium market to be at or above 15 tonnes per year, based on apparent

consumption of oxide in both alloys and SOFC applications. Product sources in Russia and

China are difficult to track into global use statistics, and can take the form of aluminium-

scandium (Al-Sc) 2% master alloy, in addition to scandium oxide. EMC Metals believes the

largest single user of scandium today is Bloom Energy (Sunnyvale, California), and while

their consumption is not publically disclosed, their supply sources would likely fall outside the

USGS data capture (internal sources and China/Russia) and volumes are believed to

approach the USGS global figure.

19.2 Scandium Products Defined Scandium is almost always found in nature in form of a complex oxide. It is in this oxide form

that almost all scandium is sold, and consumed. Scandium oxide is also commonly referred

to as scandia.

Scandium can be purified into pure elemental form as a metal, although technically difficult

and expensive to do so. In this elemental form, scandium metal is principally purchased and

used for scientific and laboratory work. Scandium can also be purchased as a master alloy,

combined usually with aluminium. In this form, Al-Sc master alloy typically has a 98%

aluminium content and a 2% scandium content. Customers wishing to stabilize materials

against heat would purchase scandia, and customers wishing to alloy scandium with

aluminium would purchase an Al-Sc master alloy. Master alloy manufacturers would make

their product using scandia. Electrical applications and lighting usually require and specify

99.9% purity, while alloying and heat stabilizing applications should be satisfied by 95-98%

grades. Scandium metal and oxide grades above 99.9% purity are reserved for science and

technical exploration of new applications.

19.3 Scandium Market Pricing There is no central quoted market price or clearing house for scandium today. Scandium

oxide (and metal) sales take place between private parties at undisclosed prices. Quotes for


October 2014


oxide product are influenced by quality specification (grade), volumes required, availability

through thin supply channels, and of course demand at any point in time.

Grade parameters are the single most important variant in oxide prices, for two reasons;

1. Quality upgrades are expensive and can negatively impact overall recoveries, and

2. It is technically challenging to make higher purity product, and the capability to

upgrade to very pure grades is not widely possessed.

High quality oxide is considered to be 99.9% grade or higher, as required for electrical

applications. Aluminium alloy applications do not require this grade of oxide, and can be

successfully manufactured from master alloy formed with product grading 95-98%. The

nature of the trace contaminants also matters, with some being more problematic than

others in specific applications. Radioactive elements, or metals that interfere with electrical

applications in the case of solid oxide fuel cells (SOFCs), are particular problems. Certain

elements in very minute quantities can disrupt the surface quality of very thin rolled

aluminium alloys. These scandium oxide quality issues aside, discounts for lower grade

product have greatly diminished lately, due to the current tight supply for any grade of oxide

product.

The USGS data sheet has provided an influential reference in defining the apparent price for

scandium oxide and scandium metal. The USGS posted prices that were notoriously low in

the 2008-2011 timeframe, as real market pricing during this period was demonstrated to be

considerably higher. In fact, the price change suggested by the 2011 USGS revisions were

actually more gradual and had happened sooner than the information in Table 19.1

otherwise indicates.

The USGS historic price estimates, as referenced below, were established by canvassing

traders and specialty metals sellers annually for offered prices, and they represent small

quantity sales only.


October 2014


Table 19.1 USGS Historic Published Pricing for Various Scandium Products

USGS Pricing Statistics Annual Estimated Pricing for Scandium ProductsScandium Products (US$) 2008 2009 2010 2011 2012 2013

Sc Oxide 99.0% purity-per kg $900 $900 $900 $900 n/a n/a99.9% purity-per kg $1,400 $1,400 $1,400 $3,700 $3,700 n/a99.99% purity-per kg $1,620 $1,620 $1,620 $4,700 $4,700 $5,000

Sc Metal - per gram $152 $155 $158 $163 $169 $175

AL-Sc 2% Master Alloy-per kg $74 $74 $74 $220 $220 $155

Source: USGS Mineral Commodity Summaries, revised annually for scandium.

A call to Stanford Materials Corp., the US supplier referenced in the footnotes of the USGS

Commodity Summary data sheet as a source of scandium quotations, confirmed (October 2,

2014) the current oxide price to be consistent with the price in the table above. Interestingly,

the Stanford website quoted US$1,350/kg for 99.99% oxide on this day, but direct discussion

with the trader indicated their web price to be incorrect, and noted recent sales had been

executed at prices over US$5,000/kg. Current prices on the Alibaba Group Holding Limited

(HK) website for 99.9% to 99.99% grade oxide range from US$3,500 to US$5,000, ex China

chemical manufacturers.

This data supports a 99.9% (‘three nines’) oxide spot price of around $5,000/kg today,

recognizing supplies are only available in limited quantities. Large quantity (tonnes) oxide

pricing is not available, and no long term sales contracts are known to exist.

19.4 Market Supply – Scandium Sources There is no known primary scandium mining producer today. Most scandium production

comes from by-product recovery from the processing activity associated with production of

other metals, minerals, or rare earths. Scandium can be separated from tailings as a co-

product of other mineral processing businesses, from historic mineral processing tailings

sites, and from waste streams of operating chemical processing facilities, most notably

titanium dioxide facilities (TiO2 pigment plants) and uranium leach solutions.

Current significant scandium producers are located in China and Russia. Those and other

potential sources can be summarized as follows:

• Chinese sources are spread over numerous producing assets. The Bayan Obo REE

(Nb-Fe deposit) mine, host to the world’s largest known rare earth element resource

and located in Inner Mongolia, produces some scandium. Other scandium sources

are located in southern and central China, typically based off leach solution waste


October 2014


streams. China has additional potential scandium by-product sources from iron, tin,

aluminium, and tungsten mining assets, located in a number of Provinces,

• Russian production has traditionally come from scandium content in tailings from the

Zheltye Zvoti mine in the Ukraine, formerly an iron and uranium underground mine,

closed in the 1980s. Stockpiles of scandium oxide and Al-Sc 2% master alloy, from

Russian strategic stockpiles built in the 1970s, continue to find their way onto

commercial markets. UC RUSAL has recently announced their intent to construct a

processing circuit at their Ural aluminium smelter facility to produce up to 2.5 tpy of

scandium oxide from ‘Red Mud’ waste material, for use in alloys at that and other

RUSAL aluminium facilities,

• US and Canadian sources are very limited, and relate to historic fluorite and tantalum

mining and processing facilities. Some (but not all) former tungsten mine tailings are

known to contain potentially commercial amounts of scandium,

• Australia has significant, large scale scandium resource potential in lateritic nickel

and cobalt resources in the States of New South Wales and Queensland. Several

potential scandium mining projects have been proposed, however there are currently

no producing mines and no mines under construction. Certain other Asian lateritic

nickel projects, specifically in Indonesia, the Philippines and New Caledonia share

this scandium by-product potential,

• Madagascar and Norway have potential scandium resources, uniquely occurring in

pegmatite formations containing the mineral thortveitite. There are currently no

operating or proposed scandium mines in Madagascar or Norway.

The Russian UC RUSAL Red Mud project bears some further discussion. If this full project is

indeed built (pilot stage now), it will be the first to attempt to commercially extract scandium

from Bayer Process waste streams formed in the bauxite refining process into alumina. This

process is the most common one for refining bauxite globally, and it generates large

volumes of waste material with low levels of numerous residual metals. Red mud tailings

typically contain 50-110 ppm scandium, but certain tailings locations show concentrations of

150 ppm, depending on the mineralization type and precise process route. The processes

that essentially double the original concentration of scandium (typically 30-50 ppm) also

concentrate numerous other metals, specifically iron, aluminium and titanium, which are

energy and process intensive to separate from scandium. Consequently, scandium recovery

from these environmental legacy residues can be problematic, both as to technical

challenges and cost.


October 2014


19.5 Scandium Applications

Two principal and potential high volume markets await a reliable and expanded supply of

scandium. These two markets are:

1. Solid Oxide Fuel Cells (SOFCs), which are very efficient electrical generation devices

powered by a pure hydrogen source, or by natural gas/methane or a more complex

hydrogen source, and

2. Aluminium-Scandium alloys (Al-Sc alloys), superior performing variants of existing Al

alloy types.

The principle advantages scandium delivers in these two market applications are:

SOFCs – Scandium promotes critical and desired electro-chemical reactions at lower

temperatures, which substantially extends the commercial life of the unit, avoids higher cost

materials for containment, and increases electrical output over competing materials.

Aluminium Alloys – Scandium additions to aluminium alloys promotes grain refinement,

while retaining desirable superplasticity, and makes alloys better respond to precipitation

hardening techniques. These effects substantially increase the strength of aluminium alloys,

while also improving corrosion resistance and retaining weldability.

Other commercial applications for scandium include doping of ceramics for increased

hardness, applications in electrical devices that include laser parts and computer switches,

mercury vapor high intensity lighting, and TV/digital displays.

19.6 Scandium Markets

Scandium markets are directly and indirectly linked to energy prices. High and rising energy

prices promote the use of scandium in numerous applications.

The SOFC market is an emerging market with a revolutionary technology for efficient, clean,

distributed electrical power. While the global power market is enormous, the application for

this form of generation is particularly suited to certain power needs. Stationary power

applications are commercial now, and the industry leader (Bloom Energy) is poised to meet

rapid adoption. This market represents an immediate customer for reliable scandium supply

in the short term, with good growth potential over time and in global markets. The

transportation market is another potential adopter of SOFCs, and while it could be at least as

large, does not appear to be as near-term in technical development.

The aluminium alloy industry is a US$100 billion a year marketplace, and most aluminium

sold today is alloyed with other metals in some form or another to promote improved material


October 2014


characteristics. Scandium represents a well-known additive in this alloy mix, and has

application in all manner of aircraft and automotive applications. Promising research is also

underway on conductivity and applications for high tension transmission lines. Scandium

promises strength, versatility and performance improvements in aluminium that enable

engineers to build higher performance structures. This market is potentially very large, but

should be seen as evolutionary in nature even though aluminium alloys are widely accepted

and integrated into products used today.

19.7 PEA Scandium Pricing Assumptions The economic analysis for this Project contains a US$2,000/kg price assumption, over all

years, covering various grades of product offered from 97% to 99.0%. This price assumption

is predicated on an expectation that multi-year sales agreements can be negotiated and

signed with customers at or above these levels, on average, across several market

segments and preferably with more than one customer in each market segment. Spot pricing

opportunities on smaller quantities in early years will potentially offer considerably higher

pricing levels.

This assumed pricing level of US$2,000 is understood to enable scandium to bring value to

both the SOFC and Al-Sc markets for customers. If scandium is only made available at

today’s high spot pricing, the penetration into these markets will be only a fraction of what it

would otherwise be with more realistic pricing and assured significant supply offered to

markets. Volume uptake and widespread adoption of scandium-enhanced products will

require the assumed level of price to assure competitive advantage against competing alloys

and technologies.


October 2014


20 Environmental Studies, Permitting and Social or Community Impact

20.1 Summary of Results of Environmental Studies An initial “Conceptual Project Development Plan” was developed by R.W. Corkery in

December 2011 to address the relevant environmental issues surrounding this project. This

Plan has subsequently been published by the NSW Government on its website.

The recommendation from the “Concept Project Development plan” concluded to proceed

with the project from an environmental perspective.

Further steps for the development of this plan are to produce an “Environmental Impact

Statement” with supporting documentation as required by the NSW government. This work is

to be completed in a staged process involving relevant State government departments, local

government and community consultation.

The “Environmental Impact Statement” with supporting documentation is expected to be

completed by mid-2015 and submitted to the NSW government for approval.

20.2 Environmental Management Plans Development consent from the NSW state government is required under Part 4, Division 4.1

of Environmental Planning and Assessment Act 1979.

The Project, where practicable, intends to adopt a progressive approach to the rehabilitation

of both mining and processing disturbances.

The Preliminary Impact Assessment of the project has been completed in the following areas,

without discovery of any issues that could interfere with project development:

• Air quality & noise

• Surface Water & ground Water

• Ecology

• Heritage

• Traffic and transportation

• Soils

The relevant sections of the “Conceptual Project Development Plan” of December 2011 by

R.W. Corkery have been condensed in the following sections 20.2.1 to 20.5.


October 2014


20.2.1 Waste and Tailings Disposal

As referred to in section 2.8 of the R.W. Corkery December 2011 “Conceptual Project

Development Plan” adequate provision has been proposed for the management of waste

and tailings disposal.

20.2.2 Site Monitoring

Rehabilitation will involve an ongoing monitoring and maintenance program following

completion of mining-related operations. Areas being rehabilitated would need to be

regularly inspected.

No time limit has been placed on post-mining rehabilitation monitoring and maintenance.

Rather, maintenance would continue until such time as the objectives are achieved to the

satisfaction of the relevant government agencies.

20.2.3 Water Management during Operational Life

The “Conceptual Project Development Plan” proposes to obtain water required for

operational purposes from the Bogan River using a combination of existing and proposed

infrastructure. The Environmental Impact Statement will include further information in relation

to the licensing and infrastructure aspects of the supply of this water.

Property water run-off control will need engineering and management as well. A range of

water management structures are contemplated to ensure:

• That the active sections of the Site are not subjected to flooding,

• That surface water flowing from areas of proposed disturbance is of an appropriate

quality to be discharged, and

• That any water that is not of an appropriate quality to be discharged is retained within

the Site.

20.3 Project Permitting Requirements The following key approvals for the Project will include:

• Development Consent,

• Environment Protection Approval,

• Mining Lease,

• Water Access Licenses,

• Bogan Shire Council permit for Site Access Road,


October 2014


• Dam Safety Approval, and

• Cultural/Aboriginal Heritage review

Post-performance and reclamation bonds are a consideration upon Government granting the

mining lease. Reclamation costs have been directly provided for in project capital costs, but

no bonding costs prior to hypothetical closure in 2035 have been considered.

20.4 Social and Community Relationships Preliminary consultation has commenced with both government agencies, and local

landholders. Government agencies and infrastructure authorities that have been or will be

consulted include the following:

• Department of Planning and Infrastructure,

• Department of Trade, Investment and Regional Infrastructure and Services – Division

of Resources and Energy,

• Office of Environment and Heritage,

• NSW Office of Water,

• RTA,

• Department of Primary Industries – Crown Lands,

• Bogan Shire Council,

• Australian Rail and Track Corporation, and

• Essential Energy.

Negotiations with immediate landholders have commenced, with agreements established

such that environmental studies can commence. Further consultation with immediate

neighbours and the wider community will occur throughout preparation of the Environmental

Impact Statement.

20.5 Mine Closure Requirements

The project requirements for remediation and reclamation are, where practicable, to adopt a

progressive approach to the rehabilitation of disturbed areas.

Procedures to be applied to areas of disturbance associated with the mining activities will be

outlined in relevant Annual Environmental Management Reports and/or any amended Mining

Operations Plans.

The resource and mine life extends well beyond the proposed project duration of 20 years.

Notwithstanding the ability of the resource to support larger mining/processing operations, or

longer terms of operation, or both, an allowance for mine shutdown and site rehabilitation


October 2014


has been included. The financial results in Section 22.9 of this PEA have a US$3M (constant

dollar) allowance in Year 20 to rehabilitate for areas currently related to this mining and

processing project. No offsetting plant salvage values were assumed.


October 2014


21 Capital and Operating Costs

21.1 Introduction The Nyngan Scandium Project is a relatively small development project by mining standards.

The mining activity, at under 300,000 tpy (overburden and resource) is a relatively low

tonnage program, with a simple mine plan, and is well suited to a contractor/campaign

program. The processing facility on-site is, however, relatively technically sophisticated, and

while small in size, does contain a number of steps, process stages, reagent inputs, and will

require high grade materials in design and construction. Much of the process can be

automated, and the day shift workforce is estimated at 10 plus 5 management, so the plant

is designed to take a small team to operate.

The initial capital cost for the project is US$ 77.4M, and the annual operating cost estimate is

US$22.5M.

21.2 Capital Cost Estimate

21.2.1 Summary of the Capital Estimate

Table 21.1 shows a summary of the initial capital cost estimate in Australian dollars and

converted to US dollars as well. Sustaining capital costs are addressed separately.

Table 21.1 Summary of initial capital costs

Nyngan Project NI 43-101 PEA ResultCapital Cost Summary A$ Cost US$ Cost

(Both A$ and US$) (M) (M)

Pre-Stripping Cost $1.7 $1.6

Direct Mechanical CostsProcess Plant Mechanicals $40.8 $36.7

Plant infrastructure $13.1 $11.8Freight and Start-Up Costs $2.3 $2.1

Sub Total Mechanicals $56.2 $50.6

EPCM (18%-Mechanicals) $10.1 $9.1Contingency (20%-inc EPCM) $13.3 $11.9

Owners Costs $1.4 $1.3Working Capital $3.3 $3.0

Total Capital Cost $86.0 $77.4


October 2014


21.2.2 Basis of Estimate – General

Because of the relatively small scale of this project, the use of estimating percentages that

are commonly used throughout the engineering industry were moderated where necessary,

to take into account the small size of equipment at the back end of the process plant. This is

particularly so for the scandium recovery section of the process plant where, output is under

5 kg/hour, and some manual handling of product is sufficient. Many of the tanks are small

enough to employ small industrial and agricultural tanks and piping methods, where

appropriate.

In contrast, HPAL operations require the use of large, insulated pressure vessels made from

special materials. Exotic alloys, stainless steel and titanium have been specified where they

will be in contact with corrosive or hot solutions. Extensive use of FRP tanks and pipes have

been utilized in design and costings wherever possible, for processes operating at

atmospheric pressure.

21.2.3 Estimating Accuracy

The overall estimating accuracy on the PEA is considered to be +/- 30%.

Over 70% of the mechanical and equipment items were sourced from direct vendor budget

quotes. Preliminary designs were conducted to develop quantities for structural steel and

concrete. Specialist piping was developed from a material take-off and factored for the rest

of the plant. Most of the infrastructure items were taken directly from a previous Report done

for management by SNC-Lavalin in 2012, with an accuracy of +/- 35%.

21.2.4 Base Currency and Estimate Base Date

Pricing is based on conditions as at the 16 September 2014.

Most of the project pricing was received from Australian suppliers as A$ quotes. Some of the

equipment, including the twin batch autoclaves, flash vessel, and agitator systems, was

quoted from suppliers in US dollars (4.5% of total) or in Euros (2.5%). All quotes and

estimates were ultimately summarized in US$, at an exchange rate of 1US$=A$1.11

(A$0.90).

21.2.5 Pre Stripping Cost Detail

The mine plan calls for pre stripping 340,000 bank cubic meters (BCM) of overburden prior

to mining resource for mill processing, for a total cost of A$1.7M. This will be done with

contractor resources, at a cost of A$5/BCM. The material moved to initiate the production pit

will be used to build berms, water management levies, and roads on site. An additional


October 2014


A$0.7M is provided for road works, both construction and gravel bedding/drainage material,

as necessary.

21.2.6 Initial Pricing and Quantity Development-Plant Cost

The cost estimating team began the capital cost estimation process by developing an initial

equipment list, in conjunction with the metallurgical team. That list included a mechanical

equipment group, pressure vessels and associated equipment, a plate-work estimate

including chutes and hoppers, storage tanks/requirements, and established kW ratings on all

drives required.

From this initial equipment list, a process plant layout was produced, and an HPAL area

arrangement drawing developed, to more clearly designate pressure vessel relationships.

From these drawings, concrete and steelwork quantities were assessed for each sub-area

within the process plant, after a preliminary design of the area was conducted. In the HPAL

area, specific high pressure pipe-work quantities were calculated from the layout drawings.

Insulation quantities were calculated from the surface area of vessels and large pipes. Key

quantities of structural materials were then estimated, specifically:

• Concrete quantity estimate - 1040 m3

• Structural steelwork quantity estimate - 113 tonnes.

21.2.7 Process Plant Mechanical Equipment

Details on mechanical equipment costs are shown in Table 21.2.

Table 21.2 Summary - Mechanical Equipment Capital Cost Detail

Nyngan Project Larpro 2014 PEA ResultProcess Plant Capital Costs Detail A$ Cost US$ Cost

(Both A$ and US$) ($M) ($M)

Earthworks $0.10 $0.09Mechanical, Plate work, HPAL Piping $29.81 $26.84

Concrete $2.60 $2.34Structural steel $1.30 $1.17

Buildings $0.10 $0.09General Piping (8% of MEL) $2.38 $2.14

Elect. & Instrumentation (15% of MEL) $4.47 $4.02Process Plant Mechanicals Total $40.76 $36.68


October 2014


21.2.8 Process Plant Discipline Pricing

21.2.8.1 Earthworks

Earthworks pricing was taken from a previous study done by SNC-Lavalin, adjusted for

current estimates of labor rates and cost.

21.2.8.2 Mechanical Equipment, Tanks, Platework, and HPAL Specialist Piping

Mechanical items, tanks and specialist piping within the HPAL section, as detailed in the

Mechanical Equipment List, have been individually priced. By dollar value, 70% of this

pricing comes from direct vendor-sourced budget pricing responses, the remaining from

database figures. For the major equipment items, up to 4 suppliers where appropriate were

asked to quote.

In the case of the solvent extraction equipment, a modular design from Outotec was

received incorporating the mixer-settler units, pumps, internal pipe work and electrical fittings

as necessary. Modular designs have been considered for other aspects of the plant, but

have not been sufficiently progressed to be incorporated at this stage.

Erection and installation hours have been estimated from first principles and an overall site

rate of A$226 per man hour has been applied based on recent experience. This figure is a

gang rate and includes all costs of labor, supervision, equipment, contractor’s overhead and

profit, plus any crane support of less than 100 tonnes capacity.

21.2.8.3 Concrete

Concrete has been priced at an average of A$2,500 per cubic meter throughout the plant.

Much of the concrete supply is simple slab on ground work, due to the relatively small size of

the process equipment, but still requiring nib walls and footings. Ring beam footings have

been designed for the large tanks, both autoclaves and the shared flash vessel.

21.2.8.4 Structural Steel

Structural steel has been priced at an average supply rate of A$6,500 per tonne and an

erection rate of A$5,000 per tonne (22 man hours per tonne at A$226/hr). The main area of

structural steel use is in the HPAL circuit, where the autoclaves need to be vertically

supported above ground, with suitable clearances for operation and servicing, above

concrete foundations. A preliminary structural steel design was produced around a

preliminary configuration and location, including both plan and elevation view drawings of the

area.


October 2014


21.2.8.5 Buildings

An allowance has been made for light building structures for workshop facilities and the

scandium precipitation and recovery area. This is the only part of the process plant covered

by a building. Wherever possible, demountables, modular buildings, and freight containers

are planned to be employed for offices, workshops, warehouses and storage facilities.

21.2.8.6 General Piping

A calculation was made for specialist, corrosion and pressure certified piping length in the

HPAL area, and for insulation and custom flange work that would be required.

Piping in the solvent extraction area is largely included in the modular package.

The remainder of piping has been assessed at 8% of the equipment list pricing and is likely

to be small bore piping extensively utilising site run HDPE pipe.

21.2.8.7 Electrical and Instrumentation (Plant)

Most of the electrical cost on the project is estimated in the infrastructure area, although

some plant wiring and electrical is included in the mechanicals section. Electrical and

instrumentation works for the solvent extraction module from Outotec are included directly in

the price of their modular unit. General plant electrical and instrumentation requirements

have been assessed at 15% of the equipment list pricing.

21.2.8.8 Infrastructure

Infrastructure quantities and pricing have been utilised from the previous SNC-Lavalin study.

However the pricing was adjusted where necessary to incorporate the current all-inclusive

rates, and a contractor mark-up of 10% has also been applied to electrical materials. Labor

adjustments were made as follows:

• Earthworks A$200/man-hour

• Electrical A$220/man-hour

• Pond Liner installation A$175/man-hour

• Water supply HDPE piping A$191/man-hour

Details of infrastructure capital costs are shown in Table 21.3.


October 2014


Table 21.3 Summary – Infrastructure Capital Cost

Nyngan Project Larpro 2014 PEA ResultInfrastructure Capital Costs Detail A$ Cost US$ Cost


Evaporation Pond $2.30 $2.07Tailings Dam $4.32 $3.89

Sediment Basin $0.03 $0.03Drainage & Fencing $0.15 $0.13

Access Road $0.66 $0.59Transformer, Switchroom,Control Room $2.51 $2.26

Site Office Building $0.12 $0.11Workshop & Maintenance Building $0.10 $0.09

Site vehicles & Light Equipment $0.40 $0.36Incoming Water Supply Piping $1.44 $1.30

Incoming 33kV power line $0.51 $0.46 Fibre Optic Comms $0.53 $0.48

Infrastructure Cost Total $13.06 $11.76

The following specific electrical items have been included in this area:

• Substation and transformer,

• Bus duct transformer to main isolator at the main switch room building,

• Control room and main switch room building,

• Main switchboard,

• PLCs and hardware,

• Operator workstations,

• UPS and auxiliary power units,

• Plant software development and installation, and

• VoIP and telephone system.

21.2.9 Freight and Start-up Costs

This cost area is intended to collect construction and erection costs that are typically not

included in the EPCM cost, and the costs are detailed in Table 21.4.


October 2014


Table 21.4 Summary – Freight/Start-up Capital Cost

Nyngan Project Larpro 2014 PEA ResultFreight and Start-up Costs Detail A$ Cost US$ Cost


Heavy Lift Craneage $0.20 $0.18Sea Freight Cost $0.30 $0.28

Local Freight Allowance $0.89 $0.80Vendor Rep Allowance $0.06 $0.05Commissioning Spares $0.40 $0.36

First Fills $0.50 $0.45Subtotal Start-up Costs $2.35 $2.12

21.2.10 Craneage

There is only a small requirement for heavy lift cranes. An allowance of A$200,000 has been

made for crane hire in excess of 100 tonnes lifting capacity. Smaller cranes are included in

the all-in site rates.

21.2.11 Freight Costs

Sea freight has been included at 5% of the ex-works value of imported equipment (A$6M) A

local freight allowance of 3% of list pricing on mechanical items totals has been included for

local sourced items.

21.2.12 Vendor Representatives

An allowance of A$60,000 has been considered as sufficient for equipment vendor

representation during installation and commissioning.

21.2.13 Spare parts

A commissioning spares allowance of A$400,000 has been allowed to cover mechanical,

electrical and in particular valve requirements.

21.2.14 First Fills

An allowance for first fills of A$500,000 has been considered. This includes a calculated

A$170,000 for inventory of organic phase in the solvent extraction circuit.

21.2.15 Engineering, Procurement and Construction Management (EPCM)

EPCM costs (US$9.1M) have been applied at an industry standard 18% of total estimated

costs with consideration given to the limited design input at this stage of the process

development.


October 2014


21.2.16 Contingency

A contingency level has been set at 20% (US$11.9M). This contingency figure was

calculated on the project total direct cost of US$60M, which includes the EPCM estimate, but

excludes owner’s costs and the working capital allowance (US$5.8M)

No allowance has been made in the capital cost estimate for escalation between time of this

PEA and actual equipment purchase.

21.2.17 Owner’s Costs and Working Capital

A summary of the owner’s costs and working capital included in the estimate is shown in

Table 21.5.

Table 21.5 Summary – Owner’s Capital Cost

Nyngan Project Larpro 2014 PEA ResultOwners Capital Costs Detail A$ Cost US$ Cost


Water License - Purchase $0.25 $0.23Construction Mess/Accomodation $0.70 $0.64

Construction Insurance $0.44 $0.40Working Capital $3.30 $3.00

Total Owners Costs and WC $4.69 $4.26

Specific detail on select items as follows:

• Initial water license – a figure of A$250,000 has been provided to purchase a non-

interruptible clean water delivery right, to be purchased from a private party,

• Messing and accommodation during construction – estimated at A$697,000 ($85 per

day for 82,000 man hours), based on the assumption that the camp will be the

construction camp already set up for the Nyngan Solar Project which will become

vacant in time for construction of this project,

• Construction insurance- US$0.4M, for one year, based on a quote from EMC’s

existing carrier, to cover site insurance during construction, environmental accidents

during construction, and shipment losses on transported (FOB) items for

construction,

• Working capital – US$3M, represents 50 days of cash (C1) operating costs.

The estimator team generated a list of items not included in this project capital cost estimate,

which fall into two categories;


October 2014


1. Pre-project costs to be borne by the owner prior to construction, and

2. Costs that may or may not be included in EPCM or other construction expense items

and would be a part of project capital.

That list is as follows:

Potential Owner’s Costs

• Costs of geotechnical investigations and soil testing,

• Costs of mineral resource drilling, metallurgical test work programs, and mining

studies,

• Costs of property environmental studies,

• Costs to complete work required to be granted a mining license on the property, and

• Pre-project marketing costs and legal fees.

Potential Project Capital Costs

• Land purchase or leasing costs,

• Technology fees,

• Community assistance and development programs, donations and sponsorships,

• Extra, non-planned commissioning and ramp-up costs, which could include extra

training costs, or extended pre-production staff and operating costs, and

• Capitalized insurance spare parts, not included in commissioning spares.

In addition to these capital items, additional risks are present with a strengthening Australian

dollar or other exchange rate exposures, and to negative variations in project scope.

21.3 Project Operating Cost

21.3.1 Operating Cost Summary

This section defines all annual operating expenses for mining, processing, purifying and

selling product to end use markets. Table 21.6 shows the operating cost summary for the

project. Figure 21.1 shows the process plant operating costs in a graphical form highlighting

the major operating cost items.


October 2014


Table 21.6 Operating Cost Summary

Nyngan Project Larpro 2014 PEA ResultOpEx Mine/Process Expense Annual Cost Annual Cost

(A$ & US$)) A$ M US$ M

Mining CostsStripping Cost $1.19 $1.07

Mining Cost $0.37 $0.34Total Mining Costs $1.56 $1.41

Processing CostLabor Cost $4.32 $3.89

Utilities Costs $0.88 $0.79Gas/Heat Costs $0.67 $0.61

Acid Costs (H2SO4 & HCl) $9.86 $8.87Lime (neutralizer) $1.00 $0.90Other Reagents $2.91 $2.62

Lab Costs $0.28 $0.25Consumables $1.08 $0.98

Total Processing Costs $21.00 $18.90

Marketing & Insurance $0.83 $0.75Maintenance Spend $1.48 $1.33

Mobile Equipment Cost $0.61 $0.55

Annual Cash Operating Cost $25.49 $22.94

Figure 21.1 Operating cost summary by area


October 2014


An examination of the detail that generates Figure 21.1 shows that the reagents are by far

the largest component of operating cost with sulfuric acid supply being over half of the

reagent cost.

21.3.2 Stripping and Mining Cost

The annual mining operation is very small, requiring a delivery to the plant of only 75,000

tonnes of resource per year. Strip ratios are low, and as both overburden and mill feed will

be free-dig, they will not require blasting. Annual costs are estimated to be US$1.4M per

year.

The mining operation is planned as a contractor task, and expected to be conducted in

campaigns of one month, three times per year. Costs for overburden removal are estimated

to be A$5/BCM. Mining costs are estimated to be A$3.50/tonne, and will climb to A$5/tonne

with hauling and stockpiling costs. See Chapter 16 for more detail.

21.3.3 Process Plant Operating Costs

21.3.3.1 Labor cost

The Nyngan processing plant requires a relatively small workforce. A workforce plan was

developed and specifies a workforce of 37 staff total. The process plant will operate 24x7, on

an 8-hour shift, 4-panel basis, with 5 operators per shift (including supervisor), plus one

multi-skilled maintenance operator and one safety/security officer per shift. Management (5),

and lab/metallurgy/environmental (5) will operate on day shift only, 5 days per week basis.

Labor rates were developed from a Larpro database of labor rates and was checked against

rates supplied from a recently opened mineral processing concentrator in the Nyngan vicinity.

It is anticipated that the majority of the workforce will be recruited from the regional area,

which includes a number mines and mineral processing operations.

21.3.3.2 Water Costs

Water will be provided to the site from the Cobar service line adjacent to the Barrier Highway,

approximately 5 km from the project site. Raw water will be piped under pressure to a raw

water storage tank on site. All water will be treated through a water treatment plant on site.

Operating costs for the reverse osmosis plant were provided by Osmoflow as part of the

discussion around supply capital cost.

Water permit conditions have been negotiated with the Department of Primary Industries

(Office of Water) in Dubbo. Although no permit currently exists, negotiations with a water

broker have commenced. Likely fees for a 200 ML annual consumption are A$250,000 for

the water entitlement and then A$5,000 per annum for a usage fee.


October 2014


21.3.3.3 Gas/Heating Electrical Costs

LPG gas will be used mainly for the operation of the steam boiler. It is anticipated that it will

be delivered to site in B-Double trucks and transferred to a pressurised 50 tonne bullet on

site. This will provide approximately 3 days of storage. Elgas have provided prices for both

LPG and LNG supply, including installation and bullet rentals.

21.3.3.4 Power Costs

Electrical power consumption for the process plant has been calculated based on the

mechanical equipment list. The electricity market is deregulated in Australia and supply

prices are highly negotiable depending on a variety of factors. The supply charge is usually

comprised of factors such as a network access charge, consumption amount and the time of

day that consumption has occurred. Prices charged during peak periods are usually higher

than off-peak. In lieu of detailed electrical engineering, a supply price of A$0.1055 per kW/h

has been used based on supply prices provided to other mineral processing operations in

regional NSW.

21.3.3.5 Reagents (including acids, lime and other reagents)

The largest element of operating cost for the processing plant is reagent supply. Sulfuric acid

supply in particular is the single largest component of operating cost. Figure 21.2 shows the

proportion of cost made up from the individual reagents.

Figure 21.2 Split of Operating Costs

7%

55% 13%

0% 1%

0% 8%

9%

1% 5%

1%

Reagent Cost Summary Lime, CaO

Sulphuric Acid, H2SO4

Hydrochloric Acid, HCl

Organic Extractant, Primene JM-T

Organic Diluent, Shellsol D70

Sodium Sulphate, Na2SO4

Sodium Hydroxide, NaOH

Ammonium Hydroxide, NH4OH(25%)Oxalic Acid, H2C2O4

Liquefied Petroleum Gas, LPG

Flocculant


October 2014


Budget prices of all reagents have been sourced from suppliers. The sulfuric acid price is

based on non-Australian supplied “white” sulfuric acid delivered to the Nyngan site. Potential

exists for cheaper sulphuric acid supply from the Nyrstar smelter in Port Pirie in South

Australia. The current smelter configuration produces “black” acid which would be suitable

for addition to the autoclave. However, the Nystrar smelter acid is contracted via long-term

contract to Interacid until the end of 2015. In early 2016, the redeveloped smelter at Port

Pirie is due to come on line. This will provide higher purity “white” acid and at larger

quantities than currently available. Therefore negotiations for future acid supply from Port

Pirie offer the promise of reduced sulfuric acid costs.

Lime is provided as bulk supply of quicklime with a lime slaking plant included in the capital

cost.

21.3.3.6 Laboratory Costs

The product produced from the Nyngan facility is subject to very high standards of purity,

and that purity must be achieved while minimizing operating costs. It is essential to locate

and staff a laboratory facility on-site, to enable accurate process analysis, high quality

product assays, and product quality assurance through certification of standards, and to be

able to do so in real time in support of plant operations. In addition to a full time laboratory

chemist (included in labor costs), the operating costs estimate includes US$250,000 in

annual costs for operation of the on-site facility. This budget provides for assays, some off-

site analyses, a limited amount of metallurgical test work, and an allowance for

environmental test work consistent with requirements to meet environmental licence

conditions.

21.3.3.7 Consumables

As well as reagents, consumables have been handled as a separate cost. Table 21.7 shows

the allocation of operating cost to consumables. The return of acidic raffinate to the feed

preparation circuit would result in excessive consumption of steel grinding media. Grinding

media planned for use in the ball mill is therefore a ceramic product called Steatite from

CeramTec in Germany.


October 2014


Table 21.7 Summary of Consumables Costs

Nyngan Project Larpro 2014 PEA ResultPlant Consumables Expense Annual Cost Annual Cost

(A$ & US$) A$ M US$ M

Crusher Liners $0.17 $0.16Scrubber and Mill Liners $0.33 $0.30

Grinding Media $0.02 $0.02Screen Panels and Cyclones $0.09 $0.08

Slaking Mill Liners $0.15 $0.14Slaking Mill Media $0.01 $0.01

Filter Cloth $0.22 $0.19Woven Mesh Filter Cloth $0.10 $0.09

Consumables Total $1.08 $0.98

21.3.3.8 Maintenance

Maintenance cost has been covered as a varying percentage of installed mechanical cost by

operational area. Maintenance staff labor has been included separately in the labor cost

category. Table 21.8 shows the allocation of maintenance costs by area. The HPAL area will

represent the most significant set of maintenance requirements.

Table 21.8 Maintenance Cost Derivation

Nyngan Project Larpro 2014 PEA ResultAnnual Maintenance Expense % of CapEx Annual Cost Cost

(US$)) Capital Costs US$ M US$ M US$/tonne

Plant Feed Preparation 5.0% $1.67 $0.08 $1.11HPAL and Neutralization 7.0% $10.97 $0.77 $10.24Counter Current Decant 3.0% $3.51 $0.11 $1.40

Partial Nutralization 3.0% $1.09 $0.03 $0.44Solvent Extraction 4.0% $2.60 $0.10 $1.39

Precipitation and Purification 4.0% $1.09 $0.04 $0.58Tailings Neutralizaiton and Disposal 2.5% $1.20 $0.03 $0.40

Reagents 2.5% $1.99 $0.05 $0.66Water and Air Services 2.0% $5.70 $0.11 $1.52

Maintenance Expense - Total $29.80 $1.33 $17.73

21.3.3.9 Mobile Equipment Cost & Miscellaneous Allowances

The project will have a small fleet of vehicles on site, including two utility vehicles, two small

cranes, one forklift, one front end loader, one 15 t truck and a compactor machine for tailings


October 2014


work. Operating costs including fuel and maintenance costs for these units totals

US$251,000 per annum.

Along with site vehicle operating costs, other miscellaneous cost allowances have been

included, totalling US$301,500, specifically:

• General equipment hire, (US$50k),

• Outside metallurgical test work costs (US$50k),

• Outside environmental test work or studies (US$50k),

• General consulting expenses (US$50k),

• General cleaning expenses (US$12k),

• LGAS tank rentals (US$20k), and

• Safety equipment rentals (US$69.5K).


October 2014


22 Economic Analysis

This PEA is preliminary in nature and should not be considered to be a pre-feasibility or feasibility study, as the economics and technical viability of the Project have not been demonstrated at this time. While this PEA does not consider or include any Inferred Mineral Resources, and includes only Measured and Indicated Resources, it remains a preliminary analysis that is not sufficient to enable Project Resources to be categorized as Mineral Reserves. Furthermore, there is no certainty that the PEA will be realized.

The economic performance of the project, as outlined in this PEA, has been valued using a

constant dollar cash flow forecast, based on predicted revenue, costs and capital

requirements. The cash flow stream has been discounted by various discount rates to

generate Net Present Values (“NPV’s”) for a 21 year project plan, including an initial

construction year. Both pre-tax and after-tax NPV results are presented, at various discount

rates. Discounted cash flow-internal rate of return (“DCF-IRR” or “IRR”) results are also

presented, only on an after-tax basis. The effects of changes in key inputs has also been

assessed and presented in a sensitivities review.

This PEA considered only one flow sheet design, so results are not included for any

alternative process designs. Other designs have been previously considered, but financial

results for those alternate cases have been done for management, and are not public.

Certain financial aspects of those non-public engineered designs have contributed to this

PEA, and where absorbed, have become part of the flow sheet and project economics. This

PEA does combine the best currently known options for process design and project

development, as supported by completed test work.

22.1 Cash Flow Model – Financial Summary The project exhibits strong financial returns from initial capital investment of US$77.4 million,

with the direct mechanical items sourced in either US dollars (US$), Euros (€) or Australian

Dollars (A$), and all local erection, installation and infrastructure sourced in Australian

dollars (A$). All project revenues, capital costs, operating costs, and financial returns have

been converted to US$, and presented in this PEA in US$, unless otherwise noted.

Project after-tax NPV (10% discount rate) is US$175.6 million, generating an IRR of 40.6%

and a 2.5 year payback on invested cash flow. Project investment spending to date, and

through to construction, is considered sunk cost and is not included in the cash flow or part

of the financial returns.


October 2014


Investment (construction) is planned for 2016, which is year 1 of the cash flow model,

followed by initial full year production in 2017, which is the first of 20 years of production at

the rate of 35,975 kg of scandium oxide product per year, terminating in 2035.

Financial returns from the economic model are shown in Table 22.1.

This PEA is preliminary in nature and should not be considered to be a pre-feasibility or feasibility study, as the economics and technical viability of the Project have not been demonstrated at this time.

Table 22.1 Project Financial Returns Summary

Nyngan Scandium Project Pre-Tax After-Tax2014 PEA Economic Economic

Financial Returns Summary Return Return

Constant Dollar Net Present Value (US$ M)

6% Discount $402.6 $272.28% Discount $327.1 $217.810% Discount $268.5 $175.6

Internal Rate of Return (IRR) 56.1% 40.6%

Payback (Years) 1.8 2.5

NOTE: Based on a scandium oxide selling price of US$ 2,000/kg Sc2O3

22.2 Capital Cost Summary The overall initial capital cost for the project is US$77.4 million. The financial model includes

a construction and commissioning year capital cost outflow of US$74.4 million to initiate

production, plus US$3 million in working capital in the first year of operations, and an

additional US$ 2 million per year (US$ 38M over project term) in sustaining capital over the

20-year project operating life.

The capital cost is spread over a number of areas, but the high pressure autoclave systems

(HPAL), leaching and neutralization circuits, boiler and utilities, and tailings/settling ponds

systems are the most significant capital items. While some of the circuits have been vendor-

bid as modular, pre-assembled units, the Engineering, Procurement, Construction &

Management (“EPCM”) cost factor was left at 18%, recognizing the cost of integrating a

number of process steps. EPCM costs and contingency allowances total US$21M or 28% of

total costs (excluding working capital allowance). Details of the elements of capital are

presented in Table 22.2.


October 2014


Table 22.2 Nyngan Capital Cost Summary

Nyngan Project NI 43-101 PEA ResultCapital Cost Summary Capital CapEx/Annual

(US$) Cost (US$ M) kg Oxide

Pre-Stripping Cost $1.6 n/a

Mining Equipment contractorMine Vehicles/Site Equipment $0.4 $10

Processing Plant EquipmentPlant Feed Preparation $2.1 $58

HPAL $13.7 $381CCD, Ph Adjust $5.9 $164

Solvent Extraction $3.1 $86Product Precipitation $1.3 $37

Tailings $1.3 $36Reagent Storage $2.6 $72

Water/Steam/Services $6.6 $183Plant Subtotal $36.6 $1,019

Other Site CostsFreight and First fills $2.1 $59

Evaporation Ponds-Tailings Dam $6.7 $186Transformer Farm/Buildings $2.5 $69On/Offsite Utilities Supply $2.2 $62

Other Costs Subtotal $13.5 $376

Owners Costs & Working Cap. $4.3 $118EPCM Costs (18%) $9.1 $253Contingency (20%) $11.9 $332

Total Project Capital Cost $77.4 $2,151

Total (20 Year) Sustaining Capital $38.0 N/A

NOTE: The ratio of initial capital cost to annual scandia production volumes shown in the table above is intended to demonstrate relative capital investment values to annual production values, on a per unit (kg scandia) basis. Taken over the full 21 years, the ratio of total capital spend relative to total scandia production is US$156/kg.

22.3 Operating Cost Summary Annual cash operating costs are mostly incurred in A$, but are shown in the summary table

below in US$, having applied a $0.90 exchange rate to convert local costs. The major

processing cost is acid - both sulfuric (H2SO4), and hydrochloric acid (HCl), followed by labor

costs and other reagents used in the solvent extraction circuits. Transport does contribute to

these costs, as the property is in a rural location, but utilities are accessible and the


October 2014


pressure-based leach (HPAL) system is more efficient on almost all input quantities than

previously considered acid bake systems (atmospheric).

The cash flow inputs reflect the key operating assumptions described in Table 22.3.

Table 22.3 Key Operating Costs Summary

Nyngan Project Larpro 2014 PEA ResultOpEx Mine/Process Expense Annual Unit Cost Per Unit Cost Per

(US$ millions) US$ Cost Resource Tonne Oxide Kg

Mining CostsStripping Cost $1.1 $14.24 $29.69

Mining Cost $0.3 $4.49 $9.37Total Mining Costs $1.4 $18.73 $39.05

Processing CostLabor Cost $3.9 $51.87 $108.13

Utilities Costs $0.8 $10.53 $21.96Gas/Heat Costs $0.6 $8.08 $16.84

Acid Costs (H2SO4 & HCl) $8.9 $118.32 $245.87Lime (neutralizer) $0.9 $12.00 $25.02Other Reagents $2.6 $34.92 $72.80

Lab Costs $0.2 $2.67 $5.56Consumables $1.0 $13.00 $27.10Total Processing Costs $18.9 $251.39 $523.28

Marketing & Insurance $0.8 $10.00 $20.85Maintenance Spend $1.3 $17.73 $36.97

Mobile Equipment Cost $0.6 $7.37 $15.37

Annual Cash Operating Cost $22.9 $305.2 $635.53

NOTE: The calculated cash cost for scandium oxide of $636/kg, reported in the table above, contains marketing/insurance costs that are not included in the definition of a C1 (Brook Hunt) cash cost, A true C1 cash cost estimate for the project, which doesn’t change over the 20 year period, can be estimated at US$614/kg Sc2O3.

22.4 Project Scope The cash model is based on a 20-year mine plan to process limonite resources containing

371ppm of scandium. Saprolite resources underlie the limonite, and they tend to hold lower

scandium grades and require different leaching parameters to be effectively processed.

EMC has completed adequate testing to determine that campaign-processing one resource

type at a time, or concurrently through separate process streams, is economically desirable

as to cost and recovery.


October 2014


This project size will utilize 1.5 million tonnes of limonite resource out of a total 6.1 million

tonnes of measured and indicated (M&I) limonite resource, at a planned grade of 371ppm,

somewhat higher than the 301ppm average limonite resource (M&I) grade. The higher grade

is achieved by mine location in a higher grade section of the resource. The overall resource

(limonite and saprolite, plus minor amounts of included hematite and bedrock material) totals

12 million tonnes at 261ppm. At the planned initial rate of resource mined and processed,

the current PEA-based project will consume one-eighth of the total M&I resource.

Please refer to Chapters 14-16 for further discussion on the ability of the mine plan to

achieve these higher initial grades. The project plan calls for a 9-month construction program

and commissioning in 2016, followed by full production beginning in first quarter 2017.

22.5 100% Basis Presentation

The Nyngan Project PEA result is presented on a 100% ownership basis, for two reasons:

1. The 100% basis presentation shows the true size of the project, without regard for

ownership, which can change with time and development strategy, and

2. EMC currently controls 100% ownership of the project today, notwithstanding the

reality that full transfer of property and mineral rights from the former owner remains

underway with NSW State agencies.

The Company does have a financial partner (Scandium Investments LLC), currently a lender

at the parent level, and there is an outstanding loan (US$2.5M) between the parties. Upon

completion of certain milestones, the financial partner’s debt is automatically converted to a

20% project level interest in the Nyngan Scandium Project. Those milestones, and that debt-

to-project equity conversion, is anticipated to be reached sometime in 2015.

The PEA result is also presented on a 100% equity basis. The cash flow model is

constructed with annual revenue and cost inputs, plus scheduled annual capital cost inputs.

The financial return figures assume no debt leverage - all project capital is assumed

provided from equity sources. Annual cash flows are discounted back to ‘time zero’,

specifically January 1, 2016 (beginning period convention), to arrive at NPV and IRR

calculations.

22.6 Basis of Revenue Estimates Sales revenues are based on EMC pricing knowledge in the market today, plus independent

spot market pricing, and EMC direct conversations as to offtake and pricing with key

customers. The market for scandium oxide is not developed, or at all transparent. Based on

EMC discussions with customers in both the SOFC and aluminium-scandium master alloy


October 2014


markets, the Report establishes an average long term FOB price for oxide of US$2,000/kg.

This price assumption is supported by a mix of sales volumes, pricing assumptions, and

product quality grades into the two principal perceived markets, utilizing both long term and

spot sales pricing estimates.

22.7 Cost and Product Price Escalation The cash flow model is a constant dollar model, and no inflation is assumed in costs,

revenues, or margins. NPV discount rates need to be viewed as constant dollar rates as well.

22.8 Currency Exchange Rate Assumptions The cash flow model is expressed in US dollars (“US$”), and any locally-sourced or

Australian currency-based costs have been converted at an exchange rate of 1 A$ to

$0.90US$. The A$/US$ rate as of the writing of this report is US$0.87.

The Australian dollar has been on a steady weakening trend for approximately two years,

beginning in early 2013, when it fell below parity with the US dollar. The Australian dollar has

historically traded below parity to the US currency, although it has traded above parity for 3

of the past 5 years. The current weakening trend is expected to continue, and the currency

has traded at levels significantly lower than today (October 2014) in the last 10-15 years.

The Nyngan Project has exposure to a change in the A$/US$ relationship, because

operating costs are largely in Australian dollars, while revenues are expected to be

denominated in US dollars, and with international customers. The project requires a 20-year

view on exchange rates. Banks and financial institutions offer forecasts, but they typically

extend only two or three years forward.

22.9 Mine Closure and Salvage Costs The cash flow model includes US$3M in costs for mine closure, expensed in the final year of

operation, which is 2035. The model does not include any recovery of value for equipment or

facilities in the form of salvage.

The Measured and Indicated scandium resource is considerably larger than the current

project would consume, allowing for either expansions of capacity, extensions of the 20-year

initial time period of operation, or both. One or both of these project extensions is viewed as

more likely, based on markets for product, than a closure of operations in 20 years.

22.10 Taxes and Royalties The property is burdened by four royalties, each different as to amounts and the

circumstance to which they have been established. Each has been modelled and included in

the cash flow analysis.


October 2014


The royalties fall under two categories: NSR’s and NPI’s, defined and detailed as follows:

• NSR’s – Net Smelter Return Royalties, Levied on Revenue (less freight ) o Jervois Mining Limited Royalty. 1.7% of actual sales prices on oxide,

subject to a 10 tpy minimum once production commences, and a 12 year

time period to expiry.

o Lenders Royalty. 0.2% of actual sales prices on oxide, subject to a cap

of US$370,000 total payout, expected to be approximately 2.5 years of

production

• NPI’s – Net Profit Royalties, levied on Pre-Tax Income o Plumbum & Canateal Royalty. 1.5% on actual sales prices, but all costs

of production are allowable deductions, so this is a percentage on

earnings before tax

o New South Wales Mineral Royalty. 4% on actual sales prices, but

refining, processing, and freight costs are deductable for calculation of

royalty payable.

Australian Federal corporate taxes are currently 30% on pre-tax income generated from

Australia-source business assets and entities, and 30% is the long-term tax rate assumption

applied to the project.

Australia offers attractive research tax credits, referred to as an R&D Tax Concession

Program. These credits are intended to encourage technology application in new businesses,

and EMC anticipates that the Nyngan Project, as the first primary scandium mine/mill in

Australia, would qualify. The new program offers a 45 per cent refundable tax offset

(equivalent to a 150 per cent tax deduction) in advance of production, and a 40 per cent

non-refundable tax offset (equivalent to a 133 per cent tax deduction) after revenues exceed

A$20 million. Foreign R&D spend is also eligible now, so long as it is matched by Australian-

based R&D work. The cash flow model assumes A$3 million in eligible benefits will generate

a US$1.35 million credit on company tax payable in the first year of operation, 2017.

Australia levies a Goods and Services Tax (“GST”) on sales of most items. GST has not

been included in the cost of all consumables that make up operating costs, and therefore no

allowance has been made in the cash flow for recovery of the tax, which would otherwise be

recoverable out of corporate taxes or as a direct reimbursement. Export sales of product are

exempt from GST, and no Australian sales of product are assumed in the cash model.


October 2014


22.11 Sensitivities to Key Variables

Project economic risks to the base case conventional acid plant development plan were

assessed and can be seen below. The risks were segregated into two categories, as follows:

• Sensitivity to financial parameters, such as production cost, product pricing, capital

cost, and exchange rate changes, as shown in Table 22.4, and

• Sensitivity to production and operating parameters, such as mill recoveries, mill

availabilities and resource head grade assumptions, as shown in Table 22.5.

Table 22.4 Sensitivity to Product Price

Project Constant Dollar (After Tax) Project NPV atFinancial Sensitivity Various Discount Rates and

to Product Price Oxide Product Prices (US$)Product Price US$/kg) $1,200 $1,500 $2,000 $2,500 $3,000

Constant Dollar Net Present Value (US$ M)

10% Discount $30.5 $85.1 $175.6 $267.0 $357.98% Discount $47.3 $111.4 $217.8 $325.2 $432.06% Discount $69.1 $145.5 $272.2 $400.1 $527.7

Internal Rate of Return (IRR) 15.8% 25.9% 40.6% 55.8% 71.0%

Table 22.5 Financial Parameters Sensitivity

Sensitivity to NPV (10%)Financial Parameters ($US M) IRR (%)

PEA RESULT $175.6 40.6%

Operating Cost SensitivityCost Increase (10%) $163.9 38.6%Cost Decrease (10%) $187.4 42.5%

Price SensitivityLower Realized Product Price (10%) $139.3 34.5%Higher Realized Product Price (10%) $212.0 46.6%

Capital Cost SensitivityHigher Capital Cost (10%) $169.6 37.0%Lower Capital Cost (10%) $181.6 44.9%

Fx SensitivityUS$/A$ @ $1.00 $162.6 38.3%US$/A$ @ $0.80 $188.7 42.8%


October 2014


Table 22.6 Sensitivity to Operating Parameters

Sensitivity to NPV (10%)Operating Parameters (US$ M) IRR (%)

PEA RESULT $175.6 40.6%

Mill Recoveries (84.3%) Recovery Decrease (75%) $135.5 33.9%Recovery Increase (90%) $200.2 44.6%

Mill Availability (86%) Availability Decrease (82%) $160.7 38.1%Availability Increase (90%) $194.7 43.7%

Ore Grade Sensitivity (371 ppm) Lower Plant Feed Grade ( 330 ppm) $135.8 33.9%Higher Plant Feed Grade (410 ppm) $214.3 47.0%


October 2014


23 Adjacent Properties

The area is generally agricultural and as such there are no significant adjacent properties.

EMC Metals has another exploration lease to south of the deposit within trucking distance

known as Honeybugle. This property has also shown scandium enriched laterites but is still

at the early exploration stage.


October 2014


24 Other relevant data and information

(No other relevant data and information is attached to this section)


October 2014


25 Interpretation and Conclusions

During the preparation of this report, some of the data from the earlier SNC-Lavalin internal

report has been used. This Technical Report updates the information in that report and

replaces the front end leaching process from an acid bake and water leach to a high

pressure acid leach. In the process, some downstream operational aspects also required

changing. As a result of the change in process, scandium recovery has increased to 84%

from 72% with the new process.

A number of process operations have been included in the process flow sheet, even though

they may not end up being required. They have been included because they can be verified

by test work. These include:

• Partial neutralization of the leach slurry before solvent extraction, when indications

from published literature and minor extrapolation indicates that solvent extraction into

the primary amine will work be more effective at lower pH and will be more selective

for scandium over iron,

• Partial neutralization with ammonium hydroxide before scandium precipitation is

detailed in the flow sheet as most of the Hazen Research was conducted using this

approach. Sodium hydroxide is likely to be cheaper and simpler but there is no test

work to support this process route at the current time. The effect of pH range on

scandium oxalate precipitation has not been examined over a wide range of pH

conditions and with different neutralizing agents. It is likely that sodium hydroxide

may be suitable, which would result in the removal of the ammonia destruction

circuit,

• Recirculation of the loaded strip liquor is employed to increase the scandium tenor

leading to scandium oxalate precipitation. Whilst there is no test work on this process

variant, the Larpro technical team have modelled this in METSIM and believe that the

process extrapolation is valid. It may even have a positive effect on scandium oxalate

purity, which has not been catered for.

The Larpro technical team in development of the HPAL process for scandium leaching are

satisfied that HPAL leaching, followed by solvent extraction with a primary amine and

scandium oxalate precipitation and calcination has been demonstrated by test work and

process modelling to be a possible process flow sheet. Members of the technical team and

Dr. Nigel Ricketts have been involved in other projects where scandium leaching by high

pressure acid leaching has also been demonstrated to be possible.


October 2014


The Larpro technical team and experienced estimator have developed a mechanical

equipment list and process engineering variables which have been used to developed a

capital cost estimate consistent with +/- 30% accuracy. They have also developed an even

more rigorous operating cost estimate, with reagent usage data provided by a fully

converged METSIM mathematical model of the proposed process. The accuracy of the

operating cost provided is +/- 25% accuracy.

In development of a capital cost estimate, the technical team have taken into account the

relatively small size of the operation. The ability to develop modules of multiple pieces of

equipment has been utilised, in particular in the feed preparation and solvent extraction

circuits. The use of HDPE site-run piping, the use of pre-made and plastic tanks and

transportable buildings has allowed a reduction in some of the factors used in the estimating

process.

The capital cost and operating cost estimates have been used in a financial model that is

consistent with industry norms. The model includes provisions for considered sustaining

capital costs and owner’s costs. Mining is structured to be contract in nature and mining

costs have not been developed to the same rigorous degree as the other areas. However,

the mining costs are only a small fraction of the operating costs of the project due to the fact

that the mine pits are shallow, it is free-dig material and only limited overburden needs to be

moved.

The economic analysis shows a project that is sufficiently attractive that it should be taken to

higher levels of engineering studies. The key issue though with any scandium project is what

price to use in a market that is likely to change if the Nyngan Scandium Project is built. The

US$2,000/kg figure used is conservative based on current prices. If the increase in supply

created by the Nyngan Scandium Project coming into production creates a reduction in

market price, then the economics of the project should enable it to still remain competitive at

the expense of other smaller, higher cost producers. Market discussions with potential end

users has indicated though that it is highly likely that the presence of a large, reliable

producer in a stable western democracy will enable an increase in scandium use without a

significant price reduction.

Whilst the process design development is well advanced, a number of process alternatives

are under consideration by EMC Metals and metallurgical test work is currently underway. It

is likely that these process improvements will lead to enhanced project economics by:


October 2014


• Reducing or eliminating some by-product streams,

• Reducing capital cost, and

• Reducing operating costs by using cheaper reagents and less of them.

The infrastructure for the project is excellent and well understood. Plans appear to be in

place to continue with progression of these in the future. Evidence of suitable negotiations

with government agencies and major suppliers was provided to the QP. Both water supply

and electricity supply contracts will need to be finalised. Opportunities exist for negotiation

on LPG gas supply contracts or even replacements with LNG as an alternative.

Resource definition is already at a suitable level for study work. Plans are being made for

further drilling on site, in particular in areas where mining will commence first and this

material will be used in new confirmatory test work. The current process plant design is

suitable for the limonite portion of the resource only. Process variant test work is underway

for utilisation of the saprolite component of the deposit as well.

Product purity should also be a focus of future test work. The current test work results and

METSIM plan allow for minimum product purity of 97.4% Sc2O3, which should be readily

marketable for the aluminium-scandium alloy market as the remaining impurities should not

be an issue for use in aluminium alloys. Product purity will need to be upgraded for use in

ceramic fuel cells and consideration should be given in subsequent phases of work for the

production of a second, high purity stream to produce 99+% purity oxide product. The Hazen

Research test work previously done for EMC has shown potential process solutions, which

can be further investigated and refined.

Additional work is required on tailings settling characteristics related to tailings disposal, and

on the potential for leaching of deleterious elements such as magnesium, manganese and

chromium from the tailings, as part of the EIA activities. The previously completed EIA

activities need to be aligned with the new HPAL process flow sheet.


October 2014


26 Recommendations

26.1 Next steps The project has been shown to have developed a potentially viable process flow sheet and

modelled economic analysis has been shown at the level of a PEA to be attractive. However,

the nature of a PEA is that it is preliminary in nature and should not be considered to be a

pre-feasibility or feasibility study, as the economics and technical viability of the Project have

not been demonstrated at this time. The recommendation is therefore to proceed to the next

stage of study which should be a Preliminary Feasibility Study (PFS). This work should

include:

• Mining studies, including development of an updated mine plan

• Process plant engineering

• Tailings storage facility engineering

• Hydrology studies

• Geotechnical studies on both the mine and proposed plant site

• Finalization of the Environmental Impact Assessment process, including integration

with the process plant engineering design

A number of technical improvements have been noted that should be addressed by test

work before commencing more advanced engineering studies and these are highlighted

below.

Marketing efforts should be continued with the goal of developing an off-take arrangement

for at least part of the product from the plant to provide financiers more surety that the

product produced from the plant will have a ready market at the project price structure.

26.2 Areas Recommended for Technical Improvements

26.2.1 Batch versus continuous autoclaves

The HPAL front-end of the process used in this PEA is designed as a twin-autoclave batch

process. As the filling and emptying time is about the same as the leaching time, effectively

two autoclaves are required where one continuous autoclave of the same size would

achieve the same leaching performance.

The flash vessel arrangement is simplified in the current flow sheet compared to a

continuous autoclave arrangement and the ability to recycle raffinate back to the feed

preparation area is useful. The steam boiler is larger for a batch autoclave system due to

the intermittent steam load requirement.


October 2014


It is recommended that an engineering study at better accuracy than +/- 30% be conducted

to determine the relative operating and capital costs of batch versus continuous operation.

The preferred leaching system engineering can then be used within the PFS.

26.2.2 Solvent extraction

Further solvent extraction test work needs to be conducted on solution straight from HPAL

operations without any neutralization, and on alternative amine extractants that may optimize

the altered system. Further work should be considered on optimisation of the modifier to be

used, in particular with respect to phase disengagement times and crud formation utilising an

extended pilot plant operation.

The formulation of the combined acid/chloride strip solution should be investigated in order

to potentially eliminate the use of sodium hydroxide in this area with potential replacement of

hydrochloric acid with common sea salt.

26.2.3 Feed preparation

The laterite feed contains clay and if it gets wet, nickel laterite processing plant experience

shows that it can be difficult to handle. Some test work on materials handling characteristics

for Nyngan laterite is appropriate before final feed handling equipment is specified. An

alternative to using raffinate for feed preparation would result in lower materials

requirements for the feed preparation circuit and the ability to use steel rather than ceramic

grinding media. The use of raw water for feed preparation, followed by filtration of the solids

and re-pulping in raffinate may achieve the desired goals of raffinate recycle but with

improvements in capital cost and reduced operational corrosion issues.

26.2.4 HPAL Leaching

Further work in HPAL leaching is required to test a number of parameters which have design

implications for equipment selection:

• Further test work on the optimum slurry density in the autoclaves

• The influence of chloride ion concentration on leaching performance and downstream

settling characteristics

• The effect of particle size on leaching performance,

• Consideration of the use of direct addition of sulfur-bearing minerals in a brick-lined

continuous autoclave to provide most of the acid/heat requirement.


October 2014


26.2.5 Slurry rheology

The presence of clays and fine limonite in the feed to the autoclaves is likely to produce

viscous solutions. Consideration should be given to slurry viscosity measurement when

future test work solutions are produced so that pump and thickener sizing are more accurate.

26.2.6 Tailings

While the tailings storage facility is relatively small, the tailings dam design will still need to

be engineered. This activity should include test work on settled density as well as

investigation of local rock materials for construction of the tailings dam walls.

26.2.7 Scandium oxalate precipitation

Scandium oxalate precipitation test work should be conducted at a range of pH values with a

range of neutralizing agents to determine the following:

• Optimum pH range for scandium recovery, crystal particle size and product purity

• The effect of various neutralizing agents on scandium recovery, crystal particle size

and product purity

• The effect of temperature and potentially a temperature gradient across the

precipitation vessels on scandium recovery, crystal particle size and product purity

It is likely that some or all of the above factors could contribute to lower oxalic acid use and

higher product purity. The elimination of ammonium hydroxide as a neutralizing agent would

have a significant benefit to operating cost and a reduction in effluent required to be added

to the evaporation pond.


October 2014


27 References

The information contained in this Technical Reports sections was obtained from:

• NSW Government Data Systems (Minview and DIGS)

• http://imagery.maps.nsw.gov.au

• http://www.weatherzone.com.au

• http://www.minerals.nsw.gov.au/tasmap/jsp/Viewer.jsp?cmd=login

• Department of Lands, Dubbo Office, Contact: Craig Ferguson

• http://www.legislation.nsw.gov.au/maintop/scanact/inforce/NONE/0,

• Bogan Shire Council, Nyngan, Contact: Josh Loxley, Google Earth,

• Manager Engineering Services, Bogan Shire Council, Nyngan, Contact: Keith Dawe

Various online technical reports from previous and current license holders:

• Anaconda Australia Limited (2001) Final report EL 76 1967 Nyngan area

• Anaconda (NSW) Pty Ltd (2002) First to the Third (and final) Annual reports EL 5589

Nyngan area.

• Bogan Shire Council (2001-02) ‘State of the Environment’ Report.

• Douglas McKenna and Partners (2005) Review of Environmental Factors for

Proposed Aircore Drilling to define a trial pit at Gilgai NSW for Jervois Mining Limited.

• Douglas McKenna and Partners (2006) Report on Gilgai Scandium Project and

Resource Calculations EL 6009 Nyngan NSW for Jervois Mining Limited Volumes 1

to 3.

• Douglas McKenna and Partners (2006) Nyngan EL 6009 Composite Sample

• Collection of Gilgai Limonite Resource.

• Fogarty JM and Thomson AB (2005) Girilambone and Girilambone north Copper

Deposits, NSW.

• Lachlan Resources NL and Platinum Search NL (1988-1990) Exploration Reports on

EL 2965 Nyngan/Miandetta area.

• Platsearch NL (2001) First to the Seventh (and final) Annual Exploration Reports EL

4756 Cobar Area.

• Recovery of Scandium from Gilgai Laterite Ores by Acid Baking, Water Leaching,

Solvent Extraction and Precipitation, CSIRO Report DMR-3770, March 2010.

• Pilot Study for the Recovery of Scandium from Laterite Ore, Hazen Research Inc.,

June 15, 2011, Hazen Project No. 11129-01.


October 2014


• Pilot Solvent Extraction Study for the Recovery of Scandium from Laterite Ore Leach

Liquor, Hazen Research Inc, June 30, 2011, Hazen Project No. 11129-01.

• Laboratory Study for the Recovery of Scandium from Laterite Ore, Hazen Research

Inc, December 10, 2010, Hazen Project No. 11129.

• Project Update on Scandium Purification, E-mail Delivery Hazen Research Inc,

Nicholas Dummer / Richard Houston to Mr Willem Duyvesteyn, July 1, 2011, Hazen

Project No. 11129-01.

• Additional Laboratory Studies for the Recovery of Scandium from Laterite Ore,

Hazen Research communication to W. Duyvesteyn, 23 November 2011.

• Purification of Scandium Extracted from Laterite Ore, Revision 1, 25 January 2012,

Hazen Report No. 11129-01. (Limited inclusion by SNC-Lavalin).

• Roberts & Schaefer Pre-Feasibility Study “Scandium Recovery from Gilgai Laterite

Ores by Acid Curing, Baking, Leaching, Solvent Extraction and Precipitation”, July

2010, Project No. 3001.

• SNC-Lavalin Nyngan Scandium Project Study Report, 140101-0000-30RF-0001,

February, 2012

• R.W. Corkery Report: Conceptual Project Development Plan, December 2011

reference No. 773/04.

• NI 43-101 Technical Report on The Nyngan Gilgai Scandium Project, Jervois Mining

Limited, Nyngan, New South Wales, Australia. (Report Date: 25th March 2010).

• An Investigation into Leaching and Recovery of Scandium from Australian Laterite

Samples, SGS Canada Inc. Report, 13261-001 Final Report, January 19, 2012.

• Hydrometallurgical (HPAL) Processing of Scandium-Bearing Australian

Limonite/Saprolite Ore Samples, SGS Canada Inc., 13261-002 Final Report, June

14, 2013.

• Nyngan Scandium Polygonal Resource and Pit Optimization, Mining One

Consultants, Report 1675_M/3008, February 23, 2012.