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UPDATE ON THE NICKELIFEROUS LATERITE MINERAL RESOURCES …

UPDATE ON THE NICKELIFEROUS LATERITE MINERAL RESOURCES

OF MARCVENTURES MINING AND DEVELOPMENT CORPORATION’S

MPSA 016-93-XIII

LOCATED IN THE MUNICIPALITIES OF CANTILAN AND CARRASCAL,

SURIGAO DEL SUR, PHILIPPINES

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  • 1. UPDATE ON THE NICKELIFEROUS LATERITE MINERAL RESOURCESOF  MARCVENTURES  MINING  AND  DEVELOPMENT  CORPORATION’S MPSA 016-93-XIII LOCATED IN THE MUNICIPALITIES OF CANTILAN AND CARRASCAL, SURIGAO DEL SUR, PHILIPPINES FOR MARCVENTURES MINING AND DEVELOPMENT CORPORATION Unit E, One Luna Place, E. Luna Street, Butuan City, Philippines January 2013 Radegundo S. de Luna Competent Person for Nickel (PMRC No. 071205) Licensed Geologist (No. 0000218)
  • 2. Update on the Mineral Resources of the MMDC Nickel Project Marcventures Mining & Development Corporation Radegundo S. de Luna, Competent Person for Geology TABLE OF CONTENTS1. EXECUTIVE SUMMARY 12. INTRODUCTION 43. TENEMENT AND MINERAL RIGHTS 54. GEOGRAPHIC FEATURES 5 4.1 Location and Accessibility 5 4.2 Topography, Physiography and Drainage 6 4.3 Climate 7 4.4 Vegetation 75. PREVIOUS WORK 86. HISTORY OF PRODUCTION 107. GEOLOGIC SETTING 12 7.1 Regional Geology and Tectonic Setting 12 7.2 Local Geology 15 7.2.1 Dinagat Ophiolite Complex 15 7.2.2 Sohoton Greenschist 16 7.2.3 Alipao Andesite 16 7.2.4 Timamana Limestone 168. MINERALIZATION 189. EXPLORATION 2110. DRILLING 22 10.1 Drilling Contractors 24 10.2 Drill hole Collar Survey 2611. SAMPLING METHOD 2612. SAMPLE PREPARATION, SECURITY AND ANALYSES 2813. DATA VERIFICATION 3014. MINERAL RESOURCE ESTIMATE 3115. INTERPRETATION AND CONCLUSIONS 3316. RECOMMENDATIONS 3417. REFERENCES 35 i
  • 3. Update on the Mineral Resources of the MMDC Nickel Project Marcventures Mining & Development Corporation Radegundo S. de Luna, Competent Person for Geology LIST OF TABLESTable 1: MMDC Mineral Resources as of December 2012 3Table 2: Technical description of MPSA 016-93-XIII 4Table 3: Resource estimates of previous exploration works 9Table  4:  MMDC’s  production  history from 2011 to 2012 11Table 5: Summary of drilling activities conducted over Cabangahan, Sipangpang and Pili 22Table 6: List of rigs of CDSI 24Table 7: Relationship of accepted value and reassay of standard samples 30Table 8: Summary of Mineral Resource estimate by polygon method 33Table 9: Comparison of 2010 and 2012 resource estimates 33 LIST OF FIGURESFigure 1: Location Map of MMDC Tenement Area in Cantilan, Surigao del Sur 4Figure 2: Road network from Surigao City and Butuan City to MMDC Tenement Area 6Figure 3: Map showing location of Carac-an River 7Figure 4: Climate map of the Philippines with relative location of MMDC Tenement Area 8Figure 5: MMDC Tenement Map showing Cabangahan, Sipangpang and Pili Areas 10Figure 6: Current Mine site in Cabangahan Area 11Figure 7: General tectonic map of the Philippines 12Figure 8: Close-up of the tectonic setting of northern Surigao Peninsula 13Figure 9: Distribution of ophiolites in the Philippines 13Figure 10: Updated stratigraphic column of the Northern Pacific Cordillera 15Figure 11: Geologic map of MMDC Tenement Area 16Figure 12: Graph of nickel and iron values versus depth 19Figure 13: Frequency distribution graphs of Nickel and iron values of samples 20Figure 14: Map showing dominant structures inferred in the vicinity of MMDC area 22Figure 15: Location map of drill holes in Cabangahan, Sipangpang and Pili 23Figure 16: Photograph of CDSI drill rig 24Figure 17: Photograph of Georock drill rig 25Figure 18: Photograph of portable mechanized  auger  used  by  Dr.  Arcilla’s  Team   25Figure 19: Photograph of in-house drill rig, YBM 26Figure 20: Sample of core photograph with label 27Figure 21: Photograph of MMDC Sample Preparation Facility 28 ii
  • 4. Update on the Mineral Resources of the MMDC Nickel Project Marcventures Mining & Development Corporation Radegundo S. de Luna, Competent Person for GeologyFigure 22: Steel plate and electric oven used for sample preparation 28Figure 23: Crusher and pulverizer used for sample preparation 29Figure 24: AAS equipment and chemical used for titration 29Figure 25: Scatter plot for standard samples 30 LIST OF APPENDICESAppendix 1: Daily Drilling Report, Core Log Form and Sample Submission FormAppendix 2: Assay results of standard samplesAppendix 3: Sample database used in the resource estimation iii
  • 5. Update on the Mineral Resources of the MMDC Nickel Project Marcventures Mining & Development Corporation Radegundo S. de Luna, Competent Person for Nickel1. EXECUTIVE SUMMARYOn December 2012, Marcventures Mining and Development Coporation (MMDC) requested theauthor to update the Competent Person Report on its mineral resource which was filed on August2010. The first report was written by Dr. Carlo Arcilla, Competent Person for Geology and currentDirector of the National Institute of Geological Sciences. The previous resource estimate of Dr.Arcilla in 2010 reported a total of 3,867,000 dry metric tonnes of Indicated limonite resource at 1.0%nickel cut-off, averaging 1.3% nickel and 35.9% iron, and 5,635,000 metric tonnes of Indicatedsaprolite resource at 1.0% nickel cut-off, averaging 1.4% nickel, within a 120-hectare portion of the4,799-hectare tenement area. This report discloses the result of exploration carried out by MMDCfrom 2010 to 2012 on its Nickel Project as well as the updated resource estimate.The tenement area is mostly underlain with serpentinized peridotite and dunite of the DinagatOphiolite. Geological mapping and exploratory drilling showed favourable development of iron-richlimonite ore north of Carac-an River and the occurrence of nickel-rich saprolite ore was observedsouth of the said river.The MPSA area is divided into three sub-areas, namely: 1) Cabangahan, 2) Sipangpang, and 3) Pili. Atotal of 1,289 drill holes with an aggregate depth of 21,266.98 meters have been drilled to date.Combination of compass and tape traverse, and Global Positioning System (GPS) were used primarilyto locate holes at 50-m, 100-m and 200-m interval. Collar coordinates of drill holes at 25-m intervalwere obtained using total station. Assay results of Pili and Sipangpang drill holes indicate presence ofhigh-iron limonite ore in these areas. Cabangahan samples yielded assay results indicative of high-nickel saprolite ore overlain by high-iron limonite ore.Core samples from the field were logged and prepared at MMDC Core House and Sample PreparationFacility located in Sition Banban, Cantilan. Whole-rock chemical analyses of the core samples weredone by Atomic Absorption Spectroscopy (AAS)   at   MMDC’s   Laboratory   also located within thevicinity. Quality analysis/quality control program includes AAS calibration using in-house lateritestandard samples prepared by titration. Statistical evaluation and graphical presentation of 1,059standards showed excellent correlation for nickel and iron with R2 = 0.99.The Resources are classified purely as a function of the drilling density. Resource estimation used inthis report is the polygon method in which the classification guidelines applied are consistent with theCIM or JORC classification standards, to wit: 1
  • 6. Update on the Mineral Resources of the MMDC Nickel Project Marcventures Mining & Development Corporation Radegundo S. de Luna, Competent Person for Nickel  Measured Resources - for limonite, where drilling is at a grid of 50m x 50m or less - for saprolite, where drilling is at a grid of 25m x 25m or less  Indicated Resource - for limonite, where drilling is at a grid of up to 100m x 100m - for saprolite, where drilling is at a grid of up to 50m x 50m  Inferred Resource - for limonite and saprolite, where drilling is at a grid of up to 300m x 300mCut-off grade for saprolite estimation is ≥1.5% nickel and <20% iron. While for limonite ore, cut-offgrade used was ≥0.7% nickel and  ≥20% iron. Total Measured and Indicated Saprolite Resourcewith average 1.90% nickel and 11.81% iron is 2,883,000 WMT. For Limonite Ore, totalMeasured and Indicated Resource averaging 1.08% nickel and 44.48% iron is 15,991,000WMT.Total Inferred Saprolite Resource with average 1.73% nickel and 13.08% iron is 4,490,000WMT. For Limonite Ore, total Inferred Resource averaging 1.00% nickel and 47.93% iron is21,960,000 WMT. Details of the Mineral Resource estimation are shown in Table 1. 2
  • 7. Update on the Mineral Resources of the MMDC Nickel Project Marcventures Mining & Development Corporation Radegundo S. de Luna, Competent Person for NickelTable 1. MMDC MINERAL RESOURCES as of December 2012. Tonnes Tonnes Area Class Type (Wet) (Dry) %Ni %Fe Ni TonnesCabangahan Measured Saprolite 2,400,000 1,580,000 1.91 11.77 30,152 Limonite 2,634,000 1,637,000 1.24 42.36 20,367 Total/Ave. 5,034,000 3,217,000 1.57 27.33 50,519 Indicated Saprolite 482,000 347,000 1.88 12.00 6,524 Limonite 12,512,000 7,758,000 1.06 44.61 82,299 Total/Ave. 12,994,000 8,105,000 1.47 28.31 88,822 Measured and Indicated 18,028,000 11,322,000 1.52 27.82 139,341 Inferred Saprolite 4,483,000 2,909,000 1.73 13.08 50,343 Limonite 4,699,000 2,914,000 1.08 46.64 31,561 Total/Ave. 9,182,000 5,823,000 1.41 29.86 81,905Sipangpang Indicated Saprolite 0 0 0.00 0.00 0 Limonite 839,000 520,000 0.94 49.18 4,874 Total/Ave. 839,000 520,000 0.94 49.18 4,874 Inferred Saprolite 0 0 0.00 0.00 0 Limonite 9,770,000 6,058,000 1.01 47.49 60,958 Total/Ave. 9,770,000 6,058,000 1.01 47.49 60,958Pili Inferred Saprolite 0 0 0.00 0.00 0 Limonite 7,493,000 6,058,000 0.95 49.35 57,661 Total/Ave. 7,493,000 6,058,000 0.95 49.35 57,661Total Measured Saprolite 2,401,000 1,580,000 1.91 11.77 30,152 Limonite 2,640,000 1,637,000 1.24 42.36 20,367 Total/Ave. 5,041,000 3,217,000 1.58 27.07 50,519 Indicated Saprolite 482,000 347,000 1.88 12.00 6,524 Limonite 13,352,000 8,278,000 1.05 44.90 87,173 Total/Ave. 13,834,000 8,625,000 1.47 28.45 93,696 Measured and Indicated 18,875,000 11,842,000 1.52 27.76 144,215 Inferred Saprolite 4,484,000 2,909,000 1.73 13.08 50,343 Limonite 21,962,000 15,029,000 1.00 47.93 150,181 Total/Ave. 26,446,000 17,938,000 1.37 30.58 200,524 Measured + Indicated + Inferred contained nickel in tonnes 344,739 3
  • 8. Update on the Mineral Resources of the MMDC Nickel Project Marcventures Mining & Development Corporation Radegundo S. de Luna, Competent Person for Nickel2. INTRODUCTIONThis technical report was prepared at the request of Mr. Mario G. Vijungco, Chairman and Presidentof Marcventures Mining and Development Corporation (MMDC), with the purpose of providing anupdated nickeliferrous laterite resource estimate of the MMDC Nickel Project located within theMunicipality of Cantilan and Carrascal in Surigao del Sur (Figure 1). MMDC Nickel Project Figure 1. Map showing location of the MMDC Nickel Project in the Municipality of Cantilan, Province of Surigao del Sur relative to adjacent provinces.The author was commissioned by MMDC to complete a review, site visit and technical report on themining and exploration activities being undertaken by the company. This technical report, whichcomplies with the requirements, guidelines and implementing rules and regulation of the PhilippineMineral Reporting Code (PMRC), relied on the technical reports, opinion and statement ofgeologists/consultants of MMDC.The report also provides detailed summary of the assessment of historical data and results of theexploration program carried out over the tenement area for the past 2 years after the last competentperson report. This document is compiled from technical reports written by consultants of MMDC,published technical data and observations made by MMDC geologists. All sources of data used areherein cited and listed in Section 17.This technical report is compliant with the implementing rules and regulations of the PhilippineMineral Reporting Code (PMRC). 4
  • 9. Update on the Mineral Resources of the MMDC Nickel Project Marcventures Mining & Development Corporation Radegundo S. de Luna, Competent Person for Nickel3. TENEMENT AND MINERAL RIGHTSMMDC Nickel Project is located within Barangays Cabangahan and Panikian in the Municipalities ofCantilan and Carrascal, respectively. Cantilan and Carrascal are within the Province of Surigao delSur. The project is covered by MPSA 016-93-XI. Table 2 shows the geographic coordinates of theboundary of the tenement area. Tabel 2. Technical description of MPSA 016-93-XI in Luzon-Mindanao Datum Corner Longitude Latitude 1 125°5230" 9°2000" 2 125°5500" 9°2000" 3 125°5500" 9°1900" 4 125°5400" 9°1900" 5 125°5400" 9°1530" 6 125°5330" 9°1530" 7 125°5330" 9°1400" 8 125°5100" 9°1400" 9 125°5100" 9°1500" 10 125°5130" 9°1500" 11 125°5130" 9°1900" 12 125°5230" 9°1900"The project area is within a logging concession that was operated by Ventura Timber Corporationsince 1986. Realizing the potential of the area, Ventura Timber Corporation engaged the services ofGeomin Management Corporation in May 1991 to explore the area for possible mineral deposits andin July 1991, applied for a Mineral Production Sharing Agreement (MPSA) over 4,799 hectares inaccordance with the transitory provision of the 1987 Mining Law known as Executive Order No. 279(E.O. 279).4. GEOGRAPHIC FEATURES 4.1 Location and Accessibility The tenement area is located approximately 3 kilometers west of Cantilan along the Surigao City-Tandag National Highway and accessible through newly renovated logging roads westward from Barangay Panikian. Surigao del Sur is bordered by Surigao del Norte to the north, Agusan del Norte and Agusan del Sur to the west, and Davao Oriental to the south. 5
  • 10. Update on the Mineral Resources of the MMDC Nickel Project Marcventures Mining & Development Corporation Radegundo S. de Luna, Competent Person for Nickel Cantilan is accessible from Surigao City by travelling 120 kilometers southward (Figure 2) and from Tandag by land travel for about 60 kilometers northward. Surigao City and Butuan City can be reached from Manila or Cebu City most conveniently by daily flights by all major airlines in the country. Figure 2. Map showing road network from Surigao City and Butuan City to MMDC tenement area.4.2 Topography, Physiography and Drainage The tenement area is located at the north eastern fringe of the Diwata Mountain Range (also called the Pacific Cordillera), a 300-kilometer stretch of rugged mountains that extends all the way to Davao. To the west of the Diwata Mountain Range are topographic low areas, Tubay Valley and Lake Mainit. These areas are bordered to the west by a 70-kilometer long elevated terrain that runs parallel to the west coast of Surigao del Norte, the Malimono Ridge. Within the tenement area, the terrain is generally gently to moderately sloping and undulating with the exception of some portions in Cabangahan with steep slopes. The Carac-an River transects the tenement area from west to east (Figure 3). The portion of the tenement north of the river attain elevations up to 400 meters above sea level while the portion located south of the river reaches up to 650 meters above sea level. The 6
  • 11. Update on the Mineral Resources of the MMDC Nickel Project Marcventures Mining & Development Corporation Radegundo S. de Luna, Competent Person for Nickel Carac-an River merges with the Taracan River to the south and empties into Lanuza Bay at the east. To the northeast and northwest of the MPSA is well-formed karst topography, indicative of limestone areas. The Eyamjo River appears to be the boundary between the karst topography and the other mountains. Figure 3. Map showing the Carac-an River transecting the tenement area. Also shown are the Eyamjo and Taracan Rivers.4.3 Climate Surigao del Sur exhibits TYPE II Climate which has no pronounced dry and wet season (Figure 4). Maximum rainfall is experienced from November to February and minimum rainfall from May to April with annual rainfall not exceeding 4,500 millimeters (Kintanar, 1984).4.4 Vegetation Dense growth of primary forest trees (e.g. narra, lauan, apitong, tangile) covers the mountainous portions of the tenement. Secondary growth plant covers the logged out portions of the area. Lowlands are used for agricultural purposes and are cultivated with 7
  • 12. Update on the Mineral Resources of the MMDC Nickel Project Marcventures Mining & Development Corporation Radegundo S. de Luna, Competent Person for Nickel rice, corn, coconut and fruit trees. Mangroves are observed to grow along the lower sections of rivers and coastal areas. Figure 4. Climate map of the Philippines with relative location of MMDC tenement area represented by a red star (CORONA, 1920).5. PREVIOUS WORKThe potential of the tenement area for nickeliferrous laterite was first recognized in the 1950s whenthe Mines and Geosciences Bureau (MGB) delineated areas with potential for laterite in the SurigaoPeninsula. Several companies had taken interest in the property including Surigao Nickel Mining andIndustrial Corporation in a joint venture with Marcopper Mining Corporation (1970s); VenturaTimber Corporation (1990s) who engaged Geomin Management Corporation to explore the area in1991, and Queensland Nickel Incorporated and Hinatuan Mining Corporation in 1992.Table 3 shows the previous exploration works and various resource estimates undertaken for MMDC. 8
  • 13. Update on the Mineral Resources of the MMDC Nickel Project Marcventures Mining & Development Corporation Radegundo S. de Luna, Competent Person for NickelTable 3. Resource estimates of previous exploration works.Period Proponent Area Auger drill Test pits Rotary drill Results / Resource Coverage holes holes Estimate 1970 Marcopper Mining 1,300 has. over 1,000 80 MMT of laterite; Corp / Surigao sampling average 1.2 percent nickel Nickel Mining and points and 0.1 percent cobalt Industrial Corp 1991 Geomin Area 1, Area 2 45 holes with 200-m grid 0.1 to 13% heavy mineral Management Corp aggregate spacing fraction, high anomaly in meterage of central northern part of 275 meters at the area; conducted 300-m grid geological mapping, petrographic and mineralogical studies 1992 Hinatuan Mining Area 2 (25 25 holes with 826kg of limonite at 0.9% has.) depth ranging Ni cut-off, averaging from 7 to 24 1.16% Ni and 50.7% Fe; meters 2,044kg of saprolite at 1.6% Ni cut-off, averaging 2.15% Ni 1994 Ventura Timber 1,500 has. 1,000 drill 111 test pits estimated potential holes ranigng from resource of 100MMT at 6.3 to 14.3 1.5% Ni, 24% Fe and meters 0.05% Co 2000 QNI Philippines 400 has. 412 drill holes 2009 Arcilla Area 2 (117 170 holes 3.8 MMT of Indicated has.) Limonite at 1% Ni cut-off, averaging 1.3% Ni and 35.9% Fe; 5.6 MMT of Indicated Saprolite at 1% Ni cut-off, averaging 1.4% Ni Initially, auger drilling and test-pitting was conducted to explore the area. In 1992, Hinatuan Mining Corporation used portable vibro drills to explore for saprolite and drilled at several random locations. The drilling program delineated a 120-hectare mineralized zone in Cabangahan, which was then referred   to   as   ‘Area   2’.   The   result   of   this   drilling became the basis for the first PMRC-compliant report of Arcilla in 2010. Figure 5 shows the location of Areas 1, 2, and 3 (or Pili, Cabangahan and Sipangpang, respectively). A systematic rotary in-fill drilling program was then conducted over Cabangahan, Sipangpang and Pili from 2010 to 2012. The second-phase exploration yielded 1,289 drill holes with a total meterage of 21,266.98 meters. A total of 21,247 samples were collected which constitute the basis for the updated resource report of 2012. 9
  • 14. Update on the Mineral Resources of the MMDC Nickel Project Marcventures Mining & Development Corporation Radegundo S. de Luna, Competent Person for Nickel Figure 5. MMDC MPSA 016-93-XIII tenement map showing Cabangahan, Sipangpang and Pili areas.6. HISTORY OF PRODUCTIONMMDC has started its mining operation from the last quarter of 2010 which includes clearing,grabbing and stockpiling of limonite and saprolite ore from Area 2 (Cabangahan) which is covered byan ECC (120 has.). By the third quarter of 2011, MMDC was able to start shipping out limonite andsaprolite ore up to the present. MMDC has already shipped nearly 1,300,000 WMT of limonite andsaprolite. This indicates extensive mineralization in the MPSA. Nearly 30% of the shipped ore issaprolite with an average grade of 1.8% Ni. The rest are limonite with an average grade of 1.01% Niand 48.44% Fe. Table 4 summarizes the shipment details of MMDC from 2011 to 2012. 10
  • 15. Update on the Mineral Resources of the MMDC Nickel Project Marcventures Mining & Development Corporation Radegundo S. de Luna, Competent Person for Nickel Table 4. MMDCs Production History from 2011 to 2012. Quarter, Year Limonite Saprolite Grade Grade Tonnage (WMT) (% Fe) Tonnage (WMT) (% Ni) Q3, 2011 55,603.00 1.8 Q3, 2011 55,529.01 48 Q3, 2011 54,578.00 1.8 Q3, 2011 51,554.73 48 Q4, 2011 55,860.64 48 Q4, 2011 51,008.50 48 Q4, 2011 55,481.60 48 Q4, 2011 55,913.36 48 Q4, 2011 57,220.16 48 Q4, 2011 54,805.41 48 Q4, 2011 53,805.00 1.8 Q4, 2011 26,738.59 48 Subtotal 2011 464,112.00 48 163,986.00 1.8 Q2, 2012 55,517.00 48 Q2, 2012 49,560.00 1.8 Q2, 2012 50,201.00 49 Q2, 2012 52,100.04 49 Q2, 2012 52,215.00 49 Q3, 2012 48,000.00 49 Q3, 2012 55,000.35 1.8 Q3, 2012 54,999.99 49 Q3, 2012 55,000.00 49 Q4, 2012 53,145.52 1.8 Q4, 2012 37,193.91 49 Q4, 2012 55,000.01 49 Q4, 2012 20,000.00 1.8 Subtotal 2012 460,226.95 48.89 177,705.87 1.8 TOTAL 924,338.95 48.44 341,691.87 1.8Figure 6. Photograph of the current mine site in Cababangahan area where high-nickel saprolite resource has beendelineated. 11
  • 16. Update on the Mineral Resources of the MMDC Nickel Project Marcventures Mining & Development Corporation Radegundo S. de Luna, Competent Person for Nickel7. GEOLOGIC SETTING 7.1 Regional Geology and Tectonic Setting The principal tectonic element of the Philippine archipelago is the elongate Philippine Mobile Belt (Rangin, 1991) which is bound to the east and west by two major subduction zone systems, and bisected along its north-south axis by the Philippine Fault (Figure 7). Figure 7. General tectonic map of the Philippines with relative location of the tenement area (orange star). The Philippine Fault and its associated faults play an important role in the mineralization of the Surigao District. The trace of the Philippine Fault in Surigao is marked by the highly rectilinear NNW-SSE trending Tubay Valler, Lake Mainit and Maniayao Volcano (Figure 8). These structures were formed by a pull-apart mechanism associated with left-stepping left-lateral strike slip fault. 12
  • 17. Update on the Mineral Resources of the MMDC Nickel Project Marcventures Mining & Development Corporation Radegundo S. de Luna, Competent Person for Nickel Figure 8. Close-up of the tectonic setting of northern Surigao Peninsula.Intense physical and chemical weathering of ultramafic rocks in ophiolite suitesproduces nickel-bearing laterite. The distribution of ophiolite belts in the Philippines isshown in Figure 9. Figure 9. Map showing distribution of ophiolites in the Philippines and relative location of MMDC tenement area (yellow star). 13
  • 18. Update on the Mineral Resources of the MMDC Nickel Project Marcventures Mining & Development Corporation Radegundo S. de Luna, Competent Person for NickelThe basement rocks in the district are basalts and slabs of the Dinagat Ophiolite andmetamorphic rocks of the Cretaceous Sohoton Greenschist. The ophiolite consists ofamphibolite, peridotite, pyroxenite, gabbro and dunite. They are regionallyserpentinized and can be found along Malimono Ridge and Northern Pacific Cordillera.These rocks were dated to be Cretaceous to Paleocene (MGB, 2010; Rohrlach, 2005).Overlying the basement rocks are calcareous conglomerates of the Upper EoceneMadanlog Formation in Surigao, and its equivalent terrigenous and calcareoussediments of the Nabanog Formation in Agusan. These formations are in turn overlainby the Late Oligocene to Early Miocene Bacuag Formation. The Bacuag Formationconsists of basaltic flow and breccia, limestone, limestone conglomerate, wackes,siltstone, and muddy limestone.Intruding the Bacuag Formation and other older formations is the Asiga Diorite namedafter the river where most outcrops were to be found. The Early to Late Miocene AlipaoAndesite also intrudes the Bacuag Formation in the vicinities of Alipao and Siana MinePits. The Bacuag Formation is overlain by the Lower to Middle Miocene MabuhayFormation (Motherlode Turbidite by UNDP, 1987). The Middle Miocene TimamanaLimestone inconformably overlies the Bacuag and Mabuhay Formations. This consistsof massive coralline limestone (MGB, 2010).Andesitic pyroclastic eruption and lava flows formed the Tugunan Formation(Mabuhay Clastics by UNDP, 1987) during the Pliocene. Associated magmatismbrought about the epithermal mineralization of the Surigao District (Rohrlach, 2005),and produced the andesites reported as the Andesite Group by Santos et.al. (1962) andas the Andesite Series by Santos-Ynigo (1944). These were separated by MGB (2010)into the Early to Late Pleistocene Ipil Andesite, Late Pliocene Bad-as Dacite and thePleistocene Maniayao Andesite. Pleistocene deposits in the region are the MainitFormation, Hinatigan Formation and Placer Conglomerate (MGB, 2010), all of whichare dominated by conglomerates and sandstones. Figure 10 shows the updatedstratigraphic column of the Northern Pacific Cordillera by MGB, 2010. 14
  • 19. Update on the Mineral Resources of the MMDC Nickel Project Marcventures Mining & Development Corporation Radegundo S. de Luna, Competent Person for Nickel Figure 10. Updated stratigraphic column of the Northern Pacific Cordillera (MGB, 2010).7.2 Local Geology In summer of 2012, students from the National Institute of Geological Sciences (NIGS) conducted geological and structural mapping within the MPSA area under the supervision of Dr. Carlo Arcilla. Figure 11 shows the location and inferred boundaries of the different lithologic units as mapped by the group. 7.2.1 Dinagat Ophiolite Complex The Dinagat Ophiolite Complex is composed of amphibolite, residual peridotite, cumulate peridotite, massive and layered gabbro, sheeted dike complex and pillow basalts of Cretaceous age. Serpentinized peridotite, pyroxenite and dunite are best exposed in landslide area, quarry site and road cuts along networks of logging roads in Barangay 15
  • 20. Update on the Mineral Resources of the MMDC Nickel Project Marcventures Mining & Development Corporation Radegundo S. de Luna, Competent Person for Nickel Panikian. The rock units were also observed in Barangays Sipangpang and Cabangahan located south of the MPSA area. Section along Line A-A’Figure 11. Geologic map produced by the UP-NIGS Team after conducting geologic mapping and sampling on April 2012. MMDCtenement is outlined by red. Fresh rock samples are greenish black to black. Dunite is predominantly composed of olive green-colored grains of olivine. Pyroxene occurs as fine to coarse black crystals in peridotite and pyroxenite. Bronzite is recognized by their bronze color and pronounced two-direction cleavage. It is scattered randomly with the pyroxene. All rock samples are serpentinized at varying degrees. Serpentine minerals occur in platy and fibrous varieties with whitish green to green platy varieties occuring as fracture-fillings along joints and fault planes. 7.2.2 Sohoton Greenschist The Sohoton Greenschist is composed of greenschist, phyllite, and low-grade metamorphic sedimentary and volcanic rocks with marble interbeds. Phyllite 16
  • 21. Update on the Mineral Resources of the MMDC Nickel Project Marcventures Mining & Development Corporation Radegundo S. de Luna, Competent Person for Nickel and low grade metamorphic rocks are distributed over the northwestern part of Cabangahan in the vicinity of Sipangpang River. Metavolcanics and metasedimentary rocks have lower degree of metamorphism than Phyllites such that the protolith can still be inferred from the sample. Phyllites, on the other hand, show higher degree of metamorphism such that traces of the protolith are poorly expressed. Foliation and sheen produced by mica minerals are more pronounced.7.2.3 Alipao Andesite The Alipao Andesite intrudes all older units and assigned to a Middle Miocene age by UNDP (1987). Outcrops are found in the northwestern part of the Cabangahan area, south of the metavolcanics and phyllite area. Minor andesite dikes and outcrops are found along the Carac-an River in Lubo near the metavolcanics zone. Rock samples are gray to greenish in color with no observed manifestation of metamorphism. Texture is aphanitic to porphyritic with long amphibole phenocrysts in fine-grained matrix.7.2.4 Timamana Limestone The Middle Miocene Timamana Limestone is composed of massive coralline limestone and may contain oolites, coral and shell fragments. Well-bedded calcarenite, calcisiltite and gritty sandstone are found at the base of the unit. The limestone unit caps the ultramafic unit with outcrops found in Sitio Bagong Pili and Purok 5, Barangay Panikian, located in the northeastern part of the study area. Outcrops are generally cream to gray in color. Contact between the ultramafics and the limestone unit was observed in Parang near Sitio Bagong Pili. Hand samples are cream to gray in color and compose of sand to mud-sized calcareous sediments. Fossiliferous limestones contain foraminifera. Some samples are crystalline with coarse calcite crystals. 17
  • 22. Update on the Mineral Resources of the MMDC Nickel Project Marcventures Mining & Development Corporation Radegundo S. de Luna, Competent Person for Nickel8. MINERALIZATIONNickel/Iron deposits in the MMDC tenement area are in the form of laterite (limonite ore) andsaprolite derived from the physical and chemical weathering in place of the underlying ultramaficrocks, the bulk of rock suites of the Dinagat Ophiolite Complex. Laterites are accumulation of theresidual product of the upper oxidizing zone in the weathering profile. It is essentially made up of clayand other oxide minerals rich in iron. The lower reducing zone directly underlying the laterite is thesaprolite, a secondary nickel enriched zone made up of rocks and clay in silicate form. They aresurface and near surface deposits localized by topographic controls and geologic structures.The typical laterite deposit at Cabangahan mining pit shows distinct color variation with depth, to wit:1) a pale yellowish and light brown upper to near surface laterite, 2) a middle section of a yellowishlaterite, and 3) a multi-colored bottom laterite. The color described is the gross effect of several colorsas viewed in its totality. However, a closer examination of the laterite would reveal various shades ofred, brown, orange, yellow and gray. They appear as alternating bands, streaks, oolites, lenses andmottled colors. Occasional chromite, magnetite, manganese specks are noted.Underlying the laterite is saprolitic layer with grey to greenish brown color. It has low plasticity andconsists of partly decomposed rocks, softly clayey rock, boulders rimmed by decomposed materialswith fairly unweathered core and clast of bedrock. This is a zone characterized by rapid changes inphysical properties and chemical composition. The saprolite layer may reach up to more than 8 metersthickness in some portion of the tenement area. Garnierite was also observed in the saprolite layer. Itoccurs as irregular fracture filling, lenses and paper thin coating in joints and layering structures.Results of X-ray Diffraction (XRD) of a garnierite sample taken from the tenement area showed thatthe garnierite consists mostly of lizardite (magnesium-dominant serpentine), remnants of forsterite(magnesium-dominant olivine), augite (calcic magnesium-iron clinopyroxene), and traces ofmagnetite. Geothite was also found as an alteration product of olivine.Nickel is relatively mobile over a wide range of environment. Its fixation in the laterite zone is inoxide form. Nickel is absorbed and included in the goethite and other oxide form. Its values generallyincrease with depth and attain maximum values at the saprolite layer. Its concentration in the lateriteis not high compared to that in the saprolite. Iron content is highest in the laterite zone and remains soin the laterite column with small variation but decreases rapidly from the bottom of the laterite to thesaprolite zone (Figure 12). 18
  • 23. Update on the Mineral Resources of the MMDC Nickel Project Marcventures Mining & Development Corporation Radegundo S. de Luna, Competent Person for Nickel Figure 12. Graph of nickel (green) and iron (brown) values with respect to depth. Drill hole ID N1850-E2625 located west of the present mine site.Nickel and iron grade distributions shown in Figure 13 show that Cabangahan Area contains the mostsaprolite samples. This is manifested by higher number of iron values around 5 to 15 percent inCabangahan distribution graph than at around 45 to 55 percent. Likewise, abundance of nickel valuesfrom 1.5 to 3 percent also denote high number of saprolite samples.The iron grade distribution shows the typical trend observed for most laterite deposits in the country.However, trend of nickel grade distribution observed so far in other laterite deposits in the countryshow normal or bell-shaped distribution with the peak at medium grades or around 1 percent. In thedistribution graph above, there is an unusual peak at low nickel values of 0.2 to 0.5 percent. This doesnot indicate predominant low grades in the area, but instead indicates an unusually high number ofbedrock samples drilled. 19
  • 24. Update on the Mineral Resources of the MMDC Nickel Project Marcventures Mining & Development Corporation Radegundo S. de Luna, Competent Person for Nickel Cabangahan Area Cabangahan Area 1200 4000 1000 3000 Frequency Frequency 800 600 2000 400 1000 200 0 0 0.00 0.30 0.60 0.90 1.20 1.50 1.80 2.10 2.40 2.70 3.00 22.5 37.5 52.5 0 15 30 45 60 7.5 % Nickel % Iron Sipangpang Area Sipangpang Area 1200 1500 1000 Frequency Frequency 800 1000 600 400 500 200 0 0 1.50 0.00 0.30 0.60 0.90 1.20 1.80 2.10 2.40 22.5 37.5 52.5 0 7.5 15 30 45 60 % Nickel % Iron Pili Area Pili Area 150 600 500 Frequency Frequency 100 400 300 50 200 100 0 0 0.00 0.30 0.60 0.90 1.20 1.50 1.80 2.10 2.40 22.5 37.5 52.5 0 7.5 15 30 45 60 % Nickel % IronFigure 13. Frequency distribution graphs of Nickel and Iron values of samples from Cabangahan, Sipangpang and Pili Areas. 20
  • 25. Update on the Mineral Resources of the MMDC Nickel Project Marcventures Mining & Development Corporation Radegundo S. de Luna, Competent Person for Nickel9. EXPLORATIONThe MMDC Nickel Project denominated as MPSA 016-93-XIII was registered on July 1993.Community information and education campaigns commenced and have continued since that time.All exploration work on the MMDC Nickel Project was carried out under the supervision of Mr.Mario G. Vijungco, Chairman and President of Marcventures Mining and Development Corporation.Assessment and review of related literature and available data on geology of the area was carried outinitially.Detailed  geologic  mapping  on  a  local  scale  was  conducted  by  Dr.  Arcilla’s  Team  in  April  2012.  The  team consists of 58 students supervised by 10 faculty members, 2 of which are licensed geologists,and 2 representatives from MMDC. The activity included geologic mapping using 10,000-scale basemap and sampling within the tenement area. The main purpose of the mapping activity is to identifydifferent rock types and structures including fractures, joints and faults. Trend of structures weremeasured using brunton compass and plotted on map using coordinates derived from GlobalPositioning System (GPS) devices. Displacements were inferred by observing offset in the structures.Stress orientation was determined by plotting the structures on rose diagrams; thence, the prevailingstress regime in the area was determined.A northeast-southwest lineament that extends from the General Islands toward Panikian whichappears to end southwest of Cabangahan was identified as the most prominent structure within thevicinity of the tenement area (Figure 14). The structure is inferred to be the contact between thelimestone and ultramafics. Similar trending joints were found in the limestones while northwest-southeast joints were found to be more dominant in ultramafic rocks.While the sense of movement of several faults was difficult to ascertain due to lack of referencebedding planes, high degree of weathering of outcrop, and relatively thick gouge; analysis of a left-lateral fault in an outcrop south of Cabangahan together with faults with available rake data suggests aprimary compressive stress trending along the NW-SE. 21
  • 26. Update on the Mineral Resources of the MMDC Nickel Project Marcventures Mining & Development Corporation Radegundo S. de Luna, Competent Person for Nickel Figure 14. Map showing dominant structures inferred in the vicinity of MMDC tenement area (Arcilla et.al., 2012).10. DRILLINGBased on previous drilling by Hinatuan Mining Corp. and other exploration activities, MMDCconducted extensive diamond drilling on the whole tenement area from 2010 to the last quarter of2012 to further increase its mineral resource. Three (3) drilling contractors utilizing at least 10 drillmachines each, and 5 in-house YBM drill machines were used.For the current resource estimate update, a total of 1,289 vertical holes have been completed coveringCabangahan, Sipangpang, and Pili (Figure 15). Holes within Cabangahan area are located on 25-m to100-m grid, in Sipangpang on 50-m to 100-m grid, and in Pili on 100-m to 200-m grid. Totalmeterage is 21,266.98 with an average depth of 16.50 meters per hole and maximum of 40.0 meters. Table 5. Summary of driling activities conducted over Cabangahan, Sipangpang and Pili Areas. Depth Samples Area No. of holes Total Min Max Average Total %Ni range %Fe range Cabangahan 1,009 17,095.88 3 34 16.56 17,080 0.01-3.16 0.01-57.48 Sipangpang 231 3,091.30 4 28 13.38 3,088 0.01-2.73 3.35-55.27 Pili 49 1,079.80 7 40 22.04 1,079 0.01-1.80 0.42-53.82 TOTAL 1,289 21,266.98 21,247 22
  • 27. Update on the Mineral Resources of the MMDC Nickel Project Marcventures Mining & Development Corporation Radegundo S. de Luna, Competent Person for NickelFigure 15. Location map showing 1,289 drill holes completed from 2010 to 2012. The blue outline within Cabangahan indicates the 120-hectare ECC Area where the current mining operations is located. 23
  • 28. Update on the Mineral Resources of the MMDC Nickel Project Marcventures Mining & Development Corporation Radegundo S. de Luna, Competent Person for Nickel10.1 Drilling Contractors CONSTRUCTION AND DRILLING SPECIALIST, INC. Construction and Drilling Specialist, Inc. (CDSI) was contracted to undertake coring using a minimum of ten (10) units of man-portable drilling machines complete with HQ or NQ triple-tube core barrels to ensure high percentage of core recovery. CDSI was able to complete 66 holes in Cabangahan, 49 holes in Pili and 32 holes in Sipangpang from June to September 2011. The table below lists the drill rigs used by CDSI during the activity. Table 6. List of rigs used by CDSI. Rigs used by CDSI Area GM-50 Cabangahan, Pili, Sipangpang GT80-1 Pili, Sipangpang GT80-2 Sipangpang LY-38 Pili TAS-3E Cabangahan, Pili, Sipangpang TOHO-1 Cabangahan, Pili, Sipangpang TOHO-2 Cabangahan, Pili, Sipangpang TS50 Cabangahan, Pili, Sipangpang TS50-1 Cabangahan, Sipangpang TS50-2 Cabangahan, Sipangpang YBM Cabangahan, Pili YBM-1 Cabangahan, Pili YBM-2 Cabangahan, Pili Figure 16. (LEFT) Photograph of drill hole location taken before drilling. (RIGHT) Sample of CDSI drill rig employed by the contractor. 24
  • 29. Update on the Mineral Resources of the MMDC Nickel Project Marcventures Mining & Development Corporation Radegundo S. de Luna, Competent Person for NickelGEOROCK CONSTRUCTION AND DEVELOPMENT CORPORATIONA total of 215 drill holes were completed by Georock Construction and DevelopmentCorporation from July to November of 2011 covering Sipangpang area. The contractoremployed 10 units of Koken Mechanical Drill Machine, YBM Hydraulic DrillingMachine, Kano Hydraulic Drilling Machine producing NQ size (45mm) core.Figure 17. (LEFT) Sample of drill rig used by the contractor, Georock, in Sipangpang area specifically drill hole ID Sip-42. (RIGHT) Close-up photo of Georock drill rig.DR. C. ARCILLA DRILLING TEAMDr. Arcilla conducted in-fill drilling within the Sipangpang and Cabangahan Area fromApril to November 2012. A total of 351 drill holes were completed during that periodwith a total of 5,420.00 meters. His team used 22 units of portable mechanized augerdrill with NQ-sized single tube core barrel. Figure 18. Photograph of portable mechanized auger  drill  used  by  Dr.  Arcilla’s  Drilling  Team. 25
  • 30. Update on the Mineral Resources of the MMDC Nickel Project Marcventures Mining & Development Corporation Radegundo S. de Luna, Competent Person for Nickel MMDC IN-HOUSE DRILLING TEAM The in-house drilling team of MMDC conducted the in-fill drilling at 25-m interval over the saprolite-rich area within Cabangahan and completed 630 holes over the area. The team utilized 5 YBM drill units with BQ size single tube core barrel (Figure 19). Figure 19. Photograph of YBM drill machines used by MMDC for in-fill drilling. 10.2 Drill hole Collar Survey Collar data of holes at 50-m, 100-m and 200-m grid were gathered using a Geographic Positioning System (GPS) device. Drill hole collar data, including position and elevation, of holes spaced at 25-m grid was surveyed by MMDC surveyors using 2 units of Topcon total station (GPT-3107N and GTS-100N). Two bench marks were established by the surveyors to be used as tie point. Reference system used is PRS 92 or the Luzon-Mindanao datum.11. SAMPLING METHODInitial Drilling and Sampling Procedures was set up by MMDC personnel and was adapted from2007. The protocols were re-evaluated and improvements were implemented by October 2012. Theprocedures for core handling, logging and sampling applied by MMDC are briefly described below.It is standard procedure that a representative from MMDC, either geologist or core checker, is presenton every drill rig during coring operation. This is to record drilling activities such as core recovery, 26
  • 31. Update on the Mineral Resources of the MMDC Nickel Project Marcventures Mining & Development Corporation Radegundo S. de Luna, Competent Person for Nickeldrill run, type of material recovered including problems encountered during drilling. These data arerecorded into the Daily Drilling Report (Appendix 1). Once a core box is filled, it is sealed with awooden board then secured with rubber packing band. A specific vehicle is assigned to transfer corebox from the field to the core house located within MMDC camp site in Sitio Banban.Upon arrival at the core house, core box filled with samples are received by the Core House LeadMan and recorded in a logbook. Meterage of core samples is checked against core blocks and theDaily Drilling Report. After checking, core boxes are photographed with the proper drill hole ID,project area, meterage and box number written on a white board label placed on top of the core box(Figure 20). Figure 20. Sample core photograph with drill hole ID, project area, meterage and box number indicated in the white board label.Core logging is carefully done in the core house by MMDC geologist. The geologist is guided bydifferent codes for laterite horizon classification, weathering scale, boulder size and color which arereadily available in the Core Log Sheet (Appendix 1).Once core logging is done, the geologist determines the sample interval and records it in the Core LogSheet (Appendix 1) to be used as reference by the Samplers. Sampling is done at a nominal interval ofone meter down the hole regardless of laterite horizon boundaries. The core house sampler usesspatula and sample pick to split the sample along the length and collect the samples from the left side. 27
  • 32. Update on the Mineral Resources of the MMDC Nickel Project Marcventures Mining & Development Corporation Radegundo S. de Luna, Competent Person for NickelSamples are placed into pre-labelled plastic sample bags and delivered to the Sample PreparationFacility of MMDC which is supervised by the company chemist. Figure 21. Photograph of MMDC Sample Preparation Facility in Sitio Banban. Sacks in front of the facility contains the samples that were submitted.12. SAMPLE PREPARATION, SECURITY AND ANALYSESMMDC QA/QC procedures were also diligently followed in the sample preparation and securityprocedures. Split core samples from the core house are received by the Sample Prep Men and areverified from the Sample Submission Form (Appendix 1) submitted by the Core House Lead Man. Figure 22. (LEFT) Samples are manually crushed on steel plate installed on the floor of the Sample Preparation Facility. (RIGHT) Metal trays with samples are place into the electric oven to be heated at 105°C for 8 hours. 28
  • 33. Update on the Mineral Resources of the MMDC Nickel Project Marcventures Mining & Development Corporation Radegundo S. de Luna, Competent Person for NickelThe sample is manually crushed on a steel plate using sledge hammer then placed on metal trays. Todry the samples, metal trays containing the samples are placed into the electric oven at 105°C for 8hours or more if needed. Figure 23. (LEFT) Crusher used to reduce the size of the sample after drying. (RIGHT) Pulverizer used to further reduce the size of the sample after splitting.The  sample  is  then  passed  through  a  crusher  to  crush  “the  lumps”  that  were  formed while drying thesample. A riffle splitter is used to divide the sample into two parts. One part is retained and stored ascoarse reject that can be used for check analysis in the future. The other part is pulverized to 150 meshwhere about 1 gram sample is taken to be analysed.Analyses of core samples are performed by the MMDC Laboratory using Atomic AbsorptionSpectrometry (AAS). Figure 24. (LEFT) Atomic Absorption Spectrometry (AAS) equipment installed at the MMDC Laboratory in Sitio Banban. (RIGHT) Chemicals used for titration. 29
  • 34. Update on the Mineral Resources of the MMDC Nickel Project Marcventures Mining & Development Corporation Radegundo S. de Luna, Competent Person for Nickel13. DATA VERIFICATIONThe author has observed and verified the datasets provided by MMDC against original field sheetsand official assay results. Core trays were visually inspected against core logs and selected drill holecollars were inspected in the field and cross checked against survey plans and topographic data.MMDC In-house laboratory regularly insert nickel standards for every 10 samples. A total of 1,059standards, representing 5% of the total 21,247 core samples, were inserted. In-house standards wereestablished through series of analysis by four (4) chemists using AAS and Titration methods. Allassay results fall within the allowable range of ±0.03% for nickel and ±0.30% for iron wereconsidered. Standards used for the whole drilling course to date range from 0.25 to 2.40% nickel.Figure 23 shows excellent correlation for nickel and iron of the standards that were analysed with R 2being 0.99. % Ni standard sample (accepted vs reassay) % Fe standard samples (accepted vs reassay) 3.00 60.00 2.50 50.00 2.00 40.00 Reassay Reassay 1.50 30.00 1.00 20.00 y = 0.9992x - 3E-05 y = 0.9975x + 0.0493 0.50 R² = 0.9989 10.00 R² = 0.9997 0.00 0.00 0.00 1.00 2.00 3.00 0.00 10.00 20.00 30.00 40.00 50.00 60.00 accepted value Accepted value Figure 25. Scatter plot of % nickel and iron values of the standard samples used for QA/QC showing excellent correlation, R2 = 0.99 both for nickel and iron. Standards are inserted every 10 samples. Table 7. Relationship of accepted value and reassay of standard samples. Ni % Fe % Relative Percent Error -0.19 0.13 Accepted value = Assay result 208 19 Accepted value < Assay result 382 479 Accepted value > Assay result 438 550The Relative Percent Errors shown in Table 7 are below 1%, showing consistent and high precisionrepeatability. A negative RE% value indicates that the accepted value is higher than the reassay.Therefore, standards suggest that the analyses of MMDC Laboratory are suitably precise. Furtherproof of the accuracy and precision of MMDC Laboratory and sampling practices is that purchasers of 30
  • 35. Update on the Mineral Resources of the MMDC Nickel Project Marcventures Mining & Development Corporation Radegundo S. de Luna, Competent Person for Nickelthe nickel ore conduct their own determination of grade and tonnage of materials transported in eachshipment and the values determined by the  purchasers  agree  with  MMDC’s  data.14. MINERAL RESOURCE ESTIMATIONThe data set in Microsoft Excel format used as basis for the resource estimation was provided byMMDC in December 2012. The spreadsheets contained collar, survey and assay data which consistsof drill hole ID, northing and easting, from and to depth of each sample, and nickel and ironpercentage of each samples.All holes were drilled vertically. No downhole survey was carried out which is acceptable due torelatively short length of drill holes.Polygon  method  was  used  to  estimate  the  mineral  resource  of  MMDC’s  MPSA  016-93-XIII. In thismethod, each drill hole is assigned a polygon that represents the extent of the area of influence of thedrill hole. The assumption is that everywhere within the polygon, the thickness and grade of theresource material is uniform and more or less the same to the resource material of the drill holeenclosed by the polygon.The area of influence of each drill hole is based on the halfway rule, which states that the influence ofa drill hole sample extends until halfway to other samples laterally adjacent to it. For saprolite, theMeasured Mineral Resource was estimated using data of drill holes at 25-m interval and the IndicatedMineral Resource at 50-m interval while Inferred Mineral Resource was estimated for holes at 100-mand 200-m interval. In case of limonite, Measured Mineral Resource was estimated using data of drillholes at 25-m and 50-m interval. Indicated Mineral Resource was estimated using data of drill holes at100-m interval while Inferred Mineral Resource was estimated for holes at 200-m interval.The volume of each block is the product of the area of influence and the combined thickness ofsamples that fall within the set cut-off grades of each ore type. To determine the Wet Total Tonnage,the total in-situ volume is multiplied to a swell factor of 1.35 and 1.37 for soft and hard materials,respectively, and to the bulk density of 1.11 and 1.46, again for soft and hard materials, respectively.The soft materials contain about 38% moisture while hard materials contain about 15% moisture.Cut-off used for saprolite ore estimation is ≥1.5% nickel and <20% iron while for limonite ore, cut-offgrade   used   was   ≥0.7% nickel and   ≥20%   iron. A total of 2,882,000 WMT (wet metric tonnes) of 31
  • 36. Update on the Mineral Resources of the MMDC Nickel Project Marcventures Mining & Development Corporation Radegundo S. de Luna, Competent Person for NickelMeasured and Indicated Saprolite Resource with average 1.9% nickel and 11.88% iron wascalculated. For limonite ore, Measured and Indicated Resource was estimated at 15,992,000 WMTaveraging 1.08 percent nickel and 44.48 percent iron. Details of sample data used in the resourceestimation are shown in Appendix 3. Table 1. MINERAL RESOURCES As of December 2012 (Inclusive of Mineral Reserves) Tonnes Tonnes Area Class Type (Wet) (Dry) %Ni %Fe Ni Tonnes Cabangahan Measured Saprolite 2,400,000 1,580,000 1.91 11.77 30,152 Limonite 2,634,000 1,637,000 1.24 42.36 20,367 Total/Ave. 5,034,000 3,217,000 1.57 27.33 50,519 Indicated Saprolite 482,000 347,000 1.88 12.00 6,524 Limonite 12,512,000 7,758,000 1.06 44.61 82,299 Total/Ave. 12,994,000 8,105,000 1.47 28.31 88,822 Measured and Indicated 18,028,000 11,322,000 1.52 27.82 139,341 Inferred Saprolite 4,483,000 2,909,000 1.73 13.08 50,343 Limonite 4,699,000 2,914,000 1.08 46.64 31,561 Total/Ave. 9,182,000 5,823,000 1.41 29.86 81,905 Sipangpang Indicated Saprolite 0 0 0.00 0.00 0 Limonite 839,000 520,000 0.94 49.18 4,874 Total/Ave. 839,000 520,000 0.94 49.18 4,874 Inferred Saprolite 0 0 0.00 0.00 0 Limonite 9,770,000 6,058,000 1.01 47.49 60,958 Total/Ave. 9,770,000 6,058,000 1.01 47.49 60,958 Pili Inferred Saprolite 0 0 0.00 0.00 0 Limonite 7,493,000 6,058,000 0.95 49.35 57,661 Total/Ave. 7,493,000 6,058,000 0.95 49.35 57,661 Total Measured Saprolite 2,401,000 1,580,000 1.91 11.77 30,152 Limonite 2,640,000 1,637,000 1.24 42.36 20,367 Total/Ave. 5,041,000 3,217,000 1.58 27.07 50,519 Indicated Saprolite 482,000 347,000 1.88 12.00 6,524 Limonite 13,352,000 8,278,000 1.05 44.90 87,173 Total/Ave. 13,834,000 8,625,000 1.47 28.45 93,696 Measured and Indicated 18,875,000 11,842,000 1.52 27.76 144,215 Inferred Saprolite 4,484,000 2,909,000 1.73 13.08 50,343 Limonite 21,962,000 15,029,000 1.00 47.93 150,181 Total/Ave. 26,446,000 17,938,000 1.37 30.58 200,524 32
  • 37. Update on the Mineral Resources of the MMDC Nickel Project Marcventures Mining & Development Corporation Radegundo S. de Luna, Competent Person for Nickel15. INTERPRETATION AND CONCLUSIONSWidespread occurrence of serpentinized peridotite and dunite comprise the lithology in the MMDCtenement area. High-iron limonite ore and high-nickel saprolite are present over most of the tenementarea.The Cabangahan Area (Figure 13) hosts high-nickel saprolite and has been mined from 2011 up topresent. Additional drilling outside the present mine site has delineated additional high-iron limoniteore. The summary of the mineral resource estimation results is presented in Table 8. Table 8. Summary of Mineral Resource estimate by polygon method. Million Million Nickel Class Type WMT DMT %Ni %Fe Tonnes Measured Saprolite I 2.06 1.30 1.97 12.03 26,577 Saprolite II 0.34 0.23 1.55 10.25 3,575 Limonite Low Iron 1.09 0.68 1.56 32.37 10,581 Limonite High Iron 1.55 0.96 1.02 49.39 9,785 Indicated Saprolite I 0.40 0.28 1.95 12.25 5,543 Saprolite II 0.08 0.06 1.55 10.88 980 Limonite Low Iron 3.00 1.86 1.51 29.50 27,982 Limonite High Iron 10.35 6.42 0.92 49.36 59,191 TOTAL MEASURED + INDICATED Saprolite I 2.46 1.58 1.96 12.14 32,120 Saprolite II 0.42 0.29 1.55 10.57 4,555 Limonite Low Iron 4.09 2.54 1.54 30.94 38,563 Limonite High Iron 11.90 7.38 0.97 49.38 68,976 Inferred Saprolite I 3.20 2.05 1.81 13.24 37,185 Saprolite II 1.29 0.86 1.54 12.70 13,158 Limonite Low Iron 1.93 1.19 1.56 32.05 18,631 Limonite High Iron 20.03 13.83 0.95 49.46 131,549 MEASURED + INDICATED + INFERRED Saprolite I 5.66 3.63 1.89 12.69 69,305 Saprolite II 1.71 1.15 1.55 11.63 17,713 Limonite Low Iron 6.02 3.73 1.55 31.49 57,194 Limonite High Iron 31.93 21.21 0.96 49.42 200,525 Table 9. Comparison of R.  de  Luna’s  2012 resource estimates with Dr. Arcillas 2010 resource estimates. Area covered Saprolite Limonite Author, Year (hectares) No. of holes Class Million MT % Ni Million MT % Ni Arcilla, 2010 120 170 Indicated 5.64 1.40 3.87 1.30 de Luna, 2012 1,889 1,289 Measured + Indicated 2.88 1.90 15.99 1.08Table 9 shows the comparison between the 2010 mineral resource estimate by Dr. Arcilla and 2012mineral resource estimate by R. de Luna. There is notably a great increase in the high-iron limoniteore resource from 2010 with 3.87 Million metric tonnes (1.3% Ni and 35.9% Fe), to 15.99 Million 33
  • 38. Update on the Mineral Resources of the MMDC Nickel Project Marcventures Mining & Development Corporation Radegundo S. de Luna, Competent Person for Nickelwet metric tonnes (1.08% Ni, 44.48% Fe) in 2012. This is primarily due to the extensive drilling thatwas done outside the 120-hectare ECC area.The decrease in the saprolite resource is due to higher nickel cut-off used during the 2012 estimation.Another factor is the reduction of saprolite resource due to production. Some of the saprolite resourcefrom the 2010 estimation has already been mined and shipped out. The potential for obtainingsubstantially more saprolite ore tonnage is shown by the 4.48 Million WMT of Inferred Resource.More detailed drilling would increase the saprolite resource tonnage considerably.16. RECOMMENDATIONSAdditional exploration and drilling is recommended over the Pili and Sipangpang Areas to upgradethe resources from Indicated and Inferred to Measured and Indicated. This will increase the shippablehigh-iron limonite ore tonnage.In-fill drilling is needed in Cabangahan where high-nickel saprolite has been delineated to upgrade the4.48 Million WMT Inferred saprolite resource into Measured and Indicated resource.Additional QA/QC method needs to be implemented to also check for accuracy of MMDC Laboratorygiven that standard samples only check for analytical precision. Other method that can check foraccuracy is insertion of Certified Reference Materials and inter-laboratory check analysis. Insertion ofgeological Blank Sample should also be considered to check and monitor contamination duringsample preparation. Coarse and Pulp Duplicate Samples will check for error in sample size reductionand error in analyses. 34