ORBMINCO LIMITED — Interim / Quarterly Report 2011

Dec 12, 2011

Australian American Mining Company La Paz Rare Earths Project

Arizona

AusAmerican Mining Corporation Ltd.

Interim Report La Paz Rare Earth Project, Arizona

By:

John W. Petersen, M.Sc. geol. Bernhard Free, Ph.D. geol.

December 2011

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Table of Contents

Abstract ………………………………………………………………………………………… i Introduction ………………………………………………………………………………… 1 Location, Access & Infrastructure ………………………………………………. 2 Physiography & Climate ………………………………………………………………. 3 Property Description & Ownership …………………………………………….. 4 Geology ………………………………………………………………………………………….. 5,6,7 Mineralogy …………………………………………………………………………………….. 7,8 Resource ………………………………………………………………………………………… 9,10 Metallurgy …………………………………………………………………………………….. 10,11 Conclusion ……………………………………………………………………………………… 11 References ………………………………………………………………………………………. 12,13

APPENDIX

TREO Concentrating Processes from Drill Hole Samples, La Paz REE Deposit

SRC Publication No. 13179 - 1C11

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Abstract

The La Paz Rare Earth deposit, although of relative low grade, excels by its sheer volume, uncomplicated mineralogy, lack of deleterious constituents (i.e. radio nuclides), standard metallurgical extraction, and location. Host rock and mineralization are open to depth and to lateral extension in all but one direction. Therefore, a significant increase in volume can be expected. The entire complex is either exposed on surface or lightly concealed by alluvial deposits making it amenable to open-pit mining.

The final configuration and volume of the deposit will be determined pending results of additional drilling. Geological evidence suggests a significant increase in size and tonnage.

Sufficiently distant from population centers, the socio-political impact is much reduced. Excellent infrastructure combines with favourable climatic conditions to enable yearround operations.

Located in west-central Arizona, the deposit falls within the structural Detachment Fault Domain of the large Basin-Range Province. The mineralised complex consists of an alkalic granite gneiss body and to a lesser extent, a structurally superimposed suite of continental red bed sediments.

A late hydrothermal overprint is responsible for the introduction of the bulk of the entire suite of rare earth metals (except of course promethium), and lanthanum, yttrium and scandium.

Mineralogical investigations failed to account fully for the actual TREE content. Through subsequent metallurgical tests, the full range of extractable REOs was established,

It is believed that by its geologic nature, the La Paz REE deposit is distinctly different from all REE occurrences known to date.

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1. Introduction

The La Paz Deposit was discovered by AusAmerican Mining Corporation geology staff in August 2010. In September 2011, AusAmerican announced the completion of its first phase of drilling on its La Paz REE project. A total of 195 holes were drilled bottoming in mineralisation. All bed rock intervals were sampled at 5 foot intervals.

A total of 3274 samples of gneiss and red bed host rock cuttings were submitted for analysis of concentration of 60 elements including all naturally occurring rare earth elements (including La, Y and Sc). Work was done by ALS-Chemex, a well known ISO certified laboratory. Results confirmed continuous mineralisation in all holes.

Selected rock samples were submitted to SGS Canada Inc. in Vancouver for mineralogical investigation. Monazite and allanite were identified as REE carriers. On balance, both minerals could only account for 10% to 15% of TREO as compared to the mass balance arrived at from chemical assays. In order to address the mass deficit, SGS suggested extractive metallurgical testing.

After vetting suitable metallurgical services available in North America, the Saskatchewan Research Council (SRC) facilities in Saskatoon was selected among other reasons on account of pertinent experience from China by Dr. J. Zhang .

The assay results from all drill holes established that the REE mineralisation is remarkably uniform from hole to hole throughout the entire mineralised rock complex, vertically and laterally. One drill hole, from surface to bottom was selected as the medium to perform a preliminary metallurgical test to establish concentration and mass balances of the TREO content.

Composites and selected intervals were subjected to gravity and magnetic separation as well as flotation processes. The obtained results for TREO concentrating definitely warrant taking this project to technical feasibility.

Inherent qualities of the project such as large volume, excellent infrastructure, open-pit mining and economically favourable concentrating and recovery parameters are compelling reasons to rank the project competitive among its peers.

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Project Location Map Fig.1

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2. Location, Access & Infrastructure.

Located in north-western La Paz County, the property is readily accessed from Phoenix, the State capital via Hwy 93 to Wickenburg and from there by well maintained gravel roads which traverse the property (Fig.1).The nearest population center is the town of Bouse, approximately 32 km distant.

A high voltage power line runs 11km west of the project and a high pressure natural gas pipe line passes 8km to the east. The Bill Williams River is 8km north of the project area. It is anticipated that sufficient ground water resources will be available to meet processing needs for a future operation.

3. Physiography & Climate

The area lies within the Sonoran Desert, and receives about 14.9 cm per year of rainfall, principally during a summer thunderstorm season and a winter rainy season. Average temperature is 21[0 ] C and rarely does the temperature dip to freezing. Summer temperatures can reach 43[0] C.

The terrain within the project area is generally low hills separated by alluvial filled valleys. Maximum topographic relief is 30-35 meters. (Fig.2)

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Fig.2

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4. Property Description & Ownership

The property consists of 360 claims administered by the Bureau of Land Management (BLM) and one Arizona State lease comprising 3,270 hectares. The tenements are unencumbered and 100% controlled by AusAmerican. A tenement map is shown in Figure 3.

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Fig. 3

5. Previous Exploration

In addition to prospecting activities, there are several percussion or RC drill holes of unknown date that were drilled into the red bed sequence, possibly for uranium exploration. Cuttings from the subjacent gneiss of these holes show substantial REE enrichment.

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6. Geology

Geology of the La Paz Deposit

Geologic units in the project area may be combined into a minimum of three. Young alluvium and other sedimentary units are locally thick enough to obscure underlying geology, especially to the east and west. An Upper Plate, which may consist of several rock units of differing character and age, but here are dominantly continental red bed deposits. And Lower Plate rocks, which here are dominantly gneisses that have been altered to varying degree by epigenetic structural deformation and alteration.

The planar surface between the Upper and Lower Plates is a fault. This fault in the La Paz area is merely a small portion of the regional detachment fault of mid-Tertiary age. The Detachment Fault System on a regional scale is known to be associated with various ore deposits. It is best known for gold deposits, but may also carry a variety of other metals including copper, silver, lead, barium, zinc, and manganese.

Until recently the potential of the Detachment Fault System for Rare Earth Elements had not been recognized and likely no large number of analyses for REE’s was made before AusAmerican’s in July, 2010. Even if there had been such analyses in gold-enriched portions of the system there appears to be a mutual exclusion between REE’s and gold.

The factors which are most important in control of Rare Earth (and all other) mineralizations include the detachment fault itself, which caused significantly thick breccias at and below the fault surface and provided a conduit for the movement of mineralizing solutions. Host rock lithology played an unknown role in the mineralizing system since both the red beds and gneiss are hosts to REE’s despite differing significantly in character. In fact, other similar mineralizations explored by AusAmerican in the immediate area include limestone host rock. In the case of La Paz there is also an upwarp of the detachment fault that conceivably played a localizing control during the time of mineralization (Fig. 4).

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The initial outcrop sampling at La Paz resulted in recognition of a gradual transition from relatively unaltered gneiss at the margins to strongly affected gneiss in the central portions of the deposit. Subsequent shallow drilling has found the REE mineralization to be remarkably uniform in the hole through the upper 30 meters of its extent. Such differences in grade that seem to have significant lateral extent have a layered appearance that may reflect original compositional layering or second-order control by faulting.

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Fig. 4

Detail diagram showing mineralised level to 30m ( Note that mineralisation is open to depth and laterally)

The lateral extents of mineralization to the North, East and West have not yet been determined although reconnaissance sampling to the west has discovered a possible re-emergence of REE mineralized rock from beneath

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alluvial cover. In this area, the Upper Plate consists of a variety of volcanic rock units, that are, nonetheless, REE-mineralized. Nor has the depth extent of mineral yet be determined as numerous of the shallow drill holes not only ended in mineralization, but quite often ended in the highest grade found in the hole.

7. Mineralogy

Considering the remarkable uniformity of TREO distribution throughout the mineralised complex, three representative rock specimens labeled UKC 01, 02 and 03 were submitted for mineralogical tests to SGS Canadian Laboratories in Vancouver. The Results were presented in a final report in July 2011.

The objective of the tests was to determine the mineral composition and liberation/association of minerals of interest, primarily REE carriers.

The samples were subjected to robust technology i. e. QEMSCAN[TM] (Quantitative Evaluation of Materials by Scanning Electron Microscopy), XRD (X-Ray Diffraction) and EMPA (Electron Microprobe Analysis).

Petrographically, the mineralised host rock corresponds to a hydrothermally altered alkalic granite derived orthogneiss with normative silicate constituents and accessory minerals indicative of hydrothermal alteration i.e. clays (4.3%), carbonates (3.1%), Fe-Oxides (3.1), chlorite (2.7) and allanite in non-determinable amounts.

Rare Earth Elemental Deportment for all three samples is auspiciously homogeneous:

• Allanite carries most of the Ce (93.5%), Monazite (3.2).

• Allanite carries most of the La (94.3%), Monazite (4.7%).

• Allanite carries most of the Nd (91.3), Monazite (3.6%).

It is expected that identification of further REE carriers will be achieved by mineralogical investigation of the concentrates produced by gravity-, magnetic- and flotation separation.

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To resolve this issue and concurrently obtain a preview for a bench scale- or pilot test of TREO, a metallurgical laboratory test on a representative sample composite was undertaken.

Distribution of REE within the mineralised complex based on chemical analysis is shown in Figures 4 & 5.

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Fig. 5 Fig. 6

REE Metals Proportions in Altered Gneiss (Fig.5) and Tertiary Red Beds (Fig. 6)

The proportion of Light TREO to Heavy TREO is 83% to 17% respectively.

8. Resource

A preliminary resource for the drilled area was calculated pending completion of a full-fledged NI 43-101 compliant resource report. Gemcom Software 2011 was used and calculation was by Mr David Boyer, M.Sc, CPG, and RG.

Parameters were derived from 195 drill holes selecting 12 intervals.

As a basis for metal grades in ppm served the analytical results of 3,274 bed rock samples delivered by ALS-Chemex in Reno and Vancouver.

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The data are summarized and presented in Table 1.

Indicated resource
	Tonnes (Millions)	Grade above cut off (ppm)	Cut off (ppm)	Ore (REE Million lbs)
Red bed Host rock (upper plate)	0.4	411.2	300	0.3
Altered Gneiss Host Rock (lower plate)	15.8	369.8	300	11.8
Total indicated	16.2	373.4	300	12.1
Inferred resource
	Tonnes (Millions)	Grade (ppm)	Cut off (ppm)	Ore (REE Million lbs)
Red bed Host rock (upper plate)	7.2	369.8	300	5.4
Altered Gneiss Host Rock (lower plate)	104.8	371.6	300	77.9
Total inferred	112	371.5	300	83.5
Total resource	128.2	371.5	300	95.6

Table 1

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For the purpose of this report stringent parameters were applied in the calculations and the resulting numbers are deemed to be conservative.

N.B. The drilled out block, with drill hole spacing at 45.5m, was tested from surface. Surface drill hole lay-out over the deposit is depicted in Fig. 7

The drilled area comprises approximately 294 continuous hectares and total depth of drill holes was 100ft, chosen arbitrarily. All drill holes bottomed in mineralisation showing a general increase in grade in the lowest intervals.

A remarkable trait of the mineralisation is its near homogeneous distribution throughout the mineralised complex.

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Drill hole Lay- out

Fig. 7

Likewise, mineralisation is open laterally on 3 sides. There is geologic evidence for considerable horizontal extent.

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There is little doubt that volume of this deposit will grow very significantly upon completion of the planned drilling campaign.

9. Metallurgy

The metallurgical test work was contracted with the Saskatchewan Research Council (SRC) in Saskatoon.

SRC was selected because Dr. J. Zhang’s credentials as SRC Chief Metallurgist based on his personal experience as metallurgical process engineer in China, eminently qualified him for the task.

Dr. Zhang is a published author in the field.

10. Conclusions

• The La Paz REE deposit is unique by its geologic and mineralogical frame work.

• The deposit is not fully delineated leaving room for significant increase in size and volume.

• Fully exposed under light alluvial cover, the deposit is amenable to open-pit mining.

• Excellent infrastructure combines with reduced socio-political impact on future mining operations.

• Mineralisation is remarkably homogeneous throughout the entire host rock complex.

• Host rock and REE carrier mineralogy is amenable to standard metallurgical extractive processes.

• Deleterious substances are present in innocuous amounts.

• The title of the tenements is flawless and unencumbered.

• Ownership of the tenements is 100% AusAmerican.

• Arizona is a recognized, mining friendly jurisdiction.

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12. References

• For the scope of this Report the authors restricted themselves to reference only the most pertinent sources.

• Auer, Anton, 2011, -Manager REE Division, Refining and Purification of REO Treibacher Industrie AG, Austria. Pers. com.

• Avrashov, Dr. Alexander, 1982.- Geological Evaluation of the Bear Lodge Th/U Deposit in Wyoming. Unpublished Internal Report, Uranerz US.

• Avrashov, Dr. Alexander, 1982.- Geological Evaluation of the Carbonatite Dykes in the Sangre de Cristo Mountains, Colorado. Unpublished Internal Report, Uranerz US.

• Bhappu, Dr.Roshan, 2011-, Mountain States Engineering, Vail, AZ. Pers. com.

• Dobbins,M & Sherrell, - Significant developments in dry rare-earth magnetic separation. SME Journal of Mining Engineering, January 2010, pp 49-54

• OEKO Institut e.V. – Study on Rare Earth and their Recycling, Report to the German Parliamernt 2009, pp 114

• Goed, Dr. Richard, 2011,- Die Pegmatite der Koralpe, Zentrum fuer Erdwissenschaften, Wien Oesterreich

• Hamilton, Chris, 2011,- REE Met Test Work, Activation Laboratories, Ontario. Pers. com.

• Holleman-Wiberg, 1958,- Lehrbuch Der Anorganischen Chemie. Die Gruppe der seltenen Erdmetalle. pp. 464-473 Walter De Gruyter& Co, Berlin

• Hykawy, Dr. Jon, 2011,- Rare Earth Elements: Pick Your Spots, Carefully. Electric Metals, Green Book, Byron Capital

• Markets, Toronto, ON pp 137-244.

• Korzeb, S. 2011, - The Round Mountain Top Rare Earth Deposit, Texas Rare Earth Resources. Pers. com.

• Machatschki, Felix, 1953,- Spezielle Mineralogie auf geochemischer Grundlage. Springer Verlag, Wien.

• Schmidt, Roland, 2011- REE Met.Test Work,Hazen Reasearch, Golden, CO Pers. com.

• SGS Canada Inc, Vancouver, 2011 – The Mineralogical Characteristics of Three Metallurgical Samples, Report prepared for AusAmerican, pp. 83

• Talbert, Terry, 2011-, REE Met. Test Work Cappes, Cassiday Assoc. Reno, NV Pers. com.

• USGS, 2011,- T.G. Goonan, Rare Earth Elements – End Use And Recyclability. Scientific Investigations Report 2011-5094

• USGS, 2010,- Keith Long et al. Principal Rare Earth Elements Deposits of the United States- A Summary of Domestic Deposits and a Global Perspective, Scientific Investigations Report 20105220

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• Zhang, Dr.Jack, 2011- TREO Concentrating Processes from Drill Hole Samples of the La Paz REE Deposit. Report prepared for AusAmerican, SRC, Saskatoon.

• Zhang, Dr. Jack & Chuck Edwards 2012- A Review of Rare Earth Mineral Processing Technology

• (Pre-Print). With special reference to REE Deposits in China. Description and Flow Sheets

Competent person

The review of exploration activities and results contained in this report is based on information compiled by Mr. John Petersen and Dr Bernhard Free. Both gentlemen are geologists and consultants of Australian-American Mining Corporation Limited (“AusAmerican” or “Company”). Dr Free is a member of the American Institute of Mining and Metallurgy. Dr Free is considered a competent person pursuant to paragraph 8 of the JORC Code and has significant experience relevant to the style of mineralisation and types of deposits under consideration. Dr Free consents to the inclusion of this information in the form and context of this report.

The resource estimation was calculated by Mr David Boyer, M.Sc, CPG, and RG. Mr Boyer is a geologist and is a consultant to the company. Mr Boyer is a member of the American Institute of Professional Geologists and is considered a competent person pursuant to paragraph 8 of the JORC code and has significant experience relevant to the style of mineralisation and types of deposits under consideration. Mr Boyer consents to the inclusion of this information in the form and context of this report.

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