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Uley graphite43 10111july2012final

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Uley Graphite Mine NI43-101

Uley Graphite Mine NI43-101

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  • 1. Uley Main Road Graphite DepositEyre Peninsula, South AustraliaNI43-101 ReportPrepared by Coffey Mining Pty Ltd on behalf of:MEGA Graphite IncEffective Date: 11 July 2012Qualified Person: Trevor Bradley – MAIGMINEWPER01006AA
  • 2. 11 July 2012MEGA Graphite IncLevel 1, Suite A192 Waymouth StreetADELAIDE SA 5000Attention: Mr Christopher DarbyDear ChrisRE: Uley Main Road Graphite Deposit – NI43-101Please find attached our report in support of the proposed submission of the Uley Project Main RoadGraphite Resource under NI43-101 reporting guidelines.If you have any queries relating to this report, please do not hesitate to contact Trevor Bradley orKaren Lloyd in our West Perth office on 9324 8800.For and on behalf of Coffey Mining Pty LtdThis is a scanned signature held on file by CoffeyMining. The person and signatory consents to itsuse only for the purpose of this document.Karen LloydPrincipal Consultant Audits MINEWPER01006AACoffey Mining Pty Ltd ABN 52 065 481 2091162 Hay Street, West Perth WA 6005 AustraliaPO Box 1671, West Perth WA 6872 AustraliaT (+61) (8) 9324 8800 F (+61) (8) 9324 8877 coffey.com
  • 3. Coffey Mining Pty LtdDOCUMENT INFORMATIONAuthor(s): Karen Lloyd Principal Consultant/Primary Author MAusIMM Trevor Bradley Manager – Audits (Supervising MAIG Principal)Date: 11 July 2012Project Number: MINEWPER01006AAVersion / Status: Final F:MINEProjectsMEGA Graphite IncMINEWPER01006AA_Uley GraphitePath & File Name: ProjectReportCMWPr_1006AA_UleyGraphite_43-101_11July2012_TB Final.docxPrint Date: Thursday, 12 July 2012Copies: MEGA Graphite Inc (1 Electronic) Coffey Mining – Perth (1)Document Change ControlVersion Description (section(s) amended) Author(s) DateDraft ALL TB / KL 07/06/2012Final ALL TB / KL 12/07/2012Document Review and Sign OffThis is a scanned signature held on file by Coffey This is a scanned signature held on file by CoffeyMining. The person and signatory consents to its Mining. The person and signatory consents to itsuse only for the purpose of this document. use only for the purpose of this document.Principal Consultant/Primary Author Supervising Principal ConsultantKaren Lloyd Trevor BradleyUley Main Road Graphite Deposit – MINEWPER01006AANI43-101 Report – 11 July 2012
  • 4. Coffey Mining Pty LtdTable of Contents1 Summary .......................................................................................................................................12 Introduction ..................................................................................................................................33 Reliance on Other Experts ..........................................................................................................44 Property Description and Location ............................................................................................55 Accessibility, Climate, Local Resources, Infrastructure and Physiography .........................76 History ...........................................................................................................................................87 Geological Setting and Mineralisation .......................................................................................9 7.1 Regional Setting ................................................................................................................9 7.1.1 Stratigraphy ............................................................................................................. 9 7.1.2 Project Geology ..................................................................................................... 12 7.1.3 Structural Geology ................................................................................................. 12 7.2 Mineralisation and Alteration .......................................................................................... 138 Deposit Types ............................................................................................................................ 149 Exploration ................................................................................................................................. 1510 Drilling ........................................................................................................................................ 16 10.1 CRAE Drilling .................................................................................................................. 16 10.2 2011 Drilling .................................................................................................................... 18 10.3 Surveying ........................................................................................................................ 18 10.4 Geological Logging ......................................................................................................... 18 10.5 Sampling ......................................................................................................................... 19 10.5.1 CRAE Sampling .................................................................................................... 19 10.6 2011 Sampling................................................................................................................ 19 10.7 Bulk Density Measurement ............................................................................................ 19 10.8 Drillhole Data .................................................................................................................. 19 10.8.1 CRAE Sample Preparation .................................................................................... 19 10.8.2 2011 Sample Preparation ...................................................................................... 20 10.8.3 Prior Analysis ........................................................................................................ 2011 Sample Preparation, Analyses and Security .......................................................................... 21 11.1 CRAE Analytical Quality Control Procedures and Data ................................................. 21 11.1.1 Certified Reference Material (Standards) and Blanks ........................................... 22 11.1.2 Umpire Laboratory Check Assaying ...................................................................... 22 11.1.3 Summary ............................................................................................................... 22 11.2 CRAE Database Validation ............................................................................................ 26 11.3 2011 Drilling Results....................................................................................................... 2612 Data Verification ........................................................................................................................ 28 12.1 Database Coding and Compositing................................................................................ 28 12.2 Summary Statistics ......................................................................................................... 28Uley Main Road Graphite Deposit – MINEWPER01006AANI43-101 Report – 11 July 2012
  • 5. Coffey Mining Pty Ltd 12.3 Density ............................................................................................................................ 28 12.4 Block Model Construction ............................................................................................... 28 12.5 Estimation Approach ...................................................................................................... 30 12.6 Modifying Factors ........................................................................................................... 30 12.7 Resource Classification Criteria ..................................................................................... 30 12.8 Mineral Resource Reporting ........................................................................................... 3313 Mineral Processing and Metallurgical Testing ....................................................................... 34 13.1 1980 - 1987 Testwork ..................................................................................................... 34 13.2 LECO Analyser ............................................................................................................... 34 13.3 Minimum Additional Testwork Requirements ................................................................. 34 13.3.1 Head Assays ......................................................................................................... 34 13.3.2 Mineralogy ............................................................................................................. 35 13.3.3 Batch Flotation Testing.......................................................................................... 3514 Mineral Resource Estimates .................................................................................................... 36 14.1 Geological Interpretation and Modelling ......................................................................... 36 14.2 Mineralisation Interpretation ........................................................................................... 36 14.3 Weathering Interpretation ............................................................................................... 3615 Adjacent Properties .................................................................................................................. 3716 Other Relevant Data and Information ...................................................................................... 38 16.1 Geological Model ............................................................................................................ 38 16.2 Grade .............................................................................................................................. 38 16.3 Resource Tonnages ....................................................................................................... 3817 Interpretation and Conclusions ............................................................................................... 4018 Recommendations .................................................................................................................... 4119 References ................................................................................................................................. 42Date and Signature Page .................................................................................................................... 43Uley Main Road Graphite Deposit – MINEWPER01006AANI43-101 Report – 11 July 2012
  • 6. Coffey Mining Pty LtdList of TablesTable 1_1 – June 2012 Resource 2Table 4_1 – Tenement Schedule Summary 5Table 10.1_1 – Estimate Summary Drilling and Sampling Statistics for 16Table 10.2_1 – 2011 Drillhole Locations 18Table 10.7_1 – Bulk Density Statistics 19Table 11.3_1 – 2011 Assay Results 27Table 12.2_1 – Summary 2m Composite Statistics –Graphitic Carbon (%) 29Table 12.4_1 – Block Model Parameters 30Table 12.7_1 – Confidence Levels of Key Categorisation Criteria 31Table 12.7_2 – Sampling Techniques and Data 31Table 12.7_3 – Estimation and Reporting of Minerals Resources – Fundamental Data 32Table 12.7_4 – Estimation and Reporting of Minerals Resources – Modifying Factors 32Table 16.3_1 – Classified Resource at 3.8% Graphitic Carbon Cutoff 39Table 18_1 – Exploration Potential – 41List of FiguresFigure 4_1 – Uley Graphite Project - Tenure 6Figure 5_1 – Uley Graphite Project - Accessibility 7Figure 7.1.1_1 – Stratigraphic Column 11Figure 7.1.3_1 – Graphitic Schist – Uley Main Road Deposit 12Figure 8_1 – Graphitic Schist Model – Uley Main Road Deposit 14Figure 9_1 – Regional Mineralisation Targets 15Figure 10.1_1 – Drillcore Storage and Sample Archive 17Figure 10.1_2 – Outcrop at the 17Figure 11.1.2_1 – Summary Statistics – Amdel versus Comlabs 24Figure 11.1.2_2 – Umpire Assaying 25Figure 17_1 –Other Adjacent Anomalies 40Uley Main Road Graphite Deposit – MINEWPER01006AANI43-101 Report – 11 July 2012
  • 7. Coffey Mining Pty LtdList of AppendicesAppendix A – Lab Assay ProtocolsAppendix B – Extracts from Warries and Barnes October 1996 ReportAppendix C – 2012: ResourceUley Main Road Graphite Deposit – MINEWPER01006AANI43-101 Report – 11 July 2012
  • 8. Coffey Mining Pty Ltd1 SUMMARY Coffey Mining Pty. Ltd. (Coffey Mining) has been retained by MEGA Graphite Inc (MEGA) via a letter of engagement dated 6 March 2012 to undertake reporting of the Uley Main Road graphite deposit under Canadian National Instrument 43-101 Standards of Disclosure for Mineral Projects (2011). Coffey Mining has validated the existing drillhole data and database, re-constructed data from local mine grid to Australian Mine Grid (AMG) survey and developed a new density model for the resource, based on billet sampling with results produced to certified Australian Standards 1289.2.1.1 and 1289.3.5.1. This report documents the graphite resource, which has been estimated using Ordinary Kriging (OK) techniques and cross checked against an estimate calculated by using Inverse 3 Distance Cubed (ID ) methods. Both estimates utilised the re-validated drillhole and assay data as well as an additional (50 sample) assay set from a diamond core drilling programme undertaken in 2011. The Uley Project is located on the Eyre Peninsula, 15km west-southwest of Port Lincoln in the state of South Australia. A site visit was undertaken in May 2012. The Uley project consists of five contiguous tenements, of which two are retention licences, two are mining leases and one is an exploration licence. Uley has been mined intermittently from the 1920s with the most recent period of production coming to an end in early 1993. The mining and processing site has been on extended care and maintenance since that time. The 20 tonne per hour (tph) processing plant is substantially intact and operable, subject to refurbishment. A 33KV power supply to the plant site is in place and energised. Coffey Mining validated substantial parts of the Conzinc Rio Tinto Exploration (CRAE) database, containing sample, assay and drillhole data. Independent contractors have re- established collar and survey control and Coffey Mining has developed a density model using recent density data measured to applicable standards by Coffey Information (an associated company to Coffey Mining) has been developed. Based upon this work the insitu dry bulk density (DBD) of the wallrock material used is 2.6g/cm³. The DBD of graphite is 2.17g/cm³. The density model using 2.17g/cm³ and the estimated percentage of graphite was applied to the resource block model.Uley Main Road Graphite Deposit – MINEWPER01006AA Page: 1NI43-101 Report – 11 July 2012
  • 9. Coffey Mining Pty Ltd Coffey verify that all the relevant core, as documented in the archive provided by MEGA, is intact; that the original and residual sampling was re- verified; that all collar positions have been updated from local mine grid to the Australian Height Datum AMG grid correctly and that a topographic survey has been completed. In addition to the classified Mineral Resource several less well explored prospects were identified and reported on. These are located on the exploration tenement and provide an additional total exploration potential, which is estimated to fall within a range of 25-150Mt with grade ranging from 5 to 20% graphitic carbon. This report has been prepared in accordance with and complies with Canadian National Instrument 43-101 for the ‘Standards of Disclosure for Mineral Projects’ of June 2011 (the Instrument) and the resource and reserve classifications adopted by the Canadian Institute of Mining (CIM) Council in November 2004. The report is also consistent with the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’ of December 2004 (JORC Code) as prepared by the Joint Ore Reserves Committee of the Australasian Institute of Mining and Metallurgy (AusIMM), Australian Institute of Geoscientists (AIG) and Mineral Industry Consultants Association (MICA). The Uley Graphite Mineral Resource Upgrade Report, of June 2011, was prepared by Coffey Mining and the Resource declared in accordance with the guidelines of the JORC Code 2004. Ms Karen Lloyd compiled this report under the direct supervision of Mr Trevor Bradley (MAIG), an employee of Coffey Mining and a Member of the Australian Institute of Geoscientists whom has sufficient experience relevant to the activity undertaken to qualify as a Qualified Person as defined in NI43-101 and whom takes responsibility for this report on behalf of Coffey Mining Pty Ltd. The Mineral Resource Statement as at 10 June 2011 is tabulated below (Table 1_1). Table 1_1 Uley Main Road Graphite Deposit - June 2011 Resource Update Classified Resource at 3.8% Graphitic Carbon Cutoff OK Estimate using a Parent Block of 10mY by 4mE and 4mRL Lower Cutoff Grade Tonnage Average Grade Classification (Graphitic Carbon %) (Mt) (Graphitic carbon %) Indicated 3.8 4.3 9.4 Inferred 3.8 2.3 7.5 Total 6.6 8.7 Notes:  There is drilling coverage for the whole rock grades on a 25m by 50m grid over the target areas. These host rocks, folded and thrust graphitic schists, were intersected by 30 drillholes. Of these all 30 are diamond drillholes.  Statistical analyses on samples and 2m composites were completed.  Grade estimates were calculated for 4m (east-west) by 10m (north-south) by 4m (vertical) blocks. The method used to obtain grade estimates was Ordinary Kridging. An ID3 check estimate was performed.  Average in situ dry bulk densities were applied. Density measurements are obtained from direct measurment to Austraslian standard. Mineral Resource classification was developed from the confidence levels of key criteria including drilling methods, geological understanding and interpretation, sampling, data density and location, grade estimation and quality. The requirements for infill drilling, together with uncertainties in geological interpretation and mineralisation envelopes in the more structurally complex zones have resulted parts of the resource being classified as an Inferred Mineral Resource.  Model does not include mining dilution nor metallurgical receovery. Metallurical recovery of flake graphite estimated at 60% of graphite grade.Uley Main Road Graphite Deposit – MINEWPER01006AA Page: 2NI43-101 Report – 11 July 2012
  • 10. Coffey Mining Pty Ltd2 INTRODUCTION Coffey Mining Limited (Coffey Mining) has been commissioned by MEGA Graphite Inc (MEGA) to report on the Uley Graphite Project, located in the state of South Australia under Canadian National Instrument 43-101 Standards of disclosure for Mineral Projects (2011). This report complies with the requirements of NI-43101 for the purpose of listing on the Toronto Stock Exchange (TSX) and has been prepared in accordance with the NI-43101. A site visit was undertaken on 22 May 2012. The competent person in respect of this report is Mr Trevor Bradley (MAIG), an employee of Coffey Mining and a Member of the Australian Institute of Geoscientists whom has sufficient experience relevant to the activity undertaken to qualify as a Qualified Person as defined in NI43-101 (2011) and whom takes responsibility for this report on behalf of Coffey Mining Pty Ltd. Ms Karen Lloyd is the primary author and compiled the report under the direct supervision of Mr Bradley. A historical Mineral Resource estimate was previously undertaken by Coffey Mining in January 2010. Previous Mineral Resource estimates have not been reported under NI-43101 as historical ownership of the project was limited to Australian Securities Exchange listed companies and privately owned entities. Coffey Mining and its parent, Coffey International, has been providing consulting services for over 50 years. Coffey International Limited (Coffey) is an Australian-based international consulting firm specialising in the areas of mining and geotechnical engineering, hydrogeology, hydrology, tailings disposal, environmental science and social and physical infrastructure. Neither Coffey, nor the Experts responsible for compiling this report, have or have had previously any material interest in MEGA Graphite Inc or the mineral properties in which MEGA Graphite Inc has, or is earning, or acquiring, an interest. Coffey Minings relationship with the Uley Graphite Project is solely one of professional association between client and independent consultant. This report is prepared in return for professional fees based upon an agreed commercial schedule of rates and the payment of these fees is in no way contingent on the results of this report.Uley Main Road Graphite Deposit – MINEWPER01006AA Page: 3NI43-101 Report – 11 July 2012
  • 11. Coffey Mining Pty Ltd3 RELIANCE ON OTHER EXPERTS The principal sources of information used to compile this report comprise technical reports and technical data variously compiled and supplied by MEGA Graphite Inc, and its consultants and discussions with its corporate management. A listing of the principal sources of information is included in Section 19 of this report. As part of this assessment a Principal Consultant and employee of Coffey Mining Ms Karen Lloyd has visited the project site in May 2012. Ms Lloyd is a Member of the Australian Institute of Mining and Metallurgy (AusIMM) and has applied for fellowship status. Mr Trevor Bradley is reliant on Ms Lloyd for the purpose of the site visit and has liaised with Ms Lloyd throughout the generation, reporting and validation of the 2012 Mineral Resource model and this document. The data supplied as related to resource estimates and exploration includes:  Primarily, digital files, in MapInfo format of geology, geophysics and tenements.  A Vulcan/Maptek Map-file with drilling and assay completed by the tenement holders prior to MEGA, who were Conzinc Rio Tinto Exploration (CRAE).  A series of resource completion reports (Collins 2007; Read and Associates, 1987; Finch 1984; and Howard, 1982) that summarises the resource estimate methodology, the project geology, the project database to that time, drilling methods, QA/QC procedures, sampling methodologies, structural analysis, target generation and a tabulated and classified resource. The latter of these reports is a comprehensive and diligent summary of all work on the Project to that date and represents the major report at hand on the Uley Project.  Data previously held in archive by Coffey Mining of project work completed by RSG Global (subsequently merged with Coffey Mining in 2007).  Assays received from ALS-Chemex, Perth for samples submitted in the 2011 drilling programme. Coffey Mining declares that it has relied upon the information it has been provided by MEGA Graphite Inc and has taken all reasonable care to ensure that the information contained in this report is, to the best of its knowledge, in accordance with the facts. Furthermore Coffey Mining assumes that the information contains no omission likely to affect its import. Coffey Mining has not undertaken any independent enquiries or audits of MEGA Graphite Inc to verify that all material documentation has been provided and gives no representation that its assumption is correct. MEGA Graphite Inc has agreed to indemnify Coffey Mining from any liability arising from Coffey Mining’s reliance on data provided or not provided to it.Uley Main Road Graphite Deposit – MINEWPER01006AA Page: 4NI43-101 Report – 11 July 2012
  • 12. Coffey Mining Pty Ltd4 PROPERTY DESCRIPTION AND LOCATION The Uley Graphite Project consists of five contiguous tenements (Table 4_1 and Figure 4_1), of which two are retention leases two are mining leases and one is an exploration licence. Development would be subject to the development, submission and approval of a Mining and Rehabilitation Plan (MARP) which is mandated under South Australian State legislation. MEGA has a 100% interest in these tenements and no royalty agreements are in place. Table 4_1 Uley Main Road Graphite Deposit - Resource Update Tenement Schedule Summary Type Lease/Title Number Area Expiry ML 5561 44ha 16 March 2017 Mining Lease ML 5562 22ha 16 March 2017 RL 66 225ha 10 October 2016 Retention Lease RL 67 187.5ha 10 October 2016 Exploration Lease EL 3414 75km² 12 October 2014 Allotment 1/Plan 28872 Freehold Title 117ha N/A Hundred of UleyUley Main Road Graphite Deposit – MINEWPER01006AA Page: 5NI43-101 Report – 11 July 2012
  • 13. Coffey Mining Pty Ltd Figure 4_1 Uley Graphite Project – Tenure (Source: MEGA)Uley Main Road Graphite Deposit – MINEWPER01006AA Page: 6NI43-101 Report – 11 July 2012
  • 14. Coffey Mining Pty Ltd5 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY The project site is situated approximately 23km west and southwest from the City of Port Lincoln (population 14,000), the regional centre for the Lower Eyre Peninsula (Figure 5_1). Port Lincoln offers a nearby workforce and substantial infrastructure. Port Lincoln has a modern deep water port and is serviced by air from Adelaide the capital city of the state of South Australia. A two lane highway connects Port Lincoln to other regional towns on the peninsula and through to Adelaide, a total road distance of just over 600 kilometres. With rolling topography and coastal cliffs, the areas average maximum temperatures range from 25 - 29°C in summer to a slightly cooler 15-18°C in winter. Rainfall is about 500mm or 20 inches which mainly falls during the winter months. Figure 5_1 Uley Graphite Project – Accessibility North 10kmUley Main Road Graphite Deposit – MINEWPER01006AA Page: 7NI43-101 Report – 11 July 2012
  • 15. Coffey Mining Pty Ltd6 HISTORY The project was mined by open pit methods intermittently from the 1920s and the latest episode of production ceased in early 1993. The mining and processing site has been on extended care and maintenance since that time. The 20 tonne per hour (tph) processing plant is substantially intact and presumed operable, subject to refurbishment. A 33KV power supply to the plant site is in place and energised. A tailings storage facility (TSF) is present, as are the mine-offices and accommodation blocks. The depleted pit is flooded and the records of production from the old pit were abandoned in 1993 when the mine was closed.Uley Main Road Graphite Deposit – MINEWPER01006AA Page: 8NI43-101 Report – 11 July 2012
  • 16. Coffey Mining Pty Ltd7 GEOLOGICAL SETTING AND MINERALISATION7.1 Regional Setting The graphite deposits around Port Lincoln are located within the Gawler Craton geological province. The Hutchison Group metasediments within which the deposits are hosted overlies the granitoid gneisses of the Sleaford Complex and is itself overlain elsewhere by marine shelf sediments of the Wallaroo Group. Regionally the project area is overlain by calc-arenites of the Tertiary age Bridgewater Formation, which locally, are immediately underlain by either the Pliocene age Uley Formation (well sorted, rounded orange-brown-clayey sand and quartzose sand) or the Eocene age Wanilla Formation (humic fluvial sands). Local laterally extensive ferricrete is developed over the Wanilla sediments. The Uley and Wanilla formations overlie the Archean age, Hutchinson Group which is split into a lower and upper Hutchinson Group and separated by the Cook Gap Schist. The graphite deposits which are the subject of this report are hosted within the Cook Gap schist. To the north east of the Uley tenements lies the Kalinjala mylonite, which represents a vertical tectonic terrane boundary and fault zone. To the north of the tenements lies an eastward verging thrust zone within the Donnington (1850 Ma) suite of charnockites, granite gneiss and gabbro-norites geographically proximal to Boston and Louth bays. The Uley Graphite Project tenements lie within the Lincoln SI53-11 1:250,000 Geology sheet (Schwarz, 2003). Drilling on the tenements has intersected the Katunga dolomite and the Warrow quartzite at the base of the Hutchinson Group. The Uley Main Road deposit and the now depleted Uley pit are both interpreted to be developed within a thrust zone of similar age to the one to the North within the Donnington suite. The geological basement is comprised of undifferentiated ortho- and para-gneiss of the Archean age Sleaford Complex.7.1.1 Stratigraphy The basement to the Hutchison Group is the Sleaford Gneiss and similar age gneisses in the Port Lincoln area, though little of this sequence has been recognised in the Middleback Ranges. Areas between the Hutchison Group exposures are most probably Dutton or Donnington Suite granites and gneisses, although exposure in these areas is poor. Figure 7.1.1_1 summarises the stratigraphy in the region. Parker & Lemon (1982) defined the stratigraphy of the Hutchison Group for the entire Eyre Peninsula. Facies variations were invoked to account for the significant iron formations of the Middleback Ranges around Whyalla. The Hutchison Group stratigraphy in the Middleback Range comprises from base: the Warrow Quartzite, Katunga Dolomite, Lower Middleback Jaspilite, Cook Gap Schist, and the Upper Middleback Jaspilite.Uley Main Road Graphite Deposit – MINEWPER01006AA Page: 9NI43-101 Report – 11 July 2012
  • 17. Coffey Mining Pty Ltd The Lower Middleback Jaspilite was further subdivided into 4 members: the Duke, Duchess, Knight and Long Gulley members (Lemon, 1979). These members were originally limited to the South Middleback Ranges only, however RSG Global (now Coffey Mining) geophysical interpretations suggest that the lower 3 members can be identified throughout the entire Eyre Peninsula.Uley Main Road Graphite Deposit – MINEWPER01006AA Page: 10NI43-101 Report – 11 July 2012
  • 18. Coffey Mining Pty Ltd Figure 7.1.1_1 Source Parker & Lemon (1982) Stratigraphic ColumnUley Main Road Graphite Deposit – MINEWPER01006AA Page: 11NI43-101 Report – 11 July 2012
  • 19. Coffey Mining Pty Ltd7.1.2 Project Geology The Uley project target horizon within the Hutchison Group is the Cook Gap Schist, The Warrow Quartzite and Katunga Dolomite have been intersected and are horizons below the target. Thrusting, faulting and folding with subsequent metamorphism have resulted in graphite mineralisation being developed in thickened local synclinal rootless folds. Faulting and thrusting has further disrupted the graphite mineralisation resulting in brecciated and sheared textures. Three broad sub-horizontal broad graphitic horizons are recognised, two above and one below an interpreted flat lying fault, interpreted to be a thrust. This interpretation of the Uley Main Road deposit is in broad agreement with mapping and interpretations made during excavation of the now depleted Uley pit, some 600m to the north7.1.3 Structural Geology The Uley prospect is hosted within a suite of graphitic schists (Figure 7.1.3_1) and biotite- garnet gneisses. This has been historically interpreted as a basal sub-horizontal thrust, with folded and thrust schists and gneiss in the hanging wall of the thrust. Locally the stratigraphy has been metasomatised during high grade metamorphism and siliceous pegmatite veins invade the schists and gneiss. The timing of these events is unknown Figure 7.1.3_1 Graphitic Schist – Uley Main Road DepositUley Main Road Graphite Deposit – MINEWPER01006AA Page: 12NI43-101 Report – 11 July 2012
  • 20. Coffey Mining Pty Ltd7.2 Mineralisation and Alteration Metasomatised pegmatites that are quartz rich, are developed during high grade prograde metamorphism and are encountered throughout the stratigraphy. Carbonate alteration occurs both as pervasive wall-rock alteration and as carbonate veins/veinlets. Pervasive carbonate alteration haloes have been observed in the rocks within and surrounding the Uley mineralisation on a scale of up to hundreds of metres. Carbonate alteration has been observed in nearly all types of rocks.Uley Main Road Graphite Deposit – MINEWPER01006AA Page: 13NI43-101 Report – 11 July 2012
  • 21. Coffey Mining Pty Ltd8 DEPOSIT TYPES Graphite is developed as a constituent mineral in coarse prograde metamorphic assemblages as well as in the fabric and foliation of micaceaous schists. These are interpreted to be the folded, thrust and metamorphosed equivalents of the Cook Gap Schist. Folding on various local scales is obvious (Figure 8_1). Figure 8_1 Graphitic Schist Model – Uley Main Road Deposit View to N across N9500 Local Grid Light blue: un-mineralised < 3% Graphitic carbon, Blue/mauve 3-5%, Yellow 5-6%, Orange 6-10%, Red 10-20%; Purple > 20%Uley Main Road Graphite Deposit – MINEWPER01006AA Page: 14NI43-101 Report – 11 July 2012
  • 22. Coffey Mining Pty Ltd9 EXPLORATION Coffey Mining has reviewed the existing regional exploration data. The primary exploration targeting tool is a Sirotem geophysical survey completed by Solo Geophysics using a 50m x 50m loop size and MKIII instrument. These EM anomalies (Figure 9_1) have subsequently been followed up with diamond drilling and significant intersections are reported below (Table 10_1). Exploration is targeting graphitic schists within a sequence of garnet-biotite and cordierite gneisses and metasediments. These targets have an obvious and distinct EM signature which has not been affected by weathering. Figure 9_1 Regional Mineralisation Targets (Source: SER)Uley Main Road Graphite Deposit – MINEWPER01006AA Page: 15NI43-101 Report – 11 July 2012
  • 23. Coffey Mining Pty Ltd10 DRILLING The original RSG Global and Coffey Mining resource estimates were based on a subset of a global database consisting of 2,560m of diamond drilling dating from 1982 to 1983 completed by Conzinc Rio Australia Exploration (CRAE). The drilling database has been reformatted into a Vulcan ISIS database and Excel spreadsheet for use in Vulcan and comprises 71 drillholes for 5,212.7m of drilling. Of these 18 drillholes, for 1,153.6m of diamond drilling (HQ size) were actually used for the Uley Main Road resource estimate, with 987.4m of core sampled. The remainder represent scattered drilling on other geophysical anomalies on the surrounding exploration tenement. Coffey Mining has independently verified the drilling data through access to the HQ/HQ3 core stored in secured core-sheds on the Retention Leases. Eight of the CRAE drillhole collars used for the resource estimate were also preserved in the field and visited.10.1 CRAE Drilling All remaining CRAE drill core (Figure 10.1_1), post sampling are kept on-site in two secure sheds. All assay (Table 10.1_1), sampling results, procedures, manuals and remnant materials are kept on-site, either in a laboratory annex to the site-office, or a metallurgical laboratory next to the plant site. There are a number of scattered test pits (Figure 10.1_2). Table 10.1_1 Uley Main Road Graphite Deposit - December 2009 Resource Update Estimate Summary Drilling and Sampling Statistics Number Average Length Total Drilled Number of Method of Holes (m) Metres Assays Diamond 18 96 1,153.6 1,028Uley Main Road Graphite Deposit – MINEWPER01006AA Page: 16NI43-101 Report – 11 July 2012
  • 24. Coffey Mining Pty Ltd Figure 10.1_1 Drillcore Storage and Sample Archive Figure 10.1_2 Outcrop at the “Eastern Anomaly” to the East of Uley Main Road DepositUley Main Road Graphite Deposit – MINEWPER01006AA Page: 17NI43-101 Report – 11 July 2012
  • 25. Coffey Mining Pty Ltd10.2 2011 Drilling Diamond drilling (Table 10.2_1) on infill spacing of 25 x 50m has been completed to complement the existing resource and assay database. The core is HQ (63.5mm) and all drilling is vertical. Table 10.2_1 Uley Main Road Graphite Deposit 2011 Drillhole Locations Drillhole Easting (m) Northing (m) Dip Final Depth (m) ULEY 500 564,347 6,148,618 -90 105.5 ULEY 501 564,297 6,148,618 -90 108.5 ULEY 502 564,247 6,148,618 -90 96.3 ULEY 503 564,372 6,148,568 -90 85.6 ULEY 504 564,347 6,148,568 -90 100 ULEY 505 564,272 6,148,568 -90 102.5 ULEY 506 564,247 6,148,568 -90 94.6 ULEY 507 564,197 6,148,568 -90 103.5 ULEY 508 564,197 6,148,518 -90 99.5 ULEY 509 564,197 6,148,468 -90 104 ULEY 510 564,247 6,148,468 -90 80.4 ULEY 511 564,347 6,148,518 -90 81.410.3 Surveying All plan collars and data was based on the Uley Mine Grid. In Howard (1982) a reference is provided to the local to AMG grid conversion factors. As was common in 1982, local mine grid was used and then truncated to deal with the 8 bit processors in calculators and computers at that time. The reported truncation was E -56,000m and N -6,140,000 metres. This has been applied to reformat the composite “Mapfiles” used in the estimation and the block model these data inform. Drillhole collars have been re-surveyed in the field and these transforms validated. Topography has been re-surveyed by a qualified local land surveyor and applied to the block models as a DTM. Drillhole data had heights specified to AHD (Australian Height Datum). All holes used in the resource database were recorded as vertical.10.4 Geological Logging The geological logging was completed and recorded by qualified CRAE geologists with logging details, assay sheets and drillhole core recoveries provided in Appendix 1. The drillhole logs were directly entered into Excel spreadsheets on-site. The drillhole database is currently stored in a Vulcan - ISIS format. The project database stores the geological logging data, assay analyses and collars which is considered sufficient for the current study.Uley Main Road Graphite Deposit – MINEWPER01006AA Page: 18NI43-101 Report – 11 July 2012
  • 26. Coffey Mining Pty Ltd10.5 Sampling10.5.1 CRAE Sampling CRAE sampled the core as 1m lengths, typically as ½ sawn drillcore. Where geology remained constant, lengths where increased to a maximum of 1.5m, 2m or 3m intervals. Where geology varied at lengths less than 1m, intervals down to 0.3m were sampled. The most common sample length is 1m. For the resource estimate, 2m composites were used.10.6 2011 Sampling Whole core was selected on geological intervals that were dispatched to ALS-Chemex in Perth. Fifty percent by weight of crushed -6mm sample was retained as a reference sample.10.7 Bulk Density Measurement Selected core samples have undergone density determination by the Coffey Mining affiliate Coffey Information. Selected billets of core have been tested and certified to Australian Standards 1289.2.1.1 for core and AS1289.3.5.1 for looser material. Twenty four direct measurements were taken. Two different methods were used, both are direct measurement of selected billets and soil particle measurement was only used where material was no longer coherent core. The average of these is 2.6g/cm³. Table 10.7_1 summarises the results of the density measurements. Table 10.7_1 Uley Main Road Graphite Deposit Bulk Density Statistics Mean 2.6 Median 2.7 Kurtosis 2.2 Mode 2.6 Geomean 2.6 Number 24 Maximum 3.5 Minimum 1.7 Skew -0.4715210.8 Drillhole Data10.8.1 CRAE Sample Preparation The CRAE core samples were crushed and sieved on site and the +75µm fraction subjected to LECO analysis for graphite. This method in essence follows the “Proximate” analysis methodologies used in oil, gas, coal and carbon based mineral systems, where % volatiles, % ash and % fixed carbon are determined.Uley Main Road Graphite Deposit – MINEWPER01006AA Page: 19NI43-101 Report – 11 July 2012
  • 27. Coffey Mining Pty Ltd10.8.2 2011 Sample Preparation The core samples were crushed and sieved by ALS-Chemex and the +75µm fraction subjected to LECO analysis for graphite using techniques C-IR07, C-IR17, C-IR-06 and carbonate % by calculation.10.8.3 Prior Analysis The determination of graphitic carbon in a specimen containing graphite cannot be determined by loss on ignition and moisture analysis alone, as a significant fraction of the non-graphitic mineral component may be present as volatile carbonates, bicarbonates, sulphides and nitrates. Organic compounds are expected to be present in samples, when mined. The total concentration of organic and inorganic decomposition gases is determined as the Volatile Matter by heating a weighed specimen in a covered crucible, at > 950°C for a specified time in an insert atmosphere. All CRAE samples were analysed on-site or at Amdel in 1980-1987, with analysis involving the following steps:  Determination of moisture content;  Loss on Ignition and residual ash content  Content of non-combustible volatiles, fixed carbon after combustion and volatilisation;  Sizing analysis;  Acid leach of minerals fractions;  LECO carbon analysis by Infrared spectrometry;  Wet-sieving analysis. Samples (20g) are sieved at +150µm, 106µm and 75µm, after crushing and froth flotation, acid leach and LECO analysis is performed on all size fractions. The LECO CR 412 Analyser is a non-dispersive, infrared, digitally controlled device and is designed to measure the carbon content in a wide variety of organic and inorganic materials, including soil, cement and limestone. Analysis begins by weighing out a sample into a combustion boat (crucible). On analysis, the sample is typically combusted at >1350°C, within a pure oxygen environment. All sample materials contained in the combustion boat go through an oxidative reduction process which causes carbon bearing compounds to break down freeing the carbon, which oxides to form CO2. From the combustion chamber, the gases flow through two Anhydrone (MgCl4) tubes to remove moisture, through a flow controller (3.5l/min) then through to an infrared (IR) detection cell. The IR cell measures the concentration of carbon dioxide gas present. The instrument, its theory of operation, and characteristics are presented in Appendix 1. The LECO CR 412 Analyser has an inherent manufacturer specified accuracy of +/- 1% carbon present.Uley Main Road Graphite Deposit – MINEWPER01006AA Page: 20NI43-101 Report – 11 July 2012
  • 28. Coffey Mining Pty Ltd The method as developed and applied by Amdel (now part of the Bureau Veritas group) is reported in Howard, 1982. Samples are acid digested at 90°C and then filtered on fibreglass. Dried samples are then heated in an oven to 500°C before being heated in a “LECO” combustion chamber at 1500°C and the CO2 is determined by infrared spectrometry. Subsequent stoichiometric calculation results in percentage carbon as graphite or carbon in carbonate. These were the two variables estimated in the original resource estimate.11 SAMPLE PREPARATION, ANALYSES AND SECURITY The current round of sampling was subjected to:  Acid leach of mineral fractions;  LECO carbon analysis by Infrared spectrometry.11.1 CRAE Analytical Quality Control Procedures and Data As part of a previous study, Coffey Mining had completed a statistical review on the quality control data provided by MEGA. The objective of these analyses was to determine accuracy of the assaying and also to assess the relative precision and accuracy levels between various sets of assay pairs. It should be noted that no additional assay quality control data has been provided to Coffey Mining for any assaying completed since Howard (1982) reported these. The quality control data investigated by Coffey Mining for this assignment was only the umpire and duplicate assays undertaken by Howard (1980). The statistical measures used in these assessments are summarised as follows:  Thompson and Howarth Plot, showing the mean relative percentage error of grouped assay pairs across the entire grade range, used to visualise precision levels by comparing against given control lines.  Rank % HARD Plot, which ranks all assay pairs in terms of precision levels measured as half of the absolute relative difference from the mean of the assay pairs (% HARD), used to visualise relative precision levels and to determine the percentage of the assay pairs population occurring at a certain precision level.  Mean vs % HARD Plot, used as another way of illustrating relative precision levels by showing the range of % HARD over the grade range.  Mean vs %HRD Plot is similar to the above, but the sign is retained, thus allowing negative or positive differences to be computed. This plot gives an overall impression of precision and also shows whether or not there is significant bias between the assay pairs by illustrating the mean percent half relative difference between the assay pairs (mean % HRD).Uley Main Road Graphite Deposit – MINEWPER01006AA Page: 21NI43-101 Report – 11 July 2012
  • 29. Coffey Mining Pty Ltd  Correlation Plot is a simple plot of the value of assay 1 against assay 2. This plot allows an overall visualisation of precision and bias over selected grade ranges. Correlation coefficients are also used.  Quantile-Quantile (Q-Q) Plot is a means where the marginal distributions of two datasets can be compared. Similar distributions should be noted if the data is unbiased.  Standard Control Plot shows the assay results of a particular reference standard over time. The results can be compared to the expected value, and the ±10% precision lines are also plotted, providing a good indication of both precision and accuracy over time.11.1.1 Certified Reference Material (Standards) and Blanks Coffey Mining can find no records of standard certified reference materials and blanks being used. Laboratory procedures and manuals are however comprehensively documented on- site. The sampling methodology used is similar to that used in coal and the determination of organic content in sediments and these are broadly destructive techniques, with a limited ash residue not suited for replicate analysis.11.1.2 Umpire Laboratory Check Assaying Howard (1982) took seventeen samples from the remnant HQ core for the purposes of umpire and duplicate analysis. The Amdel laboratory is the original sample venue. Due to the nature of the HQ sampling, only limited material was reportedly available for this umpire analysis. Results of umpire and duplicate analysis as reported in Howard (1982) are presented in Figures 11.1.2_1 and 11.1.2_2. At a 15% precision level, >80% of the data are within precision limits. Given the flakey and thus nuggetty effect the graphite flakes and grains would have on sampling, these results are considered acceptable. The LECO instrument has stated manufacturers accuracy of 1% carbon under ideal operating conditions. The Amdel versus check laboratory (Comlabs) comparison displays overall acceptable precision (82% within a 15% Rank HARD limit) although the mean of the Comlabs analysis (15.3% C) is 2.1% higher than the Amdel assay (13%).11.1.3 Summary Although limited, the CRAE quality control protocols implemented at Uley are considered to represent good industry practice at the time and allow some assessment of analytical precision and accuracy. The assay data is considered to display acceptable precision. Further investigation is recommended into the sample preparation to ensure improved precision is achieved in future assay results.Uley Main Road Graphite Deposit – MINEWPER01006AA Page: 22NI43-101 Report – 11 July 2012
  • 30. Coffey Mining Pty Ltd Additional duplicate assaying should be completed at a rate of 1:20 samples submitted. This additional quality control data allowed further investigation of the sample preparation and enabled the determination of the errors associated with the crushing and splitting of the crushed sub-sample relative to the pulverisation. Coffey Mining notes that the umpire repeats are ~20% higher in grade, however the graphs indicate this is due to nuggetty mineralisation at grades > 20% graphite carbon. No standards data was available for review at the time of this report, however the AMDEL laboratory was considered to be a reputable laboratory at the time for carbon analysis.Uley Main Road Graphite Deposit – MINEWPER01006AA Page: 23NI43-101 Report – 11 July 2012
  • 31. Coffey Mining Pty Ltd Figure 11.1.2_1 Summary Statistics – Amdel versus Comlabs Summary (All Data) AMDEL COMLABS Units Result No. Pairs: 17 17 Pearson CC: 1.0 Minimum: 0.2 0.5 carbon % Spearman CC: 1.0 Maximum: 41.8 53.5 carbon % Mean HARD: 11.6 Mean: 13.0 15.8 carbon % Median HARD: 4.7 Median 10.8 10.8 carbon % Std. Deviation: 11.2 14.7 carbon % Mean HRD: -11.5 Coefficient of Variation: 0.9 0.9 Median HRD -4.7 Mean vs. HARD Plot Rank HARD Plot (All Data) (All Data) 60 100 HARD (%) 80 HARD (%) 40 60 82.4% of data are within Precision limits 20 40 20 0 0.1 1 10 100 0 0 10 20 30 40 50 60 70 80 90 100 Mean of Data Pair (carbon %) Rank (%) Mean HARD: 11.6 Median HARD: 4.7 Precision: 15% Precision: 15% HRD Histogram Mean vs. HRD Plot (All Data) (All Data) Frequency (%) 30 20 HRD (%) 0 20 -20 10 -40 0 -60 -1.0 0.0 1.0 0.1 1 10 100 HRD (/100) Mean of Data Pair (carbon %) Mean HRD: -11.5 Median HRD: -4.7 Mean HRD: -11.5 Median HRD: -4.7 Precision: +/-15.0% Precision: +/-15% Absolute Difference (carbon %) T & H Precision Plot (Assay Pairs) T & H Precision Plot (Grouped Pairs) (All Data) (All Data) Median AD (carbon %) 100 10 10 1 1 0.1 0.01 0.1 0.1 1 10 100 1 10 Mean of Data Pair (carbon %) Grouped Mean of Pair (carbon %) 10% 20% 30% 50% 10% 20% 30% 50% Correlation Plot QQ Plot (All Data) (All Data) COMLABS (carbon %) COMLABS (carbon %) 60 60 40 40 20 20 0 0 -20 0 10 20 30 40 50 60 -20 0 10 20 30 40 50 60 AMDEL (carbon %) AMDEL (carbon %) P.CC= 1.0 S.CC= 1.0 Ref. Line y = 1.3x -0.8 Ref. Line y = 1.3x -0.9 Printed: 17-Dec-2009 16:59:22 Data Refreshed: 17-Dec-2009 16:54:24 Page 1Uley Main Road Graphite Deposit – MINEWPER01006AA Page: 24NI43-101 Report – 11 July 2012
  • 32. Coffey Mining Pty Ltd Figure 11.1.2_2 Umpire Assaying Summary (All Data) AMDEL ANALABS Units Result No. Pairs: 17 17 Pearson CC: 1.0 Minimum: 0.2 0.3 carbon % Spearman CC: 1.0 Maximum: 41.8 50.9 carbon % Mean HARD: 8.1 Mean: 13.0 14.7 carbon % Median HARD: 5.6 Median 10.8 12.5 carbon % Std. Deviation: 11.2 13.7 carbon % Mean HRD: -4.8 Coefficient of Variation: 0.9 0.9 Median HRD -2.0 Mean vs. HARD Plot Rank HARD Plot (All Data) (All Data) 30 100 HARD (%) 80 HARD (%) 20 60 82.4% of data are within Precision limits 10 40 20 0 0.1 1 10 100 0 0 10 20 30 40 50 60 70 80 90 100 Mean of Data Pair (carbon %) Rank (%) Mean HARD: 8.1 Median HARD: 5.6 Precision: 15% Precision: 15% HRD Histogram Mean vs. HRD Plot (All Data) (All Data) Frequency (%) 40 20 HRD (%) 30 0 20 -20 10 0 -40 -1.0 0.0 1.0 0.1 1 10 100 HRD (/100) Mean of Data Pair (carbon %) Mean HRD: -4.8 Median HRD: -2.0 Mean HRD: -4.8 Median HRD: -2.0 Precision: +/-15.0% Precision: +/-15% Absolute Difference (carbon %) T & H Precision Plot (Assay Pairs) T & H Precision Plot (Grouped Pairs) (All Data) (All Data) Median AD (carbon %) 100 10 10 1 1 0.1 0.01 0.1 0.1 1 10 100 1 10 Mean of Data Pair (carbon %) Grouped Mean of Pair (carbon %) 10% 20% 30% 50% 10% 20% 30% 50% Correlation Plot QQ Plot (All Data) (All Data) ANALABS (carbon %) ANALABS (carbon %) 60 60 40 40 20 20 0 0 -20 0 10 20 30 40 50 60 -20 0 10 20 30 40 50 60 AMDEL (carbon %) AMDEL (carbon %) P.CC= 1.0 S.CC= 1.0 Ref. Line y = 1.2x -0.8 Ref. Line y = 1.2x -1.1 Printed: 17-Dec-2009 16:57:29 Data Refreshed: 17-Dec-2009 16:54:24 Page 1Uley Main Road Graphite Deposit – MINEWPER01006AA Page: 25NI43-101 Report – 11 July 2012
  • 33. Coffey Mining Pty Ltd11.2 CRAE Database Validation A total of 18 CRAE era and 12 diamond drillholes drilled in 2011 in the Uley area had been used in the resource modelling study. The database used for resource estimation consists solely of diamond drilling and has been reviewed and re-validated for obvious errors by Coffey Mining prior to commencing the resource estimation study. Checks to assay certificates have been provided by ALS Chemex. The following checks were completed prior to uploading the drilling data into a Vulcan database:  Check and correct overlapping intervals.  Ensure downhole surveys existed at a 0m depth.  Ensure consistency of depths between different data tables, for example survey, collar and assays.  Check gaps in the assay data which were replaced by -999.  Data was composited to 2m lengths.11.3 2011 Drilling Results The 2011 drilling results are tabulated below in Table 11.3_1.Uley Main Road Graphite Deposit – MINEWPER01006AA Page: 26NI43-101 Report – 11 July 2012
  • 34. Coffey Mining Pty Ltd Table 11.3_1 Uley Main Road Graphite Deposit Assay Results Sampling Assay Total Graphite (%) Graphite (%) Carbon as From To Length Carbon (%) Weak Digest Strong Digest Carbonate (%) Drillhole Sample (m) (m) (m) Method Method Method Method C-IR06 C-IR07 C-IR17 CAL-15 ULEY 500 1 15.5 17.5 2.0 17.35 17.05 17.20 0.15 ULEY 501 1 22.0 24.3 2.3 13.05 7.69 8.08 4.97 ULEY 501 2 56.3 58.01 1.7 37.50 39.60 35.80 1.70 ULEY 501 3 59.1 60.8 1.7 17.40 17.65 17.30 0.10 ULEY 501 4 60.8 62.5 1.7 27.60 27.10 26.50 1.10 ULEY 502 1 60.6 62.0 1.4 34.50 34.80 32.10 2.40 ULEY 502 2 62.0 63.3 1.3 33.50 35.50 31.60 1.90 ULEY 502 3 63.3 64.3 1.0 18.70 17.40 18.50 0.20 ULEY 502 4 82.0 84.0 2.0 37.10 37.40 34.70 2.40 ULEY 502 5 85.0 87.5 2.5 46.10 42.20 39.30 6.80 ULEY 503 1 41.8 44.3 2.5 24.20 24.60 22.70 1.50 ULEY 503 2 53.4 54.7 1.3 32.20 31.90 29.50 2.70 ULEY 504 1 7.3 9.3 2.0 4.61 3.54 3.84 0.77 ULEY 504 2 28.3 29.3 1.0 12.45 8.74 10.20 2.25 ULEY 504 3 30.3 32.01 1.7 12.80 10.80 11.00 1.80 ULEY 504 4 39.3 41.1 1.8 8.10 7.78 7.51 0.59 ULEY 504 5 41.1 42.1 1.0 12.90 12.60 12.20 0.70 ULEY 505 1 11.2 13.1 1.9 28.30 23.90 23.50 4.80 ULEY 505 2 46.4 48.5 2.1 38.80 41.00 37.20 1.60 ULEY 506 1 12.9 15.3 2.4 22.50 19.00 19.25 3.25 ULEY 506 2 56.1 57.3 1.2 29.20 30.20 28.50 0.70 ULEY 506 3 57.3 60.3 3.0 >50.00 50.40 49.20 4.20 ULEY 506 4 80.7 82.01 1.3 28.30 28.30 26.70 1.60 ULEY 506 5 82.01 83.01 1.0 28.90 27.50 28.00 0.90 ULEY 506 6 83.5 87.01 3.5 28.70 27.40 28.00 0.70 ULEY 507 1 47.0 48.5 1.5 23.80 24.60 22.90 0.90 ULEY 507 2 48.5 52.01 3.5 30.00 31.10 28.20 1.80 ULEY 507 3 50.0 51.5 1.5 38.00 40.50 37.00 1.00 ULEY 507 4 51.5 53.9 2.4 36.20 36.10 35.00 1.20 ULEY 508 1 26.3 28.3 2.0 6.71 5.31 5.80 0.91 ULEY 508 3 34.9 36.1 1.2 28.90 27.20 27.50 1.40 ULEY 508 2 34.4 34.9 0.5 14.90 14.60 12.50 2.40 ULEY 508 4 38.4 42.3 3.9 18.10 19.75 17.30 0.80 ULEY 508 5 42.5 45.6 3.1 28.40 27.10 26.10 2.30 ULEY 508 6 54.5 58 3.5 19.90 20.60 18.80 1.10 ULEY 509 1 34.5 36.5 2.0 19.80 21.30 18.80 1.00 ULEY 509 2 36.5 39.5 3.0 32.80 34.30 31.30 1.50 ULEY 509 3 44.5 47.5 3.0 >50.00 52.00 48.90 1.80 ULEY 509 4 54.4 55.7 1.3 48.60 51.10 47.50 1.10 ULEY 509 5 66.5 68.5 2.0 29.60 28.30 28.20 1.40 ULEY 509 6 68.8 70.1 1.3 23.40 25.30 21.60 1.80 ULEY 509 7 70.1 72.7 2.6 25.70 29.50 25.70 <0.02 ULEY 510 1 9.1 10.2 1.1 21.80 21.50 21.20 0.60 ULEY 510 3 22.4 24.4 2.0 16.70 12.05 12.25 4.45 ULEY 510 2 30.5 33.6 3.1 18.60 18.95 15.00 3.60 ULEY 510 4 35.3 38.3 3.0 23.00 19.55 17.75 5.25 ULEY 511 1 6.4 9.4 3.0 8.71 6.34 7.28 1.43 ULEY 511 2 13.0 14.3 1.3 11.85 7.01 7.55 4.30 ULEY 511 3 36.0 38.4 2.4 18.70 17.40 18.50 0.20 ULEY 511 4 38.4 42.4 4.0 14.80 14.90 14.60 0.20Uley Main Road Graphite Deposit – MINEWPER01006AA Page: 27NI43-101 Report – 11 July 2012
  • 35. Coffey Mining Pty Ltd12 Data Verification12.1 Database Coding and Compositing The resource drillhole database was composited to a 2m downhole composite interval, which was then coded against the recording the interpreted mineralisation model. The 2m composites were used for all statistical, geostatistical and grade estimation studies. The decision to use 2m composites was based on the targeted mining approach which is to be by conventional open pit methods, using small to medium sized mining fleet.12.2 Summary Statistics Summary 2 metre composite statistics are presented in Table 12.2_1. The data distribution is positively skewed which is typical of many such deposits. The coefficient of variation (CV), which is calculated by dividing the standard deviation by the mean grade, of 1.11 is moderately high indicating that high grade composites are not materially influencing the mean.12.3 Density An average bulk density of 2.20 t/m³ has been applied to all modelled mineralised zones as a default value. Where relevant a scripted and calculated density value which considers the modelled graphite grade is substituted which is based on an average of 35 density measurements conducted on-site.12.4 Block Model Construction A three-dimensional block model was constructed for the Uley Rain Road graphite deposit, covering the interpreted mineralisation zone and including suitable additional waste material to allow later pit optimisation studies. The selected block size was based on the geometry of the domain interpretation and the data configuration (25m to 50m drill section spacing). A parent block size of 4mE x 10mN x 4mRL was selected with no sub-blocking. Block coding of the mineralisation domains, oxidation and lithology was completed on the basis of the block centroid, wherein a centroid falling within any wireframe was coded with the wireframe solid attribute. A visual review of the wireframe solids and the block model indicates robust flagging of the block model. Sufficient variables were included in the block model construction to enable grade estimation and reporting. Details are reported in Appendix B, as originally reported in Warries and Barnes, 1996. The block model construction parameters are displayed in Table 12.4_1. The mineralisation domains, lithology and modelled weathering were coded to the block model. The mean bulk density of 2.2g/cm³ was applied to the block model via block model script for tonnage reporting. A bulk density was also calculated based on Graphite Carbon % and surrounding bedrock reporting at 2.6g/cm³.Uley Main Road Graphite Deposit – MINEWPER01006AA Page: 28NI43-101 Report – 11 July 2012
  • 36. Coffey Mining Pty Ltd Table 12.2_1 Uley Main Road Graphite Deposit Summary 2m Composite Statistics –Graphitic Carbon (%) 2011 2m Composites 1996 2m Composites MIDZ %GRA MIDZ %GRA Number 720 720 Number 538 538 Minimum 389.85 0 Minimum 389.675 0 Maximum 497.02 49.2 Maximum 498.02 50.955 Mean 451.45 8.275 Mean 449.288 7.121 Median 454.57 4.6 Median 451 4.23 Std Dev 26.967 9.185 Std Dev 28.707 7.826 Variance 727.214 84.369 Variance 824.093 61.241 Std Error 0.037 0.013 Std Error 0.053 0.015 Coeff Var 0.06 1.11 Coeff Var 0.064 1.099 Log Num 720 712 Log Num 538 536 Geom Mean 450.634 4.455 Geom Mean 448.364 3.921 Log Min 5.966 -2.303 Log Min 5.965 -2.303 Log Max 6.209 3.896 Log Max 6.211 3.931 Log Mean 6.111 1.494 Log Mean 6.106 1.366 Log S Dev 0.06 1.253 Log S Dev 0.064 1.217 Log Var 0.004 1.569 Log Var 0.004 1.482 Sichel Stats Mean 450.634 9.745 Sichel Stats Mean 448.364 8.206 V 0.004 1.567 V 0.004 1.479 Gamma 1 2.188 Gamma 1 2.093 Percentiles 10 412.65 0.775 Percentiles 10 409 0.797 20 424.57 1.5 20 421 1.376 30 436.08 2.475 30 6-Mar-01 7:37:55 40 446.27 3.6 40 441 3.319 50 454.57 4.6 50 451 4.23 60 461.94 6.5 60 461 5.513 70 469.8 9.6 70 469 8.439 80 478 13.3 80 479 11.243 90 485.88 20.325 90 487 17.114 95 490.08 28 95 491 23.894 97.5 492.65 35 97.5 493 28.432 99 494.658 40.765 99 495 35.979Uley Main Road Graphite Deposit – MINEWPER01006AA Page: 29NI43-101 Report – 11 July 2012
  • 37. Coffey Mining Pty Ltd Table 12.4_1 Uley Main Road Graphite Deposit – June 2010 Resource Update Block Model Parameters East North Elevation Origin 9800 9200 -100 Extent (m) 600 500 500 Parent Block size (m) 4 10 4 Sub-Block Size (m) - - - Number of Blocks (parent) 15,050,175 15,050,175 15,050,17512.5 Estimation Approach Coffey Mining was mandated to re-estimate the block model, rather than re-validate and update work that has been completed by RSG Global in 1997 (Appendices B & C). Coffey Mining had based its grade interpolation on both Ordinary Kriging (OK) and Inverse Distance Cubed (ID3), the more common statistical methods for estimating block grades. In these interpolation techniques, contributing composite samples are identified using a search volume applied from the centre of each block. Weights are determined so as to minimise the error variance considering both the spatial location of the selected composites and the modelled variogram. Variography describes the correlation between composite samples as a function of distance. The weighted composite sample grades are then combined to generate a block estimate and variance. Variables modelled by ID3 techniques as a cross check is restricted to % Graphite Carbon only. For the mineralised zones, grade was interpolated based on 2m composite samples using structural and grade-domain (mineralisation zones) control for both composite and block selections applying hard boundaries between the zones. Grade estimates were interpolated into parent cells only.12.6 Modifying Factors No modifying factors have been applied to the global resource estimate, as the mining methodology, equipment inventory and project timeline are yet to be finalised.12.7 Resource Classification Criteria The resource estimate for the Uley Main Road deposit has been categorised in accordance with the guidelines set out in the ‘National Instrument 43-101 Standards of Disclosure for Mineral Projects. Indicated and Inferred Mineral Resources are classified for the Uley gold deposit, based on a block size of 4mE x 10mN x 4mRL. The classification is based on the confidence levels of the key criteria as presented in Tables 12.7_1 to Tables 12.7_4.Uley Main Road Graphite Deposit – MINEWPER01006AA Page: 30NI43-101 Report – 11 July 2012
  • 38. Coffey Mining Pty Ltd Table 12.7_1 Uley Main Road Graphite Deposit Confidence Levels of Key Categorisation Criteria Quality Comment Risk / Impact Comment 1 Not resource 10 Extreme (Not resource) 2-4 Inferred 7-9 High 5-7 Indicated 4-6 Moderate 8-10 Measured 1-3 Low Table 12.7_2 Uley Main Road Graphite Deposit Classification Scorecard - Sampling Techniques and Data Quality Risk Item Comment Score Score Drill type (eg. core, reverse circulation, open-hole hammer, rotary air blast, auger, Bangka etc.) and details (eg. core diameter, triple or 5 4 Drilling Techniques standard tube, depth of diamond tails, face-sampling bit or other type, etc.). Measures taken to maximise sample recovery and ensure representative nature of the samples. Diamond drilling, vertical. Core and chip samples have been logged to a level of detail to support appropriate Mineral Resource estimation, mining studies and 6 4 Logging metallurgical studies. Logging is qualitative in nature. Core photography completed, sighted & verified. 6 4 Drill Sample Recovery Sample recoveries have been recorded and results re-assessed & recorded. Nature and quality of sampling (e.g. cut channels, random chips etc.) and measures taken to ensure sample representivity. 5 3 Other Sampling Techniques Continuous over mineralised horizons. 7 3 Sub-Sampling Core, sawn half and ½ core taken. Sample sizes are appropriate to the grainsize of the material being sampled. Quality of Assay Data and Assaying and laboratory procedures used partial ½ core. Control procedures - duplicates, acceptable levels of accuracy (i.e. lack 5 6 Laboratory Tests of bias) and precision have been partly established. Verification of Sampling and 8 3 The independently verification of significant intersections by Coffey Mining. No use of twinned holes. Assaying Accuracy and quality of surveys used to locate drill holes (collar and downhole surveys), Quality and adequacy of topographic control. 8 4 Location of Data Points Re-surveyed in 2009. 6 7 Data Density and Distribution Data density is 50m x 50m x 2m. Sample compositing has been applied to produce 2m composite database. 7 7 Audits and Review No audits or reviews of sampling techniques and data, but sample and core verification undertaken by Coffey Mining. Average Score Average Score 6 5Uley Main Road Graphite Deposit – MINEWPER01006AA Page: 31NI43-101 Report – 11 July 2012
  • 39. Coffey Mining Pty Ltd Table 12.7_3 Uley Main Road Graphite Deposit Classification Scorecard - Estimation and Reporting of Minerals Resources – Fundamental Data Quality Risk Item Comment Score Score Measures taken to ensure that data has not been corrupted by, for example, transcription or keying errors, between its initial collection and 8 4 Database Integrity its use for Mineral Resource estimation purposes. Data validation procedures used. Nature of the data used and of any assumptions made. The effect, if any, of alternative interpretations on Mineral Resource estimation. 7 3 Geological Interpretation The use of geology in guiding and controlling Mineral Resource estimation. The factors affecting continuity both of grade and geology. Interpreted in terms of existing understanding of structural geology. The nature and appropriateness of the estimation technique(s) applied and key assumptions, including treatment of extreme grade values, domaining, interpolation parameters, maximum distance of extrapolation from data points. The assumptions made regarding recovery of Estimation and Modelling by-products. In the case of block model interpolation, the block size in relation to the average sample spacing and the search employed. 5 7 Techniques Any assumptions behind modelling of selective mining units (eg. non-linear Kriging). The process of validation, the checking process used, the comparison of model data to drillhole data, and use of reconciliation data if available. Check estimate completed. Mine production records not applicable. Average Score Average Score 7 5 Table 12.7_4 Uley Main Road Graphite Deposit Classification Scorecard - Estimation and Reporting of Minerals Resources – Modifying Factors Quality Risk Item Comment Score Score The basis of the cutoff grade(s) or quality parameters applied, including the basis, if appropriate, of equivalent metal formulae. 7 3 Cutoff Grade Parameters Pit-optimisation study based on client input revenue and cost. Mining Factors or Assumptions made regarding possible mining methods, minimum mining dimensions and internal (or, if applicable, external) mining dilution. - - Assumptions Where no assumptions have been made, this should be reported. 10mx10mx2m regularised block model. The basis for assumptions or predictions regarding metallurgical amenability. It may not always be possible to make assumptions regarding Metallurgical Factors or - - metallurgical treatment processes and parameters when reporting Mineral Resources. Where no assumptions have been made, this should Assumptions be reported. None made. Tonnage Factors Whether assumed or determined. If assumed, the basis for the assumptions. If determined, the method used, the frequency of the 5 3 (in-situ bulk densities) measurements, the nature, size and representativeness of the samples. Direct measurement to Australian Standard. The basis for the classification of the Mineral Resources into varying confidence categories. Whether appropriate account has been taken of all relevant factors. i.e. relative confidence in tonnage/ grade computations, confidence in continuity of geology and metal values, quality, 5 5 Classification quantity and distribution of the data. Whether the result appropriately reflects the Competent Person(s)’ view of the deposit. Drill density. 50 x 50m inferred 50 x 25m Indicated The results of any audits or reviews of Mineral Resource estimates Audits or Reviews None. Average Score Average Score 6 4Uley Main Road Graphite Deposit – MINEWPER01006AA Page: 32NI43-101 Report – 11 July 2012
  • 40. Coffey Mining Pty Ltd Using the discussed classification criteria a block model script was developed to code to the model a resource categorisation. The resource categorisation is based on drillhole spacing.  Indicated: minimum of 25mx50m spacing.12.8 Mineral Resource Reporting A selective mining (4mE x 10mN x 4mRL) block size has been reported using a range of lower cutoff grades and subdivided by resource classification. A maximum lower cutoff grade of 3.8% TC is recommended. The grade estimate is based on the assumption that open cut mining methods will be applied and high confidence grade control, for example RC grade control drilling, or ditch-witch bench top sampling will be available for ore/waste demarcation. It is recommended that mining modifiers be reviewed for any mine planning activities undertaken and that additional dilution and ore loss be added to the model, as well as mineral recovery. In addition to the OK estimate used here, Coffey Mining has undertaken a check estimate using an Inverse Distance Cubed (ID3) methodology, with no bottom sample cut and 40% top cut, using the same composite sample and assay metadata used in the OK estimate. The top cut is based on an analytical technique upper tolerance limit. A search ellipse of 20m x 40m x 7.5m (X, Y and Z) was used with a minimum of one informing samples and a maximum of 30 informing samples and a default search distance of 50m. This is chosen to constrain the estimate to local samples and prevent the samples from one structural domain in effect being used in another – these being localised antiformal limbs. Coffey Mining has elected to report mineralisation drilled at 50m x 25m spacing as “Indicated”.Uley Main Road Graphite Deposit – MINEWPER01006AA Page: 33NI43-101 Report – 11 July 2012
  • 41. Coffey Mining Pty Ltd13 MINERAL PROCESSING AND METALLURGICAL TESTING The nature and extent of the testing on the Uley Main Road Graphite Ores is minimal however the analytical procedures used for this limited scope of work are acceptable.13.1 1980 - 1987 Testwork Initially all CRAE sampled were analysed on-site or at Amdel in 1980-1987, with analysis involving the following steps:  Determination of moisture content;  Loss on Ignition and residual ash content  Content of non-combustible volatiles, fixed carbon after combustion and volatilisation;  Sizing analysis;  Acid leach of minerals fractions;  LECO carbon analysis by Infrared spectrometry;  Wet-sieving analysis. Samples (20g) are sieved at +150µm, 106µm and 75µm, after crushing and froth flotation, acid leach and LECO analysis is performed on all size fractions. Results for the above test have not been received. No froth flotation recoveries or other data has been provided.13.2 LECO Analyser As described in Section 10.8.3 prior analysis, the method as developed and applied by Amdel (now part of the Bureau Veritas group) is reported in Howard, 1982. Samples are acid digested at 90°C and then filtered on fibreglass. Dried samples are then heated in an oven to 500°C before being heated in a “LECO” combustion chamber at 1500°C and the CO2 is determined by infrared spectrometry. Subsequent stoichiometric calculation results in percentage carbon as graphite or carbon in carbonate. These were the two variables estimated in the original resource estimate.13.3 Minimum Additional Testwork Requirements For testing of a graphite ore body the following additional testwork would be considered as minimum and mandatory prior to commencement of production to ensure any unquantified mineral values are recognised and allocated to the production schedule:13.3.1 Head Assays  C speciation suite (C(tot), C(g), C(org), CO2 ), ICP scan, Au, Ag, Pt, PdUley Main Road Graphite Deposit – MINEWPER01006AA Page: 34NI43-101 Report – 11 July 2012
  • 42. Coffey Mining Pty Ltd13.3.2 Mineralogy  Semi-quantitative XRD analysis  Optical microscopy – semi-quantative modal abundance, liberation and aspects of ratio of graphite.  Electron microscopy examination – semi-quantitative analysis for silicates Semi-quantitative bulk sample analysis by powder X-ray Diffraction (XRD) should be performed. All crystalline minerals identified by XRD analysis should be reported and grouped into major (>30%), moderate (10-30%), minor (2-10%) and trace (<2%) amounts. Mineral abundances should also be reported in weight %, generated by relative intensity ratio (RIR) method. XRD should be reconciled with ICP and carbon assays.13.3.3 Batch Flotation Testing Flotation test work should aim at obtaining a saleable concentrate grade at maximum recovery. Rougher kinetic tests are used to examine the effect of primary grind size, pH, and reagent scheme. These are followed by cleaner tests, which will typically look at the effect of regrind size and cleaner configuration. When a successful flowsheet is developed, metallurgical performance should be confirmed through locked cycle testing. Further consideration and assessment of processing factors is warranted, though it is understood from personal communication and anecdotal information that historical recoveries of around 85-90% were obtained during the last processing phase in the 1980s to 1990’s.Uley Main Road Graphite Deposit – MINEWPER01006AA Page: 35NI43-101 Report – 11 July 2012
  • 43. Coffey Mining Pty Ltd14 MINERAL RESOURCE ESTIMATES14.1 Geological Interpretation and Modelling Coffey Mining undertook a lithological interpretation based on the drillhole data using the Vulcan technical software package. Two deposit wide changes in rock type are material: a barren pegmatite lithology; and a fault zone, where fault fills can be mineralised. The former is excluded from the resource declaration. Mineralised wireframe envelopes were applied as the basis of constraint for the resource model. These enveloped were based on the available geochemical data, geological logging, and the supplied geological model, a legacy of Strategic Energy Resources, the previous tenement holders.14.2 Mineralisation Interpretation The mineralisation wireframe constraints used are based on sectional interpretations generated on 25m sections using a nominal 5% graphitic carbon (GC) lower cutoff grade. The cutoff grade was selected as it represented a natural ‘geological’ cutoff that captures the anomalous intercepts. It was also selected as suitable when open cut methods are being targeted and recoverable resource estimation is to be considered. The changes from strongly mineralised to background mineralised zones is obvious in the sample composite database as changes from >5% GC, to values around < 1-3% GC. High grade (>5% GC) intercepts are present along the entire strike length of the zone. These have been included in the broad interpretation. Significant short scale variation may be common, often resulting in substantial variations between drillholes on section, especially in the development of pegmatite, fold limbs and discrete veins of graphite. Prior optimisation work by Coffey Mining in August 2009 has resulted in a 3.8% cutoff being applied.14.3 Weathering Interpretation The drillhole database contains logged weathering codes comprised of codes reflecting the degree of weathering which varies from highly to slightly weathered and includes unweathered codes. This data was used to construct a weathering profile (base of weathering and fresh zones) and coded in the block model. On some sections the intermixing of the weathering types is complicated and the interpreted profile has been simplified for the purposes of modelling. In general, the weathering surface broadly parallels the topographical profile to a 70m depth below surface. Both the weathering (which is more applicable to mining) and oxidation (which is more applicable to metallurgical recovery) will be critical components of geometallurgical models required for higher feasibility level studies. Weathering has occurred to 70m depths below the un-mineralised Tertiary age calcretised aeolianates. Graphite is stable at standard temperature and pressure (STP) and apparent even in strongly altered and weathered outcropUley Main Road Graphite Deposit – MINEWPER01006AA Page: 36NI43-101 Report – 11 July 2012
  • 44. Coffey Mining Pty Ltd15 ADJACENT PROPERTIES There are several known graphite occurrences in the area surrounding the Uley property. Lincoln Minerals has declared a 880,000 tonne @ 11.47%C Inferred Resource (in accordance with JORC guidelines (2004) and not reported under NI-43101) at its’ Kookaburra Gully prospect, and several other companies have announced active exploration in the region and several historical working are under review by numerous parties.Uley Main Road Graphite Deposit – MINEWPER01006AA Page: 37NI43-101 Report – 11 July 2012
  • 45. Coffey Mining Pty Ltd16 OTHER RELEVANT DATA AND INFORMATION The level of technical risk is defined as the likelihood of variation of resource tonnage and/or graphite grade from the stated values. While an assessment of the data quality has been completed as part of this report, it is difficult to measure this level of risk as it is a reflection of the degree of confidence in the database, the geology, and the grade interpolation process. A number of pertinent issues that have been discussed are highlighted in this section.16.1 Geological Model The mineralisation constraints have been based on a combination of geology and graphite grades. The model has been constructed to capture the anomalous graphite mineralisation and is considered acceptable for open cut mining methods. A physical constraint has been interpreted for the higher grade (>3.8% carbon) zones as these intercepts are distributed and controlled by the limbs of antiformal structures throughout the interpreted mineralisation zone. A 40% top cut constraint has been applied as well as a high yield sample limit at distance of 13m. This is to confine sampling to local structural domains.16.2 Grade Grades quoted in this report should be understood to be global estimates of the mineralisation at Uley Main Road. Local estimates for detailed planning will require grade control methodologies to be developed. The mineralisation is visually obvious which a positive in this context. An on-site laboratory however would require substantive refurbishment and capital investment to achieve to current Australian Standards which would be required from a quality control perspective. Coffey Mining estimates 60% of the graphite may be recovered as coarse graphite (flake, > 75um) from prior work involving the mineralogical characteristics presented in the RSG Global/Coffey Mining archive. Percentages of fine flake, by rock type are also reported in Keeling, 2000.16.3 Resource Tonnages The resource (Table 16.3_1) is constrained at depth by structure and stratigraphy but appears open along strike to the north and south and an extension into the Uley 3 anomaly is supported by geophysical interpretation. This resource may be upgraded in terms of size by further step-out drilling and in terms of classification by in-fill drilling at Uley Main Road. Of the Mineral Resource declared here 65% of the tonnage is “Indicated”. The inferred tonnages occur to the north of the area of 25 x 50m infill and the now depleted original Uley pit, as well as to the east of the drilled out area, where there is scattered drilling on 50 x 50m basis. A check estimate using an ID3 methodology produced a Total resource, of 6.6Mt at 7.9% Graphitic carbon (Appendix C) at the same cutoff grade, 3.8% graphitic carbon.Uley Main Road Graphite Deposit – MINEWPER01006AA Page: 38NI43-101 Report – 11 July 2012
  • 46. Coffey Mining Pty Ltd Table 16.3_1 Uley Main Road Graphite Deposit - Classified Resource at 3.8% Graphitic Carbon Cutoff OK Estimate using a Parent Block of 10mY by 4mE and 4mRL Lower Cutoff Grade Tonnage Average Grade Classification (Graphitic Carbon %) (Mt) (Graphitic carbon %) Indicated 3.8 4.3 9.4 Inferred 3.8 2.3 7.5 Total 6.6 8.7Uley Main Road Graphite Deposit – MINEWPER01006AA Page: 39NI43-101 Report – 11 July 2012
  • 47. Coffey Mining Pty Ltd17 INTERPRETATION AND CONCLUSIONS The 3D modelling undertaken and drilling data indicates mineralisation may extend in to the “Eastern Anomaly” otherwise known as Uley 3 (Figure 17_1). Figure 17_1 Other Adjacent Anomalies Based on the documentation provided, Coffey Mining considers that the data collection procedures applied are appropriate. The drillhole database is considered to be appropriate for the purposes of resource estimation. Further scope exists to improve the geological and resource estimation confidence in the areas currently defined as exploration targets. This would be achieved by additional infill and extensional drilling along the geophysical anomaly.Uley Main Road Graphite Deposit – MINEWPER01006AA Page: 40NI43-101 Report – 11 July 2012
  • 48. Coffey Mining Pty Ltd18 RECOMMENDATIONS Coffey Mining recommends undertaking continued exploration work across the Uley tenements and suggests that exploration drilling to -100m depth below collar would target the Uley4-6 deposits. Coffey Mining recommends that such drilling be undertaken with diamond drillcore at HQ and HQ3 core sizes and sampling and procedures should be standarised and substantially similar to the work already completed. Coffey Mining does not recommend reverse circulation, reverse air blast or similar technques that produce a fragmented sample. Based upon the available drillhole data, total exploration potential for the above projects, as reported by Coffey Mining in 2009, ranges from 25-150Mt with grade ranges from 6 to 9% (Table 18_1). (Coffey Mining, 2009, 2010). Table 18_1 Uley Main Road Graphite Deposit - December 2009 Resource Update Strategic Energy Resources Exploration Potential – Reported August, 2009 Surface Area Target Prospect Name Discovery Hole Intersections (km²) Ranking Fisheries 1.5 83MKRC11 68.0-99.2m, 31m @ 7.1 C 5 Salt Lake 2.5 83MKRC08 16-42m, 26m @ 7.5% C 2 Kacey 3.00 83KRD011 44.2-51.9m, 7.7m @ 9.2% C 3 18-60m, 42m@ 7.0% C Homestead 0.25 83MKRC10 1 30-60m, 30m @ 8.6% C Remnant Uley 2.0 82MKD14 40-46m,6m @ 6.1 % C 4Uley Main Road Graphite Deposit – MINEWPER01006AA Page: 41NI43-101 Report – 11 July 2012
  • 49. Coffey Mining Pty Ltd19 REFERENCES Anon, 1993. Appendix 2, Drill Logs. Uley graphite project, 31 December, 1993. Coffey Mining, 2009. Memorandum to Strategic Energy resources, Project MINEWPER00737AA, Memorandum , 2pp. Coffey Mining, 2010. December 2009 Resource Upgrade, Project MINEWPER00737AA, report, 50pp. Howard, J.P., 1982. E.L. 812 MIKKIRA – Uley Prospect. An Estimate of Graphite Resources. Keeling, J., 2000. Uley graphite a world class resource. Mesa Journal, v18, 6-11. Parker, A.J., and Lemon N.M., 1982. Reconstruction of the Early Proterozoic stratigraphy of the Gawler Craton, South Australia. Journal of the Geological Society of Australia, v.29, p.221-238. Rowe, J., 1993. Ore Reserve/Mineral Resource, 31 December, 1993. Swartz, M.P., 2003. Lincoln Map Sheet. South Australia Geological Survey, Geological Atlas 1:250,000 Series, Sheet SI 53-11. Vassallo, J.J. and Wilson, C.J.L., 2001. Structural repetition of the Hutchison Group metasediments, Eyre Peninsula, South Australia. Australian Journal of Earth Sciences, v.48, p.331-345. Warries H. and Barnes, J., 1996. Database compilation, resource estimation, pit optimisation and mine scheduling. RSG Global Report. Yeates G., 1990. Middleback Range iron ore deposits. In: Geology of the Mineral Deposits of Australia and Papua New Guinea (Ed. F.E. Hughes), The Australasian Institute of Mining and Metallurgy, Melbourne. p.1045-1048.Uley Main Road Graphite Deposit – MINEWPER01006AA Page: 42NI43-101 Report – 11 July 2012
  • 50. Coffey Mining Pty LtdDATE AND SIGNATURE PAGEThe “qualified person” (within the meaning of NI 43-101) for the purposes of this report isTrevor Bradley. The effective date of this report is 11 July 2012.This is a scanned signature held on file by Coffey Mining.The person and signatory consents to its use only for thepurpose of this document.Trevor Bradley MAIGManager - AuditsCoffey Mining Pty Ltd.Signed on the 11 July 2012Uley Main Road Graphite Deposit – MINEWPER01006AA Page: 43NI43-101 Report – 11 July 2012
  • 51. Appendix ACRAE Lab Assay Protocols
  • 52. Coffey Mining Pty LtdAppendix A – Lab Assay Protocols Page: 1
  • 53. Appendix BExtracts from Warries and BarnesOctober 1996 Report
  • 54. TABLE 7.2 ULEY GRAPHITE PROJECT STATISTICAL DATA SUMMARY 1996 GRAPHITIC CARBON UG_ASS.DAT : ORIGINAL SAMPLE DATABASE Cutoff No of Coeff of Geom Ln Std Sichel’s Grade Min Max Mean Std Dev Samples Variation Mean Dev Mean (%) Minimum 869 0.00 57.9 8.28 9.9011 1.20 3.97 1.3721 10.17 1.0 719 1.00 57.9 9.91 10.1550 1.03 6.11 1.0054 10.11 3.0 527 3.00 57.9 12.84 10.4095 0.81 9.60 0.7596 12.80 4.0 447 4.00 57.9 14.52 10.4461 0.72 11.54 0.6751 14.46 5.0 389 5.00 57.9 16.03 10.3855 0.65 13.33 0.6032 15.96 6.0 349 6.00 57.9 17.24 10.2897 0.60 14.77 0.5497 17.14 8.0 287 8.00 57.9 19.47 10.0434 0.52 17.39 0.4644 19.28 10.0 253 10.00 57.9 20.88 9.8692 0.47 19.03 0.4188 20.74 12.0 220 12.00 57.9 22.42 9.6924 0.43 20.76 0.3783 22.21 15.0 171 15.00 57.9 25.01 9.5127 0.38 23.56 0.3332 24.97 20.0 103 20.00 57.9 30.08 9.1687 0.31 28.93 0.2713 30.08 25.0 65 25.00 57.9 34.39 9.0377 0.26 33.35 0.2424 34.35 30.0 37 30.00 57.9 39.94 8.3671 0.21 39.13 0.2035 39.91 40.0 17 41.20 57.9 47.56 5.6428 0.12 47.27 0.1144 47.74 50.0 4 53.00 57.9 56.35 2.2840 0.04 56.31 0.0413 56.31 TABLE 7.4 BENCH COMPOSITING PARAMETERS 1996 TOP BENCH : 500.0mRL FIRST MID BENCH : 499.0mRL BENCH HEIGHT : 2.0m BENCH COMPOSITE RANGE : 120m MINIMUM BENCH : 380.0mRL WIREFRAME : MINTOTt3.00t SOURCE DATABASE : ULY/DH1 COMPOSITE MAP FILE : BCH2 VARIABLE : TOTCBN, GRACBN, CO3CBNAppendix B – Extracts from Warries and Barnes October 1996 Report Page: 1
  • 55. TABLE 8.1 VARIOGRAM MODEL SUMMARY 1996 2M BENCH COMPOSITES CARBONATE CARBON MAJOR AXIS SEMI MAJOR AXIS MINOR AXISDIRECTION N000E N090E -90ºNUGGET 0.10 0.10 0.10SILL1 0.56 0.56 0.68SILL2 0.45 0.45TOTAL SILL 1.11 1.11 0.78RANGE1 8 8 4RANGE 2 45 45RELATIVE NUGGET EFFECT 9% 9% 13% TABLE 8.2 VARIOGRAM MODEL SUMMARY 2M BENCH COMPOSITES GRAPHITIC CARBON MAJOR AXIS SEMI MAJOR AXIS MINOR AXISDIRECTION N000E N090E -90ºNUGGET 3.34 3.34 3.34SILL1 43.39 40.88 55.90SILL2 18.36 30.87TOTAL SILL 65.09 75.09 59.24RANGE1 7 7 7RANGE 2 48 43RELATIVE NUGGET EFFECT 5% 4% 6% TABLE 8.3 VARIOGRAM MODEL SUMMARY TOTAL CARBON MAJOR AXIS SEMI MAJOR AXIS MINOR AXISDIRECTION N000E N090E -90ºNUGGET 4.15 4.15 4.15SILL1 44.04 44.04 59.0SILL2 18.28 18.28TOTAL SILL 66.47 66.47 63.15RANGE1 7 7 7RANGE 2 35 35RELATIVE NUGGET EFFECT 6% 6% 7%Appendix B – Extracts from Warries and Barnes October 1996 Report Page: 2
  • 56. TABLE 9.1 BLOCK MODEL EXTENTS 1996 NO OFDIRECTION ORIGIN LENGTH END BLOCK SIZE BLOCKSNORTH 9200 500 9700 10 50EAST 9800 500 10300 10 50RL 380 120 500 2 60 TABLE 9.2 BLOCK MODEL VARIABLES 1996VARIABLE TYPE COMMENTORE_ZONE_CODE byte 100 for blocks within mintot3 wireframe.DENSITY floatTOTCBN_OK_UC float Estimated total carbon grade.TOTCBN_OK_NO_DIST float Average distance to samples - total carbon est.TOTCBN_OK_NO_SMPS float No of samples used in estimate - total carbon est.TOTCBN_OK_ESTFLG byte Estimation flag - total carbon.GRACBN_OK_UC float Graphitic carbon estimated grade.GRACBN_OK_AV_DIST float Graphitic carbon - average distance to samples.GRACBN_OK_NO_SMPS float Graphitic carbon - no of samples used in estimate.GRACBN_OK_ESTFLG byte Graphitic carbon - estimation flag.CO3CBN_OK_UC float Carbonate carbon estimated grade.CO3CBN_OK_AV_DIST float Carbonate carbon - average distance to samples.CO3CBN_OK_NO_SMPS float Carbonate carbon - no of samples used in estimate.CO3CBN_OK_ESTFLG byte Carbonate carbon - estimation flag.ROCK_CODE float 50 if rock, 1000 if air.RESCLASS byte Resource classification variable.TOTCBN_CALC float Calculated total carbon.TOTCBN_OK_ESTVAR float Total carbon estimation variance.GRACBN_OK_ESTVAR float Graphitic carbon estimation variance.CO3CBN_OK_ESTVAR float Carbonate carbon estimation variance.BTONNES float Block tonnage (volume * density).COARSE_GRAPHITE_DT float Total Coarse Graphite in dry tonnes.Appendix B – Extracts from Warries and Barnes October 1996 Report Page: 3
  • 57. TABLE 10.1 ORDINARY KRIGING GRADE ESTIMATION PARAMETERS 1996 CARBONATE CARBONVARIABLESGrade : CO3CBN_OK_UCEstimation Variance : CO3CBN_OK_ESTVARNo of Samples : CO3CBN_OK_NO_SMPSAverage Distance to Samples : CO3CBN_OK_AV_DISTDISCRETISATION X:4 Y:4 Z:4SEARCH TYPE : ELLIPSOID : OCTANT SERACHMinimum No of Samples : 2Maximum No of Samples : 40SEARCH RANGESMajor : 45 Semi Major : 45 Minor : 8ELLIPSOID ROTATIONROT_ALPHA : 0.0 ROT_ZETA : 0.0 ROT_BETA : 0.0VARIOGRAM PARAMETERS Major Axis Semi Major Axis Minor AxisNugget 0.1 0.1 0.1Sill 1 0.56 0.56 0.68Range 1 8.0 8.0 8.0Sill 2 0.45 0.45Range 2 45.0 45.0SOURCE DATAMap File : BCH2 Variable : CO3CBNCONDITION ORE_ZONE_CODE EQ 100Appendix B – Extracts from Warries and Barnes October 1996 Report Page: 4
  • 58. TABLE 10.2 ORDINARY KRIGING GRADE ESTIMATION PARAMETERS 1996 GRAPHITIC CARBONVARIABLESGrade : GRACBN_OK_UCEstimation Variance : GRACBN_OK_ESTVARNo of Samples : GRACBN_OK_NO_SMPSAverage Distance to Samples : GRACBN_OK_AV_DISTDISCRETISATION X:4 Y:4 Z:4SEARCH TYPE : ELLIPSOID : OCTANT SERACHMinimum No of Samples : 2Maximum No of Samples : 40SEARCH RANGESMajor : 50 Semi Major : 45 Minor : 7ELLIPSOID ROTATIONROT_ALPHA : 0.0 ROT_ZETA : 0.0 ROT_BETA : 0.0VARIOGRAM PARAMETERS Major Axis Semi Major Axis Minor AxisNugget 3.0 3.0 3.0Sill 1 43.0 41.0 56.0Range 1 7.0 7.0 7.0Sill 2 18.0 31.0Range 2 45.0 40.0SOURCE DATAMap File : BCH2 Variable : GRACBNCONDITION ORE_ZONE_CODE EQ 100Appendix B – Extracts from Warries and Barnes October 1996 Report Page: 5
  • 59. TABLE 10.3 ORDINARY KRIGING GRADE ESTIMATION PARAMETERS 1996 TOTAL CARBONVARIABLESGrade : TOTCBN_OK_UCEstimation Variance : TOTCBN_OK_ESTVARNo of Samples : TOTCBN_OK_NO_SMPSAverage Distance to Samples : TOTCBN_OK_AV_DISTDISCRETISATION X:4 Y:4 Z:4SEARCH TYPE : ELLIPSOID : OCTANT SERACHMinimum No of Samples : 2Maximum No of Samples : 40SEARCH RANGESMajor : 35 Semi Major : 35 Minor : 7ELLIPSOID ROTATIONROT_ALPHA : 0.0 ROT_ZETA : 0.0 ROT_BETA : 0.0VARIOGRAM PARAMETERS Major Axis Semi Major Axis Minor AxisNugget 4.0 4.0 4.0Sill 1 44.0 44.0 59.0Range 1 7.0 7.0 7.0Sill 2 18.0 18.0Range 2 35.0 35.0SOURCE DATAMap File : BCH2 Variable : TOTCBNCONDITION ORE_ZONE_CODE EQ 100Appendix B – Extracts from Warries and Barnes October 1996 Report Page: 6
  • 60. TABLE 11.1 ULEY GRAPHITE PROJECT STATISTICAL DATA SUMMARY 1996 TOT_OK - TOTAL CARBON - ORDINARY KRIGING ESTIMATE ULEYOK1.BMF : 3% TOTAL CARBON WIREFRAME MODEL Cutoff No of Std Coeff of Geom Ln Std Sichel’s Grade Min Max Mean Samples Dev Variation Mean Dev Mean (%) Minimum 8374 0.00 37.16 8.53 5.1116 0.60 7.57 0.5429 8.77 1.0 8154 1.03 37.16 8.76 4.9820 0.57 7.57 0.5416 8.77 3.0 7876 3.00 37.16 8.98 4.9157 0.55 7.91 0.4961 8.94 4.0 7200 4.00 37.16 9.49 4.8367 0.51 8.52 0.4499 9.43 5.0 6351 5.00 37.16 10.16 4.7671 0.47 9.29 0.4080 10.03 6.0 5489 6.00 37.16 10.90 4.7195 0.43 10.10 0.3753 10.80 8.0 3656 8.00 37.16 12.89 4.6275 0.36 12.22 0.3150 12.83 10.0 2488 10.00 37.16 14.77 4.4987 0.31 14.20 0.2702 14.77 12.0 1647 12.00 37.16 16.72 4.3747 0.26 16.23 0.2369 16.72 15.0 839 15.02 37.16 19.87 4.0770 0.21 19.48 0.1945 19.87 20.0 324 20.00 37.16 24.34 2.7610 0.11 24.19 0.1097 24.44 25.0 140 25.03 37.16 26.76 2.1030 0.08 26.69 0.0718 26.69 30.0 16 30.42 37.16 31.90 2.2158 0.07 31.83 0.0657 31.83 40.0 0 0.00 0 0.00 0.0000 0.00 0.00 0.0000 0.00 50.0 0 0.00 0 0.00 0.0000 0.00 0.00 0.0000 0.00Appendix B – Extracts from Warries and Barnes October 1996 Report Page: 7
  • 61. Appendix C2012: Resource
  • 62. ORDINARY KRIGING GRADE ESTIMATION PARAMETERS GRAPHITIC CARBONVARIABLESGrade : Graphite_Ok Graphite_ID3Estimation Variance : SpareNo of Samples : Num_samples :DISCRETISATION X:4 Y:4 Z:4SEARCH TYPE : ELLIPSOIDMinimum No of Samples : 2Maximum No of Samples : 40SEARCH RANGESMajor : 50 Semi Major : 45 Minor : 7ELLIPSOID ROTATIONROT_ALPHA : 360 ROT_ZETA : 0.0 ROT_BETA : 60VARIOGRAM PARAMETERS Major Axis Semi Major Axis Minor AxisNugget 25 25 27Total Sill 75 75 75Range 1 43 43 43SOURCE DATAMap File : uly2mjune Variable : ROCKHigh Yield limits Major:30 Semi Major :20 Minor:12.5Appendix C: Resource Update Page: 1
  • 63. Abbreviations and GlossaryA full listing of abbreviations used in this report is provided below. Uley Main Road Graphite Deposit – Resource Update List of Abbreviations Description DescriptionArchean Geological period > 2500 Ma l/hr/m² Litres per hour per square metreAUD Australian dollars M millionµ microns m metres2D two dimensional Ma Million years3D three dimensional ml millilitreAAS atomic absorption spectrometer mm millimetresAu gold MMI mobile metal ionbcm bank cubic metres Moz million ouncesC carbon Mtpa million tonnes per annumcm centimetre N (Y) northingDDH diamond drillhole NPV net present valueDTM digital terrain model NQ size of diamond drill rod/bit/coreE (X) Easting ºC degrees centigradeEocene Geological period 33.9-55.8Ma OK Ordinary KrigingG Gram P80 -75µ 80% passing 75 micronsg/m³ grams per cubic metre Pliocene Geological period 1.8-5.3MaGrade Control Controlling material dispatch during mining ppb Parts per billionGraphitic carbon % calculated contained carbon as graphite ppm Parts per millionHARD half the absolute relative difference psi pounds per square inchHQ size of diamond drill rod/bit/core QC quality controlhr hours Q-Q quantile-quantileHRD half relative difference RAB rotary air blastID Inverse Distance weighting RC reverse circulationID² Inverse Distance Squared RL (Z) reduced levelIPS integrated pressure stripping ROM run of mineIRR internal rate of return SD standard deviationISO International Standards Organisation SMU Selective mining unitkg kilogram t tonneskg/t kilogram per tonne t/m³ tonnes per cubic metrekm kilometres Tertiary Geological period < 65Makm² square kilometres Tph Tonnes per hourAppendix C: Resource Update Page: 2
  • 64. CERTIFICATE OF AUTHORTrevor BradleyCoffey Mining Pty Limited1162 Hay StreetWEST PERTH, WA, 6005AustraliaI, Trevor Bradley, B (App) Sc. (Hons); LL.M (Dist), M.A.I.G., do hereby certify that: 1. I am the Manager Audits of Coffey Mining Pty Ltd, 1162 Hay Street, West Perth, WA, 6005, Australia. 2. I am a graduate of the University of Technology, Sydney and hold a Bachelor of Applied Science degree with Honours in Geology (1986). 3. I am a member of the Australian Institute of Geoscientists (MAIG), No 2846. 4. I have worked continuously in my profession for a total of 26 years since 1986. 5. I have read the definition of “qualified person” set out in National Instrument 43-101 (“NI 43-101”) and certify; that by reason of my education, affiliation with a professional association (as defined in NI 43-101) and past relevant work experience, I fulfil the requirements to be a “qualified person” for the purposes of NI 43-101. 6. I am responsible for all Sections of this Technical Report titled “Uley Main Road Graphite Deposit, Eyre Peninsula, South Australia” with the effective date of 11, July 2012 and signed the 11th July 2012. I have not personally visited the site. Other Coffey Mining professionals have made a number of site visits to the project over the last four years. 7. I have not had prior involvement with the property that is the subject of this Technical Report. 8. As at the date of this certificate, to the best of my knowledge, information and belief, the Technical Report contains all scientific and technical information that is required to be disclosed to make the Technical Report not misleading. 9. I am independent of Mega Graphite Inc, its associates and affiliates, pursuant to Section 1.5 of National Instrument 43-101. 10. I have read National Instrument 43-101 and Form 43-101F1 and the Technical Report has been prepared in compliance with that instrument and form. 11. I consent to the filing of the Technical Report with any stock exchange and other regulatory authority and any publication by them for regulatory purposes, including electronic publication in the public company files on their websites accessible by the public Dated this 11th Day of July, 2012 at Perth, Western Australia. Trevor Bradley B(App) Sc. (Hons), LL.M (Dist), MAIG Manager Audits – Coffey MiningCoffey Mining Pty Ltd ABN 52 065 481 209 Project Number1162 Hay Street, West Perth WA 6005 AustraliaPO Box 1671, West Perth WA 6872 AustraliaT (+61) (8) 9324 8800 F (+61) (8) 9324 8877 coffey.com

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