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QUANTUM GRAPHITE LIMITED Capital/Financing Update 2019
65646_rns_2019-12-10_34144d51-a023-4c40-b618-44f7ad80c0de.pdf
Capital/Financing Update
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MARKET RELEASE For Immediate Release 11 December 2019
FURTHER UPDATE OF MINING STUDY AND ORE RESERVE ESTIMATE DFS UPDATE
Quantum Graphite Limited is pleased to announce further details in respect of the Uley 2 Mining Study and Ore Reserve Estimate (Ore Reserve Estimate).
As previously announced, the Ore Reserve Estimate contained in the report attached (Report), represents the last of the key studies required for finalisation of the DFS.
The further details summarised in this announcement build on the solid economics of Uley 2 which is expected to deliver lower quartile operating costs compared with similar/comparable mineral assets.
The Company expects further improvement in the overall economics of Uley 2 as part of the further optimisation work undertaken within the DFS which will provide the overall Uley 2 base case scope, schedule and budget.
Mining Study Results Highlights
- Crusher feed 500,000 tonnes per annum Graphitic carbon grade 11.89% Graphitic carbon recovery 84% Concentrate purity 94% total graphitic carbon (TGC) Processing cost (PCAF) A$55.3 per tonne Mining cost (MCAF) A$2.5/t milled at surface plus 5c for every 4m Operating Costs A$439 dmt (inclusive of drying & bagging) Product price US$919 dmt (Ex works)
- LOM key economic/financial input parameters and modifying factors:
Ore Reserve Estimate at a 3.5% TGC cut-off
| Classification | Tonnes (kt) | Total Graphitic Carbon (%) |
|---|---|---|
| Proved | 811 | 11.66 |
| Probable | 3,191 | 11.95 |
| Total | 4,003 | 11.89 |
Significant upside resource potential - no material classified as Inferred Mineral Resource was utilised for the pit design or mine plan.
Market Research and Pricing
Quantum has completed an analysis of the forward supply and demand outlook, including long-term pricing forecasts, for the Uley flake graphite based on the set of 4 discrete size fractions and purities distribution (Uley Products Specs) determined in accordance with the Company's metallurgical test work program as set out in its announcement of 11 June 2019 (see table below).
| Size Fraction | Size Fraction | Approx. Weight Dist. | Graphitic C Purity | LOI (%) |
|---|---|---|---|---|
| +300 | +50 | 10.5 | 97.8 | 0.26 |
| -300+150 | -50+100 | 35.4 | 97.2 | 0.34 |
| -150+75 | -100+200 | 27.1 | 96.6 | 0.36 |
| -75 | -200 | 27.0 | 90.7 | 0.73 |
The basket price of US$919 was determined following the Company's technical marketing analysis of the prices applicable to the key market segments (Target Markets) that consume flake graphite products (Target Products) within the product range included in the Uley Products Specs.
The scope of this analysis included:
- (a) a review of the Target Markets whose product specifications requirements generally fall within the range of the Uley Products Specs;
- (b) identification of the specific market segments previously serviced by Uley, i.e., traditional thermal management (e.g., refractories, foundry) and engineered products (e.g., extrusions, lubricants, foils); and
- (c) a review of the Company's historical marketing of a range of products (including the Target Products) to the abovementioned market segments. Importantly, Uley flake graphite products have previously been the subject of pre-qualification by several major companies operating in these market segments.
The set of prices resulting from this analysis comprised a range of prices for each of the products within the key market segments covered by the Uley Products Specs. The final basket price resulted from the calculation of the weighted average of these set of prices.
The Ore Reserve estimate is supported by the potential marketability of Uley flake graphite with the Uley Product Specs and the overall potential for economic extraction.
Mining
The optimisation for the pit design and mine plan was undertaken on material exclusively classified as Measured and Indicated Mineral Resources, on a 3.5% TGC cut-off. The application of reasonable Modifying Factors resulted in the conversion of this material to Proved and Probable Ore Reserves.
No material classified as Inferred Mineral Resource was utilised for the pit design or mine plan.
Pit design and mine plan material considerations included the following:
- Mining will be undertaken by conventional open pit methods of load and haul, utilising small mining equipment comprising 100t diesel hydraulic excavators and 60t off-highway dump trucks.
- The life of mine waste to ore strip ratio is approximately 4.6:1.
- Pit slope parameters were based on the slope parameters and conditions the historical Uley 1 pit and the supporting geotechnical investigations undertaken by Barrett and Fuller.
- Grade control is expected to be undertaken using surface trenching using Ditch Witch equipment.
- No mining dilution was included in the optimisation work given the expected strong visual mining control. A mining recovery of 95% was assumed.
- A minimum cutback mining width of 25m was adopted.
Process Flowsheet and Metallurgical Testwork
The Company has previously announced the process flowsheet as part of its release of the metallurgical testwork program on 11 June 2019. The flowsheet, summarised below, has been generated from a proposed process plant designed for optimum flexibility to maximise recovery and flake size at grade with minimum operating costs. The flowsheet utilises unit operations that are well proven in the industry.
The process plant will accept run-of-mine ore and liberate graphite particles through crushing and grinding. The graphitic flakes will be sequentially concentrated and delaminated using progressive flotation and polishing (regrind) mills with the final product being dried and screened for bagging.
The flotation and polishing sections will be the critical processing functions for graphite recovery, upgrading of the flake to maximise graphite purity and maintaining coarse flake size as far as practicable.
Capital Costs, Operating Costs and Sensitivity Analysis
| Cost Centre | Total Cost | FixedCost | Variable | ||
|---|---|---|---|---|---|
| (A$/y) | (A$/t) | (A$/y) | Cost (A$/t) | ||
| Mobile Equipment | $470,740 | $0.94 | $376,592 | $0.19 | |
| Labour Processing | $5,030,000 | $10.06 | $5,030,000 | $0.00 | |
| Operating Consumables | $6,549,077 | $13.10 | $982,362 | $11.13 | |
| Power | $1,780,416 | $3.56 | $760,993 | $2.04 | |
| Maintenance and Repairs | $1,122,235 | $2.24 | $945,420 | $0.35 | |
| Laboratory | $902,650 | $1.81 | $722,120 | $0.36 | |
| Subtotal –Processing | $15,855,119 | $31.71 | $8,817,487 | $14.08 | |
| Mine Admin & Support | $2,035,000 | $4.07 | $2,035,000 | $0.00 | |
| General & Admin | $2,409,250 | $4.82 | $2,409,250 | $0.00 | |
| Subtotal Admin | $4,444,250 | $8.89 | $4,444,250 | $0.00 | |
| Estimated Total | $20,299,369 | $40.60 | $13,261,737 | $14.08 | |
| The operating costs estimate for processing the graphitic ore is based on treating 500,000 tonnesper annum (tpa) of ore to produce 55,000 dtpa of saleable flake concentrate. The operating costsestimate does not include any contingency allowances and is exclusive of local and regionalgovernment rates and charges. | The respective proportions of key | ||||
| Logistics22% | Fixed 37% | chart. | operating costs are illustrated in this | ||
| Admin 18% | The operations are significantlyimpacted by the method of transportingthe flake graphite concentrate includingits packaging into 1 tonne bags. | ||||
The operating costs estimate for Uley 2 is summarised in the table below.
The operating costs estimate for processing the graphitic ore is based on treating 500,000 tonnes per annum (tpa) of ore to produce 55,000 dtpa of saleable flake concentrate. The operating costs estimate does not include any contingency allowances and is exclusive of local and regional government rates and charges.
The operations are significantly impacted by the method of transporting the flake graphite concentrate including its packaging into 1 tonne bags.
This is reflected in the magnitude of the proportion of the variable and logistics costs which collectively represent 45% of the overall operating costs.
The capital cost estimate for Uley 2 is summarised in the table below.
| Main Area | A$'000 |
|---|---|
| Construction Distributables | 6,174 |
| Treatment Plant Costs | 33,247 |
| Reagents and Plant Services | 6,593 |
| Main Area | A$'000 |
|---|---|
| Infrastructure | 877 |
| Management Costs | 9,251 |
| Owner's Project Costs | 8,411 |
| Owner's OperatingCosts (Working Capital) | 6,763 |
| Subtotal | 71,316 |
| Contingency | 8,661 |
| Estimated Total | 79,977 |
The capital cost and operating cost estimates are commensurate with a feasibility level study and were estimated by the Ore Reserve estimate contributors (see the JORC Code 2012 Table 1, Section 4 Estimation and Reporting of Ore Reserves disclosure in the Appendix to the attached Report).
The capital cost estimate has been prepared and based on an EPCM contract execution strategy.
An EPCM Engineer will be engaged to complete all detailed engineering for the process plant and infrastructure, as well as managing the procurement of all mechanical equipment, off-site fabrication and on-site installation works.
The operating and capital costs estimates are based on process plant feed of 500,000 tonnes per annum. All figures are accurate +/-15% as at the end of the second quarter 2019 and the relevant foreign exchange rates are A$1.00/US$1.44 and A$1.00/€1.61.
No allowance has been made for escalation between the estimate base date and the time at which commitments will be incurred and payments made to suppliers.
The financial evaluation undertaken as part of the Study indicated a positive net present value (NPV) at a 10% discount rate.
Sensitivity analysis indicated that a negative 20% change in any of the following variables:
- (a) product price;
- (b) foreign exchange rate;
- (c) operating cost; or
- (d) capital cost,
results in a positive NPV.
This is illustrated in the graph below which charts the sensitivity of the base case to ± 20% for both revenues and costs.
Cost and Revenue Sensitivity
The graph below illustrates the sensitivity of the project to foreign exchange movements. The impact of changes in FX rates is limited to revenues as substantially all costs associated with the project are denominated in Australian dollars.
Cost and Revenue Sensitivity to FX Movements
Site Infrastructure and Tailings Storage Facility (TSF)
The Company proposes to utilise the existing site infrastructure that serviced the previous operations subject to the following changes refurbishment and/or upgrades to facilities:
- (a) the existing SA Power Networks 33 kV electricity service will be decommissioned and a new 33kV service will be constructed along the northern boundary of the Company's property;
- (b) the existing offices, workshops and other facilities located within the mine services area will be refurbished;
- (c) the general and administration facilities located outside the mine services area will be relocated to the mine services area; and
- (d) existing process plant support buildings will be decommissioned, and new plant support building will be constructed.
An existing HDPE lined tailings storage facility of approximately 25 hectares was constructed in the north of the lease as part of the previous operation. The new facility will be a single cell with a footprint area of approximately 29 hectares utilising the existing tailings storage facility infrastructure and its geomembrane liner where practicable.
The area required for the new basin will be stripped of topsoil and the insitu soils will be reworked, conditioned and compacted to form a low permeability soil liner, suitable for installation of the overlying geomembrane primary liner.
The materials for construction of the embankment will be sourced from mining operations and borrow areas. The embankment will be raised annually over the life of the mine to a maximum of approximately 25 m.
A decant tower system will be utilised to recycle supernatant and rainwater from the TSF basin over the life of the facility with a pump back system to the process plant to provide process makeup.
Project Funding
The Company expects to commence consideration of project funding proposals for Uley 2 once it has secured sufficient offtake arrangements to support future sustainable operations. Marketing efforts have recently commenced with a focus on prospective customers which previously prequalified the Company's flake graphite products.
Tenement Holdings and Approvals
Uley 2 sits within the greater Uley Graphite Project and consists of five contiguous tenements on the Eyre Peninsula of South Australia, of which two are retention leases (RL66 & RL67), two are mining leases (ML5561 & ML5562) and one is an exploration licence (EL6224).
The Company has a 100% interest in these tenements and there are no royalty, joint venture or other material agreements impacting its interests. The map extracted below delineates the boundaries of the various tenements together with road and rail infrastructure and the key exploration targets denoted by positive electromagnetic survey results.
Mining development is subject to approved Program for Environmental Protection and Rehabilitation (PEPR) regime and relevant Environmental Licensing mandated under South Australian State legislation. There are no known impediments to obtaining a license to operate in the area.
The Company has an approved PEPR applicable to Uley 2 and relevant Environmental Licences as set out in PEPR Version 2.1 approved on 23 December 2014 by the South Australian Director, Mining Regulation.
Cautionary Statements
The Ore Reserve Estimate results should not be considered a profit forecast or production forecast. It is a technical and economic study of the potential viability of developing Uley 2 by constructing a mine, process plant and related facilities to produce saleable flake graphite concentrate, including for sale by export. The Report referred to in this announcement is based on the necessary technical and preliminary economic assessments sufficient to support the estimation of Ore Reserves and provide assurance of the potential economic development case at this stage.
The production target referred to in this presentation is based on Proved and Probable Resources for the mine life covered under the Ore Reserve Estimate. In accordance with the proposed mine plan forming part of the Ore Reserve Estimate, production will be derived exclusively from Proved and Probable Resources.
The Ore Reserve Estimate is based on the material assumptions outlined below. These include assumptions about the availability of funding. While the Company considers all the material assumptions to be based on reasonable grounds, there is no certainty that they will prove to be correct or that the range of outcomes indicated by the Ore Reserve Estimate will be achieved. To achieve the potential mine development outcomes indicated in the Ore Reserve Estimate, project funding will be required. Investors should note that there is no certainty that the Company will be able to raise funding when needed however the Company has concluded it has a reasonable basis for providing the forward looking statements included in this announcement and believes that it has a "reasonable basis" to expect it will be able to fund the development of Uley 2.
To achieve the range of outcomes indicated in the Ore Reserve Estimate, funding of or in the order of A$80 million will likely be required. As indicated above funding is unlikely to be available unless and until the Company has concluded appropriate offtake arrangements sufficient to support sustainable operations at Uley 2. It is also possible that the Company could pursue other strategies to provide alternative funding options. Given the uncertainties involved, investors should not make any investment decisions based solely on the results of the Ore Reserve Estimate.
Forward Looking Statements
Some of the statements contained in this report are forward looking statements. Forward looking statements include but are not limited to, statements concerning estimates of tonnages, expected costs, statements relating to the advancement of Uley 2 and other statements which are not historical facts. When used in this report, and on other published information of the Company, the words such as "aim", "could", "estimate", "expect", "intend", "may", "potential", "should" and similar expressions are forward-looking statements. Although the Company believes that its expectations reflected in the forward-looking statements are reasonable, such statements involve risk and uncertainties and no assurance can be given that actual results will be consistent with these forward-looking statements. Various factors could cause actual results to differ from these forwardlooking statements include the potential that Uley 2 may experience technical, geological, metallurgical and mechanical problems, changes in product prices and other risks not anticipated by the Company.
The Company is pleased to report this summary of the Study in a fair and balanced way and believes that it has a reasonable basis for making the forward-looking statements in this announcement, including with respect to any mining of mineralised material, modifying factors, production targets and operating costs estimates.
This announcement has been compiled by the Company from the information provided by the various contributors of the Report. The Company acknowledges and thanks all contributors to the Report.
Competent Person Statement – Mining Update
The information in this report that relates to the Uley 2 Ore Reserve estimate is based on information compiled by Ms Karen Lloyd who is a Fellow of the Australasian Institute of Mining and Metallurgy (FAusIMM) and has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity to which she is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves". Ms Lloyd is an external consultant to QGL and an executive director of Jorvik Resources Pty Ltd and consents to the inclusion in the report of the matters based on this information in the form and context in which it appears.
The information in this report that relates to the Uley 2 Mineral Resource estimate is based on information compiled by Ms Vanessa O'Toole who is a Member of the Australasian Institute of Mining and Metallurgy (MAusIMM) and has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity to which she is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves". Ms O'Toole is an external consultant to QGL and a full-time employee of Wicklow Resources Pty Ltd and consents to the inclusion in the report of the matters based on this information in the form and context in which it appears.
JORC Code (2012) Table 1 Compliance
Appendix B of the Report includes the relevant extracts (i.e., sections 1, 2, 3 and 4) from Table 1 of the JORC Code (2012).
For further information contact: Company Secretary Quantum Graphite Limited e: [email protected]
Quantum Graphite Limited Uley 2 Mining Update - November 2019 Uley Graphite Mine, Port Lincoln South Australia
Jorvik Resources Pty Ltd (Jorvik) was engaged by Quantum Graphite Limited (Quantum) to prepare an update to the Uley 2 Mining Study and Ore Reserve Estimate (Report). The Report is based on the Mineral Resource estimate which was reported to the Australian Securities Exchange (ASX) on 15 July 2019 and as set out in the table below. Quantum has engaged Lycopodium to prepare a definitive feasibility level study (Lycopodium Study) in respect of Uley 2 (Project) and Jorvik acknowledges that the Report will be included as an appendix to the Lycopodium Study.
Karen Lloyd Director and Principal Jorvik Resources Pty Ltd www.jorvikresources.com
1. Introduction
Jorvik Resources Pty Ltd (Jorvik) was engaged by Quantum Graphite Limited (Quantum) to prepare an update to the Uley 2 Mining Study and Ore Reserve Estimate (Report). The Report is based on the Mineral Resource estimate which was reported to the Australian Securities Exchange (ASX) on 15 July 2019 and as set out in the table below.
Quantum has engaged Lycopodium to prepare a definitive feasibility level study (Lycopodium Study) in respect of Uley 2 (Project) and Jorvik acknowledges that the Report will be included as an appendix to the Lycopodium Study.
June 2019 Mineral Resource Estimate Reported using a 3.5% Graphitic Carbon cut off for reporting purposes Graphitic Carbon Grade tonnage distributions subdivided by JORC Code 2012 Resource Categories using ROUNDED figures
| Measured | Indicated | Inferred | Total (Measured +Indicated + Inferred) | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Tonnes(Mt) | GraphiticC(%) | ContainedGraphite(Kt) | Tonnes(Mt) | GraphiticC(%) | ContainedGraphite(Kt) | Tonnes(Mt) | GraphiticC(%) | ContainedGraphite(Kt) | Tonnes(Mt) | GraphiticC(%) | ContainedGraphite(Mt) |
| 0.8 | 17.51 | 125 | 4.2 | 10.4 | 435 | 1.3 | 10.5 | 137 | 6.3 | 11.1 | 697 |
2. Reliance on other parties
Jorvik has relied on information sourced from the companies presented in Table 1 to determine the modifying factors for use in mine optimisation and Ore Reserve estimation.
| Table 1 – Reliance on other parties |
|---|
| ------------------------------------- |
| Item | Source |
|---|---|
| Market research and commodity price | Quantum |
| Mining operating and capital cost | Quantum, based on mining contractor quotations |
| Metallurgical and processing | Lycopodium |
| Processing operating and capital costs | Lycopodium |
| General site operating costs | Quantum |
| General site infrastructure | Quantum |
| Geotechnical investigation | Barrett, Fuller and Partners (via Quantum) |
| Hydro(geo)logical investigation | Quantum |
| Tailings storage facility | Lycopodium |
| Social and Environmental | Quantum |
| Legal tenure | Quantum |
| Government | Quantum |
3. Pit Optimisation
Pit optimisations were carried out on the material classified as Measured and Indicated Mineral Resource using Whittle Four-X pit optimisation software. For a given block model, cost, recovery and slope data, Whittle Four-X software calculates a series of incremental pit shells in which each shell is an optimum for a slightly higher commodity price factor.
The sequence of the pit shell increments is sorted from the economically best (the inner smallest shell viable for the lowest commodity price) to the economically worst (the outer largest pit shell viable for the highest commodity price).
Whittle Four-X provides indicative discounted cashflows for two mining sequences called "best case" and "worst case" scenarios, both using time discounting of cashflows. In the best case, the optimum pit shells are mined bench by bench in increments from inner to the outer shell, resulting in a higher discounted cashflow (DCF) due to lower stripping ratios and/or higher grades in the early years of mine life. The worst-case scenario is based on mining the whole pit outline bench by bench as a single pit, hence resulting in a lower DCF as a result of usually high stripping requirements in the early years of the operation.
Ordinarily, after the selection of the ultimate pit, several practical mining stages are designed and sequenced when developing a final production schedule. This sequence would provide a discounted cashflow somewhere between worst- and best-case scenarios. For this reason, the average discounted cashflows are calculated for each pit shell (mean of the worst and best cases) in order to emulate a practical mining sequence. The cashflows, are exclusive of any capital expenditure or Project start-up costs and should be used for pit optimisation comparison purposes only. No project Net Present Value (NPV) can be derived from these cashflows.
Whittle Four-X requires a regularised block model. As the resource model was a sub-blocked model, containing blocks of varying sizes, regularisation to a uniform block size (12.5 X 12.5 X 4m) was carried out prior to optimisation. The regularised block model file name is 201906uley_2PT5AUD.dm.Table 2 presents a summary of the economic input parameters used in the pit optimisations.
| Item | Unit | Value |
|---|---|---|
| Crusher feed | ktpa | 500 |
| Graphitic carbon recovery | % | 84 |
| Concentrate graphitic carbon grade | % | 94 |
| Concentrate moisture content | % | <5% |
| Product price (Ex-works based on US$919/t at a foreignexchange rate of US$ to A$ of 1.43) | A$/dmt | 1,312.86 |
| Cashflow Discount Rate | Real % | 10 |
| Government Royalty | % | 5.0 |
| Processing cost (PCAF) | $/t milled | 55.3 |
| Mining cost (MCAF) | $/t mined | 2.5at surface plus 5c for every4m vertical advancement |
Table 2 – Summary Whittle Four-X Input Parameters
| Item | Unit | Value |
|---|---|---|
| Mining dilution | % | Nil |
| Mining recovery | % | 95 |
| Overall pit wall slope angle | degrees | 44 |
The pit optimisation results are presented in Appendix A. Using a Revenue Factor of 1, Pit Shell 36 provides the best case undiscounted operating cashflow of A$207M. This shell comprises a large single pit (Table 3 and Figure 1).
Pit Shell 36 reaches a depth of 132m (360mRL) and contains approximately 4.0Mt of mill feed at 11.89% TGC (Total Graphitic Carbon).
Table 3 – Selected Pit
| Pit | RevenueFactor | Rock (Mt) | Waste (Mt) | Ore (Mt) | StripRatio | TGC(kt) | TGC (%) | UndiscountedCash Flow(A$M) |
|---|---|---|---|---|---|---|---|---|
| 36 | 1.00 | 22.55 | 18.55 | 4.00 | 4.63 | 476 | 11.89 | 207 |
Figure 1: Selected Pit Shell 36
4. Pit design
Pit shell 36 provided guidance for the life of mine (LOM) detailed pit design work. The pit design parameters were informed by the historical mining information taken from the Quantum database and are in keeping with established mining practice (Table 2). The final pit design (Figure 2) reconciles within 5% of the optimisation shell.
Table 2 – Pit Design Criteria
| Pit Design Parameter | |||||
|---|---|---|---|---|---|
| Batter Face Angle | 60º | ||||
| Pit Wall Parameters | Berm Width | 5m | |||
| Berm Spacing | 12m | ||||
| Width-Dual Lane | 21.0m | ||||
| Haul Road Design | - Single Lane | 12.0m | |||
| Gradient | 10% |
Figure 2: Life of Mine Pit Design
5. Mining Schedule
The mine production schedule was developed in Microsoft Excel. The schedule was based on annual periods targeting an annual mill throughput rate of 500,000 tonnes (Table 3 and Figure 4). The schedule is based on bench by bench mining of material classified as clay, carbonate, saprolite, saprock and fresh rock Table 4 and Figure 4).
Clay mill feed was delayed until year 6 by Quantum. As such, a re-handle stockpiles will be developed. The mining schedule will be refined prior to the commencement of mining once the process flowsheet has been optimised and the target mill specifications by period are finalised.
| Ore Processed | ||||||
|---|---|---|---|---|---|---|
| Year | Ore Mined(Mt) | WasteMovement (Mt) | Strip Ratio (WasteMined: Ore Mined) | Tonnes(Mt) | TGC % | |
| 1 | 1.22 | 10.29 | 8.43 | 0.50 | 10.08 | |
| 2 | 0.53 | 2.08 | 3.92 | 0.50 | 10.48 | |
| 3 | 0.75 | 2.84 | 3.79 | 0.50 | 11.34 | |
| 4 | 0.33 | 0.95 | 2.88 | 0.50 | 11.42 | |
| 5 | 0.66 | 1.51 | 2.29 | 0.50 | 12.84 | |
| 6 | 0.41 | 0.72 | 1.76 | 0.50 | 12.49 | |
| 7 | 0.19 | 0.16 | 0.84 | 0.50 | 12.35 | |
| 8 | 0 | 0 | 0.50 | 13.53 | ||
| TOTAL | 4.00 | 18.55 | 4.64 | 4.00 | 11.89 |
Table 3 – Summary Mine Production Schedule
Table 4 – Material Mined
| Year | Ore Type 500(Clay) (Mt) | Ore Type 400(Carbonate)(Mt) | Ore Type 300(Saprolite)(Mt) | Ore Type 200(Saprock) (Mt) | Ore Type 100(Fresh) (Mt) |
|---|---|---|---|---|---|
| 1 | 0.63 | 0.10 | 0.06 | 0.43 | 0.00 |
| 2 | 0.01 | 0.00 | 0.01 | 0.52 | 0.00 |
| 3 | 0.00 | 0.00 | 0.00 | 0.67 | 0.08 |
| 4 | 0.00 | 0.00 | 0.00 | 0.20 | 0.14 |
| 5 | 0.00 | 0.00 | 0.00 | 0.31 | 0.36 |
| 6 | 0.00 | 0.00 | 0.00 | 0.05 | 0.36 |
| 7 | 0.00 | 0.00 | 0.00 | 0.00 | 0.09 |
| 8 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| TOTAL | 0.64 | 0.10 | 0.07 | 2.17 | 1.02 |
Figure 3: Annual Material Movements
Figure 4: Annual Stockpile Balance
Table 5 – Summary Processing Schedule
| Year | Ore ProcessedTonnes (Mt) | TGC % | OreType500(Clay)(Mt) | Ore Type400(Carbonate)(Mt) | Ore Type300(Saprolite)(Mt) | Ore Type200(Saprock)(Mt) | Ore Type100(Fresh)(Mt) |
|---|---|---|---|---|---|---|---|
| 1 | 0.50 | 10.08 | 0.00 | 0.10 | 0.06 | 0.34 | 0.00 |
| 2 | 0.50 | 10.48 | 0.00 | 0.00 | 0.01 | 0.49 | 0.00 |
| 3 | 0.50 | 11.34 | 0.00 | 0.00 | 0.00 | 0.50 | 0.00 |
| 4 | 0.50 | 11.42 | 0.00 | 0.00 | 0.00 | 0.48 | 0.02 |
| 5 | 0.50 | 12.84 | 0.00 | 0.00 | 0.00 | 0.31 | 0.19 |
| 6 | 0.50 | 12.49 | 0.10 | 0.00 | 0.00 | 0.05 | 0.35 |
| 7 | 0.50 | 12.35 | 0.24 | 0.00 | 0.00 | 0.00 | 0.26 |
| 8 | 0.50 | 13.53 | 0.28 | 0.00 | 0.00 | 0.00 | 0.22 |
| TOTAL | 4.00 | 11.89 | 0.62 | 0.10 | 0.07 | 2.17 | 1.04 |
Figure 5: Mine Production Schedule by Material Type
Figure 6: Plan View, Uley 2 Ore Reserve Estimate – September 2019
6. Ore Reserve Estimate
The Ore Reserve estimate was based on the modifying factors presented in Table 6.
| Table 6 – Summary Modifying Factors used for Ore Reserve estimation | ||
|---|---|---|
| Input | Unit | Value |
|---|---|---|
| Mill throughput | Mtpa | 0.5 |
| Product Price | A$/t | 1,312.86 |
| Royalty | % | 5.0 |
| Processing Cost | A$/t milled | 55.3 |
| General and Administration | A$/t milled | 4.82 |
| Mine supervision, grade control | A$/t milled | 0.50 |
| Average Mining Cost | A$/t mined | 2.50 |
| Processing recovery(Variable, with average shown) | % | 84 |
| Mining recovery | % | 95 |
| Mining dilution added | % | Nil |
| Input | Unit | Value |
|---|---|---|
| Overall Pit Wall Slope Angle(inclusive of a ramp system) | degrees | 44 |
| Initial capital expenditure | A$M | 79.98 |
| Sustaining capital | A$/year | 4.0 |
| Asset closure and monitoring | A$/year | 0.5 |
A detailed summary of the supporting data and modifying factors is provided in Appendix B (see JORC Code 2012 Table 1 disclosure). Table 7 provides a summary of the Ore Reserve estimate as of 19 September 2019. The Ore Reserve estimate is inclusive of the Mineral Resource estimate and is stated in dry metric tonnes.
Table 7 – Ore Reserve – As of 19 September 2019 (inclusive of Mineral Resources)
| Classification | Tonnes(1) (kt) | Total Graphitic Carbon(%) |
|---|---|---|
| Proved | 811 | 11.66 |
| Probable | 3,191 | 11.95 |
| Total | 4,003 | 11.89 |
Notes: 1. Tonnes are expressed in dry metric tonnes
The reported Ore Reserves have been compiled by Ms Karen Lloyd. Ms Lloyd is a Fellow of the Australasian Institute of Mining and Metallurgy and Principal of Jorvik Resources Pty Ltd. Ms Lloyd has sufficient experience, relevant to the style of mineralisation and type of deposit under consideration and to the activity she is undertaking, to qualify as a Competent Person as defined in the 'Australasian Code for Reporting of Mineral Resources and Ore Reserves' of December 2012 (JORC Code) as prepared by the Joint Ore Reserves Committee of the Australasian Institute of Mining and Metallurgy, the Australian Institute of Geoscientists and the Minerals Council of Australia.
APPENDIX A - Pit Optimisation Results
| Pit | RevenueFactor | Rock (Mt) | Waste (Mt) | Ore (Mt) | StripRatio | TGC(kt) | TGC (%) | undiscountedCash Flow(A$) |
|---|---|---|---|---|---|---|---|---|
| 1 | 0.30 | 0.01 | 0.01 | 0.00 | 6.31 | 0 | 30.09 | 0.23 |
| 2 | 0.32 | 0.03 | 0.02 | 0.00 | 6.78 | 1 | 27.79 | 0.93 |
| 3 | 0.34 | 0.27 | 0.24 | 0.03 | 8.35 | 8 | 27.04 | 6.48 |
| 4 | 0.36 | 0.59 | 0.52 | 0.07 | 7.98 | 17 | 25.87 | 14.72 |
| 5 | 0.38 | 0.67 | 0.59 | 0.08 | 7.38 | 20 | 24.94 | 16.88 |
| 6 | 0.40 | 0.71 | 0.62 | 0.09 | 7.03 | 22 | 24.29 | 18.07 |
| 7 | 0.42 | 1.49 | 1.31 | 0.18 | 7.17 | 41 | 22.35 | 33.15 |
| 8 | 0.44 | 2.29 | 1.98 | 0.31 | 6.44 | 63 | 20.60 | 49.36 |
| 9 | 0.46 | 4.12 | 3.60 | 0.53 | 6.81 | 104 | 19.76 | 81.83 |
| 10 | 0.48 | 4.66 | 4.04 | 0.62 | 6.51 | 119 | 19.15 | 89.22 |
| 11 | 0.50 | 5.32 | 4.58 | 0.74 | 6.18 | 137 | 18.49 | 99.87 |
| 12 | 0.52 | 5.55 | 4.74 | 0.81 | 5.84 | 146 | 18.01 | 103.22 |
| 13 | 0.54 | 5.82 | 4.94 | 0.88 | 5.60 | 155 | 17.59 | 106.75 |
| 14 | 0.56 | 10.66 | 9.43 | 1.24 | 7.61 | 217 | 17.52 | 139.36 |
| 15 | 0.58 | 11.92 | 10.53 | 1.39 | 7.58 | 238 | 17.14 | 148.96 |
| 16 | 0.60 | 14.03 | 12.43 | 1.60 | 7.78 | 268 | 16.79 | 161.01 |
| 17 | 0.62 | 14.22 | 12.55 | 1.67 | 7.51 | 276 | 16.50 | 162.78 |
| 18 | 0.64 | 14.73 | 12.97 | 1.76 | 7.38 | 286 | 16.26 | 165.75 |
| 19 | 0.66 | 14.97 | 13.15 | 1.83 | 7.20 | 293 | 16.03 | 167.55 |
| 20 | 0.68 | 17.25 | 15.10 | 2.14 | 7.05 | 329 | 15.34 | 181.71 |
| 21 | 0.70 | 18.22 | 15.83 | 2.38 | 6.65 | 352 | 14.78 | 189.81 |
| 22 | 0.72 | 18.95 | 16.37 | 2.58 | 6.36 | 370 | 14.37 | 194.45 |
| 23 | 0.74 | 19.38 | 16.66 | 2.72 | 6.13 | 383 | 14.08 | 197.48 |
| 24 | 0.76 | 19.54 | 16.71 | 2.83 | 5.91 | 391 | 13.83 | 198.55 |
| 25 | 0.78 | 20.15 | 17.14 | 3.01 | 5.70 | 406 | 13.51 | 201.20 |
| 26 | 0.80 | 20.64 | 17.48 | 3.17 | 5.52 | 419 | 13.23 | 203.20 |
| 27 | 0.82 | 21.02 | 17.71 | 3.30 | 5.37 | 429 | 13.00 | 204.55 |
| 28 | 0.84 | 21.29 | 17.89 | 3.40 | 5.27 | 436 | 12.85 | 205.14 |
| 29 | 0.86 | 21.41 | 17.92 | 3.49 | 5.14 | 443 | 12.69 | 205.45 |
| 30 | 0.88 | 21.66 | 18.08 | 3.58 | 5.05 | 449 | 12.54 | 205.89 |
| 31 | 0.90 | 21.84 | 18.17 | 3.67 | 4.95 | 455 | 12.40 | 206.22 |
| 32 | 0.92 | 22.32 | 18.55 | 3.77 | 4.93 | 462 | 12.27 | 206.64 |
| 33 | 0.94 | 22.39 | 18.56 | 3.82 | 4.86 | 466 | 12.18 | 206.74 |
| 34 | 0.96 | 22.46 | 18.57 | 3.90 | 4.77 | 470 | 12.06 | 206.79 |
| 35 | 0.98 | 22.51 | 18.56 | 3.95 | 4.69 | 473 | 11.97 | 206.81 |
| 36 | 1.00 | 22.55 | 18.55 | 4.00 | 4.63 | 476 | 11.89 | 206.82 |
| 37 | 1.02 | 22.68 | 18.60 | 4.07 | 4.57 | 480 | 11.79 | 206.80 |
| 38 | 1.04 | 22.91 | 18.78 | 4.13 | 4.54 | 484 | 11.70 | 206.76 |
| 39 | 1.06 | 22.94 | 18.76 | 4.18 | 4.48 | 486 | 11.63 | 206.74 |
| 40 | 1.08 | 23.04 | 18.80 | 4.24 | 4.43 | 490 | 11.54 | 206.68 |
| Pit | RevenueFactor | Rock (Mt) | Waste (Mt) | Ore (Mt) | StripRatio | TGC(kt) | TGC (%) | undiscountedCash Flow(A$) |
|---|---|---|---|---|---|---|---|---|
| 41 | 1.10 | 23.21 | 18.90 | 4.30 | 4.40 | 493 | 11.46 | 206.57 |
| 42 | 1.12 | 23.28 | 18.92 | 4.36 | 4.34 | 496 | 11.37 | 206.48 |
| 43 | 1.14 | 23.34 | 18.94 | 4.41 | 4.30 | 498 | 11.31 | 206.41 |
| 44 | 1.16 | 23.43 | 18.98 | 4.45 | 4.26 | 501 | 11.24 | 206.31 |
| 45 | 1.18 | 23.58 | 19.07 | 4.51 | 4.23 | 503 | 11.17 | 206.09 |
| 46 | 1.20 | 25.29 | 20.58 | 4.72 | 4.36 | 516 | 10.95 | 203.72 |
| 47 | 1.22 | 25.57 | 20.80 | 4.77 | 4.36 | 519 | 10.89 | 203.43 |
| 48 | 1.24 | 25.74 | 20.93 | 4.80 | 4.36 | 521 | 10.85 | 203.29 |
| 49 | 1.26 | 26.01 | 21.16 | 4.84 | 4.37 | 523 | 10.81 | 203.03 |
| 50 | 1.28 | 26.23 | 21.33 | 4.90 | 4.36 | 526 | 10.75 | 202.68 |
| 51 | 1.30 | 26.31 | 21.38 | 4.93 | 4.34 | 528 | 10.70 | 202.56 |
| 52 | 1.32 | 26.34 | 21.39 | 4.95 | 4.32 | 529 | 10.67 | 202.50 |
| 53 | 1.34 | 26.41 | 21.42 | 4.99 | 4.29 | 530 | 10.63 | 202.35 |
| 54 | 1.36 | 26.55 | 21.53 | 5.02 | 4.29 | 532 | 10.59 | 202.08 |
| 55 | 1.38 | 26.56 | 21.52 | 5.04 | 4.27 | 533 | 10.57 | 202.06 |
| 56 | 1.40 | 26.71 | 21.65 | 5.06 | 4.27 | 534 | 10.54 | 201.82 |
| 57 | 1.42 | 26.74 | 21.66 | 5.08 | 4.26 | 534 | 10.52 | 201.76 |
| 58 | 1.44 | 26.78 | 21.68 | 5.10 | 4.25 | 535 | 10.50 | 201.69 |
| 59 | 1.46 | 26.82 | 21.71 | 5.11 | 4.25 | 536 | 10.48 | 201.63 |
| 60 | 1.48 | 26.84 | 21.72 | 5.12 | 4.24 | 536 | 10.47 | 201.58 |
| 61 | 1.50 | 26.86 | 21.73 | 5.13 | 4.23 | 537 | 10.45 | 201.54 |
| 62 | 1.52 | 26.95 | 21.81 | 5.15 | 4.24 | 537 | 10.43 | 201.37 |
| 63 | 1.54 | 26.96 | 21.81 | 5.16 | 4.23 | 537 | 10.42 | 201.35 |
| 64 | 1.56 | 27.15 | 21.98 | 5.17 | 4.25 | 538 | 10.40 | 201.02 |
| 65 | 1.58 | 27.16 | 21.98 | 5.18 | 4.24 | 539 | 10.40 | 201.01 |
| 66 | 1.60 | 27.16 | 21.97 | 5.19 | 4.23 | 539 | 10.38 | 200.99 |
| 67 | 1.62 | 27.20 | 22.00 | 5.20 | 4.23 | 539 | 10.37 | 200.93 |
| 68 | 1.64 | 27.34 | 22.12 | 5.22 | 4.24 | 540 | 10.35 | 200.61 |
| 69 | 1.66 | 27.47 | 22.23 | 5.24 | 4.24 | 541 | 10.32 | 200.21 |
| 70 | 1.68 | 27.49 | 22.24 | 5.25 | 4.24 | 541 | 10.31 | 200.15 |
| 71 | 1.70 | 27.53 | 22.27 | 5.26 | 4.24 | 542 | 10.30 | 200.08 |
| 72 | 1.72 | 27.55 | 22.29 | 5.26 | 4.24 | 542 | 10.30 | 200.02 |
| 73 | 1.74 | 27.68 | 22.41 | 5.27 | 4.26 | 542 | 10.30 | 199.79 |
| 74 | 1.76 | 27.70 | 22.43 | 5.28 | 4.25 | 543 | 10.28 | 199.74 |
| 75 | 1.78 | 27.72 | 22.44 | 5.28 | 4.25 | 543 | 10.27 | 199.69 |
| 76 | 1.80 | 27.85 | 22.56 | 5.29 | 4.26 | 543 | 10.26 | 199.49 |
| 77 | 1.84 | 27.86 | 22.56 | 5.30 | 4.26 | 543 | 10.25 | 199.46 |
| 78 | 1.88 | 27.87 | 22.57 | 5.31 | 4.25 | 544 | 10.24 | 199.43 |
| 79 | 1.90 | 27.96 | 22.65 | 5.31 | 4.26 | 544 | 10.24 | 199.28 |
| 80 | 1.92 | 28.05 | 22.74 | 5.31 | 4.28 | 544 | 10.24 | 199.12 |
| 81 | 1.94 | 28.05 | 22.74 | 5.32 | 4.28 | 544 | 10.23 | 199.11 |
| 82 | 1.96 | 28.15 | 22.84 | 5.32 | 4.29 | 544 | 10.24 | 198.95 |
| Pit | RevenueFactor | Rock (Mt) | Waste (Mt) | Ore (Mt) | StripRatio | TGC(kt) | TGC (%) | undiscountedCash Flow(A$) |
|---|---|---|---|---|---|---|---|---|
| 83 | 1.98 | 28.32 | 23.00 | 5.32 | 4.32 | 545 | 10.23 | 198.56 |
| 84 | 2.00 | 28.33 | 23.01 | 5.32 | 4.32 | 545 | 10.23 | 198.54 |
Appendix B - JORC Code 2012 Table 1
Section 1 Sampling Techniques and Data (Criteria in this section apply to all succeeding sections)
| Criteria | JORC Code Explanation | Commentary | CompetentPerson |
|---|---|---|---|
| Samplingtechniques | Nature and quality of sampling (e.g. cut channels,random chips, or specific specialised industry standardmeasurement tools appropriate to the minerals underinvestigation, such as down hole gamma sondes, orhandheld XRF instruments, etc). These examples shouldnot be taken as limiting the broad meaning of sampling.Include reference to measures taken to ensure samplerepresentivity and the appropriate calibration of anymeasurement tools or systems used.Aspects of the determination of mineralisation that areMaterial to the Public Report.In cases where 'industry standard' work has been donethis would be relatively simple (e.g. 'reverse circulationdrilling was used to obtain 1m samples from which 3kgwas pulverised to produce a 30g charge for fire assay').In other cases, more explanation may be required, suchas where there is coarse gold that has inherent samplingproblems. Unusual commodities or mineralisation types(e.g. submarine nodules) may warrant disclosure ofdetailed information. | All holes used in the Resource Estimate were HQ diamonddrillholes, sampling moderately dipping strata boundgraphite mineralised zones.30 vertical drillholes were used for ore definition togetherwith 114 drillholes drilled at -60° towards 090.Half cores samples were obtained on geological intervals,typically 1m in length but ranging from 0.3m to 4m.High grade graphite mineralisation is reasonably visibleduring geological logging and sampling.Visibly mineralised intervals were crushed and pulverised toat least 85% passing 75μm, then sent to ALS Brisbane foranalysis by LECO method.The sample preparation and assaying techniques areindustry standard and appropriate for this type ofmineralisation.Some core material remains selectively sampled. | KL |
| Drillingtechniques | Drill type (e.g. core, reverse circulation, open-holehammer, rotary air blast, auger, Bangka, sonic, etc) anddetails (e.g. core diameter, triple or standard tube,depth of diamond tails, face-sampling bit or other type,whether core is oriented and if so, by what method,etc). | All holes used in the Resource Estimate were drilled fromsurface.30 vertical drillholes were drilled using HQ standard tubeand were not orientated.114 angled drillholes were drilled using HQ triple tube.Downhole surveys were obtained using a Ranger SS118downhole camera. The angled drillholes were orientated | KL |
| Criteria | JORC Code Explanation | Commentary | CompetentPerson |
|---|---|---|---|
| using the Reflex ACT II RD core orientation tool. | |||
| Drill samplerecovery | Method of recording and assessing core and chipsample recoveries and results assessed.Measures taken to maximise sample recovery andensure representative nature of the samples.Whether a relationship exists between sample recoveryand grade and whether sample bias may have occurreddue to preferential loss/gain of fine/coarse material. | Core recovery was captured by logging "Core Loss" in areasof no or low recovery.Industry standard procedures/techniques were employed toensure maximum downhole recovery. Overall core recoveryfor all resource drillholes is 87%.There has been no identified relationship between samplerecovery and grade. | KL |
| Logging | Whether core and chip samples have been geologicallyand geotechnically logged to a level of detail to supportappropriate Mineral Resource estimation, miningstudies and metallurgical studies.Whether logging is qualitative or quantitative in nature.Core (or costean, channel, etc) photography.The total length and percentage of the relevantintersections logged. | Geological and geotechnical logging of the drillholes is of anappropriate standard to support a Mineral Resourceestimation, mining studies and metallurgical studies.Geological core logging is qualitative.Core photography is available.The total cumulative length of the sample intervals for allholes used for resource definition was 11,270 m (90% oftotal core length was sampled). | KL |
| Sub-samplingtechniquesand samplepreparation | If core, whether cut or sawn and whether quarter, halfor all core taken.If non-core, whether riffled, tube sampled, rotary split,etc and whether sampled wet or dry.For all sample types, the nature, quality andappropriateness of the sample preparation technique.Quality control procedures adopted for all sub-samplingstages to maximise representivity of samples.Measures taken to ensure that the sampling isrepresentative of the in-situ material collected,including for instance results for field duplicate/secondhalf sampling.Whether sample sizes are appropriate to the grain sizeof the material being sampled. | Half core samples were taken. In competent core, thesewere cut by diamond saw. In incompetent material, thesample was collected by manual halving of the material.Half core sampling is an appropriate, industry standardtechnique.Bulk reject duplicate samples were taken in the currentangled drillholes to ensure sample representivity. Theseduplicates were typically inserted at a frequency of 1 in 100samples (1% rate of insertion). Certified reference standardswere inserted at a typical rate of 1 in 20 samples (5% rate ofinsertion) for quality assurance checks of analyses reportedby the mineral testing laboratory ALS Global.There is no record of field duplicate samples or standardshaving been submitted in the 30 vertical drillholes to test | KL |
| Criteria | JORC Code Explanation | Commentary | CompetentPerson |
|---|---|---|---|
| sampling representativity.Samples from the 18 vertical CRAE drillholes were crushedand sieved on site prior to dispatching the coarse +75μm toALS-Chemex for assaying. There is no available data on theweights of the sieved fractions. If the fine fraction made upa significant proportion of the total sample, assays from thecoarse fractions should be higher than corresponding wholerock assays. A comparison of grades from the CRAE drillingwith the whole rock assays from other drilling programmesshows no difference in grade tenor. Visual comparison ofgrades in the CRAE drillholes with neighbouring holes fromthe other programme likewise shows no notable differencein grade tenor. As such, despite the description of assayingof coarse fractions only, the assays from the CRAE drillingare treated in the same manner as whole rock assays withno tonnage correction required.Some discrepancies were noted in the C values in the CRAEsamples, with non-carbonate C occasionally being greaterthan the Total C value. These are assumed to reflect a lackof complete homogenization in the crushing/sieving processcarried out on site.Sample preparation on the 12 vertical drillholes (2011campaign) and the 92 angled drillholes (2014 and 2015campaigns) was undertaken by ALS Adelaide. Samples werecrushed and split to >70% passing -6mm and pulverized to>85% passing 75μm prior to assaying by ALS Brisbane.Sample sizes (half core samples) are deemed appropriate forthe material that is being sampled. | |||
| Quality ofassay dataand | The nature, quality and appropriateness of the assayingand laboratory procedures used and whether the | Techniques used are:C-IR18 (Graphitic carbon by LECO analyser). | KL |
| Criteria | JORC Code Explanation | Commentary | CompetentPerson | |
|---|---|---|---|---|
| laboratorytests | technique is considered partial or total.For geophysical tools, spectrometers, handheld XRFinstruments, etc, the parameters used in determiningthe analysis including instrument make and model,reading times, calibrations factors applied and theirderivation, etc.Nature of quality control procedures adopted (e.g.standards, blanks, duplicates, external laboratorychecks) and whether acceptable levels of accuracy (ielack of bias) and precision have been established. | C-CAL15 (Inorganic carbon by difference).C-IR17 (Organic carbon by LECO analyser).C-CON01 (Carbon concentrate by LECO analyser).C-IR07 Total Carbon by LECO analyser).C-IR18 was used for the 2014 and 2015 samples, and C-IR17was used for previous samples. As the rocks are assumed tocontain no organic material (supported by petrographicstudy), the difference between these two techniques is lessthan the analytical error of the techniques and henceconsidered negligible.Bulk reject duplicate samples were taken in the 2014 angleddrillholes at a typical frequency of 1 in 100 samples (1% rateof insertion). Certified reference standards were inserted ata typical rate of 1 in 20 samples (5% rate of insertion).There is no record of field duplicate samples or standardshaving been submitted in the 30 vertical drillholes.Internal laboratory QAQC for all sampling has beenreviewed with no problems highlighted with respect tosampling bias or precision. | ||
| Verification ofsampling andassaying | The verification of significant intersections by eitherindependent or alternative company personnel.The use of twinned holes.Documentation of primary data, data entry procedures,data verification, data storage (physical and electronic)protocols.Discuss any adjustment to assay data. | Metallurgical drillholes were designed to allow for twindrilling analysis. Analysis demonstrated acceptablecomparative intercepts for tenor and thickness ofmineralization.Assays in the database have been checked againstlaboratory certificates and original logs which containedassay data. No inconsistencies were identified.Non-sampled intervals were assumed to be "unmineralised"and given a Graphitic C value of 0.01%, equivalent to halfthe detection limit of C-IR18.No adjustments to any assay data were done. | KL |
| Criteria | JORC Code Explanation | Commentary | CompetentPerson |
|---|---|---|---|
| Location ofdata points | Accuracy and quality of surveys used to locate drillholes(collar and down-hole surveys), trenches, mine workingsand other locations used in Mineral Resourceestimation.Specification of the grid system used.Quality and adequacy of topographic control. | Drill location co-ordinates are reported in Uley Mine Grid(transformed to truncated AMG). The reported truncationwas:Easting = 554,216.866mNorthing = 6,139,092.867mADH= RL + 404.252mDrillhole collars have been re-surveyed in the field and thesegrid transformations validated. All drillholes were resurveyed during 2014 by PA Dansie & Associates Pty Ltd.A complete site survey was undertaken during 2014 byMaptek Pty Ltd. | KL |
| Data spacinganddistribution | Data spacing for reporting of Exploration Results.Whether the data spacing and distribution is sufficientto establish the degree of geological and gradecontinuity appropriate for the Mineral Resource andOre Reserve estimation procedure(s) and classificationsapplied.Whether sample compositing has been applied. | No exploration results are reported or included in thisMineral Resource estimate.Diamond drilling on an infill spacing of up to 25m X 25m wasused to estimate geological and grade continuity at a leveldeemed appropriate for the classification and reporting of aMineral Resource estimate (updated estimate).1m sample composites were used during the resourceestimation process. | KL |
| Orientation ofdata inrelation togeologicalstructure | Whether the orientation of sampling achieves unbiasedsampling of possible structures and the extent to whichthis is known, considering the deposit type.If the relationship between the drilling orientation andthe orientation of key mineralised structures isconsidered to have introduced a sampling bias, thisshould be assessed and reported if material. | Drilling orientation is considered appropriate considering thedeposit type and orientation of moderately WNW dippingmineralisation. Sampling bias related to the orientation ofsampling is considered minimal. | KL |
| Samplesecurity | The measures taken to ensure sample security. | All reasonable measures were being taken to ensure samplesecurity along the value chain. These measures included therecording of sample dispatch and receipt reports, securestorage of samples, and a locked and gated core shed. | KL |
| Criteria | JORC Code ExplanationCommentary | CompetentPerson | ||
|---|---|---|---|---|
| The assay method used is destructive. A representativesample library is maintained on site for reference. | ||||
| Audits orreviews | The results of any audits or reviews of samplingtechniques and data. | No formal third-party audits have been undertaken to date.Laboratory procedures and manuals are comprehensivelydocumented on-site and both the AMDEL and ALSlaboratories are considered to be reputable laboratories forcarbon analysis. As the assaying techniques used are broadlydestructive techniques, with a limited ash residue, they arenot suited for replicate analysis.The quality control protocols implemented at Uley 2 areconsidered to represent good industry practice and allowassessment of analytical precision and accuracy to a degree.The assay data is considered to display an acceptable level ofprecision and accuracy.Internal laboratory QAQC data (standards, blanks andduplicates) have been reviewed and no significant problemswere identified regarding the quality of the chemicalassaying. | KL |
| Criteria | JORC Code Explanation | Commentary | CompetentPerson | |||
|---|---|---|---|---|---|---|
| Mineraltenement andland tenurestatus | | Type,referencename/number,locationandownership including agreements or material issueswith third parties such as joint ventures, partnerships,overriding royalties, native title interests, historicalsites, wilderness or national park and environmentalsettings.The security of the tenure held at the time ofreporting along with any known impediments toobtaining a licence to operate in the area. | | The Uley Graphite Project consists of five contiguoustenements on the Eyre Peninsula of South Australia, of whichtwo are retention leases, two are mining leases and one is anexploration licence. Tenement identification numbers are:RL66, RL67, ML5561, ML5562 and EL6224.Mining development is subject to the approved Program forEnvironmental Protection and Rehabilitation (PEPR) and anEnvironmental Licence which is mandated under SouthAustralian State legislation.QGL has a 100% interest in these tenements and no royalty,joint venture or other material agreements are in place.Tenement ownership is secure with expiration dates varyingfrom 2020 (EL6224) to 2023 (RL66 and RL67) and 2023(ML5561 and ML5562). There are no known impediments toobtaining a license to operate in the area. | KL | |
| Explorationdone by otherparties | | Acknowledgment and appraisal of exploration byother parties. | | Historically a number of parties have undertaken explorationon the leases. The data set held by QGL, and used in theresource update, includes all available information. | KL | |
| Geology | | Deposit type, geological setting and style ofmineralisation. | | Graphite is developed as a constituent mineral in coarseprograde metamorphic assemblages as well as in the fabricand foliation of micaceous schists. These are interpreted tobe the folded, thrusted and metamorphosed equivalents ofthe Cook Gap Schist. Folding of stratigraphy on various localscales is obvious from the core logging. | KL | |
| DrillholeInformation | | A summary of all information material to theunderstanding of the exploration results including atabulation of the following information for allMaterial drillholes: | | A summary of all drillholes used in the Resource Estimate isprovided in Section 8.3 1 of the Mineral Resource estimatereport. | VO/KL |
Section 2 Reporting of Exploration Results (Criteria listed in the preceding section also apply to this section)
| Criteria | JORC Code Explanation | Commentary | CompetentPerson | ||
|---|---|---|---|---|---|
| | easting and northing of the drillhole collarelevation or RL (Reduced Level – elevation abovesea level in metres) of the drillhole collardip and azimuth of the holedown hole length and interception depthhole lengthIf the exclusion of this information is justified on thebasis that the information is not Material and thisexclusion does not detract from the understanding ofthe report, the Competent Person should clearlyexplain why this is the case. | ||||
| Dataaggregationmethods | | In reporting Exploration Results, weighting averagingtechniques, maximum and/or minimum gradetruncations (e.g. cutting of high grades) and cut-offgrades are usually Material and should be stated.Where aggregate intercepts incorporate short lengthsof high-grade results and longer lengths of low-graderesults, the procedure used for such aggregationshould be stated and some typical examples of suchaggregations should be shown in detail.The assumptions used for any reporting of metalequivalent values should be clearly stated. | This Table accompanies a Resource Estimation, and is notreporting Exploration results.No metal equivalents are used. | KL | |
| Relationshipbetweenmineralisationwidths andinterceptlengths | | These relationships are particularly important in thereporting of Exploration Results.If the geometry of the mineralisation with respect tothe drillhole angle is known, its nature should bereported.If it is not known and only the down hole lengths arereported, there should be a clear statement to thiseffect (e.g. 'down hole length, true width not known'). | As this table accompanies a Resource Estimation, and is notreporting Exploration results, this section is not applicable.The relationships are captured and defined on a hole-by-holebasis in the resource model and orientations of holes tomineralised zone are appropriately accounted for in theestimate. | KL |
| Criteria | JORC Code ExplanationCommentary | CompetentPerson |
|---|---|---|
| Diagrams | Appropriate maps and sections (with scales) andRefer to Section 4 of the Mineral Resource estimate reporttabulations of intercepts should be included for anysignificant discovery being reported These shouldinclude, but not be limited to a plan view of drillholecollar locations and appropriate sectional views. | VO/KL |
| Balancedreporting | Where comprehensive reporting of all ExplorationQGL carry out balanced reporting of exploration results.Results is not practicable, representative reporting ofSelective sampling of visible graphitic material only has beenboth low and high grades and/or widths should becarried out on the 2011 and current drill core.practiced to avoid misleading reporting of ExplorationResults. | VO/KL |
| Othersubstantiveexplorationdata | Other exploration data, if meaningful and material,All available and material exploration information has beenshould be reported including (but not limited to):considered.This comprised a drilling database, previousgeological observations; geophysical survey results;estimates and reports, academic literature, petrologicalgeochemical survey results; bulk samples – size andreports, metallurgical test work reports, dry rock densitymethod of treatment; metallurgical test results; bulkdeterminations, and site visit photography/communication.density,groundwater,geotechnicalandrockHistorical production records from the original Uley Minecharacteristics;potentialdeleteriousorprovided assumptions related to future potential economiccontaminating substances.extraction. | KL |
| Further work | The nature and scale of planned further work (e.g.Exploration work to quantify the extent and continuity oftests for lateral extensions or depth extensions ormineralisation within the QGL-held tenure is ongoing. Thislarge-scale step-out drilling).work includes planned additional diamond and reversecirculation drilling, further geophysical surveys and geologicalDiagrams clearly highlighting the areas of possiblemapping. Details of this exploration effort are deemedextensions,includingthemaingeologicalcommercially sensitive.interpretations and future drilling areas, provided thisinformation is not commercially sensitive. | KL |
| Criteria | JORC Code Explanation | Commentary | CompetentPerson |
|---|---|---|---|
| Databaseintegrity | Measures taken to ensure that data has not beencorrupted by, for example, transcription or keyingerrors, between its initial collection and its use forMineral Resource estimation purposes.Data validation procedures used. | Data has been provided by QGL in the form of an Accessdatabase.A total of 18 1993 era diamond drill holes drilled by GraphiteMines of Australia, 12 SER diamond drillholes drilled in 2011, and112 Valence angled diamond drillholes in the Uley area havebeen used in the resource modelling update. The database usedfor resource estimation consists solely of diamond drilling andhas been reviewed and re-validated for obvious errors byWicklow prior to commencing the resource estimation study.The assay data has been cross-checked against assay certificatesprovided by ALS Chemex.The following checks were completed prior to uploading thedrilling data into a Surpac database:Check and correct overlapping intervals.Ensure downhole surveys existed at a 0m depth.Ensure consistency of depths between different data tables,for example survey, collar and assays.Check gaps in the assay data were replaced by -1 as a codefor missing data. Non-sampled intervals were assigned avalue of 0.01% Graphitic C. | VO |
| Site visits | Comment on any site visits undertaken by theCompetent Person and the outcome of those visits.If no site visits have been undertaken indicate whythis is the case. | Site visits were completed by the competent person in Septemberand December 2018. | VO |
| Geologicalinterpretation | Confidence in (or conversely, the uncertainty of) thegeological interpretation of the mineral deposit.Nature of the data used and of any assumptionsmade. | The current geological interpretation is based on a review ofprevious estimates and reports and has been augmented by thegeological and structural information provided by the additionaldrillholes not available for the May 2015 MRE. | VO |
Section 3 Estimation and Reporting of Mineral Resources (Criteria listed in the preceding sections where relevant, also apply to this section)
| Criteria | JORC Code Explanation | Commentary | CompetentPerson |
|---|---|---|---|
| The effect, if any, of alternative interpretations onMineral Resource estimation.The use of geology in guiding and controlling MineralResource estimation.The factors affecting continuity both of grade andgeology. | Information from site visits and geological reports suggests thegraphite lenses occurs within an anticlinorium i.e. a fold withparasitic folds on its limbs, as occurred in the now depleted Uleymine to the north. The current model is of a recumbent antiformplunging very shallowly to the ENE, with HW lodes dippingshallowly to the WNW and FW lodes dipping moderately (~33°)to the WNW.The deposit was previously constrained by Mineral Resourceoutlines based on mineralisation envelopes prepared using a 3.5% TGC cut-off. On review the cut-off was adjusted to 2% TGC asthe distribution in grade demonstrates a distinct variance at 2%.This likely represents the break between "ore" and waste. Theadjusted mineralisation interpretation applied a minimum 2mdown hole intercept with a maximum of 2 m internal waste.Geometallurgical domains were created to allow for themodelling of C as CO3 cohesively and guide the 2018 metallurgicaltest work program. The geometallurgical domains (geodomains)are delineated based on lithology, mineralogy, weathering and Cas CO3 content. A "carbonate" shell was created to defineelevated C as CO3 based on a 1% C as CO3 cut-off. | ||
| Dimensions | The extent and variability of the Mineral Resourceexpressed as length (along strike or otherwise), planwidth, and depth below surface to the upper andlower limits of the Mineral Resource. | The drilling relevant to the Mineral Resource estimate at Uley 2extends over a distance of 375 m (from 9,225 m grid N to 9,600m grid N) and includes a 125 m vertical interval fromapproximately 375 m to 500 m. The graphitic mineralisation isinterpreted to extend along the full strike distance. Depth ofinterpreted mineralisation varies as structural events resulted inthe plunge to the north-east of the tight isoclinal folds that hostmineralisation. Mineralisation becomes shallower and closer tothe surface towards the south-west of Uley 2. | VO |
| Criteria | JORC Code Explanation | Commentary | CompetentPerson |
|---|---|---|---|
| Estimationand modellingtechniques | The nature and appropriateness of the estimationtechnique(s) applied and key assumptions, includingtreatment of extreme grade values, domaining,interpolation parameters and maximum distance ofextrapolation from data points. If a computerassisted estimation method was chosen include adescription of computer software and parametersused.The availability of check estimates, previousestimates and/or mine production records andwhether the Mineral Resource estimate takesappropriate account of such data.The assumptions made regarding recovery of byproducts.Estimation of deleterious elements or other nongrade variables of economic significance (e.g. sulphurfor acid mine drainage characterisation).In the case of block model interpolation, the blocksize in relation to the average sample spacing and thesearch employed.Any assumptions behind modelling of selectivemining units.Anyassumptionsaboutcorrelationbetweenvariables.Description of how the geological interpretation wasused to control the resource estimates.Discussion of basis for using or not using gradecutting or capping.The process of validation, the checking process used,the comparison of model data to drillhole data, and | Based on the dominant sample length, 1 m composites for TGCand C as CO3 were extracted within the coded mineralisation bygeodomains. Variable length compositing was used to ensurethat no residuals were created.An assessment of the Coefficient of Variation (CV – ratio of thestandard deviation to the mean) parameter resulted in thedecision to top-cut C as CO3 during grade estimation for somefresh domains. The CV was low for TGC within eachmineralisation domain and therefore a top-cut was not required.TGC (%) and C as CO3 (%) were estimated into the block modelusing Ordinary Kriging (OK) utilising the cut 1m composites inSurpac mining software. Grade estimation was constrained toblocks inside individual mineralisation wireframes andgeodomains with hard boundaries applied. Results below thedetection limit were assigned a value of 0.01 % for both graphiticC and C as CO3.Variograms were generated to assess the spatial continuity ofTGC and C as CO3 and as inputs to the kriging algorithm used tointerpolate grades. Snowden Supervisor software was used togenerate and model the variograms within each geodomain. Themajor direction (direction of maximum continuity) was orientedalong strike with the intermediate (semi-major) directionoriented horizontally and the minor direction orientedorthogonal to the dip plane.A Surpac block model was used for the estimate with a block sizeof 12.5 m NS by 12.5 m EW by 4m vertical with sub-cells of 6.275m by 6.275 m by 1 m. The chosen parent block size is based onthe nominal drill hole spacing along with consideration of thegeometry of the mineralisation and the results of the gradecontinuity analysis. | VO |
| Criteria | JORC Code Explanation | Commentary | CompetentPerson |
|---|---|---|---|
| use of reconciliation data if available. | OK grade interpolation used an oriented 'ellipsoid' search toselect data for interpolation. Estimation parameters weredeveloped specifically for TGC and C as CO3 within eachmineralised geodomain. Where cohesive variograms could notbe achieved due to limited data, parameters were borrowedfrom other like domains. Search directions were adjusted toallow for variations in orientation as a result of folding.A three-step qualitative and quantitative process was applied tovalidate the grade estimate. This included visual comparison ofblock grades and the input drill hole composites and globalcomparisons of these grades. The grade trends shown by thecomposite data are honoured by the block model within eachdomain. Trend plots comparing the model and composite gradesalong and across strike and with depth were generated. Theplots displayed good correlation between the sample grades andthe block model grades in each direction.No other elements, deleterious or not, were estimated to date.No assumptions were made concerning mining selectivity beyondsmall to medium scale open pit mining. | ||
| Moisture | Whether the tonnages are estimated on a dry basisor with natural moisture, and the method ofdetermination of the moisture content. | Tonnes are estimated based on an average dry in-situ bulkdensity value. | VO |
| Cut-offparameters | The basis of the adopted cut-off grade(s) or qualityparameters applied. | Optimisation studies completed in May 2015 on the previousUley 2 MRE (Coffey) support the use of a 3.5% cut-off grade forResource reporting. | VO/KL |
| Mining factorsorassumptions | Assumptions made regarding possible miningmethods, minimum mining dimensions and internal(or, if applicable, external) mining dilution. It isalways necessary as part of the process ofdetermining reasonable prospects for eventual | The Uley graphite deposit has been historically mined by opencut mining methods and it is assumed that this will still be thecase for any future mining operation in the area.No assumptions have been made about mining selectivity forspecific material types or quality. |
| Criteria | JORC Code Explanation | Commentary | CompetentPerson | ||||
|---|---|---|---|---|---|---|---|
| economic extraction to consider potential miningmethods, but the assumptions made regardingmining methods and parameters when estimatingMineral Resources may not always be rigorous.Where this is the case, this should be reported withan explanation of the basis of the miningassumptions made. | | No external mining dilution or other factors have been applied tothe resource estimate. | |||||
| Metallurgicalfactors orassumptions | The basis for assumptions or predictions regardingmetallurgical amenability. It is always necessary aspart of the process of determining reasonableprospects for eventual economic extraction toconsider potential metallurgical methods, but theassumptions regardingmetallurgicaltreatmentprocesses and parameters made when reportingMineral Resources may not always be rigorous.Where this is the case, this should be reported withan explanation of the basis of the metallurgicalassumptions made. | | Petrographic studies by Pontifex Pty Ltd demonstrated a range ofgraphite flake sizes within a gneissic quartz-feldspar matrix.Minor amounts of mafic gangue minerals such as biotite,amphiboles and pyroxenes are also present. Biotite is shown tobe intergrown with the graphite in some samples. Graphiteliberation test work completed during 2014 and 2015 by QGLdelivered promising results. The subsequent 2019 metallurgicalcampaign was designed to ensure the necessary samplerepresentivity across all geodomains. The 2019 programexceeded the previous test work and was achieved utilisinglimited crushing and grinding to 0.6 mm followed by conventionalfroth flotation concentration with multiple stages of polishing.The resultant flake size distribution is. | MG | |||
| Size fraction | Size fraction | Approx. weight Graphitic C | LOI | ||||
| µm | (Mesh) | Distribution % | Purity % | % | |||
| +300 | +50 | 10.5 | 97.8 | 0.26 | |||
| -300+150 | -50+100 | 35.4 | 97.2 | 0.34 | |||
| -150+75 | -100+200 | 27.1 | 96.6 | 0.36 | |||
| -75 | -200 | 27.0 | 90.7 | 0.73 | |||
| Environmenta | Assumptions made regarding possible waste and | | Mining development is subject to the approved Program for | KL | |||
| l factors or | process residue disposal options. It is always | Environmental Protection and Rehabilitation (PEPR). | |||||
| assumptions | necessary as part of the process of determining |
| Criteria | JORC Code Explanation | Commentary | CompetentPerson |
|---|---|---|---|
| reasonableprospectsforeventualeconomicextraction to consider the potential environmentalimpacts of the mining and processing operation.While at this stage the determination of potentialenvironmental impacts, particularly for a greenfieldsproject, may not always be well advanced, the statusofearlyconsiderationofthesepotentialenvironmental impacts should be reported. Wherethese aspects have not been considered this shouldbereportedwithanexplanationoftheenvironmental assumptions made. | |||
| Bulk density | Whether assumed or determined. If assumed, thebasis for the assumptions. If determined, the methodused, whether wet or dry, the frequency of themeasurements,thenature,sizeandrepresentativeness of the samples.The bulk density for bulk material must have beenmeasured by methods that adequately account forvoid spaces (vugs, porosity, etc), moisture anddifferences between rock and alteration zones withinthe deposit.Discuss assumptions for bulk density estimates usedin the evaluation process of the different materials. | Bulk density test work was implemented by QGL in February2019. The analysis was completed externally to AustralianStandards by ALS Adelaide and designed to support on-site bulkdensity measurements completed as part of previous campaigns.Statistical analysis of the bulk density data determined a likelycorrelation between TGC or C as CO3 content and bulk density,dependent on geodomain. Bulk density was assigned to themodel using calculations determined from the analysis. | VO |
| Classification | The basis for the classification of the MineralResources into varying confidence categories.Whether appropriate account has been taken of allrelevantfactors(ierelativeconfidenceintonnage/grade estimations, reliability of input data,confidence in continuity of geology and metal values,quality, quantity and distribution of the data). | The Mineral Resource classification criteria were developedbased on an assessment of the following items:Nature and quality of the drilling and sampling includingQAQC review.Drilling density.Confidence in the understanding of the underlying geologicaland grade continuity and the structural characteristics. | EM |
| Criteria | JORC Code Explanation | Commentary | CompetentPerson |
|---|---|---|---|
| Whether the result appropriately reflects theCompetent Person's view of the deposit. | Confidence in the estimate of the mineralised volume.Bulk density data.Model validation results.The criteria listed in Table 1 Section 1 and Section 3 of theJORC Code.The resource classification scheme (Measured, Indicated andInferred) adopted for the Uley 2 MRE was based on the following:The majority of mineralisation was classified as IndicatedResource where the drilling density was 25 mE x 25 mN. Aportion of the Resource where vertical drilling has reducedthe drill density and supported the thickness and grade wasclassified as Measured Resource.Where mineralisation wireframes were extrapolated to morethan half of the drill density (approximately 12.5 m), theResource was classified as Inferred Resource. There is noextrapolation outside of an appropriate range for Inferredclassification. Material outside of the mineralisationenvelopes was not classified.Smaller mineralisation objects derived from minimalinforming samples (less than 2 drill holes) were classified asInferred.Bulk density data test work completed in 2018 increasedconfidence in volume to tonnage conversions.The classification scheme as applied is considered to adequatelyreflect the sample density and geological interpretation basedon all available drillhole data. | ||
| Audits orreviews | The results of any audits or reviews of MineralResource estimates. | No third-party reviews have been undertaken on the MineralResource estimation process to date, though formal peer review | VO |
| Criteria | JORC Code Explanation | Commentary | CompetentPerson |
|---|---|---|---|
| as part of mine planning processes have been completed. | |||
| Discussion ofrelativeaccuracy/confidence | Where appropriate a statement of the relativeaccuracy and confidence level in the MineralResource estimate using an approach or proceduredeemed appropriate by the Competent Person. Forexample,theapplicationofstatisticalorgeostatistical procedures to quantify the relativeaccuracy of the resource within stated confidencelimits, or, if such an approach is not deemedappropriate, a qualitative discussion of the factorsthat could affect the relative accuracy andconfidence of the estimate.The statement should specify whether it relates toglobal or local estimates, and, if local, state therelevant tonnages, which should be relevant totechnical and economic evaluation. Documentationshouldincludeassumptionsmadeandtheprocedures used.Thesestatementsofrelativeaccuracyandconfidence of the estimate should be compared withproduction data, where available. | The grade estimate is based on the assumption that open cutmining methods will be applied and that a form of highconfidence grade control sampling, for example based on RCgrade control drilling or ditch-witch bench top sampling, will beavailable for final ore/waste demarcation. As such the resourceestimate should be considered to represent a global resourceestimate. | EM |
VO = Ms Vanessa O'Toole, an employee of Wicklow Resources Pty Ltd. KL = Ms Karen Lloyd, an executive director of Jorvik Resources Pty Ltd. MG = Mr Mark Giddy, an employee of Lycopodium Minerals Pty Ltd. EM = Ms Ellen Maidens, formerly an employee of Coffey.
'JORC Code 2012 Table 1' Section 4 Estimation and Reporting of Ore Reserves
(Criteria listed in section 1, and where relevant in sections 2 and 3, also apply to this section).
| Criteria | JORC Code Explanation | Commentary | CompetentPerson | |
|---|---|---|---|---|
| MineralResourceestimate forconversion toOre Reserves | Description of the Mineral Resource estimate used as abasis for the conversion to an Ore Reserve.Clear statement as to whether the Mineral Resourcesare reported additional to, or inclusive of, the OreReserves. | The Uley 2 Mineral Resource estimate described in Section 3formed the basis for the conversion to Ore Reserves.The Mineral Resource estimate is inclusive of the Ore Reserveestimate. | KL | |
| Site visits | Comment on any site visits undertaken by theCompetent Person and the outcome of those visits.If no site visits have been undertaken indicate why this isthe case. | Ms Karen Lloyd, inspected the Uley site multiple times in theperiod January 2014 – April 2015. Ms Lloyd has not inspected thesite since April 2015 as a further site inspection was not likely toreveal information material to the September 2019 Mining StudyUpdate or Ore Reserve estimate | KL | |
| Study status | The type and level of study undertaken to enableMineral Resources to be converted to Ore Reserves.The Code requires that a study to at least Pre-FeasibilityStudy level has been undertaken to convert MineralResources to Ore Reserves. Such studies will have beencarried out and will have determined a mine plan that istechnically achievable and economically viable, and thatmaterial Modifying Factors have been considered. | A feasibility study is being completed by Lycopodium Ltd usingreliance on the following parties:Market research and commodity priceMining operating and capital costMine planningMetallurgical and processingProcessing costsGeneral site operating costsGeneral site infrastructureGeotechnical investigationHydro(geo)logical investigationTailings storage facilitySocial and EnvironmentalLegal tenureGovernment | QuantumLycopodiumJorvikLycopodiumLycopodiumQuantumQuantumQuantumQuantumLycopodiumQuantumQuantumQuantum | KL |
| Criteria | JORC Code Explanation | Commentary | CompetentPerson |
|---|---|---|---|
| Cut-offparameters | The basis of the cut-off grade(s) or quality parametersapplied. | A 3.5% graphitic carbon lower cut-off was used. This was basedon an assessment of the grade tonnage curve and the operatingcost profile. | KL |
| Miningfactors orassumptions | The method and assumptions used as reported in thePre-Feasibility or Feasibility Study to convert the MineralResource to an Ore Reserve (i.e. either by application ofappropriate factors by optimisation or by preliminary ordetailed design).The choice, nature and appropriateness of the selectedmining method(s) and other mining parametersincluding associated design issues such as pre-strip,access, etc.The assumptions made regarding geotechnicalparameters (e.g. pit slopes, stope sizes, etc), gradecontrol and pre-production drilling.The major assumptions made and Mineral Resourcemodel used for pit and stope optimisation (ifappropriate).The mining dilution factors used.The mining recovery factors used.Any minimum mining widths used.The manner in which Inferred Mineral Resources areutilised in mining studies and the sensitivity of theoutcome to their inclusion.The infrastructure requirements of the selected miningmethods. | Mining will be undertaken by conventional open pit methodsof load and haul, utilising small mining equipment comprising100t diesel hydraulic excavators and 60t off-highway dumptrucks.Detailed pit design work was completed based on pitoptimisations using Whittle Four-X optimisation software.Only Measured and Indicated Resources were used in the pitoptimisation.The life of mine waste to ore strip ratio is approximately 4.6:1.Pit slope parameters were based on the slope parameters andconditions the historical Uley 1 pit and the supportinggeotechnical investigations undertaken by Barrett and Fuller.Grade control is expected to be undertaken using surfacetrenching using Ditch Witch equipment.No mining dilution was included in the optimisation workgiven the expected strong visual mining control. A miningrecovery of 95% was assumed.A minimum cutback mining width of 25m was adopted.The mine plan was based on Measured and IndicatedResources.The primary infrastructure required for the development ofthe Project includes the refurbishment of the existing TailingsStorage facility, the construction of a new processing plantand the establishment of a water borefield. The site has anexisting power supply and access is possible via the existingroad infrastructure | KL |
| Criteria | JORC Code Explanation | Commentary | CompetentPerson |
|---|---|---|---|
| Metallurgicalfactors orassumptions | The metallurgical process proposed and theappropriateness of that process to the style ofmineralisation.Whether the metallurgical process is well-testedtechnology or novel in nature.The nature, amount and representativeness ofmetallurgical test work undertaken, the nature of themetallurgical domaining applied and the correspondingmetallurgical recovery factors applied.Any assumptions or allowances made for deleteriouselements.The existence of any bulk sample or pilot scale test workand the degree to which such samples are consideredrepresentative of the orebody as a whole.For minerals that are defined by a specification, has theore reserve estimation been based on the appropriatemineralogy to meet the specifications? | The proposed metallurgical flowsheet includes conventionalprimary crushing and milling, followed by flotation withpolishing regrinding to achieve clean graphite. Graphiteconcentrate drying, sizing and bagging of screened products tomeet industry standard size ranges will be performed. Tailingswill be thickened to recover water and disposed of to a linedstorage facility. The proposed metallurgical process followswell accepted industry standard processing approaches anduses established, proven technologies.A testwork programme was conducted at the ALSMetallurgical laboratory in Perth. Five composite sampleswere made up representing the various geodomainsidentified. Graphite mineralisation appears to be similar acrossthe geodomains with all samples upgrading to over 95% purity(total graphitic carbon (TGC) grade) in 3 cleaning stages, butthe differences in gangue mineralisation impacted on theflotation reagent regime required. For the master compositerepresenting the life of mine geodomain blend, therecommended TGC recovery for economic evaluation was85%. Variabilities in feed blending in the mine schedule willtake account of the individual geodomain recoveries. Thegraphite product has a large coarse flake fraction of typically45-50% >150 µm.Testwork is on-going for the tails settling and geo chemistry.Further work is also planned for regrinding mill optimisationand flotation scale-up to pilot scale cells. | MG |
| Environmental | The status of studies of potential environmental impactsof the mining and processing operation. Details of wasterock characterisation and the consideration of potentialsites, status of design options considered and, where | Quantum has obtained approval under the Mining Act (1971)which includes a comprehensive Program for EnvironmentProtection and Rehabilitation (PEPR) and an environmentallicence. | KL |
| Criteria | JORC Code Explanation | Commentary | CompetentPerson |
|---|---|---|---|
| applicable, the status of approvals for process residuestorage and waste dumps should be reported. | Detailed impact assessments are on-going in areas includingair quality, groundwater, surface water, flora, fauna, noise,social, visual, and heritageIt is expected that all predicted impacts may be adequatelymitigated and/or managed and that the site will be approvedfor re-establishment by the South Australian government. | ||
| Infrastructure | The existence of appropriate infrastructure: availabilityof land for plant development, power, water,transportation (particularly for bulk commodities),labour, accommodation; or the ease with which theinfrastructure can be provided, or accessed. | A new process plant and supporting infrastructure will beconstructed on site to process 0.5 Mtpa new feed andgenerate 55-60,000 tpa graphite product.Personnel will be accommodated in Port Lincoln which is23km by sealed road from the Uley mine site.Roads and power supply infrastructure in place to service theconstruction and subsequent plant operations phases.A water borefield will be established by Quantum prior to thecommencement of construction activitiesA transport and logistics study has been completed for supplyof operating consumables and transport of the containerisedproduct to offshore customers. . | KL |
| Costs | The derivation of, or assumptions made, regardingprojected capital costs in the study.The methodology used to estimate operating costs.Allowances made for the content of deleteriouselements.The derivation of assumptions made of metal orcommodity price(s), for the principal minerals and coproducts.The source of exchange rates used in the study.Derivation of transportation charges. | The capital cost and operating cost estimates arecommensurate with a feasibility level study and wereestimated by the Study contributors as listed under the StudyStatus criterion discussed above. The capital cost estimatehas been developed through the collation of a number of firstprinciple estimates completed by the various LycopodiumStudy contributors on completion of sufficient design works toprovide bills of materials to the estimators, quotations fromequipment providers and contracting companies andestimates carried out directly by the owner's team. The | KL |
| Criteria | JORC Code Explanation | Commentary | CompetentPerson |
|---|---|---|---|
| The basis for forecasting or source of treatment andrefining charges, penalties for failure to meetspecification, etc.The allowances made for royalties payable, bothGovernment and private. | operational cost estimate wasdeveloped on a 'first principlebasis:Forecast operational manning levelsProposed organisation chartsReagent & consumables usage forecast by system modellingand based on testwork usage ratesFuel utilisation estimatesCalculated power consumption from the electrical load listOperational readiness costsEstimated mining costsThe estimated capital costs for the Project areo$79.98M.The mining costs were estimated at $2.50/t mined.oThe estimated process operating costs, includingodrying and bagging, for the Project are $439/dmt ofconcentrate.Royalties of 5% of were included in the operating estimates. | ||
| Revenuefactors | The derivation of, or assumptions made regardingrevenue factors including head grade, metal orcommodity price(s) exchange rates, transportation andtreatment charges, penalties, net smelter returns, etc.The derivation of assumptions made of metal orcommodity price(s), for the principal metals, mineralsand co-products. | Assumptions made regarding revenue factors including headgrade, commodity price, exchange rates, transportation andtreatment charges have been derived by Quantum and reliedupon by Ms Lloyd. An average LOM concentrate price ofUS$919/dmt was used to inform the pit shell optimisationwork.A long-term AUD:USD foreign exchange rate of 1.43 wasadopted | KL |
| Marketassessment | The demand, supply and stock situation for theparticular commodity, consumption trends and factorslikely to affect supply and demand into the future. | Quantum has completed a detailed analysis covering theforward supply and demand outlook and long-term pricing | KL |
| Criteria | JORC Code Explanation | Commentary | CompetentPerson |
|---|---|---|---|
| A customer and competitor analysis along with theidentification of likely market windows for the product.Price and volume forecasts and the basis for theseforecasts.For industrial minerals the customer specification,testing and acceptance requirements prior to a supplycontract. | forecastsincluding a technical marketing and specificationstudy for the Uley graphite basket prices.Quantum has represented this information in writing to MsLloyd for use in mine optimisation, mine planning and OreReserve estimation. Ms Lloyd is satisfied that Quantum haveestablished a likely market window for the Uley products.The testing and acceptance of Uley graphite products hasbeen made by several offtake parties.The likely product specifications and possible productmarketability and overall potential for economic extractionare considered by Ms Lloyd to support the Ore Reserveestimate. | ||
| Economic | The inputs to the economic analysis to produce the netpresent value (NPV) in the study, the source andconfidence of these economic inputs includingestimated inflation, discount rate, etc.NPV ranges and sensitivity to variations in the significantassumptions and inputs. | The financial evaluation undertaken as part of the Studyindicated a positive net present value (NPV) at a 10% discountrate.Sensitivity analysis indicated that a negative 20% change inproduct price, foreign exchange rate, operating cost or capitalcost results in a positive NPV. | KL |
| Social | The status of agreements with key stakeholders andmatters leading to social licence to operate. | A social impacts and benefits study has been completed aspart of the requirements of the PEPR | KL |
| Other | To the extent relevant, the impact of the following onthe project and/or on the estimation and classificationof the Ore Reserves:Any identified material naturally occurring risks.The status of material legal agreements and marketingarrangements. | No significant (high) naturally occurring risks were identifiedduring a whole of project risk assessment.All Quantum tenure is in good standing with all legalobligations met. Regular meetings with state and federalGovernment agencies occur for the purposes of discussingrequired approvals and facilitating meetings with otherstakeholders. | KL |
| Criteria | JORC Code Explanation | Commentary | CompetentPerson |
|---|---|---|---|
| The status of governmental agreements and approvalscritical to the viability of the project, such as mineraltenement status, and government and statutoryapprovals. There must be reasonable grounds to expectthat all necessary Government approvals will bereceived within the timeframes anticipated in the PreFeasibility or Feasibility study. Highlight and discuss themateriality of any unresolved matter that is dependenton a third party on which extraction of the reserve iscontingent. | The PEPR currently imposes a depth restriction on mining atUley within ML5561 and ML5562 until a determination ismade regarding the requirement of a ground water licence orsuch other authorisation with respect to ground water. Such adetermination will be made following the completion of a 9month water bore monitoring campaign to assess and verifythe presence (or otherwise) of groundwater at depths below16 metres in the proposed extension of the Uley 2 Pit. Life ofMine production will be reliant upon mining beyond thisdepth restriction and also relies upon the conversion of a partof the retention lease (RL67) into a Mining Lease. Quantum iscurrently undertaking relevant studies and are in consultationwith the South Australian government on these matters. | ||
| Classification The basis for the classification of the Ore Reserves intovarying confidence categories.Whether the result appropriately reflects the CompetentPerson's view of the deposit.The proportion of Probable Ore Reserves that have beenderived from Measured Mineral Resources (if any). | Proved and Probable Ore Reserves were based on theMeasured and Indicated Mineral Resources contained withinthe pit design. The financial analysis showed that theeconomics of the project were positive and the risk analysisdid not identify any material risksAll Measured Resources that were contained within the pitdesign were converted to Proved Ore Reserves. | KL | |
| Audits orreviews | The results of any audits or reviews of Ore Reserveestimates. | No external audits or reviews of the Ore Reserve estimateshave been undertaken. | KL |
| Discussion ofrelativeaccuracy/confidence | Where appropriate a statement of the relative accuracyand confidence level in the Ore Reserve estimate usingan approach or procedure deemed appropriate by theCompetent Person. For example, the application ofstatistical or geostatistical procedures to quantify the | The relative accuracy and confidence of the Ore Reserveestimate is inherent in the Ore Reserve Classification. No mineproduction data is available for reconciliation and/orcomparative purposes. | KL |
| Criteria | JORC Code Explanation | Commentary | CompetentPerson |
|---|---|---|---|
| relative accuracy of the reserve within stated confidencelimits, or, if such an approach is not deemedappropriate, a qualitative discussion of the factors whichcould affect the relative accuracy and confidence of theestimate.The statement should specify whether it relates toglobal or local estimates, and, if local, state the relevanttonnages, which should be relevant to technical andeconomic evaluation. Documentation should includeassumptions made and the procedures used.Accuracy and confidence discussions should extend tospecific discussions of any applied Modifying Factorsthat may have a material impact on Ore Reserveviability, or for which there are remaining areas ofuncertainty at the current study stage. | Factors that may affect the global tonnages and theassociated grades include: Mining dilution, mining recoveryand mass yield | ||
| It is recognised that this may not be possible orappropriate in all circumstances. These statements ofrelative accuracy and confidence of the estimate shouldbe compared with production data, where available. |