43 101bedfordburgessfinal report

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Bedford/Burgess 43-101

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43 101bedfordburgessfinal report

  1. 1. TECHNICAL REPORT NI 43-101 ON THEBEDFORD – BURGESSGRAPHITE PROJECT BEDFORD DISTRICT AND BURGESS WARD LANARK COUNTY SOUTHEASTERN ONTARIO FORMEGA GRAPHITE INC. L.D.S. Winter, P.Geo. 29 August 2011
  2. 2. TABLE OF CONTENTS PAGE1. Summary 42. Introduction 93. Reliance on Other Experts 104. Property Description and Location 11 4.1 Bedford Property 11 4.2 Burgess Property 145. Accessibility, Climate, Local Resources, Infrastructure and Physiography 15 5.1 Bedford Property 16 5.2 Burgess Property 176. History 17 6.1 Bedford Property 17 6.2 Burgess Property 257. Geological Setting and Mineralization 27 7.1 Regional Geology 27 7.2 Mineralization 27 7.3 Bedford Property Geology and Mineralization 28 7.4 Burgess Property Geology and Mineralization 308. Deposit Types 329. Exploration 32 9.1 Bedford Property 32 9.2 Burgess Property 3310. Drilling 33 10.1 Bedford Property 33 10.1.1 Diamond Drilling Program – Bedford Property 35 10.2 Burgess Property 3911. Sample Preparation, Analyses and Security 39 11.1 Bedford Property 39 11.2 Burgess Property 4012. Data Verification 4113. Mineral Processing and Metallurgical Testing 4214. Mineral Resource Estimates 4615. Adjacent Properties (Item 23) 4816. Other Relevant Data and Information (Item 24) 4817. Interpretation and Conclusions (Item 25) 4818. Recommendations (Item 26) 5119. References 54 Signature Page 57 Certificate of Qualification 58 2
  3. 3. LIST OF TABLES PAGETable 1: Bedford District Claims 13Table 2: Burgess Ward, Tay Valley Claims 15Table 3: Drilling Summary – Bedford Property 35Table 4: Percussion and Diamond Drill Hole Summary 1999 38Table 5: Sampling January 2010 – Bedford Property 41Table 6: Historical Mineral Resource Estimate – Bedford Property 47Table 7: Recommended Exploration Program and Budget – Bedford Property 52Table 8: Recommended Exploration Program and Budget – Burgess Property 53 LIST OF FIGURESFigure 1: Location MapFigure 2: Property Map - Mining Claims - Bedford PropertyFigure 3: Property Map – Mining Claims - Burgess PropertyFigure 4: Meadow Zone Trenches – Bedford PropertyFigure 5: Regional GeologyFigure 6: Property Area Geology – Bedford PropertyFigure 7: 1999 Diamond Drill Hole Locations – Bedford PropertyFigure 8: Test Work Process Flow Diagram APPENDICESAppendix 1: Visual Drill Logs/Columns – Bedford 1999 Diamond Drill Program 3
  4. 4. 1. SUMMARY Mega Graphite Inc. (MGI or “the Company”) holds two mineral explorationproperties in Southeastern Ontario centred at the village of Westport, approximately 50km north of Kingston, Ontario that were acquired for their potential to host graphitemineralization of economic significance. The two properties are within 25 km of oneanother, have very similar geology and if at some future time a treatment facility wasconstructed it could be utilized to treat material from both properties. On this basis thefollowing report is presented as the “Bedford-Burgess Project” that consists of the twoproperties, the Bedford District, South Frontenac Township Property (the BedfordProperty) and the Burgess Ward, Tay Valley Township Property (the Burgess Property). BEDFORD PROPERTY The Bedford Property of Mega Graphite Inc. is located in Bedford District,Southeastern Ontario approximately 45 km north of Kingston, Ontario at 44o-36’Nlatitude, 76o-44’W longitude (Figure 1). The Property is centred at Concession 17, Lot 6,Bedford District, Lanark County. The Bedford Property consists of 36 contiguous, staked mining claims containinga total of 36 units and covering approximately 852 ha and held in the name of MegaGraphite Inc. MGI holds a 100% interest in the mining rights for all claims. The surfacerights for 14 claims are held by third parties. All claims are currently in goodstanding. The Bedford Property was originally acquired by Mr. A.D. Houston, prospectorand developer, in 1988 by staking. Subsequently, between 1994 and 2002 a number ofexploration programs were carried out on the Property by Graphite Mountain Inc., aprivate company controlled by Mr. Houston. The work consisted primarily of surfacetrenching and stripping followed by geological mapping and sampling. The majority ofthis work was carried out in the Meadow Zone area in the southwestern part of theProperty (claims 1037714, 1037718, 1037727 and 1037728). 4
  5. 5. In 1997 a preliminary percussion drilling program was carried out in the Meadow Zone area with a total of 358.12 metres in 16 holes being completed. The second percussion drilling program in September and October of 1999 completed 21 holes for a total of 758.1 metres. In November and early December 1999 a diamond drilling program was completed with 916.2 metres drilled in 19 holes. King (2000) using the results of the two percussion drilling and the one diamond drilling program as well as the information from the surface mapping completed a mineral resource estimate. This estimate was carried out prior to the implementation of the NI 43-101 regulatory requirements and as a result is considered as non-compliant with the current requirements. BEDFORD GRAPHITE PROPERTY HISTORIC MINERAL RESOURCE ESTIMATE (KING 2000) Category Tonnage (tonnes) Grade C% (g) Measured Resource 933,800 3.52 Indicated Resource 1,669,000 3.44 Inferred Resource 1,268,000 3.44 (1) (1) assumed to be same grade as indicated resource.Note: This resource estimate is historical and was prepared before the introduction of National Instrument 43-101 – Standards of Disclosure for Mineral Projects (NI 43-101”). It may not be relied upon until it is confirmed using methods and standards that comply with those required by NI 43-101. The potential for the exploration target to replicate the historical resource, or to reach the indicated range of tonnages, is conceptual and is based on historical reports, which cite approximate length, widths, depths, grades and projections of the historical resource. Readers are cautioned that a qualified person has not yet completed sufficient exploration, test work or examination of past work to define a resource that is currently compliant with NI 43-101. The Company further cautions that there is a risk that exploration and test work will not result in the delineation of such a currently compliant resource. Neither the Company nor its personnel treat the historical resource estimate or the historical data as defining a current mineral resource, as defined under NI 43-101, nor do they rely upon the estimate or the data for evaluation purposes; however, these data are considered relevant and will be used to guide exploration as the Company develops new data to support a current mineral resource estimate in accordance with the requirements of NI 43-101. 5
  6. 6. The Bedford Property is large, covering approximately 874 ha and much of theProperty is underlain by lithologic units that have the potential to host graphitemineralization of economic interest. Most of the work has been in the Meadow Zone inan area measuring about 500 metres x 500 metres in the southwestern part of theProperty. Graphite mineralization is recognized in other parts of the Property, however,little work has been done outside the Meadow Zone to evaluate these additional areas. To further evaluate the Bedford Property and its potential, a program ofgeological mapping, stripping and trenching of high priority areas is recommended. Tocomplete the current evaluation program resource confirmation, diamond drillingfollowed by the preparation of a resource estimate is recommended. A one phaseprogram of exploration is recommended with expenditures in Phase 1 being $800,000.The implementation of a second phase would be contingent on the results of the Phase1 program. BURGESS PROPERTY The Burgess Property is located in Burgess Ward, Tay Valley Township, LanarkCounty, Southeastern Ontario approximately 55 km north of Kingston, Ontario at 44o-21.4’N latitude, 76o-20’W longitude (UTM NAD83, co-ordinates 396000mE, 4954500mN)(Figure 1). The Property is centred at Concession 5, Lots 23-26, Burgess Ward, TayValley Township. The Property consists of 14 contiguous, staked mining claims containing a totalof 14 units and covering approximately 336 ha. All claims are currently in good standing.MGI holds a 100% interest in the mining rights only for each of the 14 claims while thesurface rights are held by third parties. The Burgess graphite deposit was discovered in 1917 with exploration, generallyconsisting of drilling, trenching and pitting, taking place from 1918 to 1923, in 1951, 1981and 1989. At the present time there is no current 43-101 compliant resource estimatefor the Property. 6
  7. 7. To further evaluate the Burgess Property and its potential, a program ofgeological mapping, stripping and trenching of high priority areas is recommended. Tocomplete the current evaluation program, diamond drilling followed by the preparation ofa resource estimate is recommended. A one phase program of exploration isrecommended with expenditures in Phase 1 being $800,000. The implementation of asecond phase would be contingent on the results of the Phase 1 program. There is currently no 43-101 compliant resource estimate for the BurgessProperty. The most recent tonnage estimate for graphite mineralization was reported byHawley (1988) as stated in the following sentences. In 1989, Lodi Metals – Black HawkMining Inc. completed an exploration program centred on the same general area asprevious work although the area explored was substantially larger and consisted of 39claim units. Their work included 13,336.5 ft of diamond drilling, excavation of 69trenches, geophysical surveys and geological mapping. This work outlined 100,000 tonsof material averaging 10% C (g) to a depth of 30 m in one of several zones tested. It isnot clear from the available information whether this tonnage represents a confirmationof a previously known deposit or whether this tonnage represented a new discovery thatshould be added to the already outlined resource. Hawley (1988) in “Summary Reporton the Timmins Graphite Project of Lodi Metals Inc., Conc. V, North Burgess Township,Lanark County, SE Ontario” and dated 21 July, 1988 makes the following statement. “Itwould appear that at least 10 million tons could be expected and considering thenumerous other conductors and geologically mapped graphite rich zones, a conservativefigure of 15 to 20 million tons of 8% C (graphite) may be increased with furtherdevelopment work.” GENERAL Both properties are geologically located within the Frontenac Terrain of theCentral Metasedimentary Belt (CMB) of the Grenville Province of Proterozoic age. TheCentral Metasedimentary Belt is a major Mesoproterozoic accumulation of marble,metavolcanic rocks and clastic metasedimentary rocks. The general structural trends inthe Frontenac Terrain are northeasterly and all units have been deeply buried and havebeen metamorphosed to amphibolite to granulite grade. 7
  8. 8. Within the Properties, the main lithologic units are marbles (metamorphosedcarbonate units), intercalated, rusty meta-arenites, graphitic schists and various felsic tomafic intrusive units. The lithologic units with the most economic interest are thecoarsely crystalline graphite-bearing Grenville marbles which were at one timecarbonate shelf sediments. The rusty meta-arenites occur in relatively narrow horizonswithin the larger marble-rich units. The rusty meta-arenites also contain significantgraphite content, sometimes exceeding 5% by weight graphitic carbon. The contactsbetween marbles and meta-arenites with graphitic schists, in general, appear to carrysignificant graphite. The graphite mineralization for the most part occurs in flakes ofgraphite ranging from 0.25 mm to 5 mm in size. MGI has carried out preliminary mineral processing and testing studies todetermine if the graphite from the Bedford and Burgess Properties can meet thespecifications required for a high quality graphite product that could be used in theconstruction of lithium-graphite batteries for example, where high purity graphite in the10-20 micron range is required for the anodes of the battery. These studies haveconsisted of; Crushing and flotation studies on 1500 lb of graphite-bearing material collected from surface from the two properties (750 lb from each property). A concentrate of 130.5 lb of raw flake graphite was produced. Material identification, size and weight tests on the 130.5 lb of concentrate. Milling tests to determine how effectively the particle size of the flake graphite could be reduced. Chemical analyses of all products and scanning electron microscope (SEM) studies. Subsequently 12.8 kg of graphite-bearing trench samples from the BedfordProperty was tested. A flake graphite concentrate was produced and then dry milled inan attempt to produce spherically shaped particles in the 10 to 20 micron range. Thispreliminary work produced material in the required size range and with an acceptablecircularity. 8
  9. 9. In summary, it is considered that the preliminary mineral processing and testwork has provided positive results and has indicated that acceptable products can beproduced from the graphite-bearing rocks of the Bedford and Burgess Properties. For both the Bedford and Burgess Properties, Phase 1 programs of geologicalmapping, trenching, sampling and diamond drilling are recommended with the objectivebeing to prepare NI 43-101 compliant Mineral Resource Estimate for both Properties.The total estimated expenditure to carry out these two work programs is $1,600,000.2. INTRODUCTION The writer was requested by Mega Graphite Inc. to prepare an independenttechnical report on the Company’s Bedford and Burgess graphite properties. This reportis being prepared for Company corporate purposes and is consistent with, “Repeal andReplacement of National Instrument 43-101 Standards of Disclosure for MineralProjects, Form 43-101 F1 Technical Report, and Companion Policy 43-101 CP,Supplement to the OSC Bulletin, April 8, 2011, Volume 34, Issue 14 (Supp – 2). MGI holds two mineral exploration properties in Southeastern Ontario centred atthe village of Westport, approximately 50 km north of Kingston, Ontario that wereacquired for their potential to host graphite mineralization of economic significance. Thetwo properties are within 25 km of one another, have very similar geology and if at somefuture time a treatment facility was constructed it could be utilized to treat material fromboth properties. On this basis the following report is presented as the “Bedford-BurgessProject” that consists of the two properties, the Bedford Property and the BurgessProperty. The writer is a principal of Winterbourne Explorations Ltd. (Winterbourne) andhas operated Winterbourne as an independent geological consulting business since1981. Through Winterbourne, the writer has prepared a number of 43-101 complianttechnical reports on gold and/or base metal and industrial mineral properties locatedwithin the provinces of Ontario and Quebec. This report is based on informationprovided by the Company, publically available information as well as a visit to theproperties by the writer on 26 January 2010. At the time of the property visits there was 9
  10. 10. limited (patchy) snow cover. On the Burgess Property the geological units in thenorthwestern part of the property were inspected and on the Bedford Property severalsites in the Meadow Zone area were looked at and 2 sites were sampled (5 sampleswere taken). Since that time no exploration work has been carried out on either Propertyas evaluation work has concentrated on the mineral dressing/metallurgical aspects ofthe Project. Metric units and Canadian dollars are used throughout this report unlessotherwise stipulated. The percentage of graphite/carbon is reported as % C (g)throughout the report. Neither the Bedford Graphite Property nor the Burgess Graphite Property areadvanced (development or production) properties at this time and as a result, this reportdoes not include information under Items 15 through 22 of National Instrument 43-101Replacement. The effective date of the report is 29 August 2011.3. RELIANCE ON OTHER EXPERTS This report is being prepared by the writer for MGI and the information,conclusions, opinions and estimates contained herein are based on; information available to the writer at the time of preparation of this report that is in the public domain, assumptions, conditions and qualifications as set forth in this report, data and reports supplied by the client and available from the public domain and, property information available from the public website of the Ontario Ministry of Northern Development Mines and Forestry. in section 13, the writer has used the following reports provided by the Company and as listed in the References (Item 27); Harwood, W. 2010; Hosokawa, 2011; Ortech 2011. 10
  11. 11. 4. PROPERTY DESCRIPTION AND LOCATION 4.1 BEDFORD PROPERTY The Property is located in Bedford District, South Frontenac Township, LanarkCounty, Southeastern Ontario approximately 45 km north of Kingston, Ontario at 44o-36’N latitude, 76o-44’W longitude (UTM co-ordinates 377000mE, 4943000mN) (Figure1). The Property is centred at Concession 17, Lot 6, Bedford District with the Propertybeing in the Southern Ontario Mining Division. The Property consists of 36 contiguous, staked mining claims containing a totalof 36 units and covering approximately 852 ha shown in Figure 2 and as summarized inTable 1. MGI holds a 100% interest in the mining rights only for each of the claims listedin Table 1. For 14 claims a third party holds the surface rights (Table 1 and Figure 2).The expiry date of all the claims is provided in Table 1 and for each claim, an annualexpenditure of $400 is required to keep the claim in good standing. All of the claims arein good standing until 26 April 2012. All claim boundaries are determined by the lot and concession line fabric of thetownship. To date, most work on the Property has been concentrated in the Meadow Zoneand its location is shown in Figure 2. There are no mine workings, tailing ponds orwaste rock piles on the Property. There are no recognized important natural features orimprovements within the Property boundaries. There are no known royalties, back-in rights, payments or other agreements towhich the Property is subject. There are no recognized environmental liabilities to which the Property is subject.In the Meadow Zone area (Figure 2), there is some disturbance to the land due to the 11
  12. 12. FIGURE 1. .i MEGA GRAPHITE INC. BEDFORD· BURGESS PROJECT LOCATION MAP Scale: 1:750 000 August 2011
  13. 13. After Mining Land Tenure Map M-0052 FIGURE 2 MEGA GRAPHITE INC. BEDFORD-BURGESS PROJECT BEDFORD PROPERTY CLAIM MAP Scale: 1:40 000 August 2011
  14. 14. stripping, trenching and drilling programs. If, for any reason, the Property wereabandoned, there would be a limited amount of rehabilitation required in this area. None of the work carried out to date required permits, however, a new OntarioMining Act was passed in October 2009 and changes are being phased in. In 2012 a“graduated regulatory scheme setting rules for early exploration activities, includingconsultation with First Nations and Metis” and “measures protecting areas which meetcriteria as sites of Aboriginal cultural significance from the impacts of mineralexploration” are being considered for future implementation. 12
  15. 15. TABLE 1 MEGA GRAPHITE INC. BEDFORD DISTRICT CLAIMS AREA CLAIM CLAIM NO. LOT / CONCESSION UNITS (ha) DUE DATE 1037688 SW/4, Lot 17, Conc. 6 1 24 2012-Apr-26 1037689 NE/4, Lot 20, Conc. 8 1 24 2012-Apr-26 1037690 SW/4, Lot 18, Conc. 6 1 24 2012-Apr-26 1037691 SE/4, Lot 18, Conc. 6 1 24 2012-Apr-26 1037692 (1) NE/4, Lot 17, Conc. 6 1 24 2012-Apr-26 (1) 1037693 SE/4, Lot 17, Conc. 6 1 24 2012-Apr-26 1037696 SW/4, Lot 18, Conc. 7 1 24 2012-Apr-26 1037697 NW/4, Lot 18, Conc. 7 1 24 2012-Apr-26 1037699 SE/4, Lot 18, Conc. 7 1 24 2012-Apr-26 1037700 SW/4, Lot 18, Conc. 8 1 24 2012-Apr-26 1037701 NW/4 , Lot 18, Conc. 8 1 24 2012-Apr-26 1037704 (1) NW/4, Lot 19, Conc. 7 1 24 2012-Apr-26 (1) 1037705 SW/4, Lot 19, Conc. 7 1 24 2012-Apr-26 1037706 SE/4, Lot 19, Conc. 7 1 24 2012-Apr-26 1037707 NE/4, Lot 19, Conc. 7 1 24 2012-Apr-26 (1) 1037708 W/2 of East half Lot 20, Conc. 7 1 20 2012-Apr-26 (1) 1037709 E/2 of West half Lot 20, Conc. 7 1 20 2012-Apr-26 1037710 W/2 of West half Lot 20, Conc. 7 1 20 2012-Apr-26 1037711 NW/4, Lot 20, Conc. 8 1 24 2012-Apr-26 1037712 SW/4, Lot 20, Conc. 8 1 24 2012-Apr-26 (1) 1037717 NE/4, Lot 16, Conc. 5 1 24 2012-Apr-26 (1) 1037718 SE/4, Lot 16, Conc. 5 1 24 2012-Apr-26 1037719 NE/4, Lot 15, Conc. 5 1 24 2012-Apr-26 1037720 SE/4, Lot 15, Conc. 5 1 24 2012-Apr-26 1037721 NE/4, Lot 14, Conc. 5 1 24 2012-Apr-26 1037722 SE/4, Lot 14, Conc. 5 1 24 2012-Apr-26 (1) 1037723 SW/4, Lot 14, Conc. 5 1 24 2012-Apr-26 (1) 1037724 NW/4, Lot 14, Conc. 5 1 24 2012-Apr-26 (1) 1037725 SW/4, Lot 15, Conc. 5 1 24 2012-Apr-26 (1) 1037726 NW/4, Lot 15, Conc. 5 1 24 2012-Apr-26 (1) 1037727 SW/4, Lot 16, Conc. 5 1 24 2012-Apr-26 (1) 1037728 NW/4, Lot 16, Conc. 5 1 24 2012-Apr-26 1037729 NW/4, Lot 15, Conc. 6 1 24 2012-Apr-26 1037730 SW/4, Lot 15, Conc. 6 1 24 2012-Apr-26 1037731 NW/4, Lot 14, conc. 6 1 24 2012-Apr-26 1037732 SW/4, Lot 14, Conc. 6 1 24 2012-Apr-26NOTE: (1) Mining rights only held by MGI. Third party holds surface rights. For all other claims, MGIholds mining rights. 13
  16. 16. 4.2 BURGESS PROPERTY The Property is located in Burgess Ward, Tay Valley Township, Lanark County,Southeastern Ontario approximately 55 km north of Kingston, Ontario at 44o-21.4’Nlatitude, 76o-20’W longitude (UTM NAD83, co-ordinates 396000mE, 4954500mN)(Figure 1). The Property is centred at Concession 5, Lots 23-26, in the Southern OntarioMining Division. The Property consists of 14 contiguous, staked mining claims containing a totalof 14 units and covering approximately 336 ha shown in Figure 2 and as summarized inTable 2. MGI holds a 100% interest in the mining rights only for each of the claims listedin Table 2 (Table 2 and Figure 3). The expiry date of all the claims is provided in Table 1and for each claim, an annual expenditure of $400 is required to keep the claim in goodstanding. On 9 August 2011, $400 per claim was transferred from the reserve (bank) tomaintain the claims in good standing until September 2012, however, as of the 29August 2011 this was not being reported on the government website. All claim boundaries are determined by the lot and concession line fabric of thetownship. To date, most work on the Property has been concentrated in the western part ofthe Property. There are no mine workings, tailing ponds or significant waste rock piles onthe Property. There are several surface stockpiles of graphite-rich material excavatedfrom surface trenches. It is estimated that in total there is 11,000 tons of material in thestockpiles. There are no recognized important natural features or improvements withinthe Property boundaries. There are no known royalties, back-in rights, payments or other agreements towhich the Property is subject. There are no recognized environmental liabilities to which the Property is subject.There is some disturbance to the land due to the stripping, trenching and drilling 14
  17. 17. E o o It) - rn :::J en :::J « M W rn c::: :i!: :) C) « ...J u::: U «; ,,-- o o ::iE Co CO " :iE f :s c z o 0 "C C CO -oJ en; c .- c .- ::iE l- G --- ( - <,.. ...- " /
  18. 18. programs and if, for any reason, the Property were abandoned, there would be a limited amount of rehabilitation required in this area. None of the work carried out to date has required permits. (See comments on page 13 re the new Ontario Mining Act). TABLE 2 MEGA GRAPHITE INC. BURGESS WARD CLAIMS AREA CLAIM CLAIM NO. LOT / CONCESSION UNITS (ha) * DUE DATE 748510 SW/4, Lot 26, Conc. 5 1 24 2011-Sep-14 748511 SE/4, Lot 26, Conc. 5 1 24 2011-Sep-14 748512 SW/4, Lot 25, Conc. 5 1 24 2011-Sep-14 748513 SW/4, Lot 23, Conc. 5 1 24 2011-Sep-14 748514 SE/4, Lot 23, Conc. 5 1 24 2011-Sep-14 840566 NE/4, Lot 24, Conc. 5 1 24 2011-Sep-16 840567 NW/4, Lot 24, Conc. 5 1 24 2011-Sep-16 840568 NE/4, Lot 25, Conc. 5 1 24 2011-Sep-16 840569 NW/4, Lot 25, Conc. 5 1 24 2011-Sep-16 840570 NE/4, Lot 26, Conc. 5 1 24 2011-Sep-16 840571 NW/4 , Lot 26, Conc. 5 1 24 2011-Sep-16 840572 SE/4, Lot 24, Conc. 5 1 24 2011-Sep-16 840573 SW/4, Lot 24, Conc. 5 1 24 2011-Sep-16 840574 SE/4, Lot 25, Conc. 5 1 24 2011-Sep-16NOTE: (1) Mining rights only held by MGI. Third party holds surface rights.* Approximate area. 5. ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY The local community of Westport approximately 14 km to the northeast of the Bedford Property and 9 km to the southwest of the Burgess Property can provide meals, accommodation and general services for any exploration work in the area. The Project area has a cool continental climate with an average annual precipitation in the order of 900 mm per year and with the annual temperatures being in 15
  19. 19. the range from -12oC to +25oC. Snow accumulations are generally present for a 4.5 to 5month period between November and March. In general, the climatic conditions permitexploration work to be carried out at all times of the year. In some cases, the winterseason is more preferable for carrying out geophysical and drilling work in that itprovides access to normally swampy areas. The areas of both the Bedford and Burgess Properties are typical of SouthernOntario’s Precambrian Shield terrain with the general topography being controlled byunderlying bedrock ridges which in part are soil covered. Smaller areas primarily oncarbonate-rich bedrock are being cultivated while the remaining area is generally forestcovered. Throughout the area of the claim groups, the soil is of a poor quality and onlysupports minor agriculture which is largely devoted to grazing of livestock. For the most part, the Properties are covered with second growth hard wood withsome open pasture land areas. In general, the average relief in the area is in the order of 5 metres or less,however, locally it may reach up to 15 metres. The overburden which is largely glacialtill and glacial outwashed deposits is relatively thin and would appear to average in theorder of 1 metre to 5 metres deep. Swampy areas generally occupy the low-lying areasbetween the forested rocky ridges. 5.1 BEDFORD PROPERTY Access to the Property from the north is from Arnprior on Provincial Hwy. 17 westof Ottawa and then south on Provincial Hwy. 15 to the hamlet of Crosby. At CrosbyCounty Road 42 leads west though Newport to Westport, a distance of 14 km. FromWestport, County Roads 12 and 8 lead southwest a distance of approximately 14 km tothe area of the Property (Figure 1). The Property can also be reached from Kingston to the south by way ofProvincial Hwy. 38 to Godfrey then northeast on County Road 8 about 12 km to theProperty. 16
  20. 20. 5.2 BURGESS PROPERTY Access to the Property from the north is from Arnprior on Provincial Hwy. 17 westof Ottawa and then south on Provincial Hwy. 15 to the hamlet of Crosby. At CrosbyCounty Road 42 leads west though Newport to Westport, a distance of 14 km. FromWestport, County Roads lead northeasterly 9 km to the property area. The Property can also be reached from Kingston to the south by way ofProvincial Hwy. 15 to Crosby then west to Westport and then 9 km northeasterly to theproperty area.6. HISTORY 6.1 BEDFORD PROPERTY The earliest reported exploration work from the general area of the subjectproperty was for galena (lead). Prior to 1915 numerous small pits, trenches and shaftswere put down on late-stage, fault-related calcite-galena veins. In the early part of the20th century, production in the general area reached several million pounds lead. Hewitt (1965) reports that Frobisher Ltd. outlined a substantial graphite body onthe Kirkham Graphite property approximately 8 km east of Godfrey and south of theBedford Property which is the subject of this report. In 1952, a diamond drilling programby Frobisher outlined two parallel lenses of graphite-rich mineralization. Harding (1951, p. 62) reported that a pit approximately 15 ft deep had been sunkon a graphite showing on the side of the hill facing Birch Lake on Lot 1, Concession 5,Bedford township. The graphite is present as disseminations in a crystalline limestone inbands between 2 cm and 20 cm wide. No substantial body of graphite- bearing materialwas exposed in the pit. Harding (1951) also reports the presence of graphite mineralization at the“Bawden Mine” in Lot 2, Concession 6 of Bedford township. Here the graphite occurs inflakes, disseminated in crystalline limestones which are steeply folded and trend in a 17
  21. 21. northeasterly direction. Harding (1951) also reports the presence of disseminatedgraphite in white Grenville marble on Lot 18, Concession 8 of Bedford township. 1970: Megaton Mines Ltd. From late November to mid-December 1970 Megaton Mines Ltd., Kingston,Ontario drilled one diamond drill hole bearing approximately north at an angle of 45o andto a depth of 891 feet (271.6 metres) on the site of current claim S01037697. Noinformation is available in the assessment report as to the purpose of this hole or thecommodity sought, however, both graphite-bearing “quartzites” and crystallinelimestones are reported in the drill log. (Megaton, 1970). 1988: A.D. Houston The original Bedford Property claims were acquired in 1988 by Mr. A.D. Houston,a prospector and developer. Prospecting at that time indicated that the graphitemineralization was more widespread than previously thought and additional claims wereadded to the group. Subsequent work consisted of general prospecting and stripping and sampling asrequired to meet assessment work requirements. This early work indicated thepresence of old pits and trenches, however, they appeared to be related to the searchfor mica deposits. During this early work many graphite-rich zones were identified onthe Property, however, the Meadow Zone Area (claims 1037717, 1037718, 1037727 and1037728) was the site of most work and was considered to be the most prospective area(Figure 2). A Self Potential electrical geophysical survey completed at this time alsosuggested the Meadow Zone Area as an area of interest. (King, 2000). 1994: Graphite Mountain Inc. A reconnaissance inspection of the planned work area was carried out on 15March 1994 following which approximately 40 test pits were excavated during the period15 March to 19 March utilizing a Case 580-Super E backhoe. Subsequently, between21 March to 15 April 1994 most of the test pits were connected to form trenches which 18
  22. 22. crosscut the apparent trend of the main graphite-bearing units. As a result, most of thetrenches were oriented approximately east-west. The trenches revealed a zone of paragneiss, marble and granitic gneisses orpossibly a granitic intrusive extending throughout the area. Graphitic zones were foundin all trenches where bedrock was encountered, however, several trenches did notencounter bedrock. Work was carried out on claims 1037704 and 1037705. (King,1994). 1995: Graphite Mountain Inc. MDX GeoServices, Bridgenorth, Ontario carried out a program of stripping andtrenching between 3 April 1995 and 21 April 1995. At this time, 4 major trenches weredrilled and blasted and/or excavated. The 4 trenches were subsequently mapped andthen the trenches were backfilled due to their being on agricultural land. The trenches exposed a zone of marble and rusty graphitic gneisses extendingthroughout the work area. It was observed that the graphite was primarily restricted tothe marble units and the contact zones between the marble units and the granitic gneiss.Visually, the graphite contact was estimated to be between 1% C (g) and 4% C (g).(King, 1995, 1995 (a). 1995-1996: Graphite Mountain Inc. A program of drilling, blasting and backhoe excavating was undertaken at the siteof the previously identified self-potential geophysical anomaly within claim 1037717.Subsequently, a 2 tonne bulk sample of the mineralized material was collected from theexcavation and shipped to a test facility in Sudbury, Ontario. In a second area to the north, a program of drilling, blasting and backhoeexcavating was carried out where several excavations were made during 1995.Previous work identified several bands of graphitic marble and granitic gneiss withnarrow zones of graphite enrichment along the contacts and good quality disseminated 19
  23. 23. flake graphite in the crystalline marbles. This area lies within claims 1037690 and1037691. Subsequent to the above work, the trenches were surveyed and mapped in withbase maps being prepared in a digital format. The testing program at the Sudbury facility involved a series of test runs utilizinga new patented dry processing method for separating and classifying flake graphite fromthe host rock. Samples for assay were collected from the bulk sample pit and submittedto Lakefield Research and were considered to represent the head grade for the testedmaterial. The report in the Assessment Files on this work indicates there were problemsassociated with the sampling and/or processing. At the second site, graphite appeared to be essentially restricted to the marbleunits and localized at zones along the contacts with the granitic gneisses. It wasconsidered that the overall observed graphite content varied from about 1% C (g) to 4%C (g) based on visual estimates and compared to assay results from elsewhere on theproperty. (King, 1996). 1996: Graphite Mountain Inc. During the period 20 May 1996 to 27 May 1996 an on-going program of drilling,blasting and backhoe excavating was undertaken within claims 1037690 and 1037691.Previous excavations had encountered significant zones of graphite mineralization in1995 and early 1996. In total, 8 total areas were stripped, trenched or excavated duringthe period following which they were mapped and then maps prepared in a digitalformat. The combination of the previous and the more recent trenching exposed theprincipal rock units and their contacts in the area. Two major graphitic marble zoneswere exposed by most of the trenches. One of the graphitic marble units is reported tohost a highly mineralized zone in the order of 2 metres thick where the graphite contentis estimated to be greater than 15% C (g). 20
  24. 24. Graphite is essentially restricted to the marble units and the contacts betweenthe marble and the granite gneiss. Overall the observed graphite content varies fromabout 1% C (g) to over 15% C (g) based on visual estimates. A zone of silicified marble occurs between the more graphitic marble and theunderlying granitic gneiss units. (King, 1996 (a). 1997: Graphite Mountain Inc. Through 1997, a two-phase exploration program consisting of surface stripping,trenching and sampling followed by a limited drilling program was completed at theMeadow Zone (claims 1037717 and 1037718). A program of stripping and trenching by excavator was conducted over an areaof approximately 100 metres by 350 metres in the vicinity of highly graphitic rocks thatoccur along a small scarp within the indicated claims. A total of 11 major trenches wereexcavated (Figure 4). The trenching exposed a graphite schist at numerous locations along the 350metre strike length. Common exposures of the graphitic schist exceed 10 metres ofcontinuous mineralization. Bands of marble generally containing disseminated flakegraphite occur above and below the graphitic schist. During the trenching program, selected mineralized zones were sampled. In total16 samples were submitted to Lakefield Research for graphitic carbon – percent C (g) –assay. These sample results range from 1.01% C (g) representing a lens of marble withonly disseminated graphite to a high of 17.0% C (g) representing a grab sample of highlymineralized graphitic schist at the extreme northern end of the explored area. Generallythe returned assay values were in the range of 6% to 10% C (g). The trench resultswere considered to demonstrate the apparent continuity of the mineralized zones andalso suggested that the grade of mineralization is relatively consistent. Based on the trenching and mapping, it was considered that the graphitic zonewas folded, appearing as an antiform-like structure whose axis trends roughly north- 21
  25. 25. Legend Bedford o ---r-t Trench Outline Graphite Property X 1.5W X 1.20 Dimensions (m) Lot 16 Concession 5, Bedford Township Claim. SO 103n17 & 1037718 Scale I w c N (ast) o 1:1600 100m MaX co.osllVlooo •AilglIIl , ll87. RoY./Wtg 88 24L X 3:ZW X 1.70 .S 1 Gl lJ . i/ / --v LS3+OON ,. / I .. W i ( ! i w ! , .lr ;Jf 1 ......... _- -- L51+00N / II 18.9LX2.6WX2.9D I i d. . ,I. if" .,. "II" "I I I ""...)J I ;, X 1.20 Ilfr 0 7.. B ", II OJ. I -J . -J -J ...." 6l.:J- .mt" .. . 8CX1.4!X1.00 I CQ .. " ! , ¥. I W / i 12 4L X tow X 1.30 1.1 T-8i, J / Claim Une ,:. ,• / / , I : ) 71.3L X t X 0.80 nIll..... i I / i Gate r1 I ....................... _ Post 3 __ __ _ _ _ _ -._- __ _-- 103n26 1037719 FIGURE 4After MDX MEGA GRAPHITE INC.Geoservices 1997, 1998 BEDFORD-BURGESS PROJECT BEDFORD PROPERTY MEADOW ZONE TRENCHES August 2011
  26. 26. south, however, as in most of the Grenville the deformation patterns are very complexand probably represent several phases of folding. (King, 1997). Following the stripping and trenching program, a limited percussion drillingprogram was undertaken to establish the overall continuity of the mineralized zone. Theprogram was undertaken utilizing a track-mounted Atlas Copco percussion drill whichcould drill to a maximum depth of 30 metres with a 2½” diameter hole. The drillingequipment was not able to install casings with the result that all set-ups were cleared tobedrock (Figure 6). A total of 16 holes for a total of 358.1 metres were completed with all holes beingvertical. The sample return was accomplished by the return air circulation above thewater table and by air plus water below the water table. An abundance of fine graphitewas observed, however, it appears that much of the fine graphite was floated off andwas not captured in the sample. The sampling protocol for the drilling was to advanceeach hole 1.5 metres following which the hole was cleaned to remove the cuttings for theappropriate sample. Most of the holes intersected the near surface part of the main graphitic zone,however, several boreholes ended in significant mineralization at the limit of the drillingequipment’s capacity. It was considered that the boring program was very successfuland provided significant information as to the sub-surface distribution of the graphite-bearing units. (King, 1997 (a), 1997 (b). 1999: Graphite Mountain Inc. In the fourth quarter of 1999 a second program of percussion drilling wascompleted on the Bedford Property. In addition, some surface trenching and strippingwas also conducted. This work was carried out within the Meadow Zone area. The 1999 percussion drilling program was carried out with similar equipment andin a similar fashion to the earlier 1997 program. The 1999 program was intended tosupplement the results from the 1997 percussion drilling program and thereby to extendthe areas of known mineralization. 22
  27. 27. In general, the drilling revealed the presence of significant thicknesses ofgraphitic schist, layered graphitic schist and marble with disseminated graphite, coarselycrystalline marble with disseminated graphite, rusty paragneiss and meta-arenite. Insome rare cases pegmatite and granitic sills were intersected. A total of 21 vertical percussion holes were completed for a total of 758.1 metres.With the sampling approach and protocols being the same as those used in the 1997program. The 1999 percussion drilling program confirmed the tightly folded nature of thegraphite-bearing horizons as indicated by the earlier surface mapping and the 1997program. The deformation patterns are very complex and polyphase and the graphitezones appear to have been subjected to at least 2 periods of folding. (King, 2000, 2000(a). A diamond drilling program carried out between late November and earlyDecember 1999 was a follow-up to the percussion drilling program completed earlier inthe year. The purpose of the diamond drilling program was to explore the foldedgraphitic schist zones previously tested by surface stripping, trenching and the shallowpercussion drilling earlier in the year and in 1997. A total of 19 drill holes werecompleted between 23 November 1999 and 6 December 1999 for a total of 916.2metres. Initially the drill core was transported to the Graphite Mountain Inc. core shackfacility at Warkworth, Ontario and the drill cores were subsequently logged and split andsawn during 2000. The drilling was conducted within claims 1037717, 1037718 and1037727. All holes were drilled vertically with the exception of 3 holes which were drilledat -70o on an azimuth of 315o. Since this is the most recent drilling program, it isdiscussed in more detail in Section 13.1 Diamond Drilling. (King, 2000 (a), 2001). 2002: Graphite Mountain Inc. Between 27 August and 30 August 2002, Graphite Mountain Inc. carried out asurface stripping and trenching program along a transect of approximately 320 metressoutheast of the Meadow Zone and in claim 1037719. The work included excavation ofa linear trench trending northeasterly plus several cross trenches to expand the 23
  28. 28. exposure. Trenching was conducted to provide new stratigraphic information to assist incorrelating the known graphite deposit with a single outlying percussion drill holeadvanced several years earlier. A total of 4 individual trenches were excavated which exposed a sequence ofcoarse crystalline calcitic marble which continues for the entire length of the exploredarea. The marble units were layered and intensely folded and locally silicified andintruded by small zones of granitic material. The marbles vary from essentially 100%white calcite to a mixture of calcite plus disseminated phylogopite mica plusdisseminated graphite plus minor actinolite/tremolite. Within the middle of the transectthe marble is intercalated with the sequence of rusty meta-arenite and as this zone isapproached, the graphite and mica content increase significantly. The graphite schistzone has an apparent dip ranging from about 20o to 45o to the southeast. Thismineralization appears indistinguishable from that observed at the main Meadow Zonedeposit. (King, 2002). 2009: Cardinal Explorations Inc. In late April 2009 a fixed-wing magnetic gradiometer and VLF surveys were flownover the Bedford township claim area, Ontario by Terraquest Limited. The totalcoverage was 319 line-km at 100 metre spacing with the results being presented atscales of 1:25000. Base maps were prepared from local topographic maps and thefollowing map types were prepared, flight path, total magnetic intensity, calculatedvertical magnetic gradient, cross track magnetic gradient, a long track magnetic gradient,reconstructed total magnetic field and VLF long track horizontal component, VLF cross-track horizontal component, VLF vertical component, low frequency EM and digitalterrain model. The Meadow Zone appears to be parallel to and on the flank of a magnetic highto the northwest. It is in the area of a measured longitudinal magnetic gradient high ofsimilar strike and strike length. There is no clear suggestion in the magnetics of a fold atthe northeast end of the Meadow Zone. A crosscutting magnetic break near thenortheast of the Meadow Zone is also a possibility. 24
  29. 29. The Meadow Zone has no clear VLF expression which may be due to a limitedstrike length (?). (Webster, 2009). 6.2 BURGESS PROPERTY The graphite mineralization on the Property was first identified in 1917 and fromtime to time over the last 90 years additional work has been carried out as summarizedbelow. 1917 – 1918: Hines and Timmins A graphite deposit was discovered in 1917 by Mr. Frank Hines in lots 24 and 25,Concession V, North Burgess Township, Lanark County. The Property was initiallyexplored from 1918 to about March 1923 by Mr. Noah A. Timmins of Montreal whocompleted 6 shallow diamond drill holes and numerous shall exploratory pits. During thisperiod, a small office, a bunkhouse and a mill were constructed. 1951: Frobisher Ltd. In 1951, the Property was explored by Frobisher Ltd. through drilling anadditional 5 diamond drill holes which outlined a resource reportedly containingapproximately 55,000 tons (none of the tonnages mentioned in this section are NI 43-101 compliant – they are historical estimates) with an average grade of 7.6% C (g) overa strike length of about 100 m. In a second zone, 15 additional diamond drill holes werecompleted, indicating the presence of a 140 m long deposit with an average grade ofapproximately 8.4% C (g). Test milling of material obtained from surface pits was alsoconducted at the Black Donald Mine, a graphite mine which was operating in the regionat that time. 1981: Orrwell Energy Corporation Ltd. Orrwell Energy Corporation Ltd., in 1981, completed a comprehensivecompilation of the known drilling and trenching results on lots 23 to 26, Concession V(16 contiguous mining claims). Orrwell’s consulting Engineer located many of the 25
  30. 30. recorded trenches and combined that data with the drill plans from previous work. This work indicated a resource inventory of approximately 967,000 tons at a grade in the order of 8% C (g). In addition, the Property contained broken material in several surface stockpiles amounting to approximately 11,000 tons with an average grade of 7.72% C (g). Samples from the on-site stock piles were collected and submitted to F. Baril & Associates Inc. (Quebec) for test purposes to determine whether economic graphite concentrates could be produced. 1989: Lodi Metals – Black Hawk Mining Inc. In 1989, Lodi Metals – Black Hawk Mining Inc. completed an exploration program centred on the same general area as previous work although the area explored was substantially larger and consisted of 39 claim units. Their work included 13,336.5 ft of diamond drilling, excavation of 69 trenches, geophysical surveys and geological mapping. This work outlined 100,000 tons of material averaging 10% C (g) to a depth of 30 m in one of several zones tested. It is not clear from the available information whether this tonnage represents a confirmation of a previously known deposit or whether this tonnage represented a new discovery that should be added to the already outlined resource (Hawley, 1988). Black and MacKinnon (1990) report a personal communication from R.G. Hawley, Field Manager, Lodi Metals Inc. in 1988 that “The Timmins Mine (had) proven reserves estimated at 227,000 tonnes of 8% graphite with an additional 681,000 tonnes of probable reserves”. Hawley (1988) in “Summary Report on the Timmins Graphite Project of Lodi Metals Inc., Conc. V, North Burgess Township, Lanark County, SE Ontario” and dated 21 July, 1988 makes the following statement. “It would appear that at least 10 million tons could be expected and considering the numerous other conductors and geologically mapped graphite rich zones, a conservative figure of 15 to 20 million tons of 8% C (graphite) may be increased with further development work.”Note: This reserve estimate is historical and was prepared before the introduction of National Instrument 43-101 – Standards of Disclosure for Mineral Projects (NI 43-101”). It may not be relied upon until it is confirmed using methods and standards that comply with those required by NI 43-101. The potential for the exploration target to replicate the historical reserve, or to reach the indicated range of tonnages, is conceptual and is based on historical reports, which cite approximate length, widths, depths, grades and projections of the historical reserve. Readers are cautioned that a qualified person has not yet completed sufficient exploration, test work or examination of past work to define 26
  31. 31. a reserve that is currently compliant with NI 43-101. The Company further cautions that there is a risk that exploration and test work will not result in the delineation of such a currently compliant reserve. Neither the Company nor its personnel treat the historical reserve estimate or the historical data as defining a current mineral reserve, as defined under NI 43-101, nor do they rely upon the estimate or the data for evaluation purposes; however, these data are considered relevant and will be used to guide exploration as the Company develops new data to support a current mineral reserve estimate in accordance with the requirements of NI 43-101. 2000 – 2009: Graphite Mountain Inc. – Cardinal Explorations Inc. More recent work by previous claim holders (Graphite Mountain Inc. and CardinalExplorations Inc.) have included trenching and airborne geophysical surveys (magneticsand VLF) completed at the same time as the work on the Bedford Property.7. GEOLOGICAL SETTING AND MINERALIZATION 7.1 REGIONAL GEOLOGY The Project is geologically located within the Frontenac Terrain of the CentralMetasedimentary Belt (CMB) of the Grenville Province of Proterozoic age (Figure 5).The Central Metasedimentary Belt is a major Mesoproterozoic accumulation of marble,metavolcanic rocks and clastic metasedimentary rocks. The Frontenac Terrain, themost easterly within the CMB, lacks volcanic rocks and contains a sequence of marbles,quartzites and quartzo-feldspathic gneisses that are considered to originally have beencontinental platform type sediments that were intruded by plutonic rocks and deformedand metamorphosed at approximately 1170 to 1160 Ma. The metamorphic grade in theFrontenac Terrain is generally at or close to granulite facies in contrast to those to thenorthwest and southeast which are at a somewhat lower grade. The general structuraltrends in the Frontenac Terrain are northeasterly. 7.2 MINERALIZATION On the Bedford and Burgess Properties, as well as in other graphite properties inthe general area, the better grade graphite mineralization, occurring as massive tolayered graphitic schists, is usually associated with the contact zone between marbleand meta-arenite units. In these contact zones, the arenites are usually sulphide-bearing with some sections being semi-massive. In outcrop, this weathered contact 27
  32. 32. 76°Note: No Legend, seereport for description FIGURE 5of the Frontenac Terrain MEGA GRAPHITE INC. BEDFORD-BURGESS PROJECTAfter OGS Map 2578 REGIONAL GEOLOGY August 2011 Scale: 1: 1 000 000
  33. 33. zone produces a noticeable gossan. Beyond the contact zones, the marbles typicallycontain disseminated flake graphite with the occasional graphite schist horizon.Typically the graphite content decreases gradually away from the contact. Within thecontact zone, the graphite content appears to be concentrated into thicker and thickerlayers as the contact is approached. Mapping by King (2000) on the Bedford Property has indicated that the graphitemineralization for the most part occurs in flakes of graphite ranging from 0.25 mm to 5mm in size. The arenitic units may host significant amounts of disseminated graphite,some of which at least appears to occur in fine fractures. Because of the flowage-type folding exhibited by the marble/meta-arenite units,the thicknesses of the various graphite-rich horizons show extreme variation. On foldlimbs the thickness of graphite-rich horizons may be only a few centimetres whereas inhinge or fold closure zones, the graphite-rich units may increase to several tens ofmetres. 7.3 BEDFORD PROPERTY GEOLOGY AND MINERALIZATION The Bedford Property is underlain by three main lithologic units; marbles(metamorphosed carbonate units), intercalated, rusty and siliceous paragneisses (meta-aranites) and various felsic to mafic intrusive units (Figure 6). Within the claim group, one of the dominant rock types and the one with the mosteconomic interest is the coarsely crystalline Grenville marbles which were at one timecarbonate shell sediments. Due to the presence of graphite within these units, it isconsidered that originally they were organic-rich and this organic material is now thegraphite. Approximately 50% or greater of the area is underlain by granitic gneisseswhich appear to occur as areas of upwelling. The Grenville marbles overlie these areasof gneissic upwelling and represent the lower portions of the stratigraphic column in thearea. All units appear to have been subjected to very deep burial which has producedthe current metamorphic grade at the amphibolite to granulite facies. 28
  34. 34. 1 LEGEND CENOZOIC Stippled grey PRECAMBRIAN Metasediments( FIGURE 6 MEGA GRAPHITE INC. BEDFORD· BURGESS PROJECT BEDFORD PROPERTY GEOLOGY August 2011 800 m
  35. 35. The rusty paragneisses occur in relatively narrow horizons within the largermarble-rich units. The paragneisses currently have a carbonate component whichsuggests that the original sediments were an organic-rich arenite. The rustyparagneisses also contain significant graphite content, sometimes exceeding 5% byweight graphitic carbon. No metavolcanic rocks have been recognized in the immediate area of theProperty, however, a major volcanic eruptive centre was probably located in the Madocarea to the west which suggests that the area of the Property represented a more stablecarbonate shelf environment which permitted the accumulation of elevated levels oforganic matter within the carbonate and associated units. King (2000a) reports that the graphite mineralization occurs as a sequence ofseveral parallel zones, all folded around a major structural feature (Figure 4). It isimportant to note that the zones illustrated by Figure 4 are not the only graphite-bearinghorizon in the Meadow Zone, the Meadow Zone contains many zones, most of whichhave not been characterized to date. The highest grade graphite mineralization (massive and/or layered graphiteschists) is associated with a major contact zone separating marble and meta-arenite.This style of mineralization is similar to other graphite deposits in the area. Typically, thecontact zone arenites are iron sulphide rich. Outside of the actual contact zone, themarble units typically contain abundant disseminated graphite with occasional thin bandsof graphite schist. Graphite content appears to gradually decrease with increasingdistance from the contact zone (or its stratigraphic equivalent). The presence of strongdisseminated graphite is therefore a good indicator of the contact zone. Approachingthe contact zone, the graphite mineralization tends to become concentrated intoprogressively thicker layers. Locally, the arenites will also host significant disseminated graphite, although thegraphite often appears to have been mobilized into fine fractures as opposed towidespread disseminations. The marble units vary for medium crystalline to very coarse(recrystallized) and many marble exposures show silicification. 29
  36. 36. On fold limbs, individual graphite schist bands may be only a few centimetres inthickness, however, approaching the fold closure zones, the graphite mineralizationthickens dramatically to several tens of metres. Since most of the graphite schists arefound within the marble units, the marble’s highly ductile nature is very important withrespect to developing “structural taps” where mineralization is concentrated. Overall, theoutcrop mapping indicates that the entire sequence has endured multiple phases ofdeformation. This has resulted in the formation of unusual and complex interferencepatterns caused by re-folding of earlier folds. The observed folding appears to be more or less isoclinal and recumbent, withfold limbs dipping on average, about 30o to the east. Numerous fold closures arepresent. The dominant plunge of parasitic folds appears to be about 35o to 40o to thesouthwest, although other plunges are present, attesting to the poly-phase deformationalhistory of the region. The ductility contrast between arenite and marble has resulted in significantboudinage. In those zones dominated by marble, intercalated layers of arenite aretypically broken into short, blocky segments. In many cases, these arenite blocks havebeen highly rotated and altered resulting in the development of coarse, rusty quartzpods. The marble (and graphite) on the other hand, have deformed without significantboudinage as a result of their high ductility. 7.4 BURGESS PROPERTY GEOLOGY AND MINERALIZATION The claims in general are underlain by folded, northeasterly-trendingmetasedimentary marbles with intercalated siliceous paragneisses which have beenintruded by small granitic to mafic dykes and sills. The Burgess claim group units are very similar to those in the Bedford propertyand, in general, contains very coarsely crystalline Grenville marbles which have beenintruded by gneissic granitic rocks and affected by remobilized granitic basement units.The marble units are considered to be thin sequences (in comparison to marblesexposed to the west) which were at one time carbonate shelf sediments. These arelikely to have been rich in organics and are now very graphitic. More than 50% of the 30
  37. 37. North Burgess region is underlain by granitic gneisses which have undergoneconsiderable upwelling. These rocks (and the overlying marbles) represent the lowerportions of the stratigraphic column in this area and are in the upper amphibolite togranulite grade metamorphic facies. The rusty (i.e., sulphide rich) paragneisses appear to occur in variable widthzones within the marbles and are thought to represent more siliceous sediments albeitwith a carbonate content. Often, the rusty paragneisses contain a significant graphitecontent, commonly exceeding 5% (by weight) graphitic carbon. Previous diamond drilling on the claims revealed the following rock types:- Epidotized Biotite Gneiss (metasediments) – fine to medium crystalline gneiss;- Marble – coarse, crystalline marble with trace disseminated flake graphite;- Graphite Schist – coarse flake graphite schist, 5 – 15% est C (g) content;- Biotite Gneiss (metasediments) – possible arkose type sediment with potassic feldspar alteration;- Amphibolite – coarse crystalline, annealed, mafic rock possible mafic intrusive or possible skarn (evidence of marble intercalations and/or replacement texture).Note: C (g) carbon as graphite. The graphite-rich zones consist predominantly of flake graphite hosted incrystalline marbles, although finer graphite in lenses in the marble locally grade up to15%. Mapping by Lodi Metals Inc. identified several parallel zones of graphitic marbleboth south and north of the previously known mineralization, and extended the length aconsiderable distance to the east. The strike length of the overall graphite-rich zonetotals at least 3000 metres from east to west, with individual zones totalling 610 metres.The true width of the overall zone including country rock is at least 1200 metres. Thezones of graphite-enriched marble are commonly 7 to 15 metres wide, and usually havea vertical or near vertical dip. 31
  38. 38. 8. DEPOSIT TYPES The Bedford District and Burgess Ward Graphite Properties are considered tohost deep metamorphic type graphite deposits formed as the result of themetamorphism of organic rich carbonate units at high temperatures and pressurestypical of those in the upper amphibolite to granulite grades of metamorphism. As aresult of the high temperatures and pressures during metamorphism the marble wasrecrystallized and the contained organic matter was converted to crystalline flakegraphite. The current zones of graphite rich sediments, whether they be marbles orparagneisses, are recrystallized and deformed metasedimentary units. Due to the hightemperatures and pressures during metamorphism, “flowage-type” folding has resultedwhich has caused thickening and thinning of the sedimentary horizons in fold hingezones and fold limbs respective. As a result, fold hinge zones may contain largertonnage of graphite-rich material and therefore represent high priority target areas.9. EXPLORATION 9.1 BEDFORD PROPERTY Previous exploration work on the subject Property is summarized in Section 6,History. The most recent work on the Property prior to the airborne survey in 2009 wascarried out during the fourth quarter of 1999 and the summer of 2000 by GraphiteMountain Inc. with reporting in 2000 and 2001 by King (2000, 2001). The details of thiswork are summarized in this and the following section, Drilling. During October 1999 and the following summer of 2000, detailed geologicalmapping of the Meadow Zone in the southwestern part of the subject Property wasconducted. Geological work to this time had shown the structural complexity of the areaand also indicated the stratigraphic setting of the graphite mineralization with the resultthat it was considered that geological mapping was a critical aspect of the explorationprogram. Mapping in the Meadow Zone was carried out using a 12 channel differentialGPS receiver as a means of determining location of observations. It was considered 32
  39. 39. that locations would be within less than 2 metres of their actual location. As a result, nogrid was cut on the Property. Traverses were carried out across the Property to observe and record thelithologic contacts, structure, folding patterns and rock fabric. The data points werereferenced to the UTM co-ordinate grid system based on a NAD 83 datum. Thegeological data was compiled and a 1:1000 geological map of the meadow area wasprepared. Apart from the geophysical survey by Cardinal Explorations Inc. in 2009, norecent exploration work has been carried out on the Property. Mega Graphite Inc. hasnot done any exploration work on the Property. 9.2 BURGESS PROPERTY Previous exploration work on the subject Property is summarized in Section 6,History. The most recent work on the Property was carried out in 2009 and consisted ofa fixed wing magnetic gradient and VLF airborne survey which detailed the location andextent of the graphite-rich horizons. Apart from the geophysical survey by CardinalExplorations Inc. in 2009, no recent exploration work has been carried out on theProperty. Mega Graphite Inc. has not done any exploration work on the Property.10. DRILLING 10.1 BEDFORD PROPERTY Drilling has been carried out 4 times on the Bedford Property between 1970 and1999. The holes drilled are summarized in Table 3 and the results obtained in the 1999programs are summarized below (King, 2000, 2000a). A percussion drilling program was conducted in two segments by GraphiteMountain Inc. (GMI) with the first being from 28 September 1999 to 2 October 1999.The second program was from 12 October 1999 to 17 October 1999. The work wascarried out utilizing a track mounted Furukawa HCR9-ES with an Atlas Copco 33
  40. 40. compressor that would advance the drill stem to a maximum depth of approximately 47metres (155 feet). The 1999 percussion drilling program was designed to serve as a preliminaryprogram in anticipation of a diamond drilling program planned for later in the year. Thegeological mapping had indicated that the mineralized zones occurred in a very complexconfiguration and therefore additional data was needed to better understand the variouszones. In 1997 a percussion drilling program had been very helpful, however, it wasdecided that a second set of percussions holes was needed to better define areas wheregeological data was missing. In addition, some of the 1999 holes were planned to checkthe continuity of graphite bearing horizons between outcrops and holes drilled in 1997. During 1999 a total of 21 percussions holes for a total of 758.1 metres weredrilled (Table 4). A continuous log of the rock types encountered was maintained duringthe drilling and sampling was conducted on 1.5 metre (5 feet) intervals as the drillingprogressed. Chip cuttings and dust samples were collected for later identification, assayand archival purposes. The majority of the 1999 holes were concentrated in the main Meadow Zonearea, however, some holes were drilled further to the west and south with the result thatthese more distal holes revealed the presence of graphitic schist indicating additionalpotential outside of the currently identified zone. The drilling equipment used in 1999 was not capable of installing casings withthe result that all holes were collared in bedrock. To do this required excavatingtrenches to expose the bedrock and to provide drill site drainage. As a result, thelocation of drill holes was dependant on being able to locate suitable starting points. All of the percussion holes drilled in 1999 intersected graphite bearingmineralization ranging from disseminated coarse flake graphite to rich graphite schist. 34
  41. 41. TABLE 3 MEGA GRAPHITE INC. BEDFORD DISTRICT PROPERTY DRILLING SUMMARY Driling Number Comments Company Metres Year Claim(s) Holes 1037697 Megaton 271.6Diamond Drilling 1970 (current 1 Mines Ltd. (891 ft) number)Percussion Drilling 1997 1037717 Graphite 16 358.122.5 inch diam. hole (July 17-22) 1037718 Mountain Inc. 1037717 1999Percussion Drilling 1037718 Graphite (Sept. 28 - 21 758.14.0 inch diam. hole 1037727 Mountain Inc. Oct. 14) 1037728 1999 1037717 GraphiteDiamond Drilling (Nov. 23 - 1037718 19 916.2 Mountain Inc. Dec. 6) 1037727 No drilling has been carried out by Cardinal Explorations Inc., the previous claim holders, or Mega Graphite Inc. 10.1.1 DIAMOND DRILLING PROGRAM In mid-November 1999 a diamond drilling program was carried out by GMI on the Meadow Zone between 23 November 1999 and 4 December 1999. A total of 19 diamond drill holes for a total of 916.2 metres (Table 4) were completed consisting of both vertical (16) and inclined holes (3) with the deepest hole being to a depth of 74.7 metres (245 feet). The inclined holes were drilled at -70o (Figure 7) (King 200a, 2001). There were two main goals to the diamond drilling program. The first objective was to confirm and demonstrate the efficacy of the percussion drilling methods and results from the 1997 and 1999 programs. The second objective was to assist in 35
  42. 42. 4942 700N - .99-14 175 n.(5 .4m) -90" 0:41111 - 4942 600N ----- .99-17 -90" • • 99-16 180 ft.(55m) 245 Ft.(74.7m) -70 99-18 240 Ft.(73.2m) 99-11 GRAPHITE • 105 Ft.(32m) -90 4942 500N 4942 400N 4942 300N W o o WESTPORT FIGURE 7 4942 200N MEGA GRAPHITE INC. DIAMOND DRlU- HOLE BEDFO BURGESS PROJECT .99-15 Number 1999 DIAMOND DRILL PROGRAM 240 FI.(73.2m) Depth HOLE LOCATONS w 315 Azimuth W 8 -70 Inclination8 o 50 100m m 0 IB.. .-••••• i If) ,..... ,..... SCALEMEGAGR.DWG AUG./l1 n n
  43. 43. outlining the geological structure at depth and to provide the basis for a geologicalresource of the graphite bearing horizons in the Meadow Zone. The diamond drill hole locations were selected to be immediately adjacent to anexisting vertical percussion drill hole or were placed on or near section lines establishedduring the geological mapping. The section lines were oriented northwest-southeast andwere laid out to be more or less at 90o to dominant foliation and elongation direction. All of the diamond drill holes were logged on a preliminary basis in the field. Thedrill core was subsequently shipped to the GMI office for detailed logging and sampling. The diamond drilling program revealed a series of silicified marbles, sulphide-bearing meta-arenites and graphitic schist in an intensely folded sequence consistentwith the geology as exposed at surface. In some cases, the drill appears to havepenetrated both limbs of a major fold. In others, multiple zones were intersected. Thedrilling appeared to confirm the observation from the geological mapping that the highestgrade of graphite mineralization was related to the contact between the marble and themeta-arenite. Few well developed fault zones were observed within the core. The drill holes were plotted in a series of sections along with the percussion borehole data from the earlier programs. The percussion drilling and the diamond drilling program explored only a smallportion of the known graphite mineralization within the Meadow Zone. There are manyadditional areas of graphite mineralization as indicated by the mapping and thepercussion drilling during 1999 and 2000 that have not been tested by diamond drilling.The drilling results were also used to prepare a resource estimate (See Section 14). The typical sections revealed by the diamond drilling consisted of the followinglithologic units. Appendix 1 contains visual drill logs/columns for the drill holes. 1. a rusty paragneiss, a wacke-type metasediments with abundant sulphide content, 2. a coarse crystalline marble with coarse disseminated flake graphite, 36

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