Metorex_Ruashi_CPR

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PREPARED BY METOREX LIMITED

COMPETENT PERSONS’ REPORT (CPR)

AND VALUATION OF

RUASHI HOLDINGS (PTY) LTD AND

RUASHI MINING SPRL IN THE

DEMOCRATIC REPUBLIC OF THE CONGO

BY METOREX LIMITED

Ref: cpr_ruashi12Mar2010 Report date: 12 March 2010 Effective Date: 1 January 2010

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Ruashi Mining sprl Competent Persons Report and Valuation – Effective 1 January 2010

TABLE OF CONTENT

EXECUTIVE SUMMARY 7 1.0 GENERAL (SR T1.2) 25 1.1 PURPOSE OF THE REPORT AND PROJECT OUTLINE (T1.1, 1.2, 5.4-5.5, 8, SV 1.2 & JSE 12.9(c) (d)) 25 1.2 CORPORATE STRUCTURE (SR T1.2, 1.7, 5.5 & 8) 26 1.3 HISTORY (SR T1.2, 1.3, 1.7, 5.4. 5.5, 8 & SV T1.4) 27 1.4 PROJECT LOCATION (SR T1.2, 1.5) 33 1.5 REGIONAL INFRASTRUCTURE (SR T5.6) 36 1.6 TOPOGRAPHY AND CLIMATE (SR T1.6) 36 1.7 LEGAL ASPECTS AND MINERAL TENURE (SR T1.7, SV T1.3) 37

2.0 PROJECT DATA (SR T1.2, 2.1, 2.3 &4.1) 40 2.1 GEOLOGY (SR T4.13, SV T1.5) 40 2.1.1 Regional Geology and Mineralisation (SR T1.2) 40 2.1.2 Local Geology and Mineralisation 45

2.2 EXPLORATION (SR T2.1-2.3, 2.5, 3.1-3.4 & 4.2) 54 2.2.1 Diamond Drilling, Collar and Downhole Surveys 54 2.2.2 Borehole Layout 56 2.2.3 Core Processing 56 2.2.4 Data Collection and Reporting 60 2.2.5 Laboratory analysis 64 2.2.6 Specific gravity and bulk tonnage data (SR T2.4) 66

2.3 EXPLORATION DATA MANAGEMENT AND ANALYSIS (SR T2.1, 2.3, 2.5, 3.1-3.4 & 4.2) 68 2.3.1 Data Capture, Validation, Integrity and Storage 68 2.3.2 Analytical QA/QC 70 2.3.3 QA/QC Results 71 2.3.4 Conclusion 74

2.4 INTERPRETATION AND MODELLING (SR 2.1, 2.2, 2.5, 4.1-4.2 & 8) 75 2.4.1 Geological model and interpretation 75 2.4.2 Estimation and modelling techniques 77

2.5 RESOURCE AND RESERVE CLASSIFICATION CRITERIA (SR T 7) 80 3.0 TECHNO-ECONOMIC STUDY AND MODIFYING FACTORS (SR T5, SV T1.7) 82 3.1 GOVERNMENTAL (SR T1.7, 5.1) 82 3.2 ENVIRONMENTAL (SR T5.2) 83 3.2.1 Environmental licences and authorisations (SR T1.17) 83 3.2.2 Environmental liabilities and rehabilitation costs (SR T1.7) 83 3.2.3 Environmental management 84 3.2.4 Environmental issues at Ruashi Mine 84 3.2.5 Social (SR T5.3) 85

3.3 MINING (SR T5.4 & 8) 86 3.3.1 Introduction 86 3.3.2 Mining method and selectivity 86 3.3.3 Geotechnical and hydrological considerations 90 3.3.4 Service infrastructure 93 3.3.5 Modifying factors and mining efficiencies 93 3.3.6 Development and production schedule 94

3.4 MINERAL PROCESSING (SR T5.5) 97 3.4.1 General 97 3.4.2 Mineralogical and metallurgical testwork (SR T3.2) 97 3.4.3 Feed grade and plant recovery assumptions 98

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3.4.4 Detailed flowsheet description 100 3.4.5 Plant availability and utilisation factors 109 3.4.6 Metallurgical constraints 110 3.4.7 Labour complement 110 3.4.8 Tailings disposal 111

3.5 INFRASTRUCTURE AND SERVICES (SR T5.6) 114 3.6 ECONOMIC CRITERIA (SR T5.7) 115 3.6.1 Capital Cost Estimate 115 3.6.2 Operating Cost Estimate 115 3.6.3 Taxation, Royalties And Exchange Rates 116 3.6.4 Commodity Price Profiles 116

3.7 HISTORICAL AND FUTURE EXPLORATION EXPENDITURE (JSE 12.9(e)(i)(ii) & (iii) 118 3.8 MARKETING (SR T5.8 & SV T1.18) 119 3.9 VALUATION (SR T5.7 & JSE 12.9(f)) 124 3.9.1 Introduction (SV T1.2) 124 3.9.2 Scope of Work (SV T1.2) 124 3.9.3 Identity and Tenure (SV T1.3) 124 3.9.4 History (SV T1.4) 124 3.9.5 Geological Setting (SV T1.5) 124 3.9.6 Mineral Resources and Mineral Reserves (SV T1.6) 124 3.9.7 Modifying Factors (SV T1.7) 124 3.9.8 Valuation Approaches and Methods (SV T1.8) 124 3.9.9 Valuation Date (SV T1.9) 126 3.9.10 Valuation Summary and Conclusion (SV T1.10 & T1.15) 127 3.9.11 Sources of Information (SVT1.11) 134 3.9.12 Previous Valuations (SVT1.12) 134 3.9.13 Reliance on Other Experts (SVT1.13) 134 3.9.14 Competent Valuator’s Statement (SR T1.11 & SV T1.14) 134 3.9.15 Ranges of Values (SV T1.15) 135 3.9.16 Historic Verification (SV T1.17) 135 3.9.17 Market Assessment (SV T1.18) 135 3.9.18 Audits and Reviews (SV T1.19) 135

4.0 RISK ANALYSIS (SR T 6) 135 4.1 RISKS TO THE METOREX GROUP 135 4.2 RISKS SPECIFIC TO RUASHI MINE 142 4.2.1 Introduction 142 4.2.2 Methodology 143 4.2.3 Risk Review Findings 146

5.0 RESOURCE AND RESERVE STATEMENT (SR T5.4, 7, 8, 10 & SV T1.7) 149 6.0 AUDITS AND REVIEWS (SR T9, SV T1.19) 155 7.0 COMPETENT PERSON(S) AND OTHER KEY TECHNICAL STAFF (SR T11 & JSE 12.9(c)) 157

8.0 COMPETENT VALUATOR (SV T1.14) 158 9.0 SUMMARY, CONCLUSIONS AND INTERPRETATION (SR T1.1, 1.7, 2.4, 4.1 & 4.2) 159

10.0 REFERENCES (SV T1.11) 161 GLOSSARY OF TERMS, ABBREVIATIONS AND UNITS 162

TABLE OF FIGURES FIGURE 1: CORPORATE STRUCTURE OF RUASHI MINING SPRL ......................................... 26 FIGURE 2: RUASHI MINING SPRL COPPER PRODUCTION HISTORY. ................................... 29

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FIGURE 3: RUASHI MINING SPRL COBALT PRODUCTION HISTORY..................................... 30 FIGURE 4: GENERAL LOCATION OF THE RUASHI MINING SPRL ASSETS IN THE KATANGA

PROVINCE OF DRC ............................................................................................................. 34 FIGURE 5: SITE PLAN AND COORDINATES OF THE RUASHI MINING PERMIT (PE578) ....... 35 FIGURE 6: REGIONAL GEOLOGICAL MAP OF THE CENTRAL AFRICAN COPPERBELT

SHOWING THE LOCATION OF THE RUASHI MINING SPRL ASSETS ............................... 42 FIGURE 7: REGIONAL STRATIGRAPHIC CLASSIFICATION OF THE KATANGA

SUPERGROUP IN DRC ........................................................................................................ 43 FIGURE 8: SIMPLIFIED LITHOSTRATIGRAPHIC CORRELATION OF THE KATANGAN

SUPERGROUP OF THE ZAMBIAN AND CONGOLESE COPPERBELT .............................. 44 FIGURE 9: REGIONAL GEOLOGY OF LUBUMBASHI AND THE SURROUNDING AREA .......... 46 FIGURE 10: THE STRATIGRAPHY OF THE RUASHI MINE ....................................................... 48 FIGURE 11: LOCATION OF THE RUASHI I, II AND III OREBODIES WITHIN THE RUASHI MINE

AREA (BLUE DOTS REPRESENT DRILLHOLE COLLARS). ................................................ 50 FIGURE 12: TYPICAL SECTION (SECTION 200) FROM RUASHI I SHOWING MINERALISED

ENVELOPE ........................................................................................................................... 51 FIGURE 13: TYPICAL SECTION (SECTION 1100) FROM RUASHI II SHOWING MINERALISED

ENVELOPE ........................................................................................................................... 51 FIGURE 14: TYPICAL SECTION (SECTION 1650) FROM RUASHI III SHOWING MINERALISED

ENVELOPE ........................................................................................................................... 52 FIGURE 15: SELECTED HAND SPECIMENS OF MALACHITE FROM THE RUASHI OPEN PIT

.............................................................................................................................................. 53 FIGURE 16: CORE STORED FROM THE 1920S. NOTE SMALL DIAMETER AND LIMITED

CORE RETAINED. ................................................................................................................ 57 FIGURE 17: QUARTERED CORE FROM HOLE RS1076. NOTE CHANGE FROM 25.8M TO

38.3M - ONLY PORTIONS OF CORE RETAINED. ................................................................ 57 FIGURE 18: CORRELATION OF DIRECTLY COMPARABLE CHECK ASSAY RESULTS FOR

COPPER ............................................................................................................................... 62 FIGURE 19: CORRELATION OF DIRECTLY COMPARABLE CHECK ASSAY RESULTS FOR

COBALT ................................................................................................................................ 62 FIGURE 20: WASTE ROCK SG RELATIONSHIP WITH DEPTH ................................................. 68 FIGURE 21: SCATTER PLOTS OF TCU AND TCO ASSAYS FOR FIELD DUPLICATES TAKEN

DURING THE METOREX 2005/6 DRILLING CAMPAIGN ..................................................... 72 FIGURE 22: ISOMETRIC VIEW OF THE RUASHI LITHOLOGICAL WIREFRAMES ................... 76 FIGURE 23: BLOCK ESTIMATE AND COMPOSITE TCU AND TCO DATA PLOT VS ELEVATION

FOR RUASHI I. ...................................................................................................................... 80 FIGURE 24: RESOURCE CLASSIFICATION PERSPECTIVE VIEW LOOKING NW .................. 82 FIGURE 25: OPEN PIT LOAD AND HAUL OPERATIONS IN THE RUASHI II PIT. ..................... 87 FIGURE 26: COPPER AND COBALT CUT-OFF GRADE APPLIED TO THE LOM PLAN ........... 88 FIGURE 27: PLAN VIEW OF MINE LAYOUT WITH SURFACE FOOTPRINT OF PLANNED

STAGES ................................................................................................................................ 89 FIGURE 28: CONSTRUCTED SLOPE GEOMETRY FOR MODELLING ..................................... 91 FIGURE 29: SLOPE FAILURE FACTOR OF SAFETY................................................................. 92 FIGURE 30: RUASHI LOM PRODUCTION SCHEDULE ............................................................. 95 FIGURE 31: RUASHI PHASE II PLANT FLOWSHEET (MASS BALANCE AS PER DESIGN) ... 101 FIGURE 32: ISOMETRIC VIEW OF THE RUASHI PHASE II HYDROMETALLURGICAL PLANT

............................................................................................................................................ 102 FIGURE 33: REDUCTION SECTION SHOWING SAG MILL AND BALL MILL COMBINATION. 103 FIGURE 34: VIEW OF LEACH TANKS, CCD THICKENERS AND PIN BED CLARIFIERS. ...... 104 FIGURE 35: LOADED COPPER CATHODE IN THE RUASHI PHASE II EW TANKHOUSE ..... 106 FIGURE 36: COBALT CARBONATE CAKE BEING BAGGED FOR SHIPMENT ....................... 108 FIGURE 37: RUASHI PHASE II PLANT UTILISATION ............................................................... 109 FIGURE 38: SITE PLAN OF RUASHI TAILINGS STORAGE FACILITY .................................... 113

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FIGURE 39: AERIAL VIEW OF THE RUASHI MINE SHOWING THE OPEN PIT, PLANT AND TAILINGS DAM SITES (OBLIQUE AERIAL PHOTOGRAPH – NORTH ARROW APPROXIMATE, NOT TO SCALE) ...................................................................................... 114

FIGURE 40: WORLD COPPER MINE PRODUCTION 2008 ...................................................... 119 FIGURE 41: LME COPPER STOCKS AND PRICES ................................................................. 120 FIGURE 42: WORLD COBALT MINE PRODUCTION 2008 (ESTIMATE) .................................. 121 FIGURE 43: COBALT PRICE HISTORY .................................................................................... 123 FIGURE 44: RUASHI SENSITIVITY ANALYSIS ........................................................................ 130

LIST OF TABLES TABLE 1.1: HISTORICAL GÉCAMINES “GEOLOGICAL RESERVE” FOR RUASHI. ................... 31 TABLE 1.2: 2005 SAMREC COMPLIANT MINERAL RESOURCE ESTIMATE COMPLETED BY

METOREX ............................................................................................................................. 32 TABLE 1.3: 2007 SAMREC COMPLIANT MINERAL RESOURCE ESTIMATE COMPLETED BY

IGS ........................................................................................................................................ 32 TABLE 1.4: AVERAGE MONTHLY TEMPERATURE AND RAINFALL FOR LUBUMBASHI ........ 37 TABLE 1.5: RUASHI MINING SPRL MINING LICENCES ............................................................ 39 TABLE 1.6: RIGHTS TO GÉCAMINES MINING LICENCES ACQUIRED BY RUASHI HOLDINGS

.............................................................................................................................................. 39 TABLE 2.1: RESULTS OF “STERILE” SAMPLES, UNSAMPLED BY GECAMINES .................... 63 TABLE 2.2: AVERAGE SPECIFIC GRAVITY BY GEOLOGICAL DOMAIN AND WEATHERING

CHARACTERISTIC ............................................................................................................... 67 TABLE 2.3: RESULTS OF METOREX 2005/6 CAMPAIGN FIELD DUPLICATES ....................... 72 TABLE 2.4:SUMMARY OF MODELLED LITHOLOGICAL UNITS ................................................. 76 TABLE 2.5: SUMMARY STATISTICS FOR 2M COMPOSITES FOR ALL GEOLOGICAL

DOMAINS .............................................................................................................................. 78 TABLE 2.6: 2009 RUASHI BLOCK MODEL DIMENSIONS .......................................................... 78 TABLE 3.1: MINING LABOUR COMPLEMENT ........................................................................... 88 TABLE 3.2: MINE DESIGN CRITERIA ......................................................................................... 89 TABLE 3.3 SUMMARY OF ROCK MASS RATINGS ..................................................................... 90 TABLE 3.4: ESTIMATED INFLOW OF GROUNDWATER INTO THE PITS ................................. 93 TABLE 3.5: MODIFYING FACTORS APPLIED IN RESERVING PROCESS ............................... 94 TABLE 3.6: RUASHI MINE LOM PRODUCTION SCHEDULE AS AT 31 DECEMBER 2009 ....... 96 TABLE 3.7 COMPARISON OF RUASHI PHASE II HEAD GRADES AND RECOVERIES AGAINST

MINTEK PILOT TESTWORK ................................................................................................. 98 TABLE 3.8: ONGOING CAPITAL EXPENDITURE ..................................................................... 115 TABLE 3.9: OPERATING COSTS FOR PERIOD 1 JULY TO 30 NOVEMBER 2009 ................. 115 TABLE 3.10: ECONOMIC FORECASTS ................................................................................... 116 TABLE 3.11: OFFICIAL LME SPOT AND FORWARD PRICES AS AT 7 JANUARY 2010 ......... 117 TABLE 3.12: CONSENSUS COPPER COMMODITY PRICE FORECASTS (2010 REAL TERMS)

............................................................................................................................................ 117 TABLE 3.13: CONSENSUS COBALT COMMODITY PRICE FORECASTS (2010 REAL TERMS)

............................................................................................................................................ 118 TABLE 3.14: EXPLORATION EXPENDITURES FOR RUASHI MINING SPRL ......................... 118 TABLE 3.15: REFINED COPPER OUTPUT MARKET BALANCE ............................................. 120 TABLE 3.16: REFINED COBALT OUTPUT MARKET BALANCE .............................................. 122 TABLE 3.17: VALUATION APPROACHES ................................................................................ 125 TABLE 3.18: COMPARABLE COPPER TRANSACTIONS ......................................................... 126 TABLE 3.19: CASH FLOW ANALYSIS OF RUASHI .................................................................. 129 TABLE 3.20: US$/LB CU EQUIVALENT .................................................................................... 132 TABLE 3.21: “FAIR” VALUE AND RANGES USED ................................................................... 133

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TABLE 3.22: RUASHI VALUATION RESULTS .......................................................................... 133 TABLE 4.1: RISK SEVERITY QUANTIFICATION ...................................................................... 144 TABLE 4.2: RISK PROBABILITY QUANTIFICATION ................................................................ 145 TABLE 4.3: RISK CONTROL EFFECTIVENESS ....................................................................... 146 TABLE 4.4: RESIDUAL RISK RANKING ................................................................................... 146 TABLE 4.5: RUASHI MINE TOP 5 RISKS .................................................................................. 147 TABLE 4.6: RESIDUAL RISK RANKING ................................................................................... 148 TABLE 4.7: RISK DISTRIBUTION PER CATEGORY ................................................................ 148 TABLE 5.1: DETAILED MINERAL RESOURCES FOR RUASHI MINING SPRL AS AT 31

DECEMBER 2009................................................................................................................ 150 TABLE 5.2: MINERAL RESERVES FOR RUASHI MINES SPRL AS AT 31 DECEMBER 2009 . 152 TABLE 5.3: RECONCILIATION OF MINERAL RESERVES BETWEEN 30 JUNE 2009 AND 31

DECEMBER 2009................................................................................................................ 153

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EXECUTIVE SUMMARY

Metorex Ltd (“Metorex”) is a public mining company incorporated in the Republic of South Africa and listed on the JSE. Metorex intends to raise funding via a claw-back offer to their shareholders during the first quarter of 2010. This funding will be used to reduce project finance debt in Ruashi Mining sprl (“Ruashi Mining”), a 75% subsidiary of Metorex, and to fund the bankable feasibility studies and holding costs of the Dilala East, Kinsenda and Lubembe projects in the DRC. Furthermore, the funding will be used to place on care and maintenance the loss making Consolidated Murchison division and to provide general treasury cash. In accordance with the JSE Listings Requirements, CPRs on certain of Metorex’s mineral assets are required to be prepared and included in a related circular, incorporating revised listings particulars, to Metorex shareholders (“the Circular”). The underlying CPR on which the Executive Summary was based, undertook a technical and economic valuation of Ruashi Mining, the operating company for Ruashi mine, in order to identify all the factors (technically and economically) which would impact the future viability, as well as the strategic merits of Ruashi mine, and to define the valuation outcomes on an open and transparent basis, to serve as supporting documentation to be disclosed in the Circular. PROJECT OUTLINE (JSE 12(ii))

Ruashi Holdings (Pty) Ltd (“Ruashi Holdings”) is a South African registered wholly owned subsidiary of Metorex, and has a 75% interest in Ruashi Mining, a private limited liability company registered in the DRC. The remaining 25% of Ruashi Mining is held by Générale des Carrières et des Mines (“Gécamines”), a state owned mining company registered in the DRC. Ruashi Mining has an open cast mining operation, Ruashi mine (“the Mine”), located near Lubumbashi in the Katanga province of the DRC, at which it produces copper cathode and cobalt carbonate/hydroxide, which it sells under off-take contracts. To date, mining activities at Ruashi mine have been carried out in two phases. The construction of Ruashi Phase I concentrator plant (“Phase I”) commencing in May 2005, and constituting an oxide concentrator plant to treat the oxide ore stockpiles left by Union Miniére du Haut Katanga (“UMHK”) and Gécamines. First concentrate was produced in September 2006. The Phase I concentrator was placed on care and maintenance in early 2008 as the production of Ruashi Phase II hydrometallurgical plant (“Phase II”) came on stream. The Phase II plant constituted a hydrometallurgical process which incorporates leaching-decantation, solvent extraction/electro-winning (“SX-EW”) and cobalt precipitation operations.

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Construction of the Phase II plant commenced in March 2007 and was followed closely by the start of open-pit mining operations in October 2007. The Phase II plant was built and commissioned in stages to allow the production of “early copper” (direct EW copper excluding SX). Early copper was first produced in March 2008 with the complete copper circuit (incorporating SX) commissioned in October 2008. The cobalt plant was commissioned in February 2009. The leaching and decantation sections of the plant have reached design capacity (1.44mtpa), whilst the downstream sections (SX-EW) are still some way from reaching design capacity, mainly due to lower than planned feed grades obtained during commissioning. History of the Project Area

The Etoile and Ruashi orebodies were discovered by UMHK in 1911 and 1919, respectively, and were both intermittently mined as high grade copper oxide quarries over a period spanning half a century. The UMHK mines, including Ruashi and Etoile, were nationalised in 1967 and Gécamines was established as the state mining company to control all copper and cobalt production and exploration across the Katanga Province. The Ruashi area has been extensively investigated by pitting, trenching, geophysical methods as well as diamond and reverse circulation drilling over the last century. Since discovery in 1919, 1,269 drillholes have been completed on the Ruashi property for a total of 94,589m. The earliest recorded exploration work commenced in 1907 by Tanganyika Concessions Ltd who excavated pits and dug trenches in the area. The Ruashi orebody was evaluated by UMHK and Gécamines over a period of nearly five decades, with drilling carried out on sections spaced at 50m intervals, along strike and intervals, and along sections of between 12m and 50m. Historical drilling activities at Ruashi prior to privatisation amounted to 1,047 holes over a total of 76,548m. In 1997, JCI Projects Ltd (“JCI”) embarked on a systematic exploration programme to validate the existing Gécamines mineral resource information for selected Ruashi and Etoile stockpiles. JCI also undertook diamond-drilling and detailed structural and geological mapping of the orebody, and conducted detailed mineralogical and metallurgical studies on stockpile material. Metorex completed a dump drilling campaign on the Ruashi stockpiles as part of the 2003 Phase I feasibility study, to verify the grades and mineralogy of the stockpile material to be processed through the Phase I concentrator plant. These stockpiles have largely been depleted and the mineral resources remaining to be mined at Ruashi are largely insitu within the three separate orebodies, commonly referred to by Ruashi mine as Ruashi I, Ruashi II and the Ruashi III orebodies.

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Metorex carried out a verification drilling program during 2005/6 of 6,665m of drilling to address certain of the concerns raised by SRK Consulting Engineers and Scientists (“SRK”) in their Independent CPR dated March 2005. A number of historical pre-Metorex mineral resource estimates have been completed for the Ruashi orebodies, the last performed by Integrated Geological Solutions (Pty) Ltd (“IGS”) in July 2009. LOCATION, ACCESS AND INFRASTRUCTURE (JSE 12(iii))

Ruashi mine is located in the DRC at latitude 11o37’S and longitude 27o33’E, 10km east of Lubumbashi, the capital city of Katanga Province. The Mine is located in the peri-urban area to the northeast of Lubumbashi and on the outskirts of Ruashi Commune. The Mine is located approximately 3.5km southeast of the Lubumbashi International airport, and is accessed using either an 11km gravel road, off the Luano International Airport road, or an unpaved commune road. Both roads connect to the Lubumbashi central business district via 5km of tarred roads in a relatively good condition. The main arterial road from Lubumbashi to Kasumbalesa has recently been upgraded by Chinese contractors, as a result, access is now improved. Border control at Kasumbalesa between the DRC and Zambia remains a concern, but upgrading of this border post and the service it provides, is seen as a critical development project by the Southern African Development Community. Water to the mine is supplied from underground aquifers. The geology is largely dolomitic and significant quantities of subsurface water are available. Power in the DRC is regulated and supplied by Société Nationale de Electricité (“SNEL”), the national power utility. Ruashi mine is fed at 220kV (40MW) by a dedicated power line. Furthermore, as part of the Phase II capital programme, Ruashi Mining spent some US$11 million in upgrading SNEL’s main supply sub-station in Lubumbashi. The mine has installed several backup diesel generators, capable of producing 3MW, which is sufficient to provide emergency power for agitation of the thickeners and leach tanks, as well as a trickle charge to the EW tankhouse. In the event of a power failure, the crushing and milling sections are not normally operated. LEGAL ASPECTS AND TENURE (JSE 12(iv))

In 2000 the rights to the Ruashi opencast resources and the Ruashi and Etoile stockpiles was obtained by Cobalt Metals Company Ltd (“CMC”), which in June 2000 entered into an agreement with Gécamines for the exploitation of the Ruashi orebody and the Ruashi-Etoile stockpiles. Under the terms of this agreement, Concession No 237 was transferred to CMC. Ruashi Mining was created and registered in the DRC in 2003, with CMC holding a 55% interest and Gécamines a 45% interest. Gécamines transformed Concession 237 into two separate exploitation licences or permis d’exploitation (“PE”) on 26 June 2003. PE 578 and

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PE 6639, granted Ruashi Mining the right to exploit the Ruashi orebodies and process the Ruashi and Etoile stockpiles. In 2004, the rights and obligations held by CMC were transferred to Ruashi Holdings, and the shareholding was reorganised such that Ruashi Holdings held 80% and Gécamines 20% of the shareholding in Ruashi Mining. On 14 May 2004 Metorex entered into an agreement with the private Sentinelle Global Investments group in exchange for a 65% interest in Ruashi Holdings. During various transactions between May 2005 and March 2007, Metorex increased its interests in Ruashi Holdings to 100%. On 25 October 2005, Ruashi Holdings negotiated an amendment to the Partnership agreement with Gécamines, whereby Ruashi Holdings acquired the rights to explore additional copper/cobalt areas in the Katangan Copperbelt region. These target areas comprise the Dilala East Project, located on the Musonoi Est permit (PE 4958) close to Kolwezi, and the Sokoroshe I (PE 523) and Sokoroshe II (PE 538) Prospects, located approximately 50km north of Lubumbashi. The Dilala East Project and the Sokoroshe Prospects are detailed in a separate CPR entitled: “Competent Persons Report and Valuation of the Metorex Other projects in the DRC”, internally compiled by Metorex. Ruashi Holdings intends providing Gécamines with feasibility studies on these prospects during February 2010. Property Licence Type Of

Title Awarded Expiry Commodity Area

(Ha)

Ruashi PE 578 Exploitation Permit

20 Jun 2003 25 Sept 2021 Cu, Co, base and precious metals,

900

Ruashi Holdings has acquired the rights to the the Musonoi and Sokoroshe permits by payment of monies and a commitment to various exploration activities, and subject to the completion of positive feasibility studies. Both the Musonoi Est property and the Sokoroshe permits are still held in the name of Gécamines, and will be transferred to Ruashi Mining by Gecamines on completion and acceptance of a feasibility study.

Property Licence Type Of Title Commodity Area (Ha)

Musonoi Est PE 4958 Exploitation Permit

Cu, Co, base and precious metals,

1,700 Sokoroshe I PE 523 330

Sokoroshe II PE 538 500

By virtue of its PE, Ruashi Mining is entitled to use the land on which the stockpiles and orebodies are situated, and to build installations and facilities required for mining exploitation.

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During 2008, the Government of the DRC, instructed the State owned mining companies to renegotiate the terms of their partnership agreements. The outcome was a reduced interest by Ruashi Holdings in Ruashi Mining to 75% and an increase to 25% by Gécamines. GEOLOGICAL SETTING DESCRIPTION (JSE 12(v))

Regional Geology and Mineralisation

The Ruashi deposits are stratiform, sediment-hosted copper deposits (“SSC”) located in the Central African Copperbelt. The Copperbelt forms one of the world’s largest metallogenic provinces containing over a third of the world’s cobalt mineral reserves and a tenth of the world’s copper mineral reserves. The copper-cobalt deposits of the Central African Copperbelt are hosted within a strongly deformed, arcuate belt of rocks that extends from northeastern Angola through southern DRC and into Zambia, referred to as the Lufilian Arc. The Katangan Sequence is divided into three Supergroups separated by two marker conglomerates. These units are described briefly below (from youngest to oldest):

• The Upper Kundelungu Supergroup (Ks): formed by detrital marine sediments, predominantly dolomitic; divided into three groups (Ks 3, Ks 2, Ksl) based on sedimentary cycles. Minor sandstone units are scattered through the succession;

• The Lower Kundelungu Supergroup (Ki): formed by detrital marine sediments, predominantly dolomitic but with limestones and dolostone in the south (the Kakontwe Limestone), divided into two groups (Ki 2 and Ki 1), based on sedimentary cycles; up to 3000m thick; and

• The Roan Supergroup (R): lagoonal and fluvial marine sediments — dolostone, dolomitic siltstones and black shales with interstratified collapse breccias formed by the dissolution of evaporitic horizons, arkosic sandstones and conglomerate units, total thickness 1500m.

In DRC, the Roan Supergroup is divided into the Roches Argileuses Talceuse (“RAT”), Mines, Dipeta and Mwachya Groups. The Mines Group is frequently referred to as the Series des Mines. The different nomenclature for the basal Roan Supergroup reflects not only the different geological history of the belt but also a lack of correlation across national boundaries. Consequently, two sub-types of SSC deposits are distinguished in the rocks of the Central African Copperbelt. These are divided on geographical lines into a northwest district in the DRC (“Congolese Copperbelt”) and a southeast district in Zambia (“Zambian Copperbelt”). The metasedimentary successions in the DRC are strongly thrusted and folded into a series of broken anticlines and synclines that are commonly overturned towards the north. Despite the obvious disruption of the sequence, the pre-Katangan basement is not exposed anywhere along the belt in the DRC.

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The statiforrm ores in the DRC occur within two principal formations confined to a 40m thick succession at the base of the Mines Series. The upper formation is a sandy shale, containing some carbonates and the lower is a bedded dolomitic sandstone. The ore formations average approximately 10m in thickness separated by 20m to 30m of siliceous dolomite. Ore grades commonly vary between 4% and 6% copper and around 0.4% cobalt, with the ratio of copper to cobalt in the order of 8:1. The weathered oxide zone generally extends to a depth of between 70m and 150m, but may vary considerably between deposits. The weathering process commonly leads to high-grade supergene deposits near surface, but may also result in leaching of the mineralisation in places and/or concentration in otherwise barren horizons. At depth, a mixed oxide-sulphide zone grades into sulphide ore, sometimes at depths greater than 250m. Local Geology and Mineralisation

The Ruashi deposits are typical of the Congolese Copperbelt deposits and are geologically similar to the Tenke Fungurume and Kamoto deposits. The stratiform Cu-Co deposits represent the largest and most important of the ore types, covering the area from Kasumbalesa in the southeast to Kolwezi in the northwest. The Ruashi copper-cobalt orebodies are situated within a 24km long by 2km wide, northwest to southeast trending fold structure. The Lukuni-Ruashi-Etoile trend consists of a recumbent, synclinal fold, with flanks made up of Kundelungu rocks and the core by the Mines Group all occurring to the southwest of a prominent northwest to southeast trending thrust fault. Three orebodies have been identified at Ruashi, namely Ruashi I, Ruashi II and Ruashi III. Ruashi I is the largest of the three and is located in the northwest of the mining area. The lateral extent of Ruashi I is approximately 900m in the northwest to southeast direction and 350m across strike. In cross-sections, the oxide zone extends to approximately 70m below surface, whilst sulphide mineralisation has been intersected at depths of more than 300m below surface. The Ruashi I orebody terminates against shear zones on the north-western and south-eastern edges of the orebody. Ruashi I was previously mined as an open pit and there were underground workings. Ruashi II is a smaller fragment extending along strike for approximately 200m and 250m across strike and terminates against shear zones on the north-western and south-eastern edges. A large gap of approximately 200m of brecciated Lower Kundelungu strata separates Ruashi II from Ruashi I. Previous mining activity on a limited scale is evident at Ruashi II. Ruashi III occurs at the south-easterly end and has a strike length of approximately 550m and a width across strike of 200m. Unlike Ruashi I and II, the copper orebody is located 30m to 80m below surface, with a high grade cobalt, low grade copper zone starting at approximately 20m below surface. Ruashi III is structurally controlled within a complex fold

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structure. The oxide zone extends to a depth of 200m. Artisanal mining on Ruashi III has not been as extensive as the other two Ruashi orebodies. Historically, mining by UMHK focussed on near surface oxide copper in the form of malachite and chrysocolla mineralisation. The high grade oxides formed a 30m to 60m supergene mineralisation blanket in the saprolitic rock close to surface, overlying the primary sulphide orebodies. This irregular blanket of mineralisation extended beyond the limits of the underlying primary sulphide ores. Oxide minerals at Ruashi include malachite, chrysocolla, native copper, cuprite, cornetite and heterogenite. Trace quantities of oxidised uranium minerals have been observed but are very uncommon. Bornite and chalcopyrite dominate the sulphide zone. Cobalt sulphides in the form of linnaeite and carrollite are irregularly distributed in intimate mixtures with the copper sulphides, with sporadic abnormal concentrations. Pyrite is found disseminated in small quantities in all the formations and occurs as small amorphous masses in the grey RAT. Chalcocite together with malachite occurs below the water table in the transition zone as replacement rims on primary bornite and chalcopyrite sulphides. Cobalt sulphides generally decrease with depth beyond the transition zone.

EXPLORATION PROGRAMME AND BUDGET (JSE 12(vi))

Since discovery in 1919, 1,269 drillholes have been completed on the Ruashi property giving a total of 97,302m. The Ruashi digital geological database is managed onsite and contains 32,342 assay records relating to 1,178 drillholes. During 2009, Ruashi Mining completed two drilling campaigns comprising of 1,651m (48 holes) of reverse circular (“RC”) drilling and 5,229m (52 holes) of diamond drilling across all three orebodies to test the continuity of mineralisation across structural and geological domains and to improve confidence in the geological resource model. During this period, Ruashi Mining performed a drillhole geological log validation exercise to improve the level of confidence in the geological lithological coding of the historical drillholes in the database. The drilling programme, data collection and recoding exercise was independently reviewed and signed off by Coffey Mining (SA) Pty Ltd in June 2009. The current sampling protocol at Ruashi mine is based on the Geological Standard Procedures manual prepared by IGS in 2007. This document sets out the minimum standards required for collecting and handling of all samples. The historical and future (committed, but not yet incurred) exploration expenditure by Ruashi Mining are summarised in the following table:

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Expenditure Historical Expenditure

(US$m)

F2010 Budget* (US$m)

Future Estimate* (US$m)

Ruashi mine permits 0.86 1.20 2.00 Musonoi Est permit 3.48 3.52 3.00 Sokoroshe permits 0.53 - -

Total 4.87 4.72 5.00

* Planned expenditure, not yet committed. Delineation and infill drilling of the Dilala East deposit on the Musonoi Est Permit in Kolwezi has been the main focus for exploration activities by Ruashi Mining in the last 3 years. A total of 49 holes (10,892m) have been completed to date. It is unlikely that the F2010 budget of $3.52m will be spent during the remainder of the financial year, largely due to cash constraints in H1-F2010. Exploration expenditure at Dilala East for F2010 are anticipated to settle at between $1m and $1.5m for the full financial year. It is estimated that a further $3m expenditure is necessary from F2011 to complete geotechnical and hydrological drilling, metallurgical testwork and engineering design to elevate this project to a Bankable Feasibility Study level. Exploration activities at Ruashi mine have largely focused on infill drilling of the oxide resource and assaying activities during H2-F2009, with some spillover of expenditures into F2010. Looking forward, an additional drilling programme of approximately 5,000m at a cost of between $1m and $1.5m will be necessary to drill out the sulphide resource at depth and convert the current Inferred sulphide mineral resources into the Indicated or Measured mineral resource category. An additional expenditure of between $0.5m and $1m is anticipated to complete the geological, mining and metallurgical studies to complete a Feasibility Study on the Ruashi sulphide project. MODIFYING FACTORS (JSE 12(vii))

The 30 June 2009 Ruashi mine mineral reserve estimate, based on a Whittle 4x pit optimisation, was determined as 15.4Mt at 3.2% copper and 0.39% cobalt. The 30 June 2009 mineral reserve was estimated by selecting ore between the surface and the optimum pit shell, and above the marginal processing cut-off grade. Conversion to mineral reserves was based on generic open pit modifying factors of 5% dilution and 95% extraction. Generic modifying factors were used for the June 2009 mineral reserve estimate since it was not possible to reconcile the 2009 resource model, updated in July 2009, with actual mining values obtained between October 2007 and June 2009, in time for the Metorex 2009 Annual Report. Subsequent to the release of the Metorex 2009 Annual Report, a study was completed to determine modifying factors empirically from actual, historical, mining factors obtained at the Ruashi mine, which differs from the generic modifying factors, used in the Whittle optimisation. The difference between the generic and empirical modifying factors used to,

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respectively, estimate the 30 June 2009 and 31 December 2009 mineral reserves are outlined in the following Table:

Modifying Factor Applied To Orebody Generic Factors Applied as at 30

June 2009

Empirical Factors Applied as at 31 December 2009

Extraction Factor Ore tons Ruashi I 95% 75% Ruashi II 95% 90% Ruashi III 95% 90% Cu grade Loss / Dilution

Copper grades

Ruashi I 5% 20%

Ruashi II 5% 5% Ruashi III 5% 5% Co Grade Loss / Dilution

Cobalt grades

Ruashi I 5% 0%

Ruashi II 5% 0% Ruashi III 5% 0%

The use of the empirical factors has resulted in a conservative life of mine (“LOM”) plan and mineral reserve estimate. It is the opinion of the Competent Person that the empirical factors will reduce over time as the understanding of the orebody improves. Development and production schedule

The empirical modifying factors was used in the determining a detailed LOM schedule during November 2009, and provide the basis for the 31 December 2009 Ruashi mine mineral reserve estimate. The 31 December 2009 LOM schedule, based on the conservative tonnage and grade factors as well as the non-inclusion of inferred resources, together with available stockpiles and the inclusion of Gécamines and Ruashi Phase I tailings feed material, stated 12.3Mt, and support a 10 year LOM plan, at an annual production rate of 1.44mtpa.

ENVIRONMENTAL ISSUES (JSE 12(viii))

An EAP, compiled in March 2005, and subsequently amended in September 2007 to include Phase II, was approved by the Ministry of Mines. Various environmental permits and authorisations are in place. The mine has a valid authorisation for the “Exploitation of Water Resources”, as well as a permit for the discharge of water from the pit into the Luano River. An environmental provision has been made for the closure and ongoing rehabilitation of Ruashi mine. An internal assessment of the required financial provision for closure has been undertaken by Metorex. The full financial provision for closure and rehabilitation of Phase I is currently due, and arrangements will need to be supplied for this security. The

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financial provision requirements for Phase II have been calculated over the duration of the mining licence, with payment commencing in 2011. There are uncertainties around potential environmental liability with regard to groundwater pollution, as no groundwater monitoring has been undertaken at Ruashi mine. The rehabilitation provision requirements will change should groundwater pollution be detected that requires significant remediation. A groundwater monitoring programme will be implemented at Ruashi mine, and a geohydrological model will be created to assess the potential impact of seepage on groundwater resources in the area. A social and environmental assessment and management plan, including Equator Principles (“EP”) requirements was compiled by SRK in 2007. Ruashi mine is currently working towards EP compliance, and an internal assessment of EP compliance will take place in early 2010. Material environmental issues at Ruashi mine include:

• A water quality monitoring programme for surface and groundwater is required to provide information on water quality and to assess whether the operations from Ruashi mine has the potential to pollute surface and groundwater resources;

• During the dry season, the mining operation generates fine dust, which can be a nuisance to those living in the vicinity of the mine, and could pose a safety hazard on the roads due to reduced visibility. The respirable fraction of dust, PM10, has not been measured, and the potential health effects of dust on employees and local communities has not been quantified;

• The mine requires a waste management strategy for the disposal of domestic and industrial waste, which will be undertaken in 2010; and

• The following stormwater controls are planned:

� Diversion of clean water around the site (away from the pits, plant and tailings dam) by means of channels or diversion berms; and

� A stormwater capture and control system to return stormwater to the process plant, arising from the different disturbed areas of Ruashi mine, is required. A stormwater dam has been constructed and temporary pumping system to transport the stormwater to the process plant, installed. The permanent pumping infrastructure is currently being designed, and planned for implementation during the 2010 dry season.

MINERAL RESOURCE AND MINERAL RESERVE STATEMENT (JSE 12(ix))

The Ruashi mine’s mineral resources and reserves have been classified into geological risk categories using the SAMREC Code definitions as a guideline. Mineral resources are limited to the Ruashi I, II and III orebodies, surface stockpiles and tailings dams (generated by Gécamines and Ruashi Phase I). Total mineral reserves as at 31 December 2009 have

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increased marginally from previously reported, due to the inclusion of the Gécamines and Ruashi Phase I tailings material. The 2009 Ruashi orebody model has been classified into SAMREC Code compliant resource categories on a subjective basis. The consensus opinion of IGS, the Ruashi mine geologists and the Competent Person, is that the observed continuity of the lower orebody in Ruashi I and II, together with the mapping of the orebody and the recent well controlled drilling, allow the oxide Minerai Vert (“MV”), Foliated (Laminated) and Silicified Rocks (“RSF”) and Stratified Dolomite (“D Strat”) units in Ruashi I and II, to be classified as a Measured resource. The remainder of the oxide resource in Ruashi I, II and II (with the exception of the Calcareous Unit with Black Minerals (“CMN”)) has been classified as an Indicated resource. The determination and use of modifying factors at Ruashi is an imprecise science and has only recently been evaluated through reconciliation of the resource model using actual, historical, mining values. The tables below outlines SAMREC compliant mineral resource and mineral reserve estimate for Ruashi Mining performed by Metorex as at 31 December 2009.

Mineral Resource Estimate for Ruashi Mining (31 December 2009) CLASSIFICATION Tonnes

(Mt)

Cu Grade

(%)

Copper

(‘000t’)

Co Grade

(%)

Cobalt

(‘000t)

Oxide Material (In-Pit)

Measured 0.9 6.8 62 0.27 2

Indicated 19.1 2.8 539 0.34 65

Inferred 8.5 2.1 182 0.13 11

Total 28.6 2.7 783 0.27 79

Oxide Material (Surface Stockpiles)

Indicated 0.5 2.0 11 0.6 3

Total 0.5 2.0 11 0.6 3

Oxide Material (Surface Tailings Dams)

Indicated 0.3 1.8 6 0.41 1

Inferred 0.5 1.9 9 0.41 2

Total 0.8 1.9 15 0.41 3

Total Oxide Material 29.9 2.7 809 0.28 85

Sulphide Material (In-Pit)

Inferred 8.0 3.1 248 0.26 21

Total Sulphides 8.0 3.1 248 0.26 21

Oxides + Sulphides Material (In-Pit)

Measured 0.9 6.8 62 0.27 2

Indicated 19.1 2.8 539 0.34 65

Inferred 16.5 2.6 430 0.19 32

Oxides + Sulphides Material (In-Pit, Surface Stockpiles & Surface Tailings Dams)

Grand Total 37.9 2.8 1,057 0.28 106

Source: Ruashi Mine Technical Services Department.

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Mineral Reserve Estimate for Ruashi Mines (31 December 2009) CLASSIFICATION Tonnes (Mt) Cu Grade

(%)

Copper

(‘000t’)

Co Grade

(%)

Cobalt

(‘000t)

Oxide Material (In-pit)

Proved 0.5 7.0 36 0.17 1

Probable 11.4 2.9 327 0.43 49

Total 12.0 3.0 364 0.42 50

Oxide Matrial (Surface Stockpiles)

Probable 0.5 2.0 11 0.60 3

Total 0.5 2.0 11 0.60 3


Probable 0.8 1.8 15 0.41 3

Total 0.8 1.8 15 0.41 3

Oxides (In-Pit, Surface Stockpiles & Surface Tailings Dams)

Grand Total 13.3 2.9 389 0.43 57


LOM schedule included in the mineral reserve statement.

Surface tailings dams, including 0.3Mt on old Gécamines tailings dams and 0.5Mt on Ruashi Phase I tailings

dam, not previously declared.

Tailings dams only partially mined in LOM schedule.

Reduction in total open pit mineral reserve tonnage and grade largely a function of applying more conservative

modifying factors.

Qualification

Both the 2005/6 and 2009 sampling programmes have had the appropriate quality assurance (“QA”) and quality control (“QC”) procedures in place. Independent audits performed on these procedures and the subsequent results, have demonstrated that the correct procedures to identify, re-assay samples and sample batches that fall outside acceptable industry norms, have been applied. In the opinion of the Competent Person, due diligence and care in the drilling, sampling and assaying of samples have been exercised, during all drilling campaigns since 2005. The lack of a robust QA/QC audit trail for the historical UMHK and Gécamines data used for the resource modelling is flagged as an area of non-compliance to the SAMREC Code with respect to the adequacy of the sampling data. Check sampling of old core by Metorex in 2004 has indicated a reasonable correlation between historical UMHK and Gécamines data and check assays. While assays for this check sampling programme were performed at an accredited laboratory, with all the necessary QA/QC procedures in place, to ensure compliance with the SAMREC Code, the number of check samples, compared to the total database were very small (approximately 0.6%) and were biased towards samples collected in the 1970s and 1980s.

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Metorex has accepted the historical data as suitable for mineral resource estimation work on the basis of the limited check sampling, and the results of the 2005/6 and 2009 drilling campaigns. The mineral resource estimate for Ruashi mine is a SAMREC compliant estimate which must therefore be qualified on the basis of no QA/QC data for ~85% of the database. OPERATIONS

Ruashi Mining commenced stockpile mining operations in June 2005 for processing through the Ruashi Phase I concentrator plant. Stockpile reserves were depleted in 2008/9 with open pit mining operations commencing in October 2007. The Phase II SX-EW plant construction was completed in October 2008. The Phase I concentrator was placed on care and maintenance in March 2009 and subsequently all copper and cobalt production has come from the Phase II plant. Mining

The Mine achieved its design milling capacity of 120,000tpm in October 2009, and it is expected that by March 2010 the Mine will operate between a production rate of 110,000tpm and 120,000tpm. The Ruashi deposit is currently mined by conventional open pit mining methods using truck and excavator combinations. Mining operations at Ruashi are undertaken by a local contracting company, Mining Company Katanga sprl (“MCK”). Mine design and planning, grade control and pit survey is managed by Ruashi Mining, with a total labour complement of 24. Maintenance of MCK’s mining fleet is carried out by the Original Equipment Manufacturer under a Maintenance and Repair Contract. Ruashi I is largely mined out to a depth of 40m below surface (Bs) and the design extends another 40m down to a final elevation of 1,205m amsl. The pit is accessed by a ramp from the north, with the north-western and south-eastern parts being serviced by ramps branching off from the existing northern ramp. Ruashi II is the smallest of the three orebodies and the pit design extends to a depth of 90m Bs (1,195m amsl). Access to all levels is via a single spiral ramp. Ruashi III is the largest ore body with the highest overburden stripping requirement. The pit has a design depth of 195m Bs (1,090m amsl) and is accessed by a dual ramp system to mitigate the risk of failure of a single ramp access. The open pits at Ruashi are accessed by a 1km haul road extending from the process plant to the Pit I access ramp. The open pits are surrounded by a 2m high windrow to prevent the ingress of surface run-off water into the pits. Dewatering drillholes have been drilled around the perimeter of Pit I and II as well as within Pit I to maintain the groundwater level below the mining face.

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Metallurgy

The Phase II process plant, a hydrometallurgical process incorporating; leaching, decantation, SX, EW and cobalt precipitation, is still in the process of ramping up. Ramping-up has taken longer than originally envisaged due to design issues that required rectification and the lower than planned feed grade of the run of mine ore. Metorex contracted Mintek, in South Africa, to conduct scoping, laboratory and pilot testwork for the Phase II plant. The hydrometallurgical testwork was conducted at both laboratory and pilot scale level. The initial laboratory scale testwork was used to guide the piloting testwork. In addition, mineralogical investigations of the leach residue and comminution testwork were also performed. The lower than forecasted copper recoveries during H1 2010 were caused by the following:

• Lower than planned feed grades as a result of a poor understanding of the orebody. Following the completion of the revised mineral resource model and mine design and schedule exercise in November 2009, improved feed grades can be expected from the various pits;

• Bulk electrical supply interruptions, as a result of maintenance being performed, occurred for a total of 11 days during H1 F2009 which affected the process plant solution balance and throughput. An investigation is underway to install more power generation at the Mine; and

• A lack of working capital which resulted in:-

� A shortage of SX diluents. It is expected that diluents levels will be at the design specifications in February 2010, resulting in improved copper recoveries; and

� A shortage of Counter Current Decantation (“CCD”) flocculant resulting in poor washing efficiencies through the CCD section which is sensitive to flocculant addition. This situation has been rectified and the benefits of improved wash efficiencies have been noted in December 2009.

The cobalt recoveries have been lower than expected due to the following reasons:

• Cobalt recovery in the leach section is dependent upon achieving a reducing environment, obtained by the introduction of SO2 gas. The SO2 gas was intended to be supplied from the acid plant, which was put on hold. Consequently, SO2 has been generated through the intermittent addition of sodium metabisulphite (“SMBS”), resulting in an unstable leaching environment, and in poor cobalt recoveries. The process is being rectified through the procurement of a customised SMBS addition plant, capable of accurately dosing the required amount of SMBS, which is expected to be operational by June 2010. In the long term the acid plant should provide a cheap supply of SO2 gas;

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• Prior to cobalt precipitation, iron and aluminium are precipitated at a pH of less than 4.5. The Mintek testwork used relatively inert limestone for pH control. However, due to the high cost of transporting limestone, quicklime has been used that resulted in less accurate pH control and a consequent loss of cobalt. This aforesaid is unlikely to improve within the next 24-months, resulting in Metorex downgrading their cobalt recoveries to 65%; and

• Poor washing efficiencies have negatively impacted cobalt recoveries in a similar manner to that described for copper recoveries.

RISK (JSE 12(x))

The risk analysis section is presented in Section 4.0 of the underlying CPR and concludes as summarised below. A corporate risk register is maintained by Ruashi mine and updated quarterly. The updated register is reviewed by the Metorex Executive Committee together with an independent risk management consultant, to safeguard shareholder interests and to obtain a balanced view of underlying risks. The Ruashi risk register updated for the December 2009 quarter identified 32 overall inherent risks and concludes that Ruashi mine is a low risk operation. VALUATION (JSE 12(xii))

Operating and Capital Cost Estimates

The ongoing capital expenditure at Ruashi mine has been estimated at 3% of the initial capital expenditure to development Phase II and is set out in real terms as at 1 January 2010 in the table below. The primary capital estimate is related to the ongoing maintenance of the processing plant.

DESCRIPTION H2 F2010 TO F2017 (US$m)

F2018 (US$m)

F2019 (US$m)

Ongoing capital 9.8* 4.9 3.3

* Per annum

The operating cost estimate for Ruashi mine is set out in the table below and has been based on the actual costs by Ruashi mine for the period 1 July 2009 to 30 November 2009, adjusted for average annual mining depths.

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Description Unit Actual Estimate Production $/Mt milled 100.1 105.0 Transport and clearing – Cu $/Cu 590.5 560.7 Transport and clearing – Co $/lb Co 1.80 0.84

Source: Metorex analysis

Production costs of $105.0/t milled represent the average costs over the LOM and are calculated before Co credits. Mining costs have been based on the existing contract mining agreement and the Ruashi mining schedule and are expected to increase with depth due to inter alia increases in hauling distances. These rates are inclusive of significant pre-stripping required for Ruashi III. From F2015, additional provision has been made for increases in haulage costs due to new waste dump facilities being located further from the pit than is the case during the earlier years. The reduction in transport and clearing costs in respect of Co is expected to arise due to the installation of a Co dryer which is expected to reduce the moisture content from c.55% to c.20% and the improvement of the purity from c.20% to c.28% through the production of a hydroxide as opposed to a carbonate, both of which would result in lower volumes of product being transported. Valuation

The valuation of Ruashi mine was based on the cash flow and market valuation approaches. Using the cash flow approach, a “fair” (attributable) value for Ruashi mine of ZAR2,615m, with an upper and lower limit range of ZAR3,064m and ZAR2,166m respectively was determined (using a real discount rate of 12.0%), and was calculated after the deduction of net debt (ZAR987m), relating primarily to the Ruashi project funding. A number of arm’s length transactions have been reviewed based on public domain documentation and conclude that the following transactions are comparative to Ruashi mine:-

• Trafigura’s investment in Anvil Mining, resulting in the former subscribing for 32% of Anvil Mining as announced in August 2009, for a consideration of US$100m;

• Camrose’s investment in Africo Resources, resulting in the former subscribing for 60% of Africo Resources as announced in April 2008, for a consideration of US$100m;

• First Quantum’s acquisition of 17.3% of Equinox as announced in December 2007, for a purchase consideration of US$194m; and

• CAMEC’s bid for 78% of Katanga for US$1,284m in August 2007.

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The value for Ruashi mine using the market approach was determined as having a “fair” (attributable) value of ZAR2,078m, and an upper and lower valuation range of ZAR2,330m and ZAR1,923m respectively. Relating Ruashi mine to any historical arm’s length transaction is challenging since there are no true comparables, since each asset is unique with respect to key factors such as geology, mineralisation, costs, stage of exploration and infrastructure. The above facts lead to the Competent Valuator to prefer the results of the cash flow approach. Furthermore, the Competent Valuator believes the premium to the “fair” value of the cash flow approach when comparing the cash flow approach to the market approach is justified as Ruashi mine is a production property and has an operating history, when compared to the projects held by Anvil Mining and Africo Resources, which at the time of the transactions, were still in development phase. Consequently, the concluding opinion of value for Ruashi mine is based on the cash flow approach as follows:-

• a “fair” (attributable) value of ZAR2,615m; and

• an upper and lower valuation range of ZAR3,064m and ZAR2,166m respectively.

COMPETENT PERSONS STATEMENTS (SR T1.1, 1.2, 1.7, 5.1, 5.2, 7, SV T1.1, JSE 12.9(E))

The Competent Persons Report and Valuation of Ruashi Mining sprl is SAMREC compliant and meets all requirements of Section 12.9 of the JSE Listing Requirements, the SAMREC Code (including Table 1) and the SAMVAL Code (including Table 1). Ruashi Mining sprl has complied with all DRC Statutory requirements with respect to the rights to mine for copper in the DRC. By virtue of its PE, Ruashi Mining is entitled to use the land on which the stockpiles and orebodies are situated. Once established, all new installations and facilities become part of the mine and are covered by PE 578. During 2008, the Government of the DRC, through the Department of Mines, instructed the State owned mining companies to renegotiate the terms of their partnership agreements with Ruashi Mining sprl as part of an industry wide review. The outcome of these negotiations was that Ruashi Holdings conceded a 5% interest in Ruashi Mining, resulting in its interests reducing to 75% and Gécamines increasing from 20% to a 25% carried interest. Ruashi is obligated to pay to Gecamines a Royalty on gross revenue derived by the mine, calculated at 2.5% and furthermore, it obliged to pay the State Royalty of 2.0% on gross revenue. In addition to the royalty payment, Ruashi is also obligated to make payment on a deferred mineral content fee payment of US$4 million to Gécamines and as at December 2009 Ruashi had paid US$2 million to Gecamines.

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An EAP, compiled for the Ruashi Mine in March 2005 and subsequently amended in September 2007 to include Phase II, was approved by the DRC Ministry of Mines. Various environmental permits and authorisations are in place. The mine has a valid authorisation for the “Exploitation of Water Resources”, as well as a permit for the discharge of water from the pit into the Luano River. Only Measured and Indicated mineral resources were considered for inclusion in the mineral reserve. The final valuation reported in this CPR is valid as at 1 January 2010. The report date is 22 January 2010 and to the best of the Competent Person’s and Competent Valuator’s knowledge, there have been no material changes between the two dates. Both the Competent Person and the Competent Valuator are employees of Metorex and have received, and continue to receive, direct benefits from Metorex and are holders of Metorex share options. The Competent Person and Competent Valuator have visited the Ruashi mine on numerous occasions over a period of 3 years. The last visit was from 30 November to 01 December 2009.

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1.0 GENERAL (SR T1.2)

1.1 PURPOSE OF THE REPORT AND PROJECT OUTLINE (T1.1, 1.2, 5.4-5.5, 8, SV 1.2 & JSE 12.9(c) (d))

Metorex Limited (“Metorex”) is a public mining company incorporated in the Republic of South Africa and listed on the JSE Limited (“JSE”). Metorex intends to raise funding via a claw-back offer to Metorex shareholders during the first quarter of 2010. This funding will be used to reduce project finance debt in Ruashi Mining sprl, an effective 75% subsidiary of Metorex, and to fund the bankable feasibility studies and holding costs of the Kinsenda and Dilala East projects in the Democratic Republic of the Congo (“DRC”). Furthermore, the funding will provide funding for the care and maintenance of the loss making Consolidated Murchison division and to provide general treasury cash. Consequently, in accordance with the Listings Requirements of the JSE, competent persons reports on certain of Metorex’s mineral assets are required to be prepared and included in the related circular, incorporating revised listings particulars, to Metorex shareholders (“Circular”). Metorex has an indirect 75% interest in Ruashi Mining sprl as the operating company for the Ruashi mine located near Lubumbashi in the DRC. This competent persons report (“CPR”), which includes a valuation statement, has been prepared by Metorex to reflect the status of the mineral assets held by Ruashi Mining sprl, and has been prepared according to the reporting requirements of the 2007 edition of the South African Code for the Reporting of Exploration Results, mineral resources and mineral reserves (“the SAMREC Code”) and the South African Code for the Reporting of Mineral Asset Valuation (“the SAMVAL Code”). This CPR has been submitted to and approved by the JSE in accordance with Section 12 of the Listings Requirements of the JSE. Each section of this CPR is designated in the headings with the relevant SAMREC Code Table 1 reference number (SR T), SAMVAL Code Table 1 reference number (SV T) and Section 12 of the JSE Listings Requirements reference number (JSE). All efforts have been made to report matters that might materially affect the readers understanding or interpretation of the results in a balanced and reasonable manner. This CPR is intended to provide updated commentary on mineral rights legal tenure, taxation issues, and sign off on the mineral resources and mineral reserves of the Ruashi mine mineral assets. The techno-economic data presented in this report has been used to determine a value for the Ruashi mine. The final valuation reported in Section 3.9 of this CPR is valid at 1 January 2010. The Competent Person and Competent Valuator have visited the Ruashi mine on numerous occasions over a period of 3 years, the last visit was from 30 November to 2 December 2009 and 12 November to 13 November 2009 respectively.

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1.2 CORPORATE STRUCTURE (SR T1.2, 1.7, 5.5 & 8) Ruashi Holdings (Pty) Ltd (“Ruashi Holdings”) is a South African registered wholly owned subsidiary of Metorex. Ruashi Holdings has a 75% interest in Ruashi Mining sprl (“Ruashi Mining”), a private limited liability company registered in the DRC. The remaining 25% of Ruashi Mining is held by Générale des Carrières et des Mines (“Gécamines”), a state owned mining company registered in the DRC. The corporate structure of Ruashi Holdings and Ruashi Mining is outlined in Figure 1. The reader is referred to section 1.7 for a detailed explanation of the transactions and legal agreements leading to this structure. Figure 1: Corporate structure of Ruashi Mining sprl

Ruashi Mining sprl

100%

75% 25%

LA GENERALE DES CARRIERESET DES MINES“GÉCAMINES”

RUASHI HOLDINGS (PTY) LTD

Ruashi Mine Dilala East Project Sokoroshe Prospects

100% 100% 100%

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1.3 HISTORY (SR T1.2, 1.3, 1.7, 5.4. 5.5, 8 & SV T1.4)

Ruashi Mining has an open cast mining operation, the Ruashi mine, located near Lubumbashi in the Katanga province of the DRC, at which it produces copper cathode and cobalt carbonate/hydroxide, which it sells under off-take contracts to two copper traders and a cobalt customer situated in China. The Etoile and Ruashi orebodies were discovered by Union Miniére du Haut Katanga (“UMHK”) in 1911 and 1919 respectively and were combined as the Etoile du Congo (Star of Congo) mine. Both orebodies were intermittently mined as high grade copper oxide quarries over a period spanning half a century. Limited formal underground mining was carried out on the Ruashi orebodies and underground plans recovered in the Gécamines Geological Department archive in Likasi suggest this was limited to prospect drives and crosscuts for sampling purposes. The Etoile orebody was mined from 1911 to 1926, 1935 to 1946 and from 1953 to 1964 while the Ruashi orebody was mined in 1919, 1931, 1932 to 1935 and from 1960 to 1963. During this period, high grade copper ore (typically >5% Cu) was selectively mined as direct feed for processing in the UMHK Lubumbashi smelter (now defunct), with lower grade material (less than 5% Cu) being stockpiled. It is estimated that some 3.1 Mt at 7.8% copper and 0.11% cobalt was mined from Ruashi and a further 2.4 Mt at 8.1% copper and 0.80% cobalt from Etoile by UMHK. In 2005, the remaining stockpile mineral resource on Ruashi and Etoile amounted to 1.5Mt at 1.84% copper and 0.34% cobalt, and 1.7Mt at 1.88% copper and 0.35% cobalt respectively as reviewed and accepted by SRK Consulting Engineers and Scientists (Pty) Ltd (“SRK”). The UMHK mines, including Ruashi and Etoile, were nationalised in 1967 and Gécamines was established as the state mining company to take charge of all copper and cobalt production activities across the Katanga Province. By the 1990s, Gécamines was experiencing production problems largely due to lack of reinvestment into their operations. Copper production had declined from approximately 450,000 tons per annum during the 1980s to 30 000 tons per annum, and cobalt from approximately 10,000 tons per annum to 4 000 tons per annum. The exploitation rights to the Ruashi copper-cobalt orebody were privatised through a lengthy process commencing in March 1996, ultimately culminating in Metorex holding 75% in Ruashi Mining as of February 2009. The Ruashi area has been extensively investigated by pitting, trenching, geophysical methods as well as diamond and reverse circulation drilling over the last century. Since discovery in 1919, 1,269 drillholes have been completed on the Ruashi property for a total of 94,589m. The earliest recorded exploration work commenced in 1907 by Tanganyika Concessions Limited who dug pits and trenches in the area. The Ruashi orebody was evaluated through drilling by UMHK and Gécamines over a period of nearly five decades, with drilling carried out on sections spaced at 50m intervals along

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strike and intervals along section of between 12m and 50m. Historical drilling activities at Ruashi prior to privatisation amounted to 1,047 holes over a total of 76,548m. In 1997, JCI Projects Ltd (“JCI”) embarked on a systematic exploration programme to validate the existing Gécamines resource information for selected Ruashi and Etoile stockpiles. JCI also undertook diamond-drilling and detailed structural and geological mapping of the orebody, and conducted detailed mineralogical and metallurgical studies on stockpile material. Metorex completed a dump drilling campaign on the Ruashi stockpiles as part of the 2003 Phase I feasibility study, to verify the grades and mineralogy of the stockpile material to be processed through the Phase I concentrator plant. These stockpiles have been largely depleted and the resources remaining to be mined at Ruashi are largely insitu within three orebodies, commonly referred to as the Ruashi I, Ruashi II and Ruashi III orebodies. Metorex carried out a verification drilling program during 2005/6 of 6,665m of drilling to address certain of the concerns raised by SRK in their Independent CPR dated March 2005. During 2009, Ruashi Mining completed two drilling campaigns. 1,651m (48 holes) of reverese circulation (“RC”) drilling and a further 5,229m (52 holes) of diamond drilling were completed across all three orebodies. Ruashi Mining is also the holder of mining rights to the Dilala East Project, located on the Musonoi Est permit close to Kolwezi. Exploration commenced on the Dilala East Project in 2006, and to date, 49 diamond drillholes have been drilled for a total drilled length of 10,892m. Steeply dipping copper-cobalt mineralisation has been identified over a strike length of 600m and to a maximum depth of 400m below surface. In addition to mining activities at Ruashi and exploration drilling at Dilala East, the company has been involved in exploration activities on the Sokoroshe I and Sokoroshe II mineral occurrences located approximately 50km north of Lubumbashi. Ruashi, Musonoi Est and Sokoroshe permits form part of the licences granted to Ruashi Mining sprl in 2005. The Dilala East Project and the Sokoroshe prospects are detailed in a separate Competent Persons Report entitled “Competent Persons Report and Valuation of the Metorex Growth Projects in the Democratic Republic of Congo” compiled internally by Metorex. To date, mining activities by Ruashi Mining have been carried out in two phases. The construction of the Ruashi Phase I concentrator plant (“Phase I”) commenced in May 2005 and the first concentrate was produced in September 2006. Phase I constituted an oxide concentrator plant with typical sections of crushing-milling-flotation to treat the oxide ore stockpiles left by UMHK and Gécamines. This plant produced a low grade concentrate which was dispatched to the Sable hydrometallurgical plant (owned by Metorex) in Zambia

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where copper cathode and cobalt carbonate were produced in a leach solvent extraction (“SX”) – electrowinning (“EW”) process plant. The Phase I concentrator was placed on care and maintenance in early 2008 as the production from the Ruashi Phase II hydrometallurgical plant (“Phase II”) came on stream. The Phase I crushing and milling sections form an integral part of the frontend processing for Phase II. The Phase II plant is a hydrometallurgical process which incorporates leaching-decantation, SX-EW and cobalt precipitation operations. Construction of the Phase II plant commenced in March 2007 and was followed closely by the start of open-pit mining of Ruashi I in October 2007. The plant was built and commissioned in stages to allow the production of “early copper” (direct EW copper – no SX). Early copper was first produced in March 2008 with the completion of the copper circuit (incorporating the SX plant) commissioned in October 2008. The cobalt plant was commissioned in February 2009. The leaching and decantation sections of the plant have already reached design capacity (1.44mtpa) whilst the downstream sections (SX-EW) are still some way from reaching design capacity, mainly due to lower than planned feed grades mined during the commissioning process.

Copper and cobalt production between 2007 and 2009 from Phase I and Phase II are shown in Figure 2 and Figure 3 respectively below. Copper production from Phase II for 2010 is split into copper produced in the year to date (July to December 2009) and the budgeted production from January to June 2010. Figure 2: Ruashi Mining sprl copper production history.

6,361

10,767

4,889

10,379

12,306

13,745

2.9

0

3.2

0

2.8

8

2.8

4

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0.50

1.00

1.50

2.00

2.50

3.00

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-

2,500

5,000

7,500

10,000

12,500

15,000

17,500

20,000

22,500

25,000

27,500

30,000

32,500

35,000

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40,000

F20

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08

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09

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r m

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Ruashi Mining sprl

Historical Copper Production Profile

Phase I Phase II Budget H2-F2010 Feed Grade Cu

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Figure 3: Ruashi Mining sprl cobalt production history.

A number of historical pre-Metorex mineral resource estimates have been completed for the Ruashi orebodies. An historical “geological reserve” of 31.7Mt at 3.6% copper and 0.4% cobalt was completed in the early 1980S by Gécamines using a manual polygonal estimation methodology. The calculation was based on 10m bench plans at a 1:1000 scale with ore blocks defined on the basis of the Gécamines Ore Classification System in force at the time. The Gécamines Ore Classification System is a three tier system taking into account the copper and/or cobalt contents, soluble lime (“CaO”) and level of oxidation. Assay grade cut-offs were set at between 1% and 2% copper for low grade ore (“LG”) and greater than 2% copper, or 0.5% cobalt for economic ore. Ore was considered to be dolomitic if the CaO was greater than or equal to 0.4% or if the CaO was greater than or equal to Total Copper (“TCu”)/15. If lower than either of these two criteria, it was classified as siliceous. Ore must contain less than 0.5% acid insoluble copper (“AICu”), or a sulphur content of up to 0.5% for ore to be classified as oxide. The Gécamines “geological reserve” is tabulated below in Table 1.1. This “geological reserve” was unclassified in terms of the SAMREC Code, but provides a very useful baseline for subsequent mineral resource estimations.

132

565

151

720

1,316

1,246

0.6

0

0.4

0

0.5

2

0.4

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0.10

0.20

0.30

0.40

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1000

1500

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2500

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Ruashi Mining sprl

Historical Cobalt Production Profile

Phase I Phase II Budget H2-F2010 Feed Grade Co

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Table 1.1: Historical Gécamines “geological reserve” for Ruashi.

Deposit Ore Type

Mt %TCu Cont.Cu (kt)

%TCo Cont.Co (kt)

Oxide

Ruashi I Siliceous oxides 5.6 4.5% 253 0.20% 11

LG oxides 4.0 1.5% 60 0.31% 12

Sub-Total 9.6 3.3% 313 0.25% 24

Ruashi II Siliceous oxides 2.5 4.5% 112 0.50% 12

LG oxides 1.4 1.2% 17 0.21% 3

Sub-Total 3.9 3.3% 130 0.40% 15

Ruashi III Siliceous oxides 7.7 5.0% 387 0.30% 23

LG oxides 3.1 0.7% 22 0.80% 25

Sub-Total 10.8 3.8% 408 0.44% 48

Total Oxides

24.3 3.5% 851 0.36% 87

Mixed or Sulphide

Ruashi I Mixed sulphides 1.1 5.0% 57 0.54% 6

LG Mixed Ore 0.7 1.5% 10 0.70% 5

Sub-Total 1.8 3.7% 67 0.60% 11

Ruashi II Mixed sulphides - - - - -

LG Mixed Ore - - - - -

Sub-Total - - - - -

Ruashi III Mixed sulphides 4.5 4.5% 206 0.42% 19

LG Mixed Ore 1.1 1.4% 16 0.50% 6

Sub-Total 5.7 3.9% 221 0.44% 25

Total Mixed or Sulphides 7.4 3.9% 288 0.47% 35

Total 31.8 3.6% 1,139 0.38% 122 Source: Gécamines Ruashi-Etoile Technical Report, date unknown

Digital Mining Services (“DMS”) of Rivonia in Johannesburg was sub-contracted on two occasions by JCI in 1997 and by Cobalt Metals Company Limited (“CMC”) in 2001 to undertake scoping studies of the copper and cobalt mineral resources and reserves of the Ruashi orebodies. In 2001 a prefeasibility mineral resource model was completed using the Surpac Vision 2000 geological and mine planning software. An assay grade cut-off of 0.3% copper was used for interpretation of the orebody. A total mineral resource of 43.9Mt at 3.6% copper and 0.3% cobalt was estimated above a 1% copper cut-off using the inverse distance weighting (“IDW”) estimation technique. 37Mt at 3.6% copper, and 0.30% cobalt was classified as oxide material and 6.9Mt at 3.9% copper, 0.39% cobalt was considered as sulphide material. In November 2004, SRK reviewed the DMS, 2001 resource estimation process, and carried out an independent assessment without consideration of the geology and structure as these were unavailable in the database at the time. SRK concluded that

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the Ruashi orebodies have the capacity to contain the resource tonnages and average grades quoted by Gécamines, but were unwilling to accept the DMS, 2001 results in the their CPR. Numerous recommendations were made by SRK for follow up by Metorex. These are discussed in section6.0.

Metorex undertook a resource modelling, open pit optimisation and scheduling study on the Ruashi orebodies in 2005 using the 2001 DMS geological database. The results of this exercise are summarised in Table 1.2 at a 1% copper cut-off. Table 1.2: 2005 SAMREC compliant mineral resource estimate completed by Metorex

Deposit Ore Type

Mt %TCu Cont.Cu (kt)

%TCo Cont.Co (kt)

Ruashi I Oxide 17.2 3.3% 566 0.46% 79 Ruashi II Oxide 4.9 4.3% 208 0.51% 25 Ruashi III Oxide 10.4 4.3% 445 0.44% 46 Total 32.5 3.8% 1,219 0.46% 150

Following the completion of additional drilling as recommended by SRK as well as detailed quality assurance (“QA”) and quality control (“QC”) checks on both old and new core, Integrated Geological Solutions (Pty) Limited (“IGS”) in Johannesburg were contracted by Metorex in 2007 to overhaul the geological database and update the mineral resource model. This exercise was carried out using a 0.5% copper and a 0.1% cobalt cut-off to provide a SAMREC compliant estimate of an all encompassing mineralisation envelope, and resulted in a significant restating of the mineral resource for the Ruashi orebodies as indicated in Table 1.3 below. Table 1.3: 2007 SAMREC compliant mineral resource estimate completed by IGS

Deposit Ore Type Mt %TCu Cont.Cu (kt)

%TCo Cont.Co (kt)

Ruashi I Oxide 25.0 2.5% 613 0.16% 40

Ruashi II

Oxide 6.9 2.8% 191 0.21% 15

Ruashi III

Oxide 14.3 3.4% 486 0.39% 56

Total 46.2 2.8% 1,290 0.24% 110

The tonnage reported is 30% higher than the 2005 study with a consequent reduction in the copper grade due to the lower cutoff grade used to define the mineralised envelope. Of interest is the fact that while total ore tonnages and grades vary between the 1980, 2000, 2005 and 2007 estimates, the contained copper remains reasonably constant with a less than +10% variance around a mean of 1.2 million tonnes of contained copper metal in the resource. Cobalt variability between estimates is much higher and reflects the incomplete nature of the cobalt assay database. IGS completed the most recent mineral resource estimate in July 2009 which is discussed in detail in section 2.4. This exercise has defined the Ruashi resource in more detail than

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any of the previous estimates and has moved a portion of the orebody into the Inferred category that has proved to be more inconsistent than previously modelled. A total SAMREC compliant mineral resource (including Inferred mineral resources) of 37.2Mt at 2.8% copper and 0.28% cobalt was estimated as at 30 June 2009 of which 29.2Mt at 2.8% copper and 0.28% cobalt was defined as oxide and 7.9Mt at 3.1% copper and 0.26% cobalt was defined as sulphide. Using the updated geological resource model, Ruashi Mining stated a mineral reserve of 15.4Mt at 3.2% copper and 0.39% cobalt as at 30 June 2009 based on the results of a Whittle 4X pit optimisation exercise. At the time, generic open pit modifying factors of 5% dilution and 95% extraction were applied. These factors were used, as a detailed reconciliation of the revised 2009 geological model to derive historical modifying factors had not been completed in time for inclusion in the optimisation study. The reconciliation study was completed by the mine subsequent to the release of the annual reserve statement in September 2009. This exercise indicated that more conservative factors should be applied as a result of unquantifiable depletion by artisanal mining in the upper levels of the resource. Using only Measured and Indicated mineral resources and the conservative modifying factors, a LOM schedule of 12.3Mt of Proved and Probable mineral reserves has been stated as at 31 December 2009. This LOM schedule supports a 10 year LOM plan at an annual production rate of 1.44mtpa. This is discussed in more detail in section 3.3.5 and 5.0.

1.4 PROJECT LOCATION (SR T1.2, 1.5)

The Ruashi mine is located in the DRC at latitude 11o37’S and longitude 27o33’E, 10km east of Lubumbashi. Lubumbashi is the largest city on the Congolese Copperbelt and is the capital city of Katanga Province. The general location of the mine is shown in Figure 4. A more detailed site plan is presented in Figure 5. The Ruashi mine is located in the peri-urban area to the northeast of Lubumbashi and on the outskirts of Ruashi Commune, consisting of the Kalukuluku, Luano and Kawama villages. The mine is located approximately 3.5km southeast of the Lubumbashi International airport, and is accessed via a secondary road off the tarred road between the airport and the centre of Lubumbashi.

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Figure 4: General location of the Ruashi Mining sprl assets in the Katanga Province of DRC

LOCATION OF RUASHI MINING SPRL ASSETS

12O S

28O E

MUSONOI

RUASHI

DEMOCRATIC DEMOCRATIC DEMOCRATIC DEMOCRATIC

REPUBLIC OF REPUBLIC OF REPUBLIC OF REPUBLIC OF

CONGOCONGOCONGOCONGO

ZAMBIAZAMBIAZAMBIAZAMBIA

SOKOROSHI I & II

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Figure 5: Site plan and coordinates of the Ruashi Mining Permit (PE578)

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1.5 REGIONAL INFRASTRUCTURE (SR T5.6)

While the overall infrastructure of the DRC can be considered to be poor, conditions in the Katanga Province and in particular in the Lubumbashi area are somewhat different. Lubumbashi is a commercial and industrial centre with a population estimated at 1.2 million people. Historically, the primary activities include copper and cobalt processing as well as the manufacture of textiles, food products, beverages, printed materials and bricks. The town boasts a university, a regional museum and an international airport with daily international flights from Johannesburg. The DRC has hydroelectric power resources which are regulated and supplied by Société Nationale de Electricité (“SNEL”) the national power utility. The main arterial road into the DRC from Zambia has recently been upgraded by Chinese contractors and as a result access is now greatly improved. Border control at Kasumbalesa between the DRC and Zambia remains a concern, but upgrading of this border post and the service it provides is seen as a critical development project by the Southern African Development Community (“SADC”). Lubumbashi lies along the transcontinental railroad system and has access to both the east and west coast ports of Angola, Tanzania, Mozambique and South Africa. Rail infrastructure and rolling stock owned by Société Nationale des Chemins de Fer du Congo (“SNCC”), the state owned national railway company, is however in poor condition. Rail services are unreliable. As a result the vast majority of consumables and finished product (copper cathode and cobalt carbonate) are moved by road transport. Water to the mine is supplied from underground aquifers. The geology is largely dolomitic and significant quantities of subsurface water are available.

1.6 TOPOGRAPHY AND CLIMATE (SR T1.6)

The Congolese Copperbelt is located in a sub-tropical zone characterised by distinct wet and dry seasons. Annual rainfall is approximately 1,200mm and occurs during a wet season (summer) lasting from October to March with the heaviest rainfall occurring between December and March. Rainfall generally occurs as short thunderstorms any time during the day or night, and it is not uncommon to have 50mm of rain in the space of a few hours. Mining production is frequently impacted by the high rainfall as production from the open pits is stopped to allow haul ramps to dry. Key Run of Mine (“ROM”) stockpiles and primary crushing installations are also impacted if material is too wet. Exploration drilling activities on the prospects are generally restricted to the dry season as vehicle access off the main bush tracks is not feasible during the wet season.

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The Ruashi mine is located to the north of a northwest to southeast trending topographic high that acts as a local water divide. Topographic elevations range between 1,320m above mean sea level (“amsl”) at the water divide to 1,235m amsl at the topographical low in the east. In the vicinity of the mine site, the elevation is approximately 1,285m amsl. The average air temperature remains fairly constant at between 17oC and 24oC throughout the year and there is no distinct winter and summer temperature regime. Average temperatures peak during September and October at 32oC. The coldest month is July with an average daily minimum of 6oC. Annual climatic data is presented in Table 1.4 below. Table 1.4: Average monthly temperature and rainfall for Lubumbashi MONTH MINoC MAXoC AVEoC RAIN

(mm) WET DAYS (+0.25 mm)

January 16 28 22 267 25 February 17 28 23 244 24 March 16 28 22 213 22 April 14 28 21 56 12 May 10 27 19 5 2 June 7 26 17 0 0 July 6 26 16 0 0 August 8 28 18 0 0.3 September 11 32 22 3 1 October 14 33 24 31 6 November 16 31 24 150 18 December 17 28 23 269 25 Source: BBC Weather

The natural vegetation in the area is deciduous tropical woodland generally referred to as Miombo Woodland. The Ruashi mine is located on the outskirts of the greater Lubumbashi peri-urban area and has been significantly deforested. The disturbed vegetation consists largely of low scrubby trees, generally not exceeding 2m in height, thick patches of elephant grass and cultivated lands.

1.7 LEGAL ASPECTS AND MINERAL TENURE (SR T1.7, SV T1.3)

In March 1996, Gécamines invited fourteen mining groups to submit pre-qualification proposals for the joint development of the Ruashi-Etoile copper-cobalt orebodies. During 1997, JCI Limited entered into a tender bid for the development of the Ruashi-Etoile project and was selected as the successful tenderer from a group of seven qualifying companies. These rights were transferred to JCI Projects in July 1998. With the fragmentation of the assets of the JCI Group, the rights to Ruashi and Etoile were assumed by a consortium under the banner of Mawenzi Resources Limited. Strategic

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changes in the management of Mawenzi Resources during 2000 resulted in the rights to the Ruashi opencast resources and the Ruashi and Etoile stockpiles being consolidated under the ownership of CMC. In June 2000, CMC entered into an agreement with Gécamines for the exploitation of the Ruashi orebody and the Ruashi-Etoile stockpiles. Under the terms of this agreement, Concession No 237 was transferred to CMC. Ruashi Mining was created and registered in the DRC in 2003, with CMC holding a 55% interest and Gécamines a 45% interest. Gécamines transformed Concession 237 into two separate exploitation licences or permis d’exploitation (“PE”) on 26 June 2003. PE 578 granted Ruashi Mining the right to exploit the Ruashi orebodies and process the Ruashi stockpiles. Metorex entered into an agreement with Sentinelle dated 14 May 2004 wherein Metorex undertook to provide a second hand concentrator plant from its O’Okiep copper mine to Ruashi Mining, raise development capital to construct the process plant at the Ruashi mine, pay an initial amount of US$2.5 million to Sentinelle and complete a feasibility study on Phase I of the Ruashi project in exchange for its 65% interest in Ruashi Holdings. In 2004, the rights and obligations held by CMC were transferred to Ruashi Holdings, and the shareholding was reorganised such that Ruashi Holdings held 80% and Gécamines 20% of the shareholding in Ruashi Mining. During the period May 2004 to September 2004, Metorex increased its shareholding in Ruashi Holdings from 65% to 68% through an issue of 1,280,162 shares in Metorex, at an average price of ZAR2.30 per ordinary share. During the period May 2005 to October 2005, Metorex further increased its interests in Ruashi Holdings from 68% to 84% by means of a further issue of 12,200,000 shares in Metorex, at an average price of ZAR3.94 per ordinary share. On 27 March 2007, Metorex increased its interest in Ruashi Holdings to 100% from 84% through the issue of 12,500,000 shares at an average price of ZAR26.16 per share and a cash payment of ZAR60 million. This resulted in Metorex having an effective interest in Ruashi Mining of 80%. On 25 October 2005, Ruashi Holding negotiated an amendment to the Partnership agreement with Gécamines, referenced ‘Annexure 3’, wherein Ruashi acquired the rights to explore additional copper/cobalt areas in the Katangan Copperbelt region. These target areas comprised Musonoi Est (in the Kolwezi Area), which forms part of PE 4958, Sokoroshe I (PE 523) and Sokoroshe II (PE 538). Ruashi Holdings intends providing Gécamines with feasibility studies on these prospects during February 2010. Gecamines was the holder of Concession No. 237 issued by Ministerial Decree, and covered the area on which the Ruashi orebody, and stockpiles and tailings of Ruashi and Etoile are situated.

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Gecamines transferred the Concession No. 237 into PE 578 on 20 June 2003. As the original Concession No. 237 was granted to Gecamines for a period of 20 years, the PE 578 will be valid until 25 September 2021. The PE 578 was transferred to Ruashi Mining on 1 June 2004, and grants Ruashi Mining the exclusive right to carry out, within the area over which it has been granted, exploration, development, construction and exploitation works in connection with the mineral substances for which the permit has been granted (being copper, cobalt and associated mineral substances). The details of the mining permit granted to Ruashi Mining sprl are set out in Table 1.5: Table 1.5: Ruashi Mining sprl Mining Licences

Property Licence Type Of Title

Awarded Expiry Commodity Area (Ha)

Ruashi PE 578 Exploitation Permit

20 Jun 2003 25 Sept 2021 Cu, Co, base and precious metals,

900

The prospecting permits set out in Table 1.6 are held by Gécamines. Ruashi Holdings has acquired PE523, PE 538 and a portion of PE4985 (to be created in respect of the Dilala East deposit) in terms of Ammendment No.3 to the Creation Contract of Ruashi Mining No.377/6713/SG/GC 2000 signed on 8th December 2005. This was confirmed during the recently concluded licence review process in February 2009 subject to Ruashi Holdings providing positive feasibility studies in respect thereof. Ruashi Holdings is required to present feasibility studies on these prospects by 23 February 2010, whereafter the permits will be registered in the name of Ruashi Mining. Table 1.6: Rights to Gécamines Mining Licences acquired by Ruashi Holdings

Property Licence Type Of Title Commodity Area (Ha)

Musonoi Est PE 4958 Exploitation Permit

Cu, Co, base and precious metals,

1,700

Sokoroshe I PE 523 330 Sokoroshe II PE 538 500

By virtue of its PE, Ruashi Mining is entitled to use the land on which the stockpiles and orebodies are situated, and to build installations and facilities required for mining exploitation. Once established, these installations and facilities become part of the mine and are covered by PE 578. During 2008, the Government of the DRC, through the Department of Mines, instructed the State owned mining companies to renegotiate the terms of their partnership agreements, which included the Partnership agreement and Statutes governing the shareholder relationship between Ruashi Holdings and Gécamines. The outcome of these negotiations was that Ruashi Holdings conceded a 5% interest in Ruashi Mining, resulting in its interests reducing to 75% and Gécamines increasing from 20% to a 25% carried interest.

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Ruashi is obligated to pay to Gecamines a Royalty on gross revenue derived by the mine, calculated at 2.5% and furthermore, is obliged to pay the State Royalty of 2.0% on gross revenue. In addition to the royalty payment, Ruashi is also obligated to make payment on a deferred mineral content fee payment of US$4 million to Gécamines and as at December 2009 Ruashi had paid US$2 million to Gecamines.

2.0 PROJECT DATA (SR T1.2, 2.1, 2.3 &4.1)

2.1 GEOLOGY (SR T4.13, SV T1.5)

2.1.1 Regional Geology and Mineralisation (SR T1.2)

The Ruashi orebody is a a stratiform, sediment-hosted copper deposit (“SSC”) located in the Central African Copperbelt. The Copperbelt forms one of the world’s greatest metallogenic provinces containing over a third of the world’s cobalt reserves and a tenth of the world’s copper reserves. The Central African Copperbelt is second only to the Chilean porphyry belt in terms of copper endowment but lags significantly in terms of production. The copper-cobalt deposits of the Central African Copperbelt are hosted within a strongly deformed, arcuate belt of rocks that extends from northeastern Angola through southern DRC and into Zambia, referred to as the Lufilian Arc as illustrated in Figure 6. The major orebodies of both Zambia and the DRC are associated with the most strongly deformed zones along the northwest-southeast axis of the arc and occur along distinctly linear trends. The Katangan Sequence is divided into three Supergroups separated by two marker conglomerates (possibly glacial tillites). These units are described briefly below (from youngest to oldest) and are illustrated in the general stratigraphy of the Katanga System in Figure 7.

• The Upper Kundelungu Supergroup (Ks): formed by detrital marine sediments, predominantly dolomitic; divided into three groups (Ks 3, Ks 2, Ksl) based on sedimentary cycles. Minor sandstone units are scattered through the succession;

• The Lower Kundelungu Supergroup (Ki): formed by detrital marine sediments, predominantly dolomitic but with limestones and dolostone in the south (the Kakontwe Limestone); divided into two groups (Ki 2 and Ki 1), based on sedimentary cycles; up to 3000m thick; and

• The Roan Supergroup (R): lagoonal and fluvial marine sediments — dolostone, dolomitic siltstones and black shales with interstratified collapse breccias formed by the dissolution of evaporitic horizons; arkosic sandstones and conglomerate units; total thickness 1500m.

In DRC, the Roan Supergroup is divided into the RAT (“Roches Argileuses Talceuse”), Mines, Dipeta and Mwachya Groups. The Mines Group is frequently referred to as the Series des Mines.

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Figure 6: Regional geological map of the Central African Copperbelt showing the location of the Ruashi Mining sprl assets

Source: Woodhead, 2007

LOCATION OF RUASHI MINING SPRL ASSETS ON THE CENTRAL AFRICAN COPPERBELT

RUASHI

MUSONOI

SOKOROSHE I & II

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Figure 7: Regional stratigraphic classification of the Katanga Supergroup in DRC

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In Zambia, the Roan Supergroup is divided into the Lower Roan, Upper Roan and the Mwashia Groups, with the Mines Group in the DRC being roughly equivalent to the top of the Lower Roan and base of the Upper Roan Group. Mineralisation in both Zambia and the DRC is largely restricted to the Lower Roan or Mines Group although important vein style mineralisation is locally important higher in the succession (e.g. Kansanshi, Kipushi, Dikulushi). The different nomenclature for the basal Roan Supergroup reflects not only the different geological history of the belt but also a lack of correlation across national boundaries. Consequently, two sub-types of SSC deposits are distinguished in the rocks of the Central African Copperbelt. These are divided on geographical lines into a northwest district in Katanga Province, DRC (the “Congolese Copperbelt”) and a southeast district in Zambia (the “Zambian Copperbelt”). Figure 8 below presents a correlation of the two sub-types with a simplified description of the major lithological units. Figure 8: Simplified lithostratigraphic correlation of the Katangan Supergroup of the Zambian and Congolese Copperbelt

In Zambia, the pre-Katangan basement rocks outcrop forming the cores of large open folds parallel to the Lufilian Arc and the deposits coincide with embayments and tight synclines at the contact between the exposed Basement and Katangan rocks. Overfolding can be severe, but there is remarkably little faulting of significance to mining in any of the present mines. Mineralisation in the Zambian deposits is dominantly sulphide, comprising chalcopyrite, bornite and chalcocite, variably accompanied by pyrite and pyrrhotite,

KATANGAN

Lithostratigraphic Correlation of the Zambian and

Congolese Copperbelts

D.R.C. ZAMBIA

ROAN

SUPERGROUP

Mwashya Group

Mwashia Group

Carbonate Unit

Upper

Roan Dipeta Group

Mixed Unit

Lower

Roan

Mines Group

(Series des Mines)

R.A.T.

Siliciclastic Unit

BASEMENT

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carollite, covellite and diginite. Ore grades are commonly around 3 to 4% copper and 0.1 to 0.2% cobalt. Lateral and vertical zonation has been widely reported but is rarely as obvious or as simple as the literature suggests. There is generally a progressive transition from chalcocite to bornite to chalcopyrite to pyrite, vertically upward within the orebodies and laterally down dip. Due to the acidic nature of the silica rich host rocks on the Zambian Copperbelt, oxidation and leaching of copper minerals is common to about 45 to 60 m from surface, although may be observed to depths of several hundred metres. The leached zone close to surface is commonly barren or very poorly mineralised. Supergene enrichment below the zone of leaching is highly variable with the main supergene minerals including malachite, chalcocite, cuprite, chysocolla and vermiculite. In contrast, the metasedimentary successions in the DRC are strongly thrusted and folded into a series of broken anticlines and synclines that are commonly overturned towards the north. Despite the obvious disruption of the sequence, the pre-Katangan basement is not exposed anywhere along the belt in the DRC. The statiforrm ores in the DRC occur within two principal formations confined to a 40 m thick succession at the base of the Mines Series. The upper formation is a sandy shale containing some carbonates and the lower is a bedded dolomitic sandstone. The ore formations average approximately 10 m in thickness separated by 20 to 30 m of siliceous dolomite. Ore grades commonly vary between 4 to 6% copper and around 0.4% cobalt with the ratio of copper to cobalt in the order of 8:1. The weathered oxide zone generally extends to a depth of 70 to 150 m but may vary considerably between deposits. The weathering process commonly leads to high-grade supergene deposits near surface but may also result in leaching of the mineralisation in places and/or concentration in otherwise barren horizons. At depth, a mixed oxide-sulphide zone grades into sulphide ore, sometimes at depths greater than 250 m.

2.1.2 Local Geology and Mineralisation

The Ruashi deposits are typical of the Congolese Copperbelt deposits and are geologically similar to Tenke Fungurume and Kamoto deposits. The stratiform Cu-Co deposits represent the largest and most important of the ore types in the Congolese Copperbelt, covering the area from Kasumbalesa in the southeast to Kolwezi in the northwest. The regional geology of Lubumbashi and surrounding area is shown in Figure 9.

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Figure 9: Regional Geology of Lubumbashi and the surrounding area

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The detailed stratigraphy of the Lower Roan Group (Series des Mines) is shown in Figure 10. Rocks belonging to the Roan Supergroup are described briefly below from the oldest to the youngest: • Breche Heterogene or Heterogeneous Breccia (“RH”): This breccia is composed of angular and sometimes well rounded rock fragments of all the various rock types of the Roan Group. The fragments vary in size from a few millimetres to several centimetres in diameter while the matrix is made up of finer-grained sandy particles of the same material as the fragments;

• Breche RAT or Brecciated RAT (“B RAT”): A reddish-pink brecciated rock with calcite and silica veinlets and is at times well mineralised with specular haematite, occurring as veinlets;

• RAT: The RAT is considered the boundary between the R2 and R1 units and consists of an upper RAT (R2) and a lower RAT (R1). Both are massive but sheared in places, silty or sandy, dolomitic rocks, Mineralisation in the form of malachite and black oxides occur associated with the upper RAT;

• Dolomie Stratifie or Stratified Dolomite (“D Strat”): This is a well bedded to laminated, argillaceous dolomite, which forms the base of the traditional “Lower Ore Zone” in Gecamines nomenclature. The mineralisation consists of copper and cobalt oxides / sulphides;

• Roches Siliceuses Feuilletées or Foliated (Laminated) and Silicified Rocks (“RSF”): This is a grey to light brown thinly bedded laminated and highly silicified dolomites. The unit is generally well mineralised with copper and cobalt oxides / sulphides. Together with the DStrat, the RSF comprises the Lower Orebody;

• Roches Siliceuses Cellulaires or Siliceous Rocks with Cavities (“RSC”): Vuggy and infilled massive to stromatolitic silicified dolomites. Copper mineralisation is almost absent in this rock and these were therefore regarded as barren. However, the infillings are enriched in wad (manganese oxide) and heterogenite (cobalt oxide)) and this rock is the target of artisanal activity;

• Schistes De Base or Basal Schists (“SDB”): Reddish-brown to grey silty and nodular dolomite to siltstone. This unit is well mineralised with copper and cobalt in varying amounts and forms the Upper Orebody;

• Shales Dolomitiques Supérieurs or Upper Dolomitic Shales (“SDS”): Yellowish, cream to red bedded laminated dolomitic siltstones and fine-grained sandstones. The rock is sparsely mineralised with malachite.

• Calcaire a Minerais Noirs or Calcareous Unit with Black Minerals (“CMN”): A slightly banded and laminated light grey to grey silicified dolomite mineralised with black oxide of iron, manganese and cobalt. The unit bears some similarities with the RSC.

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Figure 10: The stratigraphy of the Ruashi Mine

Page 49 of 170


Deformation of the lithologies of the Katangan Sequence during the Lufilian Orogeny (650 Ma) resulted in the formation of the northwest-southeast trending Lufilian Arc. The Lufilian Orogeny occurred as a result of the closure of an intracratonic rift basin, with large scale folds and thrusts occurring as inversion structures on the earlier, rift edge normal faults. This is reflected in the regional tectonic grain of the Katanga Province, characterised by southeast-northwest trending, medium to large scale folds which appear to be verging in both northerly and southerly directions. They are frequently cut by oblique transverse faults, reflecting earlier, rift related transfer faults. Stratigraphic continuity within the Congolese Copperbelt is difficult to predict as a result of the tectonic overprint. The Katangan rocks were thrust as large-scale nappes into mega-breccia/imbricate zones. Mineralisation is generally associated with competent rocks of the Mines Group which occur as detached segments referred to as écaillés (“scales” or “rafts”). Mineralised rafts often occur on the flanks of regional faulted anticlines or thrust over younger rocks. The Ruashi copper-cobalt orebodies are situated within a 24km long by 2km wide, NW-SE trending fold structure. The Lukuni-Ruashi-Etoile trend consists of a recumbent, synclinal fold, with flanks made up of Kundelungu rocks and the core by the Mines Group all occurring to the south-west of a prominent NW-SE trending thrust fault. Three orebodies have been identified at Ruashi, namely Ruashi I, Ruashi II and Ruashi III. The distribution of these orebodies is shown in Figure 11 below. Ruashi I is the largest of the three and is located in the northwest of the mining area. The lateral extent of Ruashi I is approximately 900m in the NW-SE direction and 350m across strike. In cross-sections, the oxide zone extends to approximately 70m below surface, whilst sulphide mineralisation has been intersected at depths of more than 300m below surface. The Ruashi I orebody terminates against shear zones on the north western and south eastern edges of the orebody. Ruashi I was previously mined as an open pit and there were underground workings. Ruashi II is a smaller fragment extending along strike for approximately 200m and 250m across strike and terminates against shear zones on the north western and south eastern edges. A large gap of approximately 200m of brecciated Lower Kundelungu strata separates Ruashi II from Ruashi I. Previous mining activity on a limited scale is evident at Ruashi II. Ruashi III occurs at the south-easterly end and has a strike length of approximately 550m and a width across strike of 200m. Unlike Ruashi I and II, the copper orebody is located 30m to 80m below surface, with a high grade cobalt, low grade copper zone starting at approximately 20m below surface. This orebody is structurally controlled within a complex fold structure. The oxide zone extends to a depth of 200 m. Artisanal mining has not been as extensive as the other two Ruashi orebodies.

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Figure 11: Location of the Ruashi I, II and III orebodies within the Ruashi Mine Area (blue dots represent drillhole collars).

Historically, mining by UMHK focussed on near surface oxide copper in the form of malachite and chrysocolla mineralisation. The high grade oxides formed a 30m to 60m supergene mineralisation blanket in the saprolitic rock close to surface overlying the primary sulphide orebodies. This irregular blanket of mineralisation extended beyond the limits of the underlying primary sulphide ores. This relationship is schematically portrayed in the accompanying cross section (Figure 12 to Figure 14). Secondary enriched sulphide ores have been reported in the transition zone between the weathered and fresh rock interface. Primary sulphide mineralisation in the form of bornite, chalcopyrite and carollite occurs as stratiform mineralisation contained in the shaley dolomitic units of the RSF and SDB units. These units vary between 5m and 15m in thickness and are separated by 10m to 20m of barren stromatolitic dolomites (RSC). The footwall sequences are sedimentary breccias and conglomerates of the RAT unit. The stratigraphy is overturned and faulted and the rocks dip almost sub-vertically to the north-east, close to surface, before flattening at depth. The fold structure displays a general plunge from west to east, with the deepest part of the syncline in the east.

RUASHI I

RUASHI II

RUASHI III

Page 51 of 170


Figure 12: Typical section (section 200) from Ruashi I showing mineralised envelope

Figure 13: Typical section (section 1100) from Ruashi II showing mineralised envelope

Page 52 of 170


Figure 14: Typical section (section 1650) from Ruashi III showing mineralised envelope

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Page 72 of 170


2005/6 Metorex campaign The core recovery, sampling and assay procedures for the 2005/6 drilling programme were audited by Golder in June 2006. The results are summarised below. The blanks all reported zero values. The duplicates compared well with the regression statistics on the data. The results are summarised in Table 2.3. TCu and TCo are presented as scatter plots in Figure 21. Table 2.3: Results of Metorex 2005/6 campaign field duplicates No. Samples Mean A Mean B Correlation

Coefficient (r) TCu 163 1.35 1.35 0.98 TCo 157 0.31 0.29 0.92 ASCu 59 2.13 2.13 0.97 ASCo 47 0.12 0.11 0.72

Figure 21: Scatter plots of TCu and TCo assays for field duplicates taken during the Metorex 2005/6 drilling campaign

Source: Golder, 2006 A total of 160 pulps prepared by Genalysis were submitted to Lakefield for TCu and TCo, and 47 for ASCu and ASCo. Good repeatability was observed for all samples of the variable analysed. The inter laboratory comparison confirmed that the Genalysis assay results are reasonable and suggested that they may be slightly conservative compared to Lakefield. Golder concluded that the precision results for field duplicates and pulp repeats based on inter-laboratory checks are reasonable and could be used for resource estimation purposes.

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2009 Metorex campaign IGS analysed and commented on the QA/QC data in a report dated August 2009 entitled “Ruashi Project Resource Estimation Report”. QA/QC results were discussed in terms of levels of Contamination, Accuracy and Precision. IGS reviewed the results with respect to the levels of laboratory contamination based on an assessment of the laboratory, milling and geological blanks. The level of contamination was generally between 0.05 and 0.1% for copper, with occasional spikes up to 0.2%. This level of background contamination is not material for the Ruashi orebody with average grades of 2.5 to 3% Cu. The level of contamination for cobalt was generally below 0.05% Co with only 2 out of 260 (i.e. 0.8%) laboratory blanks returning values greater than 0.1% Co. The cobalt values for the laboratory, milling and geological blanks showed a higher degree of variability compared to the copper assays, and it is possible that the waste rock selected for the lab and geology blanks was not entirely unmineralised. IGS recommended that a better blank be sourced and used. Similar comments apply to the reference standards used for determining assay accuracy. Coffey Mining noted in a site visit report dated June / July 2009 that access to Certified Reference Materials (“CRMs”) is a general and persistent problem throughout the DRC portion of the Copperbelt. There are no appropriate matrix matched CRMs available from independent commercial sources. There is a reasonable set available for the Zambian mines and copper ranges are adequately represented but these are all very low in cobalt (<0.01%) and not certified for other elements such as Al, Ca, Mg, Mn and Fe. In an attempt to minimise this problem Ruashi makes up its own reference material. However unlike CRMs which are analysed at 20-30 laboratories, Ruashi’s reference material is only analysed by two, making accuracy more difficult to demonstrate. The result is that while copper assays are generally acceptable, cobalt assays may not be accurate. Check analyses by a second laboratory may not be helpful as the second laboratory is likely to have the same or similar problems as the primary laboratory. Batches where the assay for the standard was out by more than 10% were resubmitted for assay. Cobalt reference samples show a similarly tight range. IGS concluded that accuracy was difficult to assess, since while the internal control gave consistent values, there were very few certified standards to provide an absolute check on the accuracy. Two separate certified standards from AMiS (AMiS0032 and AMiS0051) were used but were inconclusive, due to a naming error at the time of insertion. Repeat precision within the Ruashi Laboratory is good, with very good agreement between the original samples and the duplicates within the laboratory.

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Duplicates were also submitted to Robinsons as referee samples. All the Cu referee samples sent to Robinsons showed better than 10% repeat precision. Cobalt was less precise, but there are a number of samples close to the detection limit which influence this. IGS concluded that generally there was good agreement between the Ruashi laboratory and Robinson laboratory, with Robinson showing a slightly higher result generally. The core recovery, sampling and assay procedures for the 2009 drilling programme were also audited by Coffey Mining in June 2009, who made the following comments: • Ruashi has the facilities to carry out analyses using XRF and ICP techniques. They are also setup to perform tests for acid soluble metals and acid consumption;

• Initially, only samples assaying over 2% copper were sent for re-analysis by Ruashi Mining. This was flagged as a concern and was subsequently addressed in a revised procedure to include samples below 1% copper;

• It was seen in the Ruashi results that there was a good correlation for copper and cobalt between the Ruashi and Robinson laboratories but a large discrepancy between the results of Ruashi and Robinson in iron and aluminium. The iron and aluminium analytical results are not used in the resource estimation process and this discrepancy does not impact on the resource grades or tonnages;

• Core recoveries seen at Ruashi are similar to what other operators in the Copperbelt achieve and there is little that can be done to improve the recoveries; and

• There is a small but persistent bias between the two laboratories for acid soluble copper and cobalt, with the Ruashi laboratory showing a slight negative bias.

Coffey Mining concluded that the basic quality control procedures were in place for the 2009 drilling and sampling campaign, and generally reflect current industry practice.

2.3.4 Conclusion Both the 2005/6 and 2009 sampling programmes have had the appropriate QA/QC procedures in place. Independent audit of these procedures and the results have demonstrated that Ruashi Mining and Metorex have used these procedures to identify and re-assay samples and sample batches that fall outside acceptable industry assay quality norms. In the opinion of the Competent Person, Metorex and Ruashi Mining has demonstrated due diligence and care in the drilling, sampling and assay of all drilling campaigns since 2005. However, the lack of a robust QA/QC audit trail for the historical UMHK and Gécamines data used for the resource modelling is flagged as an area of non-compliance to the SAMREC Code. Check sampling of old core by Metorex in 2004 (as described in section 2.2.4) has indicated a reasonable correlation between historical UMHK / Gécamines data and check assays.

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While assays for this check sampling programme were assayed at an accredited laboratory and all the necessary QA/QC procedures were in place for this programme to ensure compliance with the SAMREC Code, the number of check samples compared to the total database is very small (approximately 0.6%) and was biased towards samples collected in the 1970s and 1980s. Metorex has accepted the historical data as suitable for mineral resource estimation work on the basis of this limited check sampling, and the results of the 2005/6 and 2009 drilling. The mineral resource estimate for the Ruashi mine is a SAMREC compliant estimate which must therefore be qualified on the basis of no QA/QC data for ~85% of the database. In order to bring the resource estimate up to a fully SAMREC compliant standard, it is essential that the assay quality control programme instituted at Ruashi mine laboratory be strictly adhered to as a means of improving the confidence in all new assay results received. Ruashi mine geological and analytical laboratory staff have received training in this respect, and a procedure is in place to ensure all drillhole samples to be used for estimation purposes, are accompanied by the appropriate level of blanks, CRM and repeat samples to ensure compliance.

2.4 INTERPRETATION AND MODELLING (SR 2.1, 2.2, 2.5, 4.1-4.2 & 8)

2.4.1 Geological model and interpretation Results from the recoding of the historical drillholes and the 2009 drilling have enabled a new geological model to be constructed. The geological model has been constructed for the major stratigraphic units and major structural features including geological discontinuities. The main geological features identified are a recumbent fold with flat lying and vertical faults causing stretching and fragmention into three parts resulting in the Ruashi I, II and III orebodies. Depth of oxidation and weathering intensity vary depending on the rock types. Depth of weathering varies from 50m to 250m below surface. A complete re-interpretation of the geological model was carried out by Metorex and the Ruashi mine geologists using the latest drilling and recoded data to re-interpret the structure. Using the sectional interpretations, stratigraphic units were digitised from the sections, snapped to the three dimensional drillhole traces and then joined up to create solid wire framed objects. These units are outlined in Table 2.4 and illustrated in Figure 22.

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Table 2.4:Summary of modelled lithological units Unit Description Thickness MV Modelled as a singular unit at the base of

the orebody 3m to 8m

RSF/DSTRAT Modelled as a combined unit 5m to 20m RSC Modelled as singular unit 12m to 25m SDS and SDB Modelled as a singular unit called the SD

unit 60m to 95m

BOMZ Modelled as a singular unit called the BOMZ

3m to 20m

Mineralised CMN Modelled as a mineralised zone on the footwall side of the unit within the broader CMN envelope – not clear

2m to 30m

Breccias Modelled as distinct units around Ruashi II N/a

A 0.5% copper or 0.1% cobalt assay cut-off has been used where lithological units such as the SDS, SDB and the CMN have been sub-divided into mineralised (e.g. CMN_MIN) or unmineralised sub-units (e.g. CMN). The mixed-sulphide interface from the Gécamines sections was adjusted using the more recent information from the 2009 drilling program. A 10m transition zone was assumed to exist above the sulphide zone, based on the transition zone thickness observed in Ruashi I. The transition zone is relatively shallow in the Ruashi I area, but gets deeper towards the east. In Ruashi III the oxide-sulphide interface is roughly 200m deep. Figure 22: Isometric view of the Ruashi lithological wireframes

Ruashi I

Ruashi II

Ruashi III

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Coffey Mining stated in July 2009 that the geological model is consistent with the structural style of the Copperbelt and the model honours the measurable features seen in the pits and the drillholes. The geological model has led to a substantial improvement in the understanding of the Ruashi orebodies.

2.4.2 Estimation and modelling techniques Reconciliation of open pit mining actual results to the 2007 resource model during 2008 highlighted limitations in the model. Recent re-interpretation based on the 2009 drilling campaign results and in-pit mapping has resulted in a dramatically improved structural and lithological interpretation with the orebody being further sub-divided into oxide and sulphide zones based on the observed degree of weathering in the drillholes. A hard boundary approach has been applied to oxide and sulphide zones of the same lithological unit to more accurately reflect the statistical difference in grades between the weathered and unweathered units. All samples falling within the individual modelled stratigraphic wireframes were selected and composited into 2m lengths. Any composites created with a length of less than 75% of 2m were discarded, so that all composites would have an approximately equal weighting in the estimation. Only samples below the June 2009 mining surface were included in the assay dataset. Composites were separated into oxide and sulphide domains, and into MV, RSF/DSTRAT, RSC, SDB, Mineralised SDS, BOMZ, CMN, Mineralised CMN and Breccia domains. The composite statistics are summarised in Table 2.5 below for each modelled domain. The highest copper grades are found in the MV unit, the RSF/DSTRAT unit and the Mineralised SD and CMN. The highest Cobalt grades are found in the MV, RSF/DSTRAT, BOMZ and Mineralised SD. Oxide grades are generally higher than sulphide grades, possibly indicating enrichment in the oxide zone. All grades were then capped to the 98th percentile value to avoid assigning undue influence to the highest grade values, for example MV oxide values were capped at 25.75% Cu, whereas the highest individual composite value was 36% Cu. The 2009 model geostatistical estimation was carried out by IGS using ordinary Kriging and has interpolated grades into discrete geological (lithological and structural) domains based on geostatistical estimation parameters matched to each domain. For each domain, omni-directional variograms were created from the 2m drillhole composites. An attempt was made to model anisotropy within the different geological domains, but due to the limited amount of data within each domain and the large amount of along strike data compared to down dip data, no anisotropy was recognised.

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Table 2.5: Summary Statistics for 2m composites for all geological domains

UNIT n %TCu 98th Percentile

%TCo 98th Percentile

OXIDE MV 704 6.85 25.75 0.50 3.63 RSF / DTSRAT 716 2.99 17.7 0.49 3.52 RSC 1,045 1.41 9.58 0.30 2.39 SD 2,871 0.93 8.50 0.19 2.07 SD_MIN 1,873 2.82 14.24 0.65 5.06 BOMZ 808 2.96 17.34 0.52 4.13 CMN 4,215 1.67 9.98 0.12 1.23 CMN_MIN 967 3.27 14.55 0.17 1.41 BRECCIA 238 1.93 12.93 0.09 0.95

SULPHIDE MV 325 4.11 16.90 0.48 3.52 RSF / DTSRAT 284 1.74 12.06 0.28 1.74 RSC 327 1.51 12.98 0.21 1.22 SD 474 0.40 8.01 0.06 0.51 SD_MIN 124 3.30 23.65 0.51 3.79 CMN 317 0.48 2.77 0.04 0.38 CMN_MIN 5 1.33 10.23 0.25 0.42

A two structure variogram was modelled in each case, with a first structure with a range of the order of 8m-31m, and a second structure with a range of between 43m-89m. Nugget effect levels are generally 20%-30% of the population variance and have been modelled using the downhole variogram direction. Most of the variance is described by the nugget and first structure of the variogram. ‘Smoother’ variograms were generally obtained in populations with larger numbers of composites. In certain sulphide domains where the number of composites was very small, the oxide variogram was used. Grade was estimated into parent blocks of 25m by 15m by 10m in order to reduce the block variance and best reflect the data spacing. A sub-cell model was created with a much smaller block size to more accurately define the orebody volumes, especially in the current mining areas. The model parameters are summarised in Table 2.6. Table 2.6: 2009 Ruashi block model dimensions

X Y Z

Minimum Coordinates 558400 8715200 900

Maximum Coordinates 560625 8716310 1300

Parent Block Size 25 15 10

Minimum Block Size 6.25 0.93 2.5

Rotation 30 0 0

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Grade estimation into the block model was carried out using ordinary Kriging. Each modelled domain was estimated using only composites within the domain and using hard boundaries between the domains. The exception to this was the Transitional zone which was estimated using the combined Oxide and Sulphide datasets for that stratigraphic domain. No data above the current mining surface was used in the estimation. This was specifically carried out to minimise the effect of “smearing” of high grades from the supergene zone (mined out by Gécamines). A search radius of 1.1 times the variogram range was used in the estimation. Subsequent to the initial estimation, a second estimation was carried out to fill the modelled units beyond the variogram range with estimated grades. All blocks estimated beyond the variogram range were classified as Inferred Resources. A maximum of 20 composites was used to estimate a block with the minimum number ranging from 4 to 10, depending on the domain estimated. Thinner units such as the MV required a lower minimum be used since a single drillhole may have only a small number of composites. Due to limited coverage of the ASCu and ASCo data within the dataset, ASCu and ASCo values were assigned based on average solubility ratios for the oxide, transitional and sulphide zone. ASCu and ASCo values in the the oxide zone was assigned 90% of the total copper and cobalt values estimated for the block. Similarly in the transition zone, 50% acid solubility was assigned and 10% in the sulphide zone. To account for mining by artisanal miners, a tonnage factor has been derived based on a subjective assessment of previous mining activity (artisanal and UMHK) taking into consideration mining above and below the static water table prior to dewatering in the pit by Ruashi Mining. All mineralised tonnages above the 1,260m level have been reduced by 20% to account for artisanal mining losses above the water table. The oxide MV tonnage below the 1260m level was reduced by 15% in Ruashi I to account for underground mining losses known to have taken place. The tonnage reduction in both instances was carried out by reducing the SG by the appropriate factor. The model was visually validated by plotting 10m vertical slices through the block model against the average of the composites within that slice. The block averages are at a zero cut-off but within the modelled stratigraphic units. The results for Ruashi I are presented in Figure 23 indicating a conservative estimate for TCu across all depth ranges with average block values consistently lower than the composite average. There has been a smoothing of the cobalt grades into the block as would be expected using ordinary Kriging.

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Figure 23: Block estimate and composite TCu and TCo data plot vs elevation for Ruashi I.

Similar graphs were produced for Ruashi II and III. A similar smoothing effect is observed for TCo in Ruashi II and III. Average TCu block grades in Ruashi II indicate a reasonable correlation with the composites in the upper benches above the 1220m elevation with more conservative block estimates in the lower benches. TCu block grades in Ruashi III below the 1200m elevation would appear to be slightly overestimated compared to the composite averages, and this divergence needs to be addressed by Ruashi Mining in the next model update, scheduled for February 2010.

2.5 RESOURCE AND RESERVE CLASSIFICATION CRITERIA (SR T 7)

The majority of the Ruashi drillhole data is spaced close enough at a grid spacing of 50m x 25m to categorise the majority of the resource as either Indicated or Measured using the variogram ranges as a guide. In 2007, IGS classified the entire Ruashi oxide resource as an Indicated Resource due to a number of uncertainties in the estimation as follows: • While the confirmatory drilling undertaken by Metorex in 2006 was well documented with the appropriate QA / QC measures in place, the bulk of the dataset used in the resource estimation comes from an old dataset where no demonstrable quality assurance measures were implemented. The assay technique used for the early drilling is uncertain, and only small parts of the core were stored for lithological reference;

Pit 1

1150

1160

1170

1180

1190

1200

1210

1220

1230

1240

1250

0 0.5 1 1.5 2 2.5 3

Tcu Ok TCu Composites Average Tco Ok TCo Composites Average

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• Geological and assay logs of the UMHK / Gécamines drillholes are of variable quality, and due to their age some of them were almost illegible. In many cases no rock type or core recovery information was recorded;

• The top of the transition between oxide and sulphide was not modeled previously as it was not recorded in the drillhole logs. IGS identified this as a geological risk and a further reason to downgrade the resource classification. This surface was modeled in the 2009 resource estimation exercise purely as a projection of the oxide-sulphide surface interpreted by Gecamines. Additional drilling is in progress, particularly in the Ruashi I pit, to define the position of the transition and sulphide interface surfaces with more confidence but this information was not available at the time of modeling in the recent exercise; and

• An unknown amount of ore has been removed from the resource by artisanal miners. While the removed volume is not likely to have been significant, the higher grade areas are likely to have been targeted and shallower high grade blocks are likely to have lower grades than estimated.

Drilling, in pit mapping, translation and recoding of old data and geological re-interpretation during 2009 has gone a long way towards addressing these concerns. However, the bulk of the drillholes used in the estimation are still from an old, unverifiable dataset and there will always be an element of uncertainty associated with these data. The 2009 Ruashi orebody model has been classified into SAMREC Code compliant resource categories on a subjective basis. The consensus opinion of IGS, the Ruashi mine geologists and the Competent Person is that the observed continuity of the lower orebody in Ruashi I and II together with the mapping of the orebody, the recent well controlled drilling and the use of appropriate tonnage discounting for prior mining allow the oxide MV, RSF and DStrat units in Ruashi I and II to be classified as a Measured resource. The remainder of the oxide resource in Ruashi I, II and III (with the exception of the CMN unit) has been classified as an Indicated resource. The CMN exposed on the north of the Ruashi I pit has proved to be substantially different from that predicted from previous modelling. Exposures in the pit which should have been high grade ore based on historical drilling proved to be low grade or barren. The CMN zone is receiving more geological attention, which should resolve the interpretation. The remobilised nature of the mineralisation and the erratic re-precipitation of oxide copper and cobalt minerals in wad zones close to the unweathered dolomite contact appears to have resulted in pockets of high grade ore surrounded by low grade and waste material. It is possible that these high grade ore pockets have been mined out by artisanal miners and subsequently backfilled with waste. Due to these uncertainties, the CMN in Ruashi I and II has been downgraded to an Inferred resource status until such time as the nature of the mineralisation is better understood. The sulphide resource estimate has not previously been reported. As the block estimates in the sulphide zone are at times beyond the variogram ranges modelled and few recent

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drillholes have targeted the sulphide zone, the sulphide resource has been classified as an Inferred resource. Drilling is in progress to better define the sulphide resource as a necessary first step to an open pit or underground mining option, with processing through the Phase I concentrator plant. Figure 24 illustrates the distribution of Measured, Indicated and Inferred blocks. Figure 24: Resource Classification Perspective View Looking NW

3.0 TECHNO-ECONOMIC STUDY AND MODIFYING FACTORS (SR T5, SV T1.7)

3.1 GOVERNMENTAL (SR T1.7, 5.1)

In terms of Law 007/2002 of July 11 2002, relating to the Mining Code of the DRC, the holder of a mining permit is obliged to: • Pay the annual surface area fees; and • Commence development and construction work within 3 years of being granted the right to exploitation.

Ruashi I

Ruashi II

Ruashi III

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Regarding the first requirement, Ruashi Mining paid the annual surface fees for PE578 in March 2009. Regarding the second requirement, Ruashi Mining was granted PE578 on 26 September 2001. Construction and development work of the Phase I concentrator plant commenced in April 2005 and that of the Phase II SX/EW plant in October 2006. Both plants were fully commissioned and the requirement to commence development work within three years has been fully met. At the time of writing the Phase I concentrator has been placed on care and maintenance.

3.2 ENVIRONMENTAL (SR T5.2)

3.2.1 Environmental licences and authorisations (SR T1.17)

An Environmental Adjustment Plan (“EAP”) which was compiled jointly by African Mining Consultants (Kitwe, Zambia) (“AMC”) and Bureau d’Expertise et d’Etudes Environmentales et Minières du Congo (“BEMC”) in March 2005 was approved by the Ministry of Mines. The EAP was amended by BEMC in September 2007 to include Phase II of the Ruashi project. The amendment has been authorised by the Ministry of Mines. Various environmental permits and authorisations are in place. The mine has a valid authorisation for the “Exploitation of Water Resources”, as well as a permit for the discharge of water from the pit into the Luano River. The permit is valid until the end of January 2010, and an application for renewal of the permit has been submitted. The Independent Engineer’s Report (SRK Consulting 2007) identified that the site selected for the tailings dam, and on which the tailings dam has been constructed extended beyond the boundaries of the PE578 area. Ruashi Mining has subsequently secured tenure for the additional portion of land on which the tailings dam is located.

3.2.2 Environmental liabilities and rehabilitation costs (SR T1.7) An environmental provision of US$ 14,549,240 was reflected on the Ruashi Mining sprl balance sheet as at 30 November 2009 for the estimated closure and ongoing rehabilitation of Ruashi mine. An internal assessment of the required financial provision for closure has been undertaken by Metorex. The following aspects of the operation were included in the assessment: The financial provision for closure, as required by the Ministry of Mines according to the approved EAPs is US$216,700 for Ruashi Phase I and US$785,000 for Phase II. According to Chapter II (Articles 6 and 7) of the DRC Mining Regulations (Decree No 038/2003), the Titleholder may choose among several financial instruments for the provision of the required guarantee. These include a cash payment into a financial security account in the name of the Titleholder, a cheque drawn in the name of a financial institution

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on behalf of the financial security account of the Titleholder, a secured fixed term certificate of deposit, an irrevocable and unconditional letter of credit, a bond or financial security policy, or a surety provided by a third party on behalf of the Titleholder. The full amount of the financial provision for Phase I is currently due, and arrangements will need to be made for this security. The financial provision requirements for Phase II have been calculated over the duration of the mining licence, with payment commencing in 2011. It must be noted that the rehabilitation provision currently does not include remediation of land or water pollution. There are uncertainties around potential environmental liability with regard to groundwater pollution, as no ongoing groundwater monitoring has been undertaken at Ruashi to date, and the nature and extent of any groundwater pollution is therefore unknown. The rehabilitation provision requirements will change should groundwater pollution be detected that requires significant remediation. These aspects will be investigated further to assess the potential pollution from the dam and its zone of influence. A groundwater monitoring programme will be implemented at Ruashi, and a geohydrological model will be created to assess the potential impact of seepage from the tailings dam on groundwater resources in the area.

3.2.3 Environmental management The Mine has an Environmental Manager responsible for all aspects of environmental management. The Environmental Manager reports to the Deputy Managing Director. Metorex has additionally recruited a Group Environmental Consultant with effect 15 November 2009.

3.2.4 Environmental issues at Ruashi Mine The lead financing institution for the Ruashi project is Standard Bank of South Africa, which is a signatory to the Equator Principles (“EP”). As such, Ruashi is required to comply with the requirements of the Equator Principles, which include the World Bank environmental and health and safety guidelines as well as the International Finance Corporation (“IFC”) Performance Standards. A social and environmental assessment and management plan, including EP requirements was compiled by SRK in 2007. Ruashi is working towards compliance of the Equator Principles, and an internal assessment of EP compliance will take place in early 2010. Material environmental issues at Ruashi include: • Water: The potential for groundwater pollution has not been assessed, as indicated in section 3.2.2. A water quality monitoring programme for surface and groundwater is required to provide information on water quality and to assess whether the operation has the potential to pollute surface and groundwater resources in the area, both of

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which are used by the local community for domestic and agricultural use. Potential sources of pollution include contaminated run-off, seepage to groundwater from the tailings dam and seepage to groundwater of soil pollution (in the event of spillage of hydrocarbons and chemicals).

• Stormwater: The following stormwater controls are required: o Diversion of clean water around the site (away from the pits, plant and tailings dam) by means of channels or diversion berms; and

o A stormwater capture and control system for stormwater falling on ‘dirty’ areas (i.e. the plant and mining area). A stormwater dam has been constructed and temporary pumping infrastructure back to the plant has been installed. The permanent pumping layouts and infrastructure are in the design phase and are planned for implementation during the 2010 dry season.

• Air quality: The waste dumps, tailings dam and roads generate large volumes of fine dust in the dry season. The dust is a nuisance to those living in the vicinity of the mine, and could pose a safety hazard on the roads due to reduced visibility. The respirable fraction of dust, PM10, has not been measured, and the potential health effects of dust on employees at the mine and local communities has not been quantified.

• Waste management: The mine requires a waste management strategy for the disposal of domestic and industrial waste, which includes the establishment of scrap and waste storage and/or disposal areas. A waste management assessment and action plan will be undertaken in 2010.

3.2.5 Social (SR T5.3)

3.2.5.1 Material Social Issues

The largest social aspect of the Ruashi project has been the relocation of communities and artisanal miners from the concession area. Title XI, Chapter II, Article 281 of the DRC Mining Code outlines the requirements for compensation for occupants of the land. SRK was appointed to compile the Relocation Action Plan in accordance with the IFC Standards, and to assist Ruashi with the relocation process. To date, the artisanal miners have moved from the ore body, and community relocation has been undertaken in the area of Pit 2, including a 3,500m buffer zone on Kalukuluku village and the waste rock dump (Kawama and Luano villages). The relocation and compensation process is still in progress for these areas, and a grievance mechanism has been set up to address issues raised during the process. Ruashi has recently acquired land to the north and west of the existing mine area, and relocation of communities in these areas will be required in the near future to cater for the mine’s waste and tailings disposal facilities. A relocation action plan compliant with the IFC and World Bank standards will be required in this regard.

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The mine concession area is presently mostly unfenced, and the local community is therefore able to access the area. There is potential for health and safety impacts on local community members if they are allowed unrestricted access to the area, which include the potential for falling into pits, excavations and dams, and road safety issues. There is a plan in place to wall off the mine concession area and thus restrict access for safety reasons.

3.2.5.2 Social programmes

A great deal of attention has been paid to social issues and the mine has made significant contributions particularly in the area of water and electricity supply to local residents as well as in respect of upgrading the airport.

3.3 MINING (SR T5.4 & 8)

3.3.1 Introduction Ruashi Mining commenced stockpile mining operations in June 2005 for processing through the Ruashi Phase I oxide flotation concentrator plant. Stockpile reserves were depleted in F2009 with open pit mining operations commencing in October 2007 to supplement feed to the Phase I process plant. The Phase II SX-EW plant construction was completed in October 2008 and has been in ramp up mode for most of 2009. The Phase I concentrator was placed on care and maintenance in March 2009 and subsequently all copper and cobalt production has come from the Phase II plant. ROM feed has consisted of a mix of tailings re-mine (unrecovered copper and cobalt from the Phase I concentrator) and direct ROM tonnes from the open pit. The mine achieved its design milling capacity of 120,000 tonnes per month in October 2009 for the first time, and it is expected that by March 2010 will be operating at a monthly production rate of between 110,000 and 120,000 tonnes per month. Ongoing LOM planning is carried out as part of an annual planning cycle. Short term planning is carried out on-mine and monitored to ensure adherence to a strict mining sequence. LOM planning is based on a detailed 3 dimensional mine design with Gantt chart schedule. Ruashi mine uses Gemcom Surpac Version 6.1.3 and the Minesched module for all geological, mine design software and scheduling requirements.

3.3.2 Mining method and selectivity The Ruashi deposit is currently mined by conventional open pit mining methods using truck and excavator combinations as illustrated in Figure 25. Metorex is of the opinion that open pit mining represents the safest and most economical mining method for the oxide portion of the resource.

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Figure 25: Open pit load and haul operations in the Ruashi II pit.

Mining operations at Ruashi are undertaken by a local contracting company, Mining Company Katanga sprl (“MCK”). Ruashi entered into a 5 year mining contract with MCK in June 2006 to provide 120,000 ROM tons per month to the process plant. Mine design and planning, grade control and pit survey is managed by Ruashi Mining. MCK’s primary mining fleet consists of 3 excavators matched with 14 articulated dump trucks (“ADT”) and one blast hole drill rig. The secondary mining fleet consists of:

• 1 x grader;

• 2 x tracked bulldozers; • 2 x water bowsers; • 1 x service vehicle; and

• Several supervision LDV’s. Maintenance of MCK’s mining fleet is carried out by the Original Equipment Manufacturer (“OEM”) under a Maintenance and Repair Contract (“MARC”). The mining contractor has mobilised an additional 15 ADTs and 2 excavators to Ruashi for the pre-stripping of Ruashi III, due to commence in April 2010.

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The Ruashi labour complement associated with mining activities consist of management and supervision to direct and control the activities of MCK. Further, grade control officers working in the pit and various stockpiles fall under the responsibility of the mining department. A summary of the mining department labour complement excluding the mining contractor is outlined Table 3.1. Table 3.1: Mining Labour Complement

Description Complement

Management & supervision 3 Grade control 21 Total Mining Labour 24

Due to the bi-metallic mineralisation, Ruashi derives its revenues from both copper and cobalt. The Ruashi LOM plan is based on the assumption that a block of material should be processed if the income derived from the sale of the product covers the cost of processing the material. The marginal cut-off grade is therefore the grade of the material where the income from the sale of the product is equal or more than the processing cost. The material discarded as waste at Ruashi can best be described as the area below the straight line connecting the single element cut off grade from copper and cobalt on the respective axis of Figure 26. Figure 26: Copper and Cobalt Cut-Off Grade Applied to the LOM Plan

The final pit shell was established using the Gemcom Whittle 4x pit optimisation software. The ultimate pit shell selected in the pit optimisation establishes the limits of mining for purpose of defining the economically mineable resources. This pit shell was further refined through the application of mine design criteria and other practical mining constraints.

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Moreover, this part of the mine planning process also requires the identification and design of defined stages or pushbacks. The criteria employed in the design of the mining stages and final mine layout are outlined in Table 3.2. Table 3.2: Mine Design Criteria

Criteria Constraint

Bench height 5m Ramp gradient 10% Ramp and haul road width 20m Pit slope angle 36 degrees Batter angle 65 degrees Berm width 5.5m

The final mine layout is presented in Figure 27. Three distinct pits (Ruashi I,II and III) can be distinguished which relate to the Ruashi orebodies. However, the proximity of the Ruashi II and III orebodies causes the associated pits to be connected at 60m below surface (“mBs”). Figure 27: Plan View of Mine Layout with Surface Footprint of Planned Stages

Ruashi I is largely mined out to a depth of 40mBs and the design extends another 40m down to a final elevation of 1,205m amsl. The pit is accessed by a ramp from the north,

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with the north-western and south-eastern parts being serviced by ramps branching off from the existing northern ramp. Ruashi II is the smallest of the three orebodies and the pit design extends to a depth of 90mBs (1,195 amsl). Access to all levels is via a single spiral ramp. Ruashi III is the largest ore body with the highest overburden stripping requirement. The pit has a design depth of 195mBs (1,090m amsl) and is accessed by a dual ramp system to mitigate the risk of failure of a single ramp access.

3.3.3 Geotechnical and hydrological considerations A geotechnical study was undertaken by Open House Management Solutions (“OHMS”) in June 2009. The OHMS study used data collected from drillhole core logging and laboratory sample testing to design optimal slope angles using analytical design charts and numerical modelling.

3.3.3.1 A Geotechnical Core Logging & Laboratory Testing

Three drillholes were drilled on the southern slope of Ruashi Pit I using triple core barrel to ensure optimum core recovery. The core was logged by a qualified geotechnical engineer with samples being recovered and sent to Johannesburg for tri-axial test work. 16 samples were collected from the saprolite zone and 32 from fresh rock. Whilst the fresh rock samples returned consistent results, the saprolite samples showed significant variability.

3.3.3.2 Rock Mass Quality

To determine the rock mass quality, the Rock Mass Rating (“RMR”) method as proposed by Bieniawski was used. Values for the RMR were quantified at 2m intervals and the results are depicted in Table 3.3 below. Table 3.3 Summary of Rock Mass Ratings

Drillhole Saprolite Fresh Rock

Mean

Standard Deviation

Mean Standard Deviation

GR01 33 4 55 8 GR02 42 7 62 3 GR03 35 5 60 4 Average 37 7 59 7

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3.3.3.3 Slope Design

The slope angle selection was done using the Adjusted RMR as proposed by Laubscher et al. The Adjusted RMR value of 51.3 for fresh rock compared well with the mean RMR of 59 ,and the Adjusted RMR value of 39.5 for weathered rock, compared well with the mean RMR of 37. To determine the Mohr Coulomb and Hoek Brown failure envelopes for the 2 rock types, the Roclab Software was used. This software uses the laboratory triaxial test results and downgrades the values by a Geological Strength Index (GSI) and a rock disturbance factor (D) mathematically to obtain in-situ rock mass properties. Numerical modelling was carried out to quantify the overall slope stability depicted in Figure 28 below. Figure 28: Constructed Slope Geometry for Modelling

The probability of slope failure using various methods of analysis was plotted in Figure 29 and it may be concluded that the probability of failure is very remote as there is no factor of safety less than 1.0.

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Figure 29: Slope Failure Factor of Safety

3.3.3.4 Hydrology

Groundwater Consulting Services (“GCS”) were commissioned by Metorex in 2005 to undertake a hydrogeological study at Ruashi. The objectives of the study were to determine quantity and quality of in-pit water flow on a bench-by-bench basis. Five large diameter water monitoring drillholes, positioned by GCS, were drilled to a final depth of 80m. Slotted PVC casings of diameter 110mm were inserted into each hole in addition to a gravel pack between the casing and the sidewall to allow for free flow of water. Point dilution tests were carried out within each drillhole to determine the aquifer permeability characteristics. A numerical flow model was then set up to estimate the aquifer flows within the proposed pit area. The following data was incorporated into the numerical model.

• Geological data including drillhole logs, geological mapping;

• Ground geophysical surveys conducted in the area. These included magnetic and electromagnetic surveys;

• Point dilution tests on the fivewater drillholes; and

• Climatic, topographical and surface drainage data. Table 3.4 lists the estimated inflows of water into the pit.

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Table 3.4: Estimated Inflow of Groundwater into the Pits

Inflow (m3/day) l/sec Year 1 800 9 Year 5 7,300 84 Year 10 17,600 204 Year 15 20,200 234

The open pits will be de-watered by a combination of dewatering holes located around the perimeter of the pit and in-pit water management systems. Water will be pumped from the sumps into an existing 8,500m3 earth holding dam on the northwestern side of the pit from where it will be pumped to the process facility for use as make-up water. SSESSMENT CRITERION: T 5.4 Mining

3.3.4 Service infrastructure The open pits at Ruashi are accessed by a 1km haul road extending from the process plant to the Pit I access ramp. Power is supplied at 15kV from the Ruashi distribution sub-station with transmission via overhead conductors mounted on timber pylons. Transformers at each pit reduce the distribution voltage from 15kV to 500V for use by dewatering pumps in the pit. The open pits are surrounded by a 2m high windrow to prevent the ingress of surface run-off water into the pits. Dewatering drillholes have been drilled around the perimeter of Ruashi I and Ruashi II as well as within Ruashi I to maintain the groundwater level below the mining face.

3.3.5 Modifying factors and mining efficiencies IGS completed the most recent mineral resource estimate in July 2009. This exercise defined the Ruashi mineral resource in more detail than any of the previous estimates and moved a portion of the orebody that has proved to be more inconsistent than previously modelled into the Inferred category. Ruashi Mining stated the mineral reserve for 30 June 2009 as 15.4Mt at 3.2% copper and 0.39% cobalt based on the results of a Gemcom Whittle 4X pit optimisation exercise. The F2009 closing mineral reserve was determined by selecting ore tonnes that fall between the surface topography and the selected ultimate pit shell, and above the marginal processing cut-off grade as presented in Figure 26. These were factored by generic open pit modifying factors of 5% dilution and 95% extraction factors before being reported as mineral reserves. The use of generic modifying factors, while not optimal, was timing related and in part due to a clash in the timing of the completion of the Mineral Resource Management (“MRM”) process with the timing of the release of the Metorex 2009 Annual Report (“Annual

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Report”). It was not possible to complete a detailed reconciliation of the updated 2009 model against the mining actuals for the period October 2007 to June 2009 in addition to completing the Whittle optimisation and mine scheduling exercise before release of the Annual Report. Subsequent to the release of the Annual Report in September 2009, a reconciliation study was completed which has resulted in a set of empirically determined modifying factors based on operational performance of the Ruashi mine to date. These differ from those used in the Whittle optimisation, as shown in Table 3.5. Table 3.5: Modifying Factors Applied in Reserving Process

Modifying Factor Applied To Orebody Generic Factors Applied as at 30

June 2009

Empirical Factors Applied as at 31 December 2009

Extraction Factor Ore tons Ruashi I 95% 75% Ruashi II 95% 90% Ruashi III 95% 90% Cu grade Loss / Dilution

Copper grades

Ruashi I 5% 20%

Ruashi II 5% 5% Ruashi III 5% 5% Co Grade Loss / Dilution

Cobalt grades

Ruashi I 5% 0%

Ruashi II 5% 0% Ruashi III 5% 0%

IGS and the Competent Person opined that the mining losses are to a large extent the result of artisanal mining of high grade material on the upper benches of the pits that occurred after the completion of the diamond drilling and prior to the commencement of mining activities by Ruashi Mining. This depletion is, by definition, very difficult to quantify as there are no mining plans available for the artisanal tunnels and excavations, or records of tonnages removed. The use of the high empirical factors has resulted in a conservative LOM plan and mineral reserve declaration. It is the opinion of the Competent Person that these factors will reduce over time as the understanding of the orebody improves and are worked into subsequent revisions of the resource model. It is highly probable that with time, these factors will fall in line with the generic extraction and dilution factors applied in the Whittle optimisation exercise.

3.3.6 Development and production schedule The empirical modifying factors outlined in Table 3.5 have been used in the detailed LOM scheduling exercise completed by VBKom Consulting Engineers (Pty) Ltd (“VBKom”) in Pretoria in November 2009, and provide the basis for the 31 December 2009 Ruashi mineral reserve.

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A LOM schedule of 12.3Mt has been stated as at 31 December 2009 and is presented in Table 3.6. Only Measured and Indicated mineral resources have been considered, together with available stockpile and the inclusion of Gécamines and Ruashi Phase I tailings feed material. This LOM schedule supports a LOM plan of 10 years at an annual production rate of 1.44mtpa. The LOM is impacted by the use of the conservative tonnage and grade factors discussed above, and the non-inclusion of inferred resources. Technical staff on the operation are aware of these sensitivities, and are actively engaged in activities to reduce the modifying factors and increase the Indicated and Measured mineral resource for inclusion in the LOM schedule and mineral reserve.

The production schedule for the Ruashi LOM plan is presented in Figure 30 below. Table 3.6 overleaf shows the annual LOM mining schedule as at 31 December 2009. Figure 30: Ruashi LOM Production Schedule

5501,353 1,437 1,440 1,389 1,440 1,440 1,440 1,368

330

3,500

13,000

9,000 8,999 9,000 9,000 9,0008,294

1,699

820

2

4

6

8

10

12

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

H2 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019S

trip

pin

g R

ati

o

To

nn

es

Ore Tonnes Mined Waste Tonnes Mined Stripping Ratio

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Table 3.6: Ruashi Mine LOM Production Schedule as at 31 December 2009

Units H2 F2010

2011 2012 2013 2014 2015 2016 2017 2018 2019 TOTAL

MINING

Ore mined k tons 585 1,354 1,438 1,440 1,390 1,440 1,440 1,440 1,369 330 12,225 Ore processed k tons 673 1,354 1,438 1,440 1,390 1,440 1,440 1,440 1,369 330 12,313

Diluted TCu Grade

% 2.96 3.23 3.03 3.01 3.13 3.02 2.86 2.28 3.21 5.24 3.03

Diluted TCo Grade

% 0.37 0.51 0.60 0.64 0.49 0.32 0.22 0.41 0.21 0.10 0.41

Waste Tons k tons 3,443 13,000 9,000 9,000 9,000 9,000 9,000 8,295 1,699 83 71,520

Stripping Ratio Waste:Ore

5.88 9.60 6.26 6.25 6.48 6.25 6.25 5.76 1.24 0.25 5.85

RECOVERY

Copper % 83 85 85 85 85 85 85 85 85 85

Cobalt % 50 60 65 65 65 65 65 65 65 65

PRODUCTION

Payable Cu k tons 16.5 37.1 37.1 36.8 37.0 36.9 35.0 27.9 37.4 14.7 316.4 Recovered Co k tons 1.2 4.1 5.6 6.0 4.4 3.0 2.0 3.9 1.9 0.2 32.3

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3.4 MINERAL PROCESSING (SR T5.5)

3.4.1 General The construction of the Ruashi Phase I plant commenced in May 2005 and first concentrate was produced in September 2006. The Phase I plant constituted a Concentrator plant with typical sections of crushing-milling-flotation. The plant treated stockpiles of oxide ore and produced a concentrate which was dispatched to the Sable hydrometallurgical plant in Zambia where electrowon copper cathode and cobalt carbonate were produced. The Ruashi Phase I flotation plant with a throughput capacity of 0.48 Mtpa was mothballed in early 2008 as the production of the Phase II plant came on stream. The Phase I crushing and milling sections forms an integral part of the Phase II plant. The redundant flotation section of the Phase I plant could be used to treat sulphide ores from the Ruashi pit. This conceptual project is currently under investigation and a drilling programme is underway to determine the sulphide mineral resource. The Phase II plant is a hydrometallurgical process which incorporates leaching, decantation, SX-EW and cobalt precipitation operations. The construction of the Phase II plant commenced in March 2007, approximately the same time as the commencement of open-pit mining of the Ruashi I orebody. The plant was built and commissioned in stages to allow the production of “early copper” (direct EW copper – no SX). Early copper was first produced in March 2008 with the complete copper circuit (incorporating the SX plant) commissioned some six months later. The cobalt plant was commissioned in February 2009. The Phase II plant is still in the process of ramping up. The ramp-up period has taken longer than originally envisaged due to design issues that required rectification and the low headgrade being fed to the plant. The leaching and decantation sections of the plant have already reached design capacity (1.44 Mtpa) whilst the downstream sections (SX-EW) are still some way from reaching design, mainly due to the lower delivered head grades.

3.4.2 Mineralogical and metallurgical testwork (SR T3.2) The pertinent testwork for this report relates to Phase II (hydrometallurgical operations). Metorex contracted the Mintek hydro-metallurgical research laboratory (“Mintek”) in Randburg, South Africa to conduct scoping, laboratory and pilot testwork for the recovery and purification of copper and cobalt. It is worth noting that the operation itself has generated large quantities of key metallurgical data (consumption rates, recovery factors) which is available for evaluation purposes. The Mintek testwork was carried out in a number of steps. Firstly, the ore was characterised by means of head grade analysis and determination of the Gangue Acid Consumption (“GAC”). From these results the samples were selected for compiling a bulk composite sample representative of the ROM feed. A series of metallurgical “mineral processing” type scoping tests were conducted to determine the optimum feed conditions

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for hydrometallurgical pilot test work. Based on the scoping tests results the bulk material was milled and then sent for hydrometallurgical testwork. The hydrometallurgical testwork was conducted at both ends of the scale - laboratory and pilot scale. The initial laboratory scale testwork was used to guide the piloting testwork which comprised the following unit operations: leach; solid-liquid separation and washing of the leach residues; low grade and high grade SX; copper EW; and cobalt purification and precipitation. Mintek also carried out mineralogical investigations of the leach residue to understand the underlying issues for optimising the copper and cobalt leach efficiencies and to determine the occurrence of other leachable metal species. Comminution testwork which was carried out on an additional set of samples comprised the following: JKTech Drop weight tests, Bond ball mill work index, Bond rod mill work index, and Bond crushability (impact) work index.

3.4.3 Feed grade and plant recovery assumptions The actual copper and cobalt feed grades into the plant during the past six months are compared to the Mintek pilot test results in Table 3.7 below: Table 3.7 Comparison of Ruashi Phase II Head Grades and Recoveries Against Mintek Pilot Testwork

Units H1 F2010 Testwork Results

LOM assumptions

Copper head grade % 2.8% 3.87% 3.03% Cobalt head grade % 0.54% 0.62% 0.42% Copper recovery % TCu 80% 85% 85% Cobalt recovery % TCo 47% 70% 65%

The lower than forecast copper recoveries during H1 2010 were caused primarily through a shortage of SX diluents. This shortage was brought about by a lack of working capital to procure the diluents and resulted in the copper output being constrained by the rate at which copper is transferred from the aqueous to organic phase in the SX plant. The copper plant is designed to be constrained by the EW tankhouse, not the SX plant and once diluents levels are at design specifications (expected Feb 2010), output should be constrained by the EW tankhouse. Further, copper recoveries were impacted by poor wash efficiencies in the Counter Current Decantation (“CCD”) section of the plant. The CCD plant washing efficiency is sensitive to flocculant addition and once again this was compromised by a lack or working capital to maintain the correct levels of flocculant on site. The result of this was inadequate dosage of flocculant and the associated loss of entrained copper in solution to the tailings dam. This

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situation has been rectified and the benefits of improved wash efficiencies have begun to flow during December 2009. Finally, the lower than planned feed grade had a negative impact on the copper recoveries. This lower than expected feed grade was brought about by a poor understanding of the orebody during the first quarter of 2009. Following completion of the revised mineral resource model , mine design and schedule exercise in November 2009, Ruashi can be expected to achieve forecast feed grades from the various open pits. Over and above the factors over which Ruashi has direct control, grid electrical supply power issues have interrupted 11 days during H1 F2009 and in turn this has affected process efficiencies. The primary reason for the power interruption was due to maintenance being carried out on the Nseke hydro-electrical scheme near Kolwezi. Intermittent grid power supply does affect the plant solution balance and throughput, and Metorex is investigating the installation of more power generation at the Ruashi site. The cobalt recoveries have been lower than expected due to the three folowing main reasons:

• The recovery of cobalt in the leach section is dependent upon leaching being carried out in a reducing environment. In order to create a reducing environment, accurate amounts of SO2 gas need to be introduced. The source of this SO2 was designed to come as off-gas from the acid plant and with the non-completion of the acid plant, the SO2 has been generated through intermittent addition of sodium metabisulphate (“SMBS”) through a makeshift feeding system. The result has been an unstable leaching environment wherein a large portion of the cobalt minerals are allowed to pass undissolved. This process is being rectified through the procurement of a customised SMBS addition plant capable of accurately dosing the required amount of SMBS. This system is expected to be operational in June 2010. In the long term the acid plant should provide SO2

gas to the process, thus ensuring a cheap supply or reducing agent to the leach plant;

• Prior to cobalt precipitation, iron and aluminium are precipitated at a pH of less than 4.5. The testwork undertaken by Mintek used limestone for iron and aluminium precipitation, however due to the high cost of transport, quicklime is used. Using quicklime has resulted in less accurate control of pH and a consequent loss of cobalt into the iron cake from time to time. This situation is unlikely to improve within the next 24-months and hence Metorex has downgraded its forecast recoveries of cobalt to 65%; and

• Poor wash efficiencies have impacted the cobalt recovery in a similar manner to that described for copper recoveries above.

In the short term, improvements in the cobalt recovery to approximately 50% are expected from better wash efficiencies through correct dosage of flocculant in the CCD circuit. Cobalt recoveries should further improve in F2011 with the commissioning of the SMBS addition plant to over 60%.

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In the long term, cobalt recoveries of 65% are envisaged through the following initiatives: • Construction and commissioning of the acid plant will provide both SO2 for reducing conditions and waste heat for optimum leach and precipitation conditions; and

• Development of limestone producing facilities by third parties in the DRC could reduce losses to iron cake.

3.4.4 Detailed flowsheet description The Ruashi Phase II hydrometallurgical plant flowsheet is described in the following section and shown in Figure 31, with the general arrangement of the hydrometallurgical plant presented in Figure 32.

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Figure 31: Ruashi Phase II Plant Flowsheet (mass balance as per design)

Return Water108 m3/h Solution

172 t/h Residue0.81 gpl Cu0.35 gpl Co Wash Water

185 ton/h Ore 185 ton/h Ore 123 m3/h Solution 1.05 m3/ton3.20 % Cu 38 % Moisture 172 tph Solids 278 m3/h0.37 % Co 108 m3/h Solution 785 m3/h slurry 54.5 % Solids Wash efficiency 92%

130 m3/h Solution

5.92 tph Cu 15 m3/h (GSW Allowance)0.68 tph Co

% Solids 23 In19 Out Over Flow Over Flow

437 m3/h 299 m3/h9.99 gpl Cu 4.30 gpl Cu

Mass loss in leach 8 % 4.0 gpl Co 1.73 gpl CoCopper recovery 85 %Cobalt recovery 70 %

30 m3/h5.13 tph (Process Water to SX)

GSW Allowance 13 m3/h

LG Raffinate303 m3/h

HG Raffinate 0.19 gpl Cu451 m3/h 1.69 gpl Co1.17 gpl Cu3.9 gpl Co

12 m3/h

Fe / Al Filter Cake to Tails86.0 m3/h0.10 gpl Cu1.18 gpl Co Co Feed

394 m3/h

0.11041 gpl Cu

1.24 gpl Co

297 m3/h(To wash water and Iron Removal)

0.48 tph Co in carbonate

Under Flow

Under Flow

Comminution Leach

Copper Transfer

(Filter wash water)

Tailings Dam

Primary Thickener CCD Circuit

LG SXHG SX

Fe / Al Precipitation

Cu EW

Co Precipitation

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Figure 32: Isometric view of the Ruashi Phase II hydrometallurgical plant

Crushing and milling circuit

Copper Leach and CCD Plant

Cobalt Plant

Reduction Plant

Copper Solvent

Extraction Plant

Sulphuric Acid Plant

Copper Electrowinning

Plant

Workshop, offices & laboratory

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3.4.4.1 Reduction Plant:

The Reduction section consists of the following sub-sections: Front-end; Milling, Pre-leach-thickening. Figure 33 shows the milling circuit configuration with one semi-autogenous grind (“SAG”) mill in combination with five ball mills, of which one is a standby unit. Currently, the “front-end” section of the Phase I plant, which includes the ramp for tipping of run of mine ores, a hopper-bin and an apron feeder for discharging material to the mill feed belt conveyor, is being used to feed the Phase II plant. A new front-end section which includes a new load hopper, new apron feeder, new jaw crusher, and new stockpile, is under construction. Commissioning of the new front end is expected to take place in mid-January 2010. The new system will ensure that the plant mills are able to receive 1.44Mtpa. The mill simulations carried out by Mintek during the Pilot Scale Testwork have shown that the existing mills (as per Phase I) are capable of producing a P80 grind of 125 microns with a feedrate of up to 200tph, which is equivalent to a feed of 1.68Mtpa, but with all of the existing 5 secondary ball mills operational. Minor engineering modifications to the milling circuit were necessary to achieve a capacity of 1.44Mtpa. The modification included the installation of a larger mill pump (Warman 12/10) and a new set of 5 cyclones. Figure 33: Reduction section showing SAG mill and ball mill combination.

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The cyclone overflow from the mill circuit reports to the Pre-Leach-Thickener (“PLT”) where the water is removed prior to leaching with acid. Decoupling between the reduction and leach circuits is achieved to degree using two large storage tanks, which provide approximately 8 hours of solution storage.

3.4.4.2 Copper Plant.

The Copper Plant consists of the following sub-sections: Leaching (copper and cobalt), CCD, Tailings Neutralization, Copper SX and Copper EW. Leaching is performed in four leach tanks arranged in series (6 hours total residence time) under acidic and reducing conditions. The optimum acidity and oxidation/reduction potential conditions in the leach tanks are maintained by the addition of sulphuric acid (to all four leach reactors) and sulphur dioxide gas (as sulphur burner gas, to the last two reactor only) respectively. Presently and until the acid plant has been fully constructed, SMBS is being used as an alternative to sulphur dioxide gas. The targeted leachate copper tenor of 8-10 gpl copper dictates that the leach circuit be operated at a solids content of approximately 22%; the leach tank agitators ensure adequate solids suspension as to allow solids discharge via the tank overflows. Larger solids particles are removed from the bottom of the leach tanks by using cropping pumps. The copper leach and CCD circuit is shown in Figure 34. Figure 34: View of leach tanks, CCD thickeners and pin bed clarifiers.

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Leach slurry from the last leach reactor is thickened in a high density thickener (deep sided) to produce a thickened underflow slurry that reports the CCD circuit, while the overflow solution is clarified using a pinned bed clarifier and then stored in the High Grade Pregnant Liquor Solution (“HG PLS”) storage pond. The solids residue after leaching is washed in the 4-stage CCD circuit using a wash ratio of ~1.5 m3 /ton residue. The washed residue reports to the Tailings Neutralisation circuit prior to being pumped to the tailings dam. The “spent” wash solution that is generated by overflowing the first CCD is first clarified using a dedicated pinned bed clarifier and then stored in the Low Grade Pregnant Liquor Solution (“LG PLS”) Storage Pond. The copper SX is arranged as a split circuit (HG SX and LG SX) in order to reduce the acid and lime requirements of the plant. The HG SX treats the bulk of the copper in solution (75%) and therefore generates large amounts of acid) which is recycled back to the leach circuit. The LG SX treats the balance of the leached copper (25%) and therefore generates lower acid tenors in its raffinate stream and is therefore suitable for sending to the cobalt circuit where the acid is neutralised. Both the HG SX and LG SX sections comprise a two stage extraction, a one stage washing and a one stage stripping circuit. The extraction, washing and stripping equipment are conventional mixer-settlers. The HG SX raffinate, containing ~1400 mg/l Cu and 15 gpl sulphuric acid, is recycled to the leach circuit to make use of the free acid. The LG SX raffinate, containing ~200 mg/l Cu and ~8 gpl sulphuric acid, is forwarded to the to the cobalt plant. The SX washing stage aims to minimise manganese deportment to the copper electrolyte inventory - aqueous carryover to the stripping stage via the loaded organic phase is limited by washing in acidified water. The SX stripping combines the spent electrolyte and loaded organic to produce loaded electrolyte and stripped organic. The loaded electrolyte is fed to the copper electrowinning tankhouse where copper is deposited electrolytically. The spent electrolyte is returned to the copper SX circuit to replenish the depleted copper – thus forming a “closed loop”. The HG SX and LG SX sections share some common pieces of equipment - an emergency pond and a crud treatment plant. The emergency pond allows the management of large solution quantities generated during plant maintenance or plant emergencies (such as a fire). The crud treatment plant treats any crud from the mixer-settlers and general spillage from the plant. The crud treatment plant consists of a centrifuge which rejects the concentrated crud and produces clear solutions for return to the mixer-settlers. The concentrated crud is discarded to tailings, after burning-off of organic residues in an incinerator.

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At the EW tankhouse, metallic copper is deposited at a temperature of 45-50oC onto permanent stainless steel cathode blank sheets, contained in 96 polymer concrete EW Cells. The ‘jumbo EW cells contain 84 cathodes per cell. Plating aids used in the tankhouse include guar gum and cobalt (as cobalt sulphate); these aids function as a smoothing agent and an anode corrosion inhibitor respectively. The copper is deposition period lasts for a period of 7 days. The cathode harvesting cycle being implemented ensures the best possible quality cathodes - current densities are limited at the critical early stage of the growth cycle. The loaded cathodes are lifted from the cells by the manually operated, electric cranes and spray-washed over the cells as illustrated in Figure 35. The design allows for the cathodes to be submerged into clean, hot water in the cathode wash tanks in order to reduce sulphate entrainment in the deposit structure. Currently no steam is being produced by the acid plant (still to commence construction). A cold water wash is being carried out using a temporary arrangement (high pressure spray gun). Cathodes are stripped by two semi-manual stripping machines; product sheets are then stacked and strapped onto wooden pallets. The sheets are sampled for purity and then moved to the product store area by forklift. A dedicated weigh scale is used to accurately weigh the pallets. Exactly 50 sheets (each 40 to 50kg) are strapped per pallet. Figure 35: Loaded copper cathode in the Ruashi Phase II EW tankhouse

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Electric current is applied to the electrodes via a twin rectifier arrangement. Furthermore, a trickle current rectifier that is fed from an emergency generator has been installed to maintain the polarisation of the electrodes during power outages. The tankhouse is of ‘open’ construction and therefore naturally ventilated; acid mist formation is minimised by the use of floating plastic balls that float on the surface of the cells.

3.4.4.3 Cobalt Plant

The Cobalt Plant consists of the iron removal section, the cobalt precipitation section, the cobalt filtering section, the cobalt drying section and finally the magnesium removal section. The LG Cu SX raffinate is heated to 40oC via the iron removal heat exchangers (“HX”) prior to oxidation/precipitation in the iron removal tanks. The HX’s are yet to be commissioned due to the lack of steam availability (awaiting completion of the acid plant). The heated solution reports to the first removal stage where the acid content of this solution is neutralised to a pH of ~2.0 through the addition of milk of lime; some oxidation and precipitation of iron also occurs in this stage. Slurry from the first removal stage overflows to the second and third removal stages where the balance of the iron is oxidised and precipitated at a pH of ~2.5. The operational target of the Iron Removal Circuit is an iron-free solution containing <2 mg/l Fe and an oxidation/reduction potential of >600 mV (vs. Ag/AgCl reference electrode). The iron removal process is susceptible to scale formation; as a result, allowance has been for three active iron removal tanks and a single stand-by unit to facilitate a routine program of tank de-scaling. Iron oxidation is designed to be carried out using an air/SO2 gas mixture that is introduced to each tank via a sparge ring, located underneath a high-solidity agitator. These units are designed to ensure near complete gas-liquid mass transfer of air/SO2 gas, resulting in tank off-gas that is essentially free of SO2. The iron removal tanks are closed tanks, fitted with extended vent pipes to avoid direct exposure to any aerosols emanating from the tank (dispersion of any cobalt containing aerosols is important as they are believed to be carcinogenic). Good oxidation potential (“Eh”) and pH control is of paramount importance to ensure good iron removal with minimal cobalt losses and optimisation of SO2 utilisation. Direct on-line measurement of these parameters is carried out at each of the tanks. Slurry from the last iron removal tank reports to the Iron Removal Thickener. Overflow from the thickener is forwarded to the Cobalt Precipitation Circuit, while thickened underflow is filtered over two belt filters operating in parallel. The filter cake from the filters is thoroughly washed to limit the entrained cobalt loss, and then repulped with process water and discarded via the Tailings Neutralisation Circuit.

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The cobalt precipitation circuit receives cobalt-rich solution from the Iron Removal Circuit. The cobalt content of this solution is precipitated with magnesia (or sodium carbonate as is currently the case) in four agitated precipitation tanks. The design caters for precipitation to be performed at 35-40oC at a pH of 8.5, but due to the lack of steam this circuit is currently operated without the heat exchangers. Slurry from the precipitation tanks reports to the Cobalt Thickener. The thickener overflow solution reports to the Magnesium Removal Circuit or Process water pond whilst the thickener underflow is pumped to the three filter presses to produce a filter cake. The cake still contains significant moisture due to its fine particulate nature and therefore needs to be dried. The cobalt cake is dried using an infra-red drier that has yet to be commissioned. This is expected to occur between March and April 2010. The magnesium removal circuit must still be commissioned. To date it has not been necessary as the use of magnesia has been limited to two short trial periods. The change over from carbonate to hydroxide (magnesia) is planned for March 2010 when the cobalt drier comes on line. Figure 36: Cobalt carbonate cake being bagged for shipment

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3.4.4.4 Sulphuric Acid Plant

The acid plant is a refurbished second hand plant and is a “double absorption” plant based on MECS technology. An SO2 gas plant is being added and will form an integral part of the acid plant operation. The SO2 plant will alleviate the requirement for SMBS and translate to operating cost savings of approximately US$0.7m per month. The construction of the Ruashi sulphuric acid plant was put on hold in October 2008 and currently remains 70% complete. To complete the construction of the acid plant an estimated capital expenditure of approximately US$13m is required.

3.4.5 Plant availability and utilisation factors

The plant was designed to treat 120 Ktpm of feed ore and produce 3,800 tpm copper cathode and 420 tpm cobalt (contained in hydroxide or carbonate product). The plant was designed to a 95% availability and taking into account the difficulty of getting spare parts into the DRC, a utilisation of 90% results in an overall operating factor of 85%. The historical throughput and utilisation rates for Ruashi Phase II are given in Figure 37 below as well as the forecast throughput and utilisation factors over the LOM. Figure 37: Ruashi Phase II Plant Utilisation

80 79 82 81

120110 115 110 115 120

95

%

82

%

82

%

80

%

96

%

98

%

97

%

96

%

85

%

85

%

0%

20%

40%

60%

80%

100%

120%

0

20

40

60

80

100

120

140

May June July Aug Sept Oct Nov Dec H2 2010

LOM

Plant Running Tim

e

Thousand Tonnes Processed

Ruashi Phase II Plant Utilisation

Feed Tons Plant Running Time

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3.4.6 Metallurgical constraints The designed constraint limiting production output of copper to 45,000tpa is the EW tankhouse. This is based on the capacity of the rectifiers and assumes a current density of 280A/m2. Over the past 6-months however, the constraints to copper production are largely ascribed to poor performance of the reagent systems, equipment breakdowns due to unavailability of critical spares and the lower than planned feed grade.

The reagent problems experienced and solutions are described below: • Lime make-up system – The size of the agitator installed in the lime plant was insufficient to cause slaking of the lime. The result of this was a lower than design lime output which in turn caused the plant feed rate to be constrained due to the limited neutralisation capacity. A larger agitator motor was fitted to the lime plant and modifications were made to the grit removal system resulting in the reagent plant is working at design capacity. Further a standby lime plant has been procured and will be commissioned in H2 F2010 so as to ensure 100% availability of neutralisation capacity; and

• Flocculant system – The flocculant system designed and installed as part of the original capital programme had two significant flaws. First, the flocculant plant elevation was lower than the surrounding areas of the plant, causing flooding during the wet season and poor access as a result of the flooding. The plant has been raised and access in the wet season is no longer an issue. Second, the original design allowed for only one type of flocculant to be used in both neutral (pre-leach thickener) and acidic (CCD’s) environments. Optimisation test work carried out at the Ruashi laboratory showed better results could be obtained using different flocculant types for the neutral and acidic sections of the plant. A second flocculant plant was commissioned in H1 F2010 to address this matter and the flocculant addition is now in-line with design specifications.

Looking towards H2 F2010, the current crusher installation is seen as a constraint during the wet season due to the inability of the feed system to deal with wet material. This will be addressed through the commissioning of a permanent jaw crusher in March 2010 capable of handling the wet feed material encountered during the wet season. The commissioning of the new crusher will lift the crushing capacity to well in excess of 140 ktpm.

3.4.7 Labour complement The manning of the plant operation is based on a four-shift cycle. The plant and laboratory labour complement is in the region of 750. Unique aspects include the language difference (the local languages are French and Swahili) and the distinct lack of skills. Much effort has

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been put into training of personnel and the improvement in the overall plant performance can be largely attributed to this.

3.4.8 Tailings disposal

Golder was appointed by Ruashi Holdings in 2005 to design the Tailings Storage Facility (“TSF”). The TSF is located to the east of the plant and a site plan is included as Figure 38. All water arising on the TSF is collected in the return water dam (“RWD”) to the east of the facility.

The TSF was constructed in phases due to the phased production and in order to reduce the initial capital cost. The tailings from the first two years were deposited in a “paddock” of one quarter of the available site. This paddock is located in the north eastern corner of the site. The full TSF has been constructed and deposition is taking place in the remaining 3 quadrants until they reach the level of the first quadrant (expected in Q1 F2011). Thereafter the dam will be raised in a uniform manner. The dam was designed for a capacity of 28Mt, however due to an error in the survey co-ordinates used by the contractor during construction, the overall area of the dam is 20% larger than designed. Golder have been appointed to address the implications of the larger area on the stability of the dam and a report is expected in H2 F2010. Golder recommended a maximum rate of rise of 2.0m per annum for the first two years and then 3.0m per annum for subsequent years. For the first two years of operation (Phase I), the deposition was open-ended into a full perimeter impoundment facility. The Phase II deposition required installation of starter walls to achieve the rate of rise of 3m per annum. Although the phase II tailings is fairly coarse (particle size of approximately 65% passing 75 micron), and readily segregates into coarse and fines fractions when deposited on a tailings beach, the tailings is being deposited using a “daywall” paddock procedure. The slurry is deposited in the daywall during the day and in the basin at night. In this way the outer wall rises faster than the basin and provides freeboard in the basin for water storage. The deposition is rotated around the wall and basin to allow time for drying and consolidation. The TSF operation has been contracted to Fraser Alexander Tailings (“FAT”) who also collects the data for monitoring purposes. The operation is being audited on an annual basis by Golder and their findings are that the TSF is being well managed but highlights a number of issues which needs addressing, and are briefly discussed below. The following construction activities were suggested in the audit report: • Construct starter embankment walls along western and part of southern perimeter; • Construct paddock walls around full TSF perimeter;

• Install the pipe between the two compartments of the return water dam. Determine the emergency overflow capacity of the outlet pipe. This has been completed;

• Complete the main embankment for the RWD with a 300 mm layer of compacted soil; and

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• Construct an access ramp to the TSF pool wall. The following additions to the management system were proposed in the audit report: • Draft a Code Of Practice which should include an environmental and safety classification as per SABS 0286:1998;

• Update the Operating Manual for the TSF to formalise the wall construction procedure, an emergency preparedness plan, a closure plan and other operating requirements;

• Hold formal monthly meetings with recorded minutes between Ruashi (owner) and Fraser Alexander Tailings (contract operator);

• Survey of TSF and RWD to formally determine the life of the TSF and rate of rise with the increased footprint; to determine the as-built locations of the perimeter embankment, the capacity of the RWD, the ”as-built” levels of the penstocks, the TSF freeboard analysis;

• Laboratory test work to determine geotechnical properties of the tailings; and

• Stability analysis based on survey and properties from laboratory testing. The following amendments to the Operating Procedures were proposed in the audit report:

• Installation and monitoring of piezometers as specified; • Daily recording of the slurry density at the point of deposition; • Provision of a 7m wide step-in with every 7m vertical lift. (Flattening the intermediate outer slope of the TSF to 1:2);

• Reducing erosion of outer slopes of the TSF by planting grass at the start of the wet season;

• Application of Dustex to the surface of Phase I TSF; • Painting the operational penstock rings red; and • Eliminating public access onto the TSF. The suggestions as proposed in the latest audit report are currently being implemented. The decant water is controlled by a gravity penstock which rises as the deposit rises. The penstocks are located such that during Phase II, they are located near the centre of the deposit. The design caters for minimisation of seepage water by the inclusion of under-drains in the outer wall. In addition, compaction of the walls was included. The RWD capacity was designed to be 540,000 m3 which is based on the water balance (a return water flow, equivalent to 70% of tailings solution, a 1 in 50-year storm water event, and evaporative losses. The actual RWD installation consists of two dams located side by side.

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Figure 38: Site plan of Ruashi tailings storage facility

•

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3.5 INFRASTRUCTURE AND SERVICES (SR T5.6)

Ruashi is an operating mine and has an adequate power supply from the national utility provider, SNEL, to ensure continuous operations. The Ruashi mine is fed at 220kV by a dedicated power line installed and owned by Ruashi Mining sprl. Further, as part of the Phase II capital programme, Ruashi Mining sprl spent some $11 million in upgrading SNEL’s main supply sub-station in Lubumbashi with state-of-the-art protection and switching equipment. In addition to the 220kV SNEL grid connection supplying 40MW power to the mine, the mine has installed several backup diesel generators capable of producing 3MW which is sufficient to provide emergency power for agitation of the thickeners and leach tanks as well as a trickle charge to the EW tankhouse. In the event of a power failure, the crushing and milling sections are not operated. The process plant uses 6,500 m3 of water per day. This is supplied from groundwater sources (both open pit and boreholes) and delivered to the process water dam for treatment prior to use in the plant. The process water dam has a total capacity of 1,600 m3 to mitigate pump failure or downtime related to pipeline maintenance. Service water for the process plant is also available from a dedicated borehole supplying potable water to the offices, workshops and service water tank. Ruashi is accessed via two service roads as illustrated in Figure 39. The main access is via an 11km gravel access road off the Luano International Airport road. The second access is via the unpaved Ruashi Commune road. Both roads connect to the centre of Lubumbashi via tarred roads maintained in a reasonably good condition. Figure 39: Aerial view of the Ruashi mine showing the open pit, plant and tailings dam sites (oblique aerial photograph – north arrow approximate, not to scale)

LUBUMBASHI CBD

RUASHI I OPEN PIT

RUASHI TSF

PHASE II SX-EW PLANT

PHASE I PLANT

GÉCAMINES “OLD”

TAILINGS DAMAIRPORT ROAD

RUASHI COMMUNE

ROAD

COFFER DAM

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3.6 ECONOMIC CRITERIA (SR T5.7)

N: T 5.7 Economic criteria

3.6.1 Capital Cost Estimate The ongoing capital expenditure at Ruashi mine has been estimated to equate 3% of the initial capital expenditure incurred in the development of Ruashi Phase II and is set out in Table 3.8 in real terms as at 1 January 2010. Primary capital spend is related to the ongoing maintenance of the processing plant. Table 3.8: Ongoing capital expenditure

H2 F2010 – F2017 ($m)

F2018 ($m)

F2019 ($m)

Ongoing capital 9.8* 4.9 3.3 * Per annum

3.6.2 Operating Cost Estimate

The Ruashi operating cost estimate is set out in Table 3.9 and has been based on the actual costs experienced by Ruashi for the period 1 July 2009 to 30 November 2009 adjusted for average annual mining depths. Table 3.9: Operating costs for period 1 July to 30 November 2009 Description Unit Actual LOM

Estimate Mining – waste $/Mt milled 14.0 19.9 Other production costs $/Mt milled 86.1 85.1 Transport and clearing – Cu $/Mt Cu 590.5 560.7 Transport and clearing – Co $/lb Co 1.80 0.84 Source: Metorex analysis

Other production costs include ore mining, processing, engineering, labour and administrative costs. The variance between actual and estimated waste mining costs is due to the higher stripping ratios expected in the future and additional provision for haulage costs from 2015 due to new waste dump facilities being located further from the pit than is the case during the earlier years. Estimated mining costs (ore and waste) have been based on the existing contract mining agreement and the Ruashi mining schedule and are expected to increase with depth due to inter alia increases in in-pit hauling distances. The reduction in transport and clearing costs in respect of Co is expected to arise due to the installation of a Co dryer which should reduce the moisture content from c.55% to c.20% and the improvement of the purity from c.20% to c.28% through the production of a hydroxide as opposed to a carbonate, both of which would result in significantly lower volumes of product being transported.

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3.6.3 Taxation, Royalties And Exchange Rates

Law n°007/2002 dated July 11, 2002 (Mining Code) and Decree n°038/2003 dated March 26, 2003 (Mining Rules) establish a specific tax and customs regime for mining operations.

Corporate tax is paid at 30% of the taxable income. Corporate tax in the DRC is paid on taxable income realised by a company that carries out any operational activity in the country. To establish taxable income the gross revenue less all costs attributable in earning the gross revenue applies. Depreciation at 60% of the purchase price of an asset may be written down for the first year, thereafter on a declining balance basis according to general law.

The government royalty on non-ferrous metals has been set at 2% net smelter return and Gécamines is entitled to a 2.5% royalty on gross sales. The economic data is presented in Table 3.10.

Table 3.10: Economic Forecasts

Bank 2010 2011 2012

Exchange rate (nominal) Standard Bank 8.45 8.09 8.20 Nedbank 7.87 8.61 8.94 Investec 7.68 8.00 8.45 First National Bank 7.50 7.25 7.75 ABSA Bank 7.70 8.39 Average 7.84 8.07 8.34

RSA CPI Standard Bank 7.20% 6.10% 5.80% Nedbank 5.70% 5.60% 6.30% Investec 6.20% 6.80% 6.30% First National Bank 5.50% 5.00% 5.50% ABSA Bank 6.30% 5.70% Average 6.18% 5.84% 5.98%

US CPI Congressional Budget Office 1.50% 1.20% 1.10% Exchange rate (real based on above) Calendar 7.84 8.07 8.34 F2010 F2011 F2012 Adjusted for Metorex financial year 7.67 7.78 7.66 Source: Bank forecasts and Metorex analysis

3.6.4 Commodity Price Profiles The LME official prices as at 7 January 2010 for copper are set out below in Table 3.11.

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Table 3.11: Official LME spot and forward prices as at 7 January 2010

Type Cash ($/t) 3 month ($/t) 15 month ($/t) 27 month ($/t) Buyer 7,593 7,605 7,605 7,545 Seller 7,594 7,610 7,615 7,555

The consensus copper price forecast for the period 2010 to 2013 was determined by adjusting the nominal price forecasts released in December 2009 by JP Morgan Chase, Standard Chartered, Goldman Sachs, Deutsche Bank and Morgan Stanley into real terms as at 1 January 2010 based on United States inflation forecasts as per the Congressional Budget Office.

The consensus real terms price forecasts were then adjusted for the Metorex financial years which run from 1 July to 30 June each year. From 2014 onwards, Metorex has used a real long term price of $5,000/t Cu which is Metorex’s in-house view. The consensus copper commodity prices used for the valuation is presented in Table 3.12.

Table 3.12: Consensus copper commodity price forecasts (2010 real terms)

Calendar year 2010 2011 2012 2013 2014 Long term

Cu ($/t) 6,766 6,900 6,888 6,740 5,000 5,000 Metorex financial year FY2010 FY2011 FY2012 FY2013 FY2014 Long term

Cu ($/t) 6,766 6,833 6,894 6,814 5,870 5,000 Source: Analyst reports and Metorex analysis

The consensus cobalt price forecast for the period 2010 to 2012 was determined by adjusting the nominal price forecasts released during the last four months of 2009 by JP Morgan Cazenove, Deutsche Bank, Morgan Stanley, Macquarie, Royal Bank of Canada, UBS and others into real terms as at 1 January 2010 based on United States inflation forecasts as per the Congressional Budget Office. The consensus real terms price forecasts were then adjusted for the Metorex financial years which run from 1 July to 30 June each year. From 2013 onwards, Metorex has used a real long term price of $15.00/lb Co which is Metorex’s in-house view which Metorex believes is realistic given that the average Co price over the period 2004 to 2009 was $24.97/lb and an annual average price that never declined below $15.96 over the same period (per research report by RBC Capital Markets dated 22 December 2009). Whilst Metorex is cognisant of the forecast cobalt market surplus as reflected in Table 3.16, new supply generally always lags forecasts in Metorex’s view and the delay in project development being experienced in the DRC is expected to put pressure on supply of refined cobalt from China due to lower supply of cobalt intermediates into China from the DRC from which to produce refined cobalt and lower production of refined cobalt from Africa, the two regions which account for the majority of forecast refined cobalt supply growth. The consensus cobalt commodity prices used for the valuation is presented in Table 3.13.

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Table 3.13: Consensus cobalt commodity price forecasts (2010 real terms)

Calendar year 2010 2011 2012 2013 Long term Co ($/lb) 18.45 17.47 16.30 15.00 15.00 Metorex financial year FY2010 FY2011 FY2012 FY2013 Long term Co ($/lb) 18.45 17.96 16.89 15.65 15.00 Source: Analyst reports and Metorex analysis

3.7 HISTORICAL AND FUTURE EXPLORATION EXPENDITURE (JSE 12.9(e)(i)(ii) &

(iii) The historical and future expenditure by Ruashi Mining are summarised in Table 3.14. Table 3.14: Exploration expenditures for Ruashi Mining sprl

Expenditure Historical Expenditure

(US$m)

F2010 Budget* (US$m)

Future Estimate* (US$m)

Ruashi mine permits 0.86 1.20 2.00 Musonoi Est permit 3.48 3.52 3.00 Sokoroshe permits 0.53 - -

Total 4.87 4.72 5.00 * Planned expenditure, not yet committed.

Exploration activities at Ruashi mine have largely focused on infill drilling of the oxide resource and assaying activities during H2-F2009, with some spillover of expenditures into F2010. Looking forward, an additional drilling programme of approximately 5,000m at a cost of between $1m and $1.5m will be necessary to drill out the sulphide resource at depth and convert the current Inferred sulphide mineral resources into the Indicated or Measured mineral resource category. An additional expenditure of between $0.5m and $1m is anticipated to complete the geological, mining and feasibility studies to determine the economic viability of the Ruashi sulphide project. Delineation and infill drilling of the Dilala East deposit on the Musonoi Est Permit in Kolwezi has been the main focus for exploration activities by Ruashi Mining in the last 3 years. A total of 49 holes (10,892m) have been completed to date. It is unlikely that the F2010 budget of $3.52m will be spent during the remainder of the financial year, largely due to cash constraints in H1-F2010. Exploration expenditure at Dilala East for F2010 are anticipated to settle at between $1m and $1.5m for the full financial year. It is estimated that a further $3m expenditure is necessary from F2011 to complete geotechnical and hydrological drilling, metallurgical testwork and engineering design to elevate this project to a Bankable Feasibility Study level. A minor drilling programme of 7 drillholes was completed on targets within the Sokoroshe permits in 2007. No subsequent follow-up has been carried out on the Sokoroshe permits as all attention has been focussed on delineating the Dilala East orebody. No further work is anticipated.

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3.8 MARKETING (SR T5.8 & SV T1.18)

Copper Markets Copper is used in a wide variety of applications mostly in electrical and electronic products and in construction and industrial applications. It is also used in the transport, automotive, consumer products and information technology industries. World mine production totalled 15.3Mt in 2008 with 80% of production arising from 9 countries. South America was the dominant regional producer with Chile accounting for 35% of world production and Peru 8% in 2008 as set out in Figure 40. Figure 40: World Copper Mine Production 2008

Source: International Copper Study Group

Global world supply and demand of refined copper is set out in Table 3.15.

Chile, 35%

USA, 9%

Peru, 8%Australia, 6%

Indonesia, 4%

China, 6%

Russia, 5%

Canada, 4%

Zambia, 4%

Others, 20%

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Table 3.15: Refined Copper Output Market Balance 2006 2007 2008 2009f 2010f 2011f 2012f 2013f

Consumption:

OECD Countries ('000t) 9,399 9,135 8,466 7,092 7,421 7,687 7,770 7,834

China ('000t) 3,998 4,637 4,845 5,499 6,021 6,473 6,926 7,411

Other Emerging Mkts ('000t) 3,970 4,235 4,390 3,911 4,266 4,462 4,668 4,886

Global ('000t) 17,367 18,007 17,701 16,503 17,709 18,622 19,364 20,131

% change 3 4 -2 -7 7 5 4 4

Supply:

Global ('000t) 17,251 17,939 18,100 17,212 17,722 18,508 19,243 20,058

% change 4 4 1 -5 3 4 4 4

Surplus/(deficit) ('000t) -116 -68 399 709 13 -114 -121 -73

Inventory/consumption (days) 12 12 15 31 30 26 23 20

Source: CRU International, GSJBW Research Estimates

Global copper demand contracted by approximately 1.7% during 2008 and is expected to have contracted by a further 6.8% for calendar 2009 as a result of the global economic crises which set in during the latter half of 2008 and continued during 2009. Similarly, global supply contracted during 2009 in response to demand but at a slower pace resulting in the build-up of significant London Metal Exchange (“LME”) inventories in excess of 500kt during March 2009 as reflected in Figure 41. LME copper prices declined from levels in excess of $8,000/t during July 2008 to a low of $2,770 in December 2008 as reflected in Figure 41. Figure 41: LME Copper stocks and prices

Source: Andisa Securities

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

-

100,000

200,000

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400,000

500,000

600,000

02

-Jan

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b-0

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02

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-08

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-Ju

n-0

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02

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l-0

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g-0

8

02

-Se

p-0

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-08

02

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v-0

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-09

02

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-09

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v-0

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02

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c-0

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US$/t copper

Tonnes Copper

LME Copper inventory vs Copper Price

LME Stocks Cu Price

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Fundamentals have begun to strengthen as the world economies show signs of recovery and copper prices have risen to close to pre-crisis levels. Cobalt Markets Cobalt is used primarily in the form of an alloy which is either used as the base metal or as an alloying element. Cobalt is used in the production of Ni-Cad batteries and as an alloy hardening agent for aircraft jet engines, gas turbines and coatings for other metal surfaces as well as diamond tools. In the form of an oxide, cobalt is used in pigmentations for glass and porcelain as well as being used as a supplement in animal feedstock. In organic derivative forms it is used in paints and tyres. Currently the majority of cobalt is mined in the DRC, however there are deposits in Zambia as illustrated in Figure 42. Both the DRC and Zambia mainly produce cobalt in oxide and sulphide form as associated with copper ores, whereas in Australia cobalt is found in conjunction with nickel oxide ores. Figure 42: World Cobalt Mine Production 2008 (estimate)

Source: US Geological Survey, Minerals Commodities Summaries, January 2009

Supply and Demand

Refined cobalt supply is largely driven by production levels of copper and nickel as well as certain government policy decisions of stockpile agencies, such as Defence Logistics Agency of the USA. A final component of supply is the recovery of secondary material which is largely a function of global economic activity. Increases in nickel and copper production to meet demand from their markets and economic activity from the superalloys and chemical sectors resulted in cobalt availability having increased by 6.4%/annum between the period 2000-2007. Secondary output growth exceeded 30% over the same period. Chinese production growth from under 1.5kt

Australia, 9%Brazil , 2%

Canada, 12%

China, 3%

DRC, 45%

Cuba, 5%

Morocco, 2%

New Caledonia, 1%

Russia, 8%

Zambia, 11%

Other, 3%

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in 2001 to 13.5kt in 2007 has largely been built on imported intermediates from Central Africa, Australia and Spain. Global world supply and demand of refined cobalt is set out in Table 3.16. Western World demand growth for cobalt, between 2000 and 2007 was 3.7% per annum with strong growth from the chemicals sector managing to overcome the decline from the metallurgical areas caused by the events of September 2001. 2002 saw an overall decline from the Western World and globally as a result of the terrorist attacks and the slump experienced in the aerospace sector. Chinese demand growth of almost 20% per annum during the period 2000-2007 sustained the global demand growth at 6.3% per annum. Insufficient domestic output resulted in strong export led growth of intermediates from mines in the West, with new facilities having been built in China to convert these intermediates into usable products. Table 3.16: Refined Cobalt Output Market Balance 2005 2006 2007 2008 2009f 2010f 2011f 2012f

Consumption:

USA (t) 11,830 12,950 13,800 15,100 14,900 15,600 16,000 15,000

Europe (t) 11,500 11,300 11,500 13,800 13,600 14,500 14,900 14,500

Japan (t) 9,800 10,400 10,800 12,000 12,500 13,500 14,000 13,800

Asia excl. Japan (t) 3,350 3,550 3,800 4,200 4,500 5,300 4,900 5,000

Rest of Western World (t) 1,000 1,400 1,500 1,700 1,600 1,800 1,700 1,700

China (t) 11,900 12,500 13,800 15,500 18,500 23,500 27,000 33,500

CIS and other east bloc

(t) 2,400 2,700 2,900 3,200 3,300 3,200 3,400 3,600

Global (t) 51,780 54,800 58,100 65,500 68,900 77,400 81,900 87,100

% change 6 6 13 5 12 6 6

Supply:

Europe (t) 9,196 9,095 9,190 10,000 10,310 10,860 11,860 12,410

Africa (t) 8,505 7,568 7,628 9,398 11,468 13,968 16,868 19,768

Asia excl China (t) 1,691 2,104 2,150 2,250 2,300 2,300 2,300 2,300

America (t) 6,090 5,925 6,990 7,360 7,940 7,925 7,990 8,920

Oceania (t) 3,150 3,996 4,150 4,200 6,735 8,900 9,500 10,150

Russia (t) 2,900 2,900 2,850 2,900 3,100 3,250 3,250 3,250

Urals (t) 1,850 1,860 1,800 1,800 1,800 2,000 2,000 2,000

China (t) 12,700 14,000 13,500 16,800 18,500 20,500 22,000 23,500

Global primary (t) 46,082 47,448 48,258 54,708 62,153 69,703 75,768 82,298

Secondary (t) 7,573 7,508 6,700 7,500 7,550 7,250 7,250 7,150

Global total production (t) 53,655 54,956 54,958 62,208 69,703 76,953 83,018 89,448

US DLA deliveries (t) 1,199 294 300 300 300 300 - -

Global supply (t) 54,854 55,250 55,258 62,508 70,003 77,253 83,018 89,448

Surplus/(deficit) (t) 3,074 450 (2,842) (2,992) 1,103 (147) 1,118 2,348

Possible projects (t) - - - - - 1,100 2,300 3,550

Surplus/(deficit) (t) 3,074 450 (2,842) (2,992) 1,103 953 3,418 5,898

Page 123 of 170


Source: Independent technical report on assets of Nikanor

Table 3.16 sets out the anticipated market surplus by 2012 of c6.7% taking into account planned increases in production and new projects within the base case supply figures. These include additional material from OMG, growth at Mopani and Chambishi in Zambia, increased availability of intermediates to Sumitomo, higher output from CVRD and Inco and an increase at QNI together with planned production from CAMEC’s Luita facility, Nikanor’s KOV and Freeport’s Tenke Fungurume operation. Whilst the latter three projects have been included in the base case supply forecast at lower volumes than anticipated by the companies’ developing the projects, these projects by their very nature carry a higher degree of risk of delay and lower than expected commissioning. In addition to the projects set out above, an additional 1.1Kt increasing to 3.6Kt has been forecast to be produced from the Ambatovy, Gladstone and Kolwezi projects between 2010 and 2012. There is no terminal market for cobalt, and prices are therefore settled within the trade as guided by reports in specialist publications. Cobalt price direction tends to reflect current market availability, or anticipated availability. Figure 43 reflects the cobalt price history from 2000 to 2009. Figure 43: Cobalt price history

Source: Metal Bulletin

-

10.00

20.00

30.00

40.00

50.00

60.00

US$

/lb

Average Low Grade Co Prices

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3.9 VALUATION (SR T5.7 & JSE 12.9(f))

3.9.1 Introduction (SV T1.2)

The valuation of Ruashi Mining has been prepared by Metorex in accordance with the reporting and assessment criteria stipulated for Mineral Asset Valuations in the SAMVAL Code (2008), and the valuation results are reported as attributable values, for which Metorex has a 75% interest in Ruashi Mining.

3.9.2 Scope of Work (SV T1.2)

Refer to section 1.1.

3.9.3 Identity and Tenure (SV T1.3)


3.9.4 History (SV T1.4)


3.9.5 Geological Setting (SV T1.5)


3.9.6 Mineral Resources and Mineral Reserves (SV T1.6)


3.9.7 Modifying Factors (SV T1.7)

Refer to section 3.3.5.

3.9.8 Valuation Approaches and Methods (SV T1.8)

The methodologies used in valuing a mineral asset differ depending on the developmental stage of the project i.e. exploration, development and production properties. The following three valuation approaches are internationally accepted methods of valuing mineral projects as illustrated in Table 3.17 and summarised below: • cash flow: used to value development and production properties and relies on the “value in use” principle and requires determination of the present value of future cash flows over the useful life of the mineral asset;

• market: used to value exploration and development properties and which is based on the relative comparisons of similar properties for which a transaction is available in the

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public domain. The market approach relies on the principle of “willing buyer, willing seller” and requires that the amount obtainable from the sale of the mineral asset is determined as if in an “arms length” transaction; and

• cost: used to value early stage exploration properties and which relies on the historical and future exploration expenditure.

Table 3.17: Valuation approaches

Valuation approach

Exploration properties

Development properties

Production properties

Dormant properties

Defunct properties

Economically viable

Not viable

Cash Flow

Not generally used

Widely used Widely used

Widely used Not generally used

Not generally used

Market Widely used Less widely used

Quite widely used

Quite widely used

Widely used

Widely used

Cost Quite widely used

Not generally used

Not generally used

Not generally used

Less widely used

Quite widely used

Source: SAMVAL Code

The selection of an appropriate valuation approach is dependent on the availability of information on the property. The SAMVAL Code (item 25) prescribes the Competent Valuator to use at least two valuation approaches. The results from the valuation approaches and methods employed must be weighed and reconciled into a concluding opinion of value. The reasons for giving a higher weighting to one method or approach over another must be stated. Ruashi is an operating mine and can be classified in terms of the SAMVAL Code as a Production Property. Consequently, Metorex has used the cash flow and market valuation approaches (Table 3.17) to value Ruashi. Cash Flow Approach The cash flow approach relies on the “value in use” principle and requires determination of the present value of future cash flows over the useful life of the asset. The asset is valued using the free cash flow capitalisation, i.e. the discounted cash flow (DCF) methodology. The cash flow approach focuses on the value of a company’s future income streams. The future forecasts are usually based on the historic results and the value of the business is based on the value, in present day terms, of an anticipated series of future income streams. The cash flow assumptions are based upon realistic estimates, at the time of the valuation, of the costs of ongoing capital spending, production, sales revenues and expenditures.

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A discount rate is then applied to the cash flows, which is dependent on the nature of the project and operating company’s cost of capital and risk profile, to yield a net present value (“NPV”) on the post-tax un-escalated DCF. The cash flow approach takes into account the unique technical and financial characteristics of each project. Market Approach The market approach relies on the principle of “willing buyer, willing seller” and requires that the amount obtainable from the sale of the asset is determined as if in an arm’s length transaction. The market approach valuation method requires comparison with relatively recent transactions of assets that have similar characteristics to those of the asset being valued. It is generally based upon a monetary value per unit of resource (where available) or per unit of defined mineralisation. Metorex has performed a search of public domain documentation and obtained the most recent copper transactions as outlined in Table 3.18. Table 3.18: Comparable copper transactions

Investor Investee % Acquired Underlying asset

Year Price (US$m)

Trafigura Anvil 32% Kinsevere 2009 100 Camrose Africo 60% Kalukundi 2008 100 First Quantum

Kiwara 100% Kalumbila 2009 260

CAMEC Katanga 78% Kamoto 2007 1,284 Katanga Nikkanor 100% KOV 2007 2,027 First Quantum

Equinox 17.3% Lumwana 2007 194

Trafigura Tiger 12.3% Kipoi 2009 7 Source: Metorex anaylsis

The above transactions occurred on an arm’s length basis, in relation to their specific stage of exploration. The CAMEC/Katanga transaction did not complete, as CAMEC withdrew its offer shortly after making it, due to negative circumstances in relation to CAMEC’s licences having arisen which impacted significantly upon the share price of CAMEC and accordingly the offer for Katanga.

3.9.9 Valuation Date (SV T1.9)

The valuation date is as at 1 January 2010. Metorex arrived at the opinion based upon the following assumptions:

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• Metorex’s equity interest in Ruashi is 75%;

• 75% of cash flow before shareholder loan repayments is utilised to repay shareholder loans and the remaining 25% is utilised to pay dividends in accordance with the statutes of the company resulting in Metorex’s economic interest exceeding 85% using the base case assumptions resulting in the Competent Valuator using an effective interest of 85%;

• ongoing capital costs as set out in section 3.6.1; • operating costs as set out in section 3.6.2;

• tax rates, royalty rates and exchange rates as set out in section 3.6.3; • commodity prices as set out in section 3.6.4 and the existing hedging commitments to sell 11.7kt of Cu at $3,900/t during the six months to 30 June 2010 and 16.2Kt at $5,972/t during FY2011. In addition, achieved Co prices are equivalent to 70% of the forecast price in accordance with the existing offtake arrangements;

• discount rate of 12% in real terms; and

• mining and milling production rates, head grades and recoveries as set out in Table 3.7.

3.9.10 Valuation Summary and Conclusion (SV T1.10 & T1.15)

The valuation of Ruashi was based on the following two valuation approaches: • cash flow approach; and • market approach. Cash Flow Approach Metorex constructed a DCF model as outlined in Table 3.19, based on the value in use principle, using cash flow projections based on inter alia future production, recoveries, sales and expenses over the life of the mine. Production forecasts excluded potential production from the sulphide inferred resources pending further studies despite the fact that a sulphide concentrator plant exists, The “fair” value for Ruashi was based on the NPV, applying a 12% real discount rate, to the post-tax, un-escalated cash flows. The upper and lower value range was determined, using varying discount rates, as well as sensitivities on revenue, operating expenditure and capital expenditure as illustrated in Figure 44. In Metorex’s experience, the difference in the valuation results of the escalated and un-escalated DCF models is zero, provided the same escalation rate as used to escalate cash flows in an escalated DCF model has been used as the inflation rate when converting the nominal discount rate to a real discount rate for purposes of an unescalated DCF model. For this reason, the un-escalated model, discounted at a real discount rate is considered to be accurate and the preparation of an escalated model to demonstrate the un-escalated models’ accuracy in unwarranted. Using the cash flow approach, Metorex determined a “fair” (attributable) value for Ruashi of ZAR2,615m, with an upper and lower limit range of ZAR3,064m and ZAR2,166m

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respectively. These values were after the deduction of net debt amounting to ZAR987m (US$1/ZAR7.40 as at 1 January 2010) relating primarily to the Ruashi project funding with the Standard Bank group.

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Table 3.19: Cash Flow Analysis of Ruashi

Financial year Totals/ H2 F2010 F2011 F2012 F2013 F2014 F2015 F2016 F2017 F2018 F2019 F2020

Project year Units Averages 1 2 3 4 5 6 7 8 9 10 11

Production

ROM mined (kt) 12,225 585 1,354 1,438 1,440 1,390 1,440 1,440 1,440 1,369 330 -

Waste mined (kt) 71,520 3,443 13,000 9,000 9,000 9,000 9,000 9,000 8,295 1,699 83 -

Ore milled (kt) 12,313 673 1,354 1,438 1,440 1,390 1,440 1,440 1,440 1,369 330 -

Cu feed grade (%) 3.03% 2.96% 3.23% 3.03% 3.01% 3.13% 3.02% 2.86% 2.28% 3.21% 5.24% 0.00%

Co feed grade (%) 0.41% 0.37% 0.51% 0.60% 0.64% 0.49% 0.32% 0.22% 0.41% 0.21% 0.10% 0.00%

Total contained Cu (kt) 372.8 19.9 43.7 43.6 43.3 43.5 43.4 41.2 32.8 44.0 17.3 -

Total contained Co (kt) 50.9 2.5 6.9 8.6 9.2 6.8 4.6 3.1 6.0 2.9 0.3 -

Processing

Metallurgical recovery Cu (%) 84.89% 83.00% 85.00% 85.00% 85.00% 85.00% 85.00% 85.00% 85.00% 85.00% 85.00% 85.00%

Metallurgical recovery Co (%) 63.59% 50.00% 60.00% 65.00% 65.00% 65.00% 65.00% 65.00% 65.00% 65.00% 65.00% 65.00%

Payable Cu (kt) 316.4 16.5 37.1 37.1 36.8 37.0 36.9 35.0 27.9 37.4 14.7 -

Recovered Co (kt) 32.3 1.2 4.1 5.6 6.0 4.4 3.0 2.0 3.9 1.9 0.2 -

Commodity sales

Cu sold into hedge (kt) 27.9 11.7 16.2 - - - - - - - - -

Cu sales - LME grade (kt) 288.5 4.8 20.9 37.1 36.8 37.0 36.9 35.0 27.9 37.4 14.7 -

Co sales (kt) 32.3 1.2 4.1 5.6 6.0 4.4 3.0 2.0 3.9 1.9 0.2 -

Commodity prices

Hedge price (US$/t) 5,103 3,900 5,972

Average Cu LME (US$/t) 5,629 6,766 6,833 6,894 6,814 5,870 5,000 5,000 5,000 5,000 5,000 5,000

Average Co MB (US$/lb) 15.69 18.45 17.96 16.89 15.65 15.00 15.00 15.00 15.00 15.00 15.00 15.00

Revenue Real (US$m) 2,645.2 147.4 368.3 401.5 394.9 319.4 254.3 221.8 228.9 230.1 78.5 -

Copper sales (US$m) 1,848.7 111.9 253.8 255.5 250.9 217.2 184.6 175.1 139.3 186.9 73.5 -

Cobalt sales (US$m) 796.5 35.4 114.5 146.0 144.0 102.2 69.7 46.7 89.7 43.2 5.1 -

Operating expenditure (US$m) -1,688.7 -118.2 -202.0 -189.4 -192.9 -184.3 -198.9 -196.4 -196.6 -161.0 -49.0 -

Stripping costs (US$m) -245.5 -6.9 -29.1 -21.6 -24.5 -24.9 -41.9 -43.3 -43.3 -9.5 -0.5 -

Production costs (US$m) -1,024.4 -55.7 -113.1 -118.5 -118.9 -115.8 -118.9 -119.1 -119.7 -116.2 -28.5 -

Hedge contract profit/(loss) (US$m) -47.5 -33.5 -14.0 - - - - - - - - -

Realisation/off-mine costs (US$m) -237.1 -14.2 -28.5 -30.6 -31.0 -28.4 -26.0 -23.2 -22.4 -24.2 -8.6 -

Royalties (US$m) -111.1 -6.2 -15.6 -17.1 -16.8 -13.4 -10.6 -9.2 -9.6 -9.5 -3.2 -

Environmental (US$m) -16.5 -1.7 -1.7 -1.7 -1.7 -1.7 -1.7 -1.7 -1.7 -1.7 -1.7 -

Terminal benefits (US$m) -6.6 - - - - - - - - - -6.6 -

EBITDA (US$m) 956.5 29.2 166.3 212.2 201.9 135.1 55.4 25.4 32.3 69.1 29.5 -

Taxation (US$m) -137.2 - - -20.5 -49.4 -29.2 -5.0 -3.6 -6.3 -17.8 -5.4 -

Capital expenditure (US$m) -86.1 -9.8 -9.8 -9.8 -9.8 -9.8 -9.8 -9.8 -9.8 -4.9 -3.3 -

Working capital (US$m) 6.4 2.4 -2.5 -1.8 1.2 3.0 7.2 1.6 -0.4 -8.4 -13.1 17.4

Net free cash flow (US$m) 739.6 21.8 154.0 180.1 144.0 99.2 47.8 13.7 15.8 38.0 7.8 17.4

Net free cash flow (ZARm) 5,813.7 167.3 1,198.0 1,379.3 1,151.7 794.0 382.6 109.3 126.3 304.2 62.0 139.0

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Figure 44: Ruashi Sensitivity Analysis

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Ruashi Cu Price Sensitivity Analysis

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Ruashi Cu & Co Price Sensitivity Analysis

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Source: Metorex analysis

Market Approach A number of arm’s length transactions have been reviewed based on public domain documentation as outlined in Table 3.20.

The Competent Valuator does not believe using the transactions involving First Quantum’s proposed acquisition of Kiwara, Katanga’s acquisition of Nikanor and Trafigura’s investment in Tiger are appropriate to that of Ruashi for the following reasons: • Kiwara is an early stage project with an inferred resource having been recently declared whereas Ruashi is an operating mine;

• The Nikanor assets were at an inferred resources stage at the time of the transaction; and

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Ruashi Operating Cost Sensitivity Analysis

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Ruashi Capex Sensitivity Analysis

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• The investment by Trafigura into Tiger Resources is relatively small.

Taking the above into consideration, the comparable arm’s length transactions which are relevant to Ruashi are the following:

• Trafigura’s investment into Anvil Mining resulting in the former subscribing for 32% of Anvil Mining as announced in August 2009 for a consideration of US$100m (“the Anvil Transaction”);

• Camrose’s investment into Africo Resources resulting in the former subscribing for 60% of Africo Resources as announced in April 2008 for a consideration of US$100m (“the Africo Transaction”);

• First Quantum’s acquisition of 17.3% of Equinox as announced in December 2007 for a purchase consideration of US$194m (“the Equinox Transaction”); and

• CAMEC’s bid for 78% of Katanga for $1,284m in August 2007 (“the Katanga Transaction”).

Table 3.20 outlines the attributable transaction values per lb Cu equivalent in respect of the Anvil Transaction, the Africo Transaction, the Equinox Transaction and the Katanga Transaction. The Equinox Transaction value has been discounted by 20% due to reduced country risk of Zambia when compared to DRC. The Equinox Transaction and the Anvil Transaction were adjusted upward by 25% to take account of a control premium due to the fact that these transactions were in respect of minority interests whereas Ruashi is 75% held by Metorex. Cu equivalent units were determined by converting Co to Cu equivalent units using a factor of 3.6 which takes into account relative pricing and metallurgical recoveries Table 3.20: US$/lb Cu equivalent

Investor Date Price (US$m)

Attributable* Cu Equivalent (t’000)

US$/lb Cu Equivalent before adj.

US$/lb Cu Equivalent after adj.

Anvil Transaction Aug 2009 100 237.0 0.19 0.24

Africo Transaction Apr 2008 100 171.2 0.26 0.26 Equinox Transaction Dec 2007 194 405.1 0.22 0.22

Katanga Transaction Aug 2007 1,284 4,518.4 0.22 0.22 Source: Metorex analysis * Attributable to the transaction The Competent Valuator believes that using the transaction values for the selected transactions to determine the value for Ruashi is reasonable for the following reasons: • All of the transactions relate to assets which are located on the Central Africa Copperbelt and specifically the DRC, with the exception of the Equinox Transaction; and

• The Anvil, Africo and Katanga assets are high grade deposits as is Ruashi. Using the different US$/lb Cu equivalent values calculated from the transactions set out in Table 3.20, a “fair” value and range of values for Ruashi can be determined.

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The upper and lower US$/lb Cu equivalent values determined from the respective transactions were used to calculate the upper and lower values for Ruashi. Similarly, the average US$/lb Cu equivalent value of the transactions is used to calculate the “fair” value for Ruashi as outlined in Table 3.21. Table 3.21: “Fair” value and ranges used

Upper US$/lb Cu Equivalent

Lower US$/lb Cu Equivalent

“Fair” US$/lb Cu Equivalent *

0.26 0.22 0.24

Applying the total mineral reserve for Ruashi of 668Kt of contained Cu equivalent to the respective US$/lb Cu equivalent as determined above, the 75% attributable value of Ruashi using the market approach was determined as:

• The upper and lower valuation range of ZAR2,330m and ZAR1,923m respectively based on the long term exchange rate of R8.00/US$1 and

• with a “fair” value of ZAR2,078m based on the long term exchange rate of R8.00/US$1.

Concluding opinion of value (SVT1.15) Table 3.22 summarises the “fair”, upper and lower values of Ruashi using the cash flow and market valuation approaches. Table 3.22: Ruashi Valuation Results

Fair ZARm

Upper ZARm

Lower ZARm*

Cash flow 2,615 3,064 2,166

Market 2,078 2,330 1,923

Relating Ruashi to any historical arm’s length transaction is challenging since there are no true comparables, since each asset is unique with respect to key factors such as geology, mineralisation, costs, stage of exploration and infrastructure. The above facts lead to the Competent Valuator to prefer the results of the cash flow approach versus the market approach. Furthermore, the Competent Valuator believes the premium to “fair” value of the cash flow approach when comparing the cash flow approach to the market approach is justified for the following reason:

• Ruashi is a production property with a substantial amount of capital having been spent and an operating history when compared to the projects held by Anvil Mining and Africo Resources which at the time of the transactions, were still in development phase.

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Consequently, the concluding opinion of value for Ruashi is based on the cash flow approach as follows:

• a “fair” value of ZAR2,615m; and • an upper and lower valuation range of ZAR3,064m and ZAR2,166m respectively.

Forward-looking Statements Certain statements contained in this document other than statements of historical fact, contain forward-looking statements regarding Ruashi and its operations, economic performance or financial condition, including without limitation those concerning; the economic outlook for the copper industry, expectations regarding copper prices, exchange rates, production, cash costs and other operating results and growth prospects. Although Metorex believes that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to be correct. Accordingly, results may differ materially from those set out in the forward-looking statements as a result of, among other factors, changes in economic and market conditions, success of business and operating initiatives, changes in the regulatory environment and other government actions, fluctuations in commodity prices and exchange rates, and business and operational risk management.

3.9.11 Sources of Information (SVT1.11)


3.9.12 Previous Valuations (SVT1.12)

No previous valuations have been presented in the public domain in respect of Ruashi over the past two years.

3.9.13 Reliance on Other Experts (SVT1.13)


3.9.14 Competent Valuator’s Statement (SR T1.11 & SV T1.14)


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3.9.15 Ranges of Values (SV T1.15)

Refer to section 3.9.10.

3.9.16 Historic Verification (SV T1.17)

Not applicable.

3.9.17 Market Assessment (SV T1.18)


3.9.18 Audits and Reviews (SV T1.19)


4.0 RISK ANALYSIS (SR T 6)

4.1 RISKS TO THE METOREX GROUP

Prior to making an investment decision prospective investors should carefully consider all the information in this Document, including the following risk factors, which the Directors consider to be material risks specific to the Group and/or the industry. Additional risks not presently known to the Group, or that the Group currently considers immaterial, may also impair the Group’s business operations. If any events or circumstances giving rise to any of the following risks, together with possible additional risks and uncertainties of which the Directors are currently unaware or which they consider not to be material in relation to the Group’s business, actually occur, the Group’s business financial condition, results or future operations could be materially and adversely affected. In such circumstances, the trading price of the Metorex Ordinary Shares could decline due to any of these risks occurring and investors could lose part or all of their investment. Investors should consider carefully whether an investment in Ordinary Shares is suitable for them in light of the information in this Document, their personal circumstances and the financial resources available to them.

The Company’s operating results and its financial condition are entirely dependent on the trading performance of members of the Group. The Company’s ability to pay dividends will depend on the level of distributions, if any, received from the Company’s subsidiaries. The Company’s subsidiaries may from time to time be subject to restrictions on their ability to make distributions to the Company, as a result of factors such as restrictive covenants contained within loan agreements, foreign exchange limitations, regulatory, fiscal or other restrictions. There can be no assurance that such restrictions will not have a material adverse effect on the Group’s business, operating results and financial condition.

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Exploration, mining and processing activities are dependent upon the grant, renewal or continuance in force of appropriate subsurface use, contracts, licenses, permits, dispensations and regulatory approvals and consents which may be valid only for a defined time period, may be subject to limitations and may provide for withdrawal in certain circumstances. Without prejudice to the generality of the foregoing, the continuing refining at the Sable plant of any copper and cobalt concentrate from the DRC is contingent on the continued dispensation from the Minister for Mines of the DRC for the export of such concentrate and the import of such concentrate into Zambia is contingent upon receiving an extension of the import license from the Zambian authorities. There can be no assurance that such licenses, permits, dispensations and regulatory approvals and consents would be granted, extended, renewed or continue in force, or, if so, on what terms. Withdrawal of licenses, termination of subsurface use contracts or failure to secure requisite licenses or subsurface use contracts in respect of any of the Group’s operations may have a material adverse impact on the Group’s business, operating results and financial condition.

Production costs are in ZAR, US dollars, Francs and Kwacha. Revenue is mainly US dollar denominated and could be affected by material currency and commodity fluctuations. Metorex does not hedge against all these risks and is therefore exposed in some instances.

The Ruashi Phase II copper and cobalt leaching plant construction is complete with the exception of the front-end crusher upgrade and the acid plant. The output from the Ruashi leaching plant comprises copper cathodes and cobalt carbonate/hydroxide. The sulphuric acid plant will ensure the supply of sulphuric acid and also sulphur dioxide for cobalt reduction.

Changes in the Group’s production costs have a major impact on its profitability. Its main production expenses are raw materials, which include energy costs, reagents and consumables, diesel, salaries and wages, and overheads. Changes in costs of the Group’s mining and processing and marketing operations can occur as a result of unforeseen events, and could result in changes in profitability or reserve estimates. Many of these changes may be beyond the Group’s control. The volume and grade of the ore the Group recovers may not conform to current expectations. With respect of the Group’s estimates of Mineral resource and Ore Reserves, no assurance can be given that the anticipated tonnages and grades will be achieved, that the indicated level of recovery will be realized or that mineral reserves can be mined or processed profitably. Actual reserves may not conform to geological, metallurgical or other expectations, and the volume and grade of ore recovered may be below the estimated levels. In addition, there can be no assurance that mineral recoveries in small-scale laboratory tests will be duplicated in larger-scale tests under on-site conditions or during production. Lower market prices, increased production costs, reduced recovery rates and other factors may render the Group’s reserves uneconomic to exploit and may result in revision of its reserve estimates from time to time. Ore Reserve data is not indicative of future results of operations. If the Group’s actual mineral reserves and resources are less than current estimates, the Group’s results of operations and financial condition may be materially impaired.

Following the 2006 general elections for the National Assembly in the DRC, the application of the regulations of the DRC relating to foreign investment and mining licensing have been

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under review. In particular, the DRC Government initiated a review process by the License Review Commission in relation to all joint venture agreements entered into by private investors with state-owned mining companies including the contract for the creation of Ruashi Mining dated 9 June 2000, as amended between Ruashi Holdings and Gécamines which provided for the transfer of the Ruashi licences by Gécamines to Ruashi Mining. In addition, the License Review Commission is also reviewing the DRC joint venture arrangements between CRC’s 75 per cent. owned subsidiary, MMK, and Sodimico, a DRC state-owned company. The mining licence review process with regard to both Ruashi and MMK are complete with new terms which are more favourable to Gécamines and Sodimico than those agreed under the original contracts with respect to royalty payments to,equity participation in and mineral content fees payable to Gécamines and/or Sodimico and participation in the management of Ruashi Mining and/or MMK respectively. The details of the conclusion of these negotiations were published by Metorex on SENS during February 2009.

Many DRC laws provide regulators and officials with substantial discretion in their application, interpretation and enforcement. Given the new DRC Government’s short legislative and administrative history, the ongoing rights of the Group under its licences and other agreements may be susceptible to revision or cancellation, and legal redress in relation to such revocation or cancellation may be uncertain. Furthermore, court decisions can be difficult to predict and enforce, and the Group’s best efforts to comply with applicable law may not always result in compliance.

The northeast region of the DRC has undergone civil unrest and instability which may adversely affect the Group business. The northeast region of the DRC has undergone civil unrest and instability which could have an impact on political, social or economic conditions in the DRC. Although Ruashi is located in the remote southeast portion of the DRC, the effect of unrest and instability on political, social or economic conditions in the DRC could result in the impairment of the mining operations of Ruashi and the CRC assets. Any such changes are beyond the control of the Company and may adversely affect its business.

The laws and regulations of Zambia relating to mining taxes and royalties are under review and uncertainties in the law in respect to mining taxes and royalties could have an adverse effect on the Group’s operations. The royalty rate payable by the Group’s mining operation at Chibuluma to the Zambian Government was at a rate of 0.6 per cent. of gross revenue and the corporate tax rate was 30% of taxable income. The Government of Zambia announced in April 2008 an increase in the royalty rate to 3.00 per cent.and the introduction a Windfall and/or Variable Tax from April 2008. However, the Zambian Chamber of Mines rejected the proposed increase in the royalty rate and the new tax rates and following discussions between the Chamber and the Zambian Government, the Windfall tax was abandoned in April 2009 but the royaly rate and Variable tax formula remained. The increase in the royalty rate and the Variable tax rate has an adverse impact on the financial result of the Group’s mining operation at Chibuluma.

Power disruption in the DRC or Zambia could have a material adverse effect on the Group’s business operating results and financial position. The Group’s operations depend upon the reliable and continuous delivery of sufficient quantities of power to its mines and

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processing facilities. While the Group currently has adequate power supply to its existing facilities, the Group’s long-term operations, when taken together with other proposed developments in the region could, if all fully operational, have a total power requirement in excess of power currently available. Failure to secure sufficient power in the future could have a material adverse effect on the Group’s business, operating results and financial position. Power disruption in the DRC or Zambia could have a material adverse effect on the Group’s business, operating results and financial positions.

HIV/AIDS remains a major healthcare challenge in South Africa, Zambia and the DRC. HIV/AIDS, malaria and other diseases are perceived as a serious threat to maintaining a healthy,skilled workforce on the copperbelt. The per capita incidence of the HIV/AIDS virus in South Africa, Zambia and the DRC are among the highest in the world. As such, HIV/AIDS remains a major healthcare challenge faced by the Companies operations in those countries. There can be no assurance that the Company will not lose members of its workforce or lose workforce man-hours, which may have an adverse effect on the Company’s operations.

Failure to obtain, or difficulty or delay in obtaining, financing could result in the delay of certain projects or exploration. The Company’s ability to continue its exploration, assessment, development and operational activities will depend on the resource industry generally which is cyclical in nature, which may in turn affect the Company’s ability to attract financing, including joint venture financing, debt or bank financing, equity financing or production financing arrangements. Failure to obtain, or difficulty or delay in obtaining, requisite financing could result in the delay of certain projects or postponement of further exploration, assessment or development of certain properties or projects. Financing through the issuance of equity will result in dilution of existing Shareholders’ shareholdings.

The South African companies in the Group are subject to South African exchange control regulations. The South Africa Reserve Bank (“SARB”), and in particular its Exchange Control Department (“ECD”), has been delegated the authority to administer the South African exchange control system. The ECD has wide discretion that is exercises in accordance with the exchange control regulations and the exchange control rulings in line with the policy guidelines laid down by the South African Minister of Finance. Certain banks have been appointed as authorised dealers in terms of the exchange control regulations and these authorised dealers assist the ECD in administering the exchange control system, their authority being regulated by the exchange control rulings. All applications to the ECD must be made though an authorised dealer. Any cash flows from South Africa will be regulated by exchange control regulations. There can be no assurance in the event that the Company makes an application to the SARB for a transfer of funds out of South Africa that such transfer will be approved, in which case any restrictions placed on the Company in respect of any such transfer may have a material adverse effect on the Group’s business, operating results and financial condition.

The profitability of the Group’s operations, and the cash flows generated by these operations, are significantly affected by material changes in the market prices for copper, cobalt and antimony. The market prices for these commodities can fluctuate widely. These fluctuations are caused by numerous factors beyond the Group’s control, including:

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speculative positions taken by investors or traders in these commodities; changes in the demand for these commodities, changes in the supply of these commodities from production, disinvestment, scrap and hedging; financial market expectations regarding the rate of inflation; the strength of the US dollar (the currency in which the commodities prices trades internationally) relative to other currencies; changes in interest rates; commodity sales by producers in forward transactions; global or regional political or economic events; and costs of commodity production. The prices of commodities are often subject to sharp, short-term changes resulting from speculative activities.

If revenue from commodity sales fall below the cost of production for an extended period, the Group may experience losses and be forced to curtail or suspend some or all of its capital projects and/or operations and change its dividend payment policies. In addition, the Group would have to assess the economic impact of low commodity prices on its ability to recover any losses it may incur during that period and on its ability to meet debt requirements at Ruashi and Chibuluma and maintain adequate cash and accounting reserves. However, the Group’s current average total cash costs and total production costs are significantly below the prevailing commodity prices with the exception of Consolidated Murchison which is an asset held for sale.

Mining companies face many exploration and development risks that may affect their cash flows, overall profitability and dividends.

The Group has a number of exploration and development interests through its interests in CRC and Ruashi. Exploration activities are speculative and are often unproductive. These activities also often require substantial expenditure to: establish reserves through drilling and metallurgical and other testing techniques; determine appropriate recovery processes for metal from ore; and construct, renovate or expand mining and processing facilities. Once mineralization is discovered it can take several years to determine whether reserves exist. During this time the economic viability of production may change. The Group considers from time to time the acquisition of reserves, development properties and operating mines, either as stand-alone assets or as part of companies. Its decisions to acquire these properties have historically been based on a variety of factors including historical operating results, estimates of and assumptions about future reserves, cash and other operating costs, the commodity prices and projected economic returns, and evaluations of existing or potential liabilities associated with the property and its operations. Other than historical operating results, all of these parameters may differ significantly from the Group’s estimates and assumptions. in addition, there is intense competition for attractive properties. As a result of these uncertainties, the exploration programmes and acquisitions engaged in by the Group may not result in the expansion or replacement of the current production with new reserves or operations. This could adversely affect the Group’s business, operating results and financial position.

The Group’s profitability will depend, in part, on the actual economic returns and the actual costs of developing mines, which may differ significantly from the Group’s current estimates. The development of the Group’s mining projects may be subject to unexpected problems and delays. The Group’s decision to develop a mineral property is typically based, in the case of an extension or, in the case of a new development, on the results of a

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feasibility study. Feasibility studies derive estimates of expected or anticipated project economic returns. These estimates are based on assumptions about: future commodity prices; anticipated tonnage, grades and metallurgical characteristics of ore to be mined and processed; anticipated recovery rates of metal from the ore; anticipated capital expenditure and cash operating costs; and the anticipated return on investment. Actual cash operating costs, production and economic returns may differ significantly from those anticipated by such studies and estimates. There are a number of uncertainties inherent in the development and construction of an extension to an existing mine, or in the development and construction of any new mine. These uncertainties include, in addition to those discussed immediately above: the timing and cost, which can be considerable, of the construction of mining and processing facilities; the availability and cost of skilled labour, electrical power, water, consumables, such as reagents, lubricants and fuel, and transportation facilities; the availability and cost of appropriate smelting and refining arrangements; the need to obtain necessary environmental and other governmental permits, and the timing of those permits; and the availability of funds to finance construction and development activities. The costs, timing and complexities of mine development and construction can increase because of the remote location of many mining properties. New mining operations could experience unexpected problems and delays during development, construction and mine start-up. In addition, delays in the commencement of mineral production could occur. Accordingly, the Group’s future development activities may not result in the expansion or replacement of current production with new production, and any new production sites or facilities may be less profitable than currently anticipated or may not be profitable at all.

Mining is susceptible to numerous events that may have an adverse impact on a mining business. These events include, but are not limited to: environmental hazards, including discharge of metals, pollutants or hazardous chemicals; industrial accidents; underground fires; labour disputes; unexpected geological formations; unanticipated ground and water conditions; fall of ground accidents; failure of mining pit slopes and tailings dam walls; legal and regulatory restrictions and changes to such restrictions; and other natural phenomena, such as floods or adverse weather conditions. The occurrence of one or more of these events may result in the death of, or personal injury to, miners, the loss of mining equipment, damage to or destruction of mineral properties or production facilities, monetary losses, delays in production, environmental damage and potential legal liabilities to third parties who suffer damage as a result. As a result, the Group’s operations could be affected and, if such effects were material, its financial position could be adversely impacted to a significant extent.

Mining companies are subject to extensive environmental laws and regulations. The Group is subject to environmental regulations requiring companies to undertake programmes to reduce, control or eliminate various types of pollution and to protect natural resources. The Group must actively monitor specific environmental issues. The Group is required to obtain licences, permits and authorisations in order to carry out many aspects of its business including (without limitation) the utilisation of water, the production or disposal of waste and the discharge of emissions. Failure to obtain, renew or comply with such licences may result in the licences being revoked or amended or members of the Group becoming unable to carry out or continue to carry out their business or being fined or becoming liable

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for damages. Furthermore, the regulatory authorities may require capital expenditure by the Group on its properties and assets as a condition to the grant or renewal of such licences, permits or authorisations. Pursuant to environmental laws and regulations, upon the cessation of mining operations mining companies are also obligated to close their operations and rehabilitate the lands that they mine in accordance with these laws and regulations. Estimates of the total ultimate closure and rehabilitation costs for mining operations are significant and based principally on current legal and regulatory requirements that may change materially. The Group provides for environmental rehabilitation to be used upon the cessation of mining operations for environmental clean-ups of the territories covered by its mining activities. However, in the event that these funds are insufficient to meet the cost of the Group’s clean-up obligations, the Group is obliged to fund any such shortfall. The Group makes payments into such rehabilitation trust funds over the course of the life of the relevant mine but the relevant government may at any time require payment in full of the amounts required for early closure of a mine. Environmental laws and regulations are continually changing and are generally becoming more restrictive. If the Group’s environmental compliance obligations were to change as a result of changes in the laws and regulations or in certain assumptions it makes to estimate liabilities, or if unanticipated conditions were to arise in its operations, the Group’s expenses and provisions would increase to reflect these changes. If material, these expenses and provisions could adversely affect its business, operating results and financial position.

Risks relating to emerging markets Metorex’s assets are located in emerging markets which are subject to greater legal, regulatory, economic and politica1 risks than more developed markets Investors should note that emerging economies, such as DRC, are subject to rapid change and that the the information set out in this Document may become outdated relatively quickly. Accordingly, investors should exercise particular care in evaluating the risks involved and must decide for themselves whether, the in light of these risks, investing in the Ordinary Shares is appropriate. Generally, investment in a company whose assets are located in emerging markets is only suitable for sophisticated investors who fully appreciate the significance of the risks involved and investors are urged to consult with their own legal and be financial advisors before making an investment in the Ordinary Shares. The Group’s mining operations are conducted in South Africa, Zambia and the DRC. Accordingly, the Group is substantially dependent on the economic and political conditions prevailing in these countries.

Publicly traded securities from time to time experience significant price and volume fluctuations that may be unrelated to the operating performance of the companies that have issued them. In addition, market prices may prove to be highly volatile and may fluctuate significantly in response to a number of factors, many of which are beyond the Group’s control, including: variations in operating results in the Group’s reporting periods; changes in financial estimates by securities analysts; changes in market valuation of similar companies; announcements by the Group of significant contracts, acquisitions, strategic alliances, joint ventures or capital commitments; additions or departures of key personnel; any shortfall in revenues or net income or any increase in losses from levels expected by securities analysts; future issues or sales of Ordinary Shares; and stock market price and volume fluctuations. Any of these events could result in a material decline in the price of Metorex Ordinary Shares.

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The Company cannot assure investors that it will make dividend payments in the future. The Company did not declare or pay a cash dividend during the five financial years ended 30 June 2009. The Company’s policy is to declare 20-30 per cent. of attributable profit as a dividend except when the Group is in an aggressive growth phase or when extensive capital expenditure is required. Any future payment by the Company of a dividend to Shareholders will depend upon a number of factors, including its results of operations and financial condition, budgets, forecasts, contractual restrictions and other factors considered relevant by the board of directors. There is no assurance that the Company will declare and pay, or have the ability to declare and pay, any dividends on the Ordinary Shares in the future.

The rights of Shareholders are governed by South African law. There may be limits at South African law regarding the ability of non-South African investors to obtain and enforce judgments against the Company based on laws of other jurisdictions. The Company is a public limited company incorporated under the laws of South Africa. The majority of the Directors reside in South Africa. In addition, a portion of the assets of the Company and its Directors and officers are or may be located in South Africa. As a result, it may not be possible for investors to effect service of process outside South Africa upon the Company or its Directors or officers, or to enforce judgments obtained in foreign courts predicated on securities laws or other laws of jurisdictions other than South Africa. In addition, awards of punitive damages in actions brought in other jurisdictions may be unenforceable in South Africa.

It should be noted that the Metorex Ordinary Shares are listed and available for trading on the JSE Limited and consequently obligation arising from applicable securities and corporate legislation in South Africa.

4.2 RISKS SPECIFIC TO RUASHI MINE

All senior Ruashi mine employees have attended a hazard identification and risk assessment training course as presented by IRCA Global. Following this training a high level risk assessment was undertaken by Ruashi mine and Metorex senior managers to determine the following: • Identify and quantify geopolitical risks (including infrastructure); • Identify and quantify the risk of social and environmental impacts;

• Identify and quantify geological, mining and process risks (technical); and • Identify and quantify the commercial risks. Analysis of the Safety, Health, Environment and Community (“SHEC”) risks associated with the various activities undertaken at Ruashi mine have been excluded from this report.

4.2.1 Introduction

A corporate risk register is maintained by Ruashi mine and updated on a quarterly basis. The updated risk registers are reviewed by the Metorex Executive Committee (“EXCO”)

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thereby ensuring a balanced view of risks. An industry renowned specialist in the area of risk management, Mr Henry Moorcroft, is invited to review the risk registers together with EXCO and his input ensures the safeguarding of shareholder interests.

4.2.2 Methodology

Metorex uses it own in-house methods to quantify risks. The risk quantification is based on a combination of severity and probability. Table 4.1 shows the criteria used to quantify the severity of the risk whilst Table 4.2 shows the criteria used to quantify the probability of the risk.

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Table 4.1: Risk Severity Quantification

SCALE SEVERITY

Code H or S Code B Code Co or En Code E or C

Code E or C

HEALTH AND SAFETY

OPERATIONAL- BUSINESS INTERRUPTION

CORPORATE

IMAGE/ ENVIRONMENT

EARNINGS / CAPITAL AT RISK (ZAR)

EARNINGS / CAPITAL AT RISK (US$)

10 > 50 fatalities Inability to resume within 3 years

Prolonged international condemnation

> R600m > US$60m

9 Disastrous Event

Total Failure International Media Coverage

R500m – R400m

US$50-US$40m

8 Long term liability

> 50 % failure Irreparable damage to natural resource

R400m – R300m

US$40m-US$30m

7 Multiple fatality Critical Senior executive prosecuted

R300m – R200m

US$30m-US$20m

6 > 1 fatality Loss of production > 6 months

Significant fines R200m – R100m

US$20m-US$10m

5 Single fatality Serious National Media Coverage

R100m – R50m

US$10m-US$5m

4 Serious irreversible effect

Moderate < 1 month downtime

Attention from local media

R50m – R30m

US$5m-US$3m

3 Moderate disability

Moderate < 1 week downtime

Minor reversible effects

R30m – R10m

US$3m-US$1m

2 Reportable injury

Minor asset damage, no production loss

Minor local media coverage

R10m – R5m US$1m-US$0.5m

1 No medical treatment required

Easily addressed Local public complaints

< R5m <US$0.5m

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Table 4.2: Risk Probability Quantification

SCALE PROBABILITY

Code % Code T Code L

10 100% Weekly

Happens Often

9 90% 1 month

8 80% 3 months

Could Easily Happen

7 70% 6 months

6 60% 1 year Could Happen and has Happened Elsewhere

5 50% 2 years

4 40% 5 years Hasn’t Happened Yet But Could

3 30% 10 years

2 20% 20 years Conceivable in Extreme Circumstances

1 10% 50 years

The risk registers takes into account the management measure put in place to mitigate the risks. This is known as the Risk Control Effectiveness (RCE) and is defined as “the actual level of control that is currently present and effective, expressed as a percentage of that reasonably achievable for that particular risk issue”. A scale of 0-100% is used with some RCE descriptions included in Table 4.3. The “reasonably achievable” criterion implies a cost-benefit aspect to the risk control measures contemplated. There will often come a point in many risk issues where, while it would be possible to reduce the level of residual risk even further, the costs of doing so would outweigh the reduction thereby gained. The “reasonably achievable” criterion also acknowledges that to varying degrees, depending on the particular risk issue, the level of residual risk will be influenced by factors over which Ruashi has little or no control. Thus the RCE could be close to 100% (ie the internal environment is well controlled) but the overall residual risk is high, as the external environment dominates that risk issue. The residual risk rating per category is the product of severity and probability rankings. Where mitigating controls have been put in place, these controls are applied to reduce either the severity or the probability (wherever applicable) by the factor given in Table 4.3.

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Table 4.3: Risk Control Effectiveness

Description RCE

Just getting started/ A lot of work still to be done 20-30% About half way there

50-60%

Most things in place and working but some more still to be done

75-80%

Nothing more to be done except review and monitor existing controls

>90%

Metorex applies the criteria in Table 4.4 to rank residual risks. Table 4.4: Residual Risk ranking

Description Residual risk

Very High >75

High 50-74

Tolerable 25-49

Low <25

4.2.3 Risk Review Findings

The Ruashi risk register updated for the December 2009 quarter identified 32 overall inherent risks. The top 5 risks are given in Table 4.5 below.

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Table 4.5: Ruashi mine top 5 risks

Category/ cluster

Risk Controls RCE Further Actions and Risk mitigation strategies

Sev

erity

Probab

ility

Risk Value

Mining Resource Definition – reduction in grade

• Due diligence on reserves estimation.

• Grade control procedures

• Mining controls

60% • Infill drilling onR1, R2 and R3 pits

• Grade control procedures implemented

• Block model optimisation underway

• Structural geology / controls investigation underway

• Mine design and optimisation (Whittling)

8E 8L 64

Mining Unable to mine due to water in the pit

• Install adequate dewatering systems.

• Monitor water levels.

• Understanding the hydrology.

• Contingency mining areas

60% • Continuous monitoring of water levels.

• Continuous monitoring of adequate maintenance

• Spare/stanby equipment available

• Comprehensive Hydrological Study.

• Focus on implementing action plans

6E 7L 42

Reduction Late commissioning of new crusher

• Project schedule

• Project review

80% • Ruashi to have more input control

• Short interval controls • Building up ROM

6E 8L 48

Community The community runs riot and takes their frustration out on the Mine

� Social programme

� Good relationships with the community

� Structured forums

� Maintain good relationships with security forces

� Fair compensation

80%

• Ensure adequate drinking water remains available

• Participate in bigger sustainable social programs

• Improve the local economy

• Improve security on the Mine, build surrounding wall

• Board members and shareholders to improve their DRC understanding

• Improve the scheduling and paying of compensation

6B 7L 42

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Commercial

Poor contracts/ logistics, lead to burden on cash flows as a result of poor terms and high costs

� Some agreements

� Long-term contracts to be concluded with credible suppliers

50%

• More on mine involvement

• Contracts to be put in place with all major suppliers

• Streamline flow

• Improve procurement practises

7E 7% 49

Over the Ruashi operation, the classification of risk is given in Table 4.6 below. Table 4.6: Residual Risk Ranking

Residual Risk Ranking No.Risks Very High 0 High 1 Tolerable 15 Low 16 TOTAL 32

Table 4.7 outlines the risk categories used for the risk assessment and the inherent risk per category. Table 4.7: Risk Distribution per Category

Risk Category Number of Risks

Geographic/Political 4

Commercial/Economic 4

Technical 19

Social/Environmental 5

TOTAL 32

On the basis of the risk assessment done to date, Ruashi is a low risk operation.

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5.0 RESOURCE AND RESERVE STATEMENT (SR T5.4, 7, 8, 10 & SV T1.7)

The Ruashi mine’s mineral resources and mineral reserves have been classified into geological risk categories using the SAMREC Code definitions as a guideline.

Mineral resources are limited to the Ruashi I, II and III orebodies, surface stockpiles and tailings dams (generated by Gécamines and Ruashi Phase I). Total mineral reserves as at 31 December 2009 have increased marginally from those reported in June 2009 due to the inclusion of the Gécamines and Ruashi Phase I tailings in the mineral resource statement for the first time.

The 2009 Ruashi orebody model has been classified into SAMREC Code compliant resource categories on a subjective basis. The consensus opinion of IGS, the Ruashi mine geologists and the Competent Person is that the observed continuity of the lower orebody in Ruashi I and II together with the mapping of the orebody and the recent well controlled drilling allow the oxide MV, RSF and DStrat units in Ruashi I and II to be classified as a Measured resource. The remainder of the oxide resource in Ruashi I, II and III (with the exception of the CMN unit) has been classified as an Indicated resource. The determination and use of modifying factors at Ruashi is an imprecise science and has only recently been evaluated through reconciliation of the resource model against mining actuals. Modifying factors used in the conversion of resources to reserves for the 31 December 2009 mineral reserve were presented in Table 3.5 and are conservatively biased in the opinion of the Competent Person.

Mineral resources are quoted inclusive of mineral reserves. Mineral reserves are limited to the Ruashi mine, stockpile and tailings reclamation.

The mineral reserves were derived from Measured and Indicated mineral resources only. The results appropriately reflect the Competent Persons view of the deposit. Table 5.1 and Table 5.2 outline a SAMREC compliant mineral resource and mineral reserve estimate for Ruashi Mining performed by Metorex as at 31 December 2009.

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Table 5.1: Detailed mineral resources for Ruashi Mining sprl as at 31 December 2009

Classification Tonnes (Mt) Cu Grade (%) Copper (‘000t’) Co Grade (%) Cobalt (‘000t)

31-Dec-09 30-Jun-09 31-Dec-09 30-Jun-09 31-Dec-09 30-Jun-09 31-Dec-09 30-Jun-09 31-Dec-09 30-Jun-09


Measured 0.9 1.0 6.8 6.7 62 70 0.27 0.29 2 3

Indicated 19.1 19.6 2.8 2.8 539 553 0.34 0.35 65 68

Inferred 8.5 8.6 2.1 2.2 182 186 0.13 0.13 11 11

Total 28.6 29.2 2.7 2.8 783 809 0.27 0.28 79 83


Indicated 0.5 0.3 2.0 2.5 11 7 0.60 - 3 -

Total 0.5 0.3 2.0 2.5 11 7 0.60 - 3


Indicated 0.3 - 1.8 - 6 - 0.41 - 1 -

Inferred 0.5 - 1.9 - 9 - 0.41 - 2 -

Total 0.8 - 1.9 - 15 - 0.41 - 3

Total Oxide Material 29.9 29.5 2.7 2.8 809 817 0.28 0.28 85 83

Sulphide Material (Insitu)

Inferred 8.0 7.9 3.1 3.1 248 248 0.26 0.26 21 21

Total Sulphide Material 8.0 7.9 3.1 3.1 248 248 0.26 0.26 21 21

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Table 5.1 cont: Combined oxide and sulphide mineral resources for Ruashi Mining sprl as at 31 December 2009

Classification Tonnes (Mt) Cu Grade (%) Copper (‘000t’) Co Grade (%) Cobalt (‘000t)


Oxide + Sulphide Material (Insitu)

Measured 0.9 1.0 6.8 0.0 62 70 0.27 0.00 2 3

Indicated 19.1 19.6 2.8 2.8 539 553 0.34 0.35 65 68

Inferred 16.5 16.6 2.6 0.0 430 434 0.19 0.00 32 32

Total Oxides + Sulphides 36.6 37.2 2.8 2.8 1,032 1,057 0.27 0.28 99 103

Oxide + Sulphide Material (Surface Stockpiles)

Indicated 0.5 0.3 2.0 2.5 11 7 0.60 - 3 -

Total Surface Stockpiles 0.5 0.3 2.0 2.5 11 7 0.60 3

Oxide + Sulphide Material (Surface Tailings Dams)

Indicated 0.3 - 1.8 - 6 - 0.41 - 1 -

Inferred 0.5 - 1.9 - 9 - 0.41 - 2 -

Total Surface Tailings Dams

0.8 - 1.9 - 15 - 0.41 - 3 -

Oxide + Sulphide Material (Insitu, Surface Stockpiles and Tailings Dams)

Grand Total 37.9 37.5 2.8 2.8 1,057 1,065 0.28 0.28 106 103


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Table 5.2: Mineral reserves for Ruashi Mines sprl as at 31 December 2009

Classification Tons (Mt) Cu Grade (%) Copper (‘000t’) Co Grade (%) Cobalt (‘000t)



Proved 0.5 - 7.0 - 36 - 0.17 - 1 -

Probable 11.4 15.1 2.9 3.2 327 483 0.43 0.39 49 59

Total 12.0 15.1 3.0 3.2 364 483 0.42 0.39 50 59


Probable 0.5 0.3 2.0 2.5 11 7 0.60 - 3 -

Total 0.5 0.3 2.0 2.5 11 7 0.60 - 3 -


Probable 0.8 - 1.8 - 15 - 0.41 - 3 -

Total 0.8 0 1.8 - 15 - 0.41 - 3 -

Oxide + Sulphide Material (Insitu, Surface Stockpiles and Tailings Dams)

Grand Total 13.3 15.4 2.9 3.2 389 491 0.43 0.38 57 59


Notes:

1. The LOM schedule is included in the mineral reserve;

2. Surface tailings dams, including 0.3Mt on old Gécamines tailings dams and 0.5Mt on Ruashi Phase I tailings dam, not previously declared.

3. Tailings dams only partially mined in LOM schedule.

4. Reduction in total open pit mineral reserve tonnage and grade largely a function of applying more conservative modifying factors;

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Table 5.3 presents a graphical reconciliation of declared mineral reserves between 30 June 2009 and 31 December 2009. A number of factors have resulted in the reduction of the declared in-pit oxide reserves from 15.4Mt in June 2009 to 12.0Mt in December 2009. The most significant reductions include • A retrospective SG adjustment to the MV, DSTRAT and RSF lithological units from approximately 2.3t/m3 to 2.05t/m3 made post completion of the pit optimisation exercise; and

• The application of more conservative modifying factors based on an empirical reconciliation exercise.

Work by the Ruashi mine geological department is ongoing to refine the resource model, and which may in the future, result in a reversal of these mineral reserve reductions. Table 5.3: Reconciliation of mineral reserves between 30 June 2009 and 31 December 2009

Qualification

Both the 2005/6 and 2009 sampling programmes have had the appropriate quality assurance (“QA”) and quality control (“QC”) procedures in place. Independent audits performed on these procedures and the subsequent results, have demonstrated that the correct procedures to identify, re-assay samples and sample batches that fall outside acceptable industry norms, have been applied.

15,431

1,818

13,613

975

14,588

649

13,940

1,975

11,965

534

12,498

809

13,308

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

Ore Tonnes

Thousands

Ruashi Mineral Reserves Reconciliation Waterfall Chart - 31 December 2009

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In the opinion of the Competent Person, due diligence and care in the drilling, sampling and assaying of samples have been exercised, during all drilling campaigns since 2005. The lack of a robust QA/QC audit trail for the historical UMHK and Gécamines data used for the resource modelling is flagged as an area of non-compliance to the SAMREC Code with respect to the adequacy of the sampling data. Check sampling of old core by Metorex in 2004 has indicated a reasonable correlation between historical UMHK and Gécamines data and check assays. While assays for this check sampling programme were performed at an accredited laboratory, with all the necessary QA/QC procedures in place, to ensure compliance with the SAMREC Code, the number of check samples, compared to the total database were very small (approximately 0.6%) and were biased towards samples collected in the 1970s and 1980s. Metorex has accepted the historical data as suitable for mineral resource estimation work on the basis of the limited check sampling, and the results of the 2005/6 and 2009 drilling campaigns. The mineral resource estimate for Ruashi mine is a SAMREC compliant estimate which must therefore be qualified on the basis of no QA/QC data for ~85% of the database.

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6.0 AUDITS AND REVIEWS (SR T9, SV T1.19)

Numerous suggestions and recommendations have been made by SRK, Golder and RSG Global (Coffey Mining) since 2005 to improve the confidence in the geological resource model. In the November 2004 CPR, SRK recommended that a thorough modelling and re-estimation should be undertaken to accurately determine the mineral resources within the Ruashi orebodies. They suggested that this should incorporate all the lithological contacts, the geological interpretation, structure and the latest topography. They further suggested that verification work should be done on the drillhole database, including but not limited to twinning existing holes, re-assaying of the selected drillholes and a complete review of the cobalt database. In June 2006, Golder concluded that

• Metorex has drilled both RC and diamond holes to confirm the results of drilling by previous companies. An auditable quality assurance quality control system was in place during this drilling campaign. The results of this drilling confirmed the historical data;

• Metorex used appropriately skilled and competent personnel for the drilling, core logging, sampling, and resource modelling and resource estimation for the result to be considered appropriate; and

• Metorex used Genalysis laboratory in Perth, an accredited facility, for all analysis work and SGS Lakefield in Johannesburg, as an appropriate accredited check laboratory. The precision results defined for field duplicates and for pulp repeats (based on the inter-laboratory checks) are reasonable.

At the time Golder recommended that the following work be completed for the mineral resource to be acceptable for a Feasibility Study: • Refinement of the variography;

• Presentation and analysis of the kriging plan and acceptance by Golder of the parameters used;

• Examination of the smoothing effect;

• Comparative checks by an alternative method such as conditional simulation, uniform conditioning or disjunctive kriging;

• Detailed definition of the relationship between TCu and AsCu and between TCo and AsCo, including conservation of metal balance, and cross relationships supported by kriging;

In November 2006, RSG Global / Coffey Mining commented on the multi generational nature of the database, and the lack of suitable QA/QC data, notwithstanding the work done by Metorex in2005/6. They concluded that there does appear to be a reasonable robust resource estimate for the Ruashi deposits, but suggested that the model be reviewed and improved to meet industry best practice standards. Consideration was to be given to lithological and structural domaining. RSG Global assigned the resource aspect of the project a Low-Medium Risk rating.

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RSG Global highlighted the lack of detail in the mine schedules available at the time and recommended that further work be spent designing all seven stages of the pit and not just the final stage. The mining and mineral reserve aspects of the project were assigned a Low-Medium risk. In 2007, IGS reviewed the database making significant changes to the cobalt sample database. As an alternative modelling methodology, a conditional simulation grade model was generated. There were however still unresolved issues regarding the geological coding in the database, resulting in the modelling of a single grade domain rather than multiple lithological or structural domains based on a revised coding. IGS concluded the June 2007 report recommending that

• a new pit optimisation study be completed on the revised model; • Ruashi carry out infill drilling, to resolve the geometry of the orebody or to infill gaps in the resource model; and

• Detailed geological mapping be undertaken before mining commences and then updated on a regular basis to enhance the geological understanding of the orebody.

IGS completed the most recent review and re-estimation of the Ruashi mineral resource in July 2009. The database used for this modelling was considerably enhanced by inclusion of a consistent set of lithological codes, identified and translated by French speaking geologists from the original hand written logs. The geological model has been appropriately domained into lithological and structural zones with grade interpolated using ordinary Kriging based on separate variograms per domain. IGS recommended that the Ruashi drillhole database be rationalised and a single relational database be stored on a secure server. Furthermore, that the site geologists be given training to analyse QA/QC data so that assaying irregularities could be identified earlier. Additional Surpac training was recommended to enable the site geologists to update the resource model on site, and to integrate the resource model with the grade control model. As a project, the Ruashi mine (and its staff) is beginning to mature and stabilise, and many of the mineral resource and reserve issues identified in the reviews and audits highlighted above have been addressed. In the opinion of the Competent Person, the challenge facing Ruashi Mining will be ensuring that the appropriate QA/QC procedures remain in place on all new drilling and sampling exercises, and that all future mineral resource and mineral reserve estimation work is done by mine staff to ensure ownership and accountability to the LOM plan.

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7.0 COMPETENT PERSON(S) AND OTHER KEY TECHNICAL STAFF (SR T11 & JSE 12.9(c))

To accompany the report dated 1 January 2010 entitled “Competent Persons Report (CPR) and Valuation of Ruashi Holdings (Pty) Ltd and Ruashi Mining sprl in the Democratic Republic of the Congo by Metorex Limited”. I, Timothy Paul Williams hereby certify that: (i) I am the Group MRM Consultant for Metorex Limited with an office at Cradock Heights, 21 Cradock Avenue, Rosebank, Johannesburg 2132, South Africa;

(ii) I am a graduate of the University of the Witwatersrand with a BSc Hons (Geology) in 1989. I have practised as a geologist continuously since 1991 and as a resource evaluation specialist since 1995. I was previously employed by Konkola Copper Mines plc in Zambia as Mineral Resources Manager from 2000 to 2005, and fulfil the requirement of the SAMREC Code with respect to experience relevant to the style of mineralisation and type of deposit under consideration;

(iii) I have been registered as a Professional Natural Earth Scientist (Registration number 400387/04) with the South African Council for Natural Scientific Professions since 2004. I am a Fellow of the South African Institute of Mining and Metallurgy (Membership number 702800);

(iv) As an employee of Metorex, I have received, and continue to receive, direct benefits from Metorex and am a holder of Metorex share options;

(v) I was assisted in the compilation of this report by the following persons who are also employees of Metorex, who have extensive experience in the mining industry and are members in good standing with the appropriate professional institutions:

a. Charles Denby Stockton Needham (Corporate and Mineral Tenure) b. Peter Norman Haworth, BSc Eng, MBL, Pr.Eng (20020097), Pr.Sci.Nat (62/88) (Exploration and Sampling)

c. Colleen Ann Parkins, MSc, Pr.Sci.Nat (400025/06) (Environment and Social)

d. Trevor John Faber, BSc Eng (Mining and Reserves)

e. Lloyd Chester Bradford, BSc (Chem Eng), MSAIMM (701588) (Metallurgy)

f. Gary Baumgarten, CA(SA) (05050471) (Valuations)

(vi) I have visited the Ruashi mine on numerous occasions over a period of 3 years. The last visit was from 30 November to 2 December 2009.

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(vii) As of the date of this certificate, to the best of my knowledge, information and belief, this Competent Persons Report contains all scientific and technical information that is required to be disclosed to provide the reader with a relevant and balanced description of the project ;

1 January 2010 Tim Williams, Pr Sci Nat, FSAIMM Johannesburg Group MRM Consultant

Metorex Limited

8.0 COMPETENT VALUATOR (SV T1.14)

To accompany the report dated 1 January 2010 entitled “Competent Persons Report (CPR) and Valuation of Ruashi Holdings (Pty) Ltd and Ruashi Mining sprl in the Democratic Republic of the Congo by Metorex Limited”. I, Maritz Smith, CA(SA) (SAICA number: 04852842) do hereby certify that:- (i) I am the Chief Financial Officer for Metorex (Limited) with an office at Cradock Heights, 21 Cradock Avenue, Rosebank, Johannesburg 2132, South Africa;

(ii) I am a graduate of the University of Johannesburg with a BCom (Hons) in 1998; (iii) I am a member of the South African Institute of Chartered Accountants; (iv) I have practiced my profession continuously since graduation from university; (v) To the best of my knowledge, information and belief, the report contains all scientific and technical information required to be disclosed to make the report not misleading;

(vi) To the best of my knowledge, information and belief all facts presented in the report are correct;

(vii) As an employee of Metorex, I have received, and continue to receive, direct benefits from Metorex and am a holder of Metorex share options;

(viii) I have read the definition of “competent person” set out in the SAMREC Code and certify that by reason of my education, affiliation with a professional association (as defined in the SAMREC Code) and past relevant work experience, I fulfil the

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requirements to be a valuator for the purposes of SAMREC Code and SAMVAL Code; and

(ix) I have visited the Ruashi mine on numerous occasions over a period of 4 years. The last visit was from the 12 November to 13 November 2009.

1 January 2010 Maritz Smith, CA(SA) Johannesburg Chief Financial Officer

Metorex Limited

9.0 SUMMARY, CONCLUSIONS AND INTERPRETATION (SR T1.1, 1.7, 2.4, 4.1 & 4.2)

The compilation of this CPR has highlighted the following conclusions and interpretations:- • The Ruashi mining licence is located on the Congo portion of the Central African Copperbelt, which is one of the world’s greatest metallogenic districts containing over a tenth of the world’s copper mineral reserves;

• The Ruashi mine is an operating mine with a design capacity of 120,000tpm of ROM feed and 45,000tpa of copper cathode;

• The Ruashi mine is compliant with the various DRC statutory environmental legislation, and has an approved EMP;

• The Ruashi mine has a SAMREC Code compliant mineral resource and mineral reserve declared as at 31 December 2009. Mineral resources are quoted inclusive of reserves with all Proved or Probable mineral reserves derived from Measured and Indicated mineral resources;

• The 31 December 2009 Ruashi LOM mineral reserve has been negatively impacted through the use of more conservative modifying factors. . Lower grades as determined by the LOM schedule will reduce the average annual copper output to approximately 36,000tpa for the next 10 years;

• Cobalt output of 3,500 to 4,000tpa has been indicated by the LOM schedule for the next 3-4 years;

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• The valuation of the Ruashi mine was carried out using two approaches as specified by the SAMVAL Code;

• Using the cash flow approach, the Ruashi mine has a “fair” attributable value of ZAR2,615m, with an upper and lower range of ZAR3,064m and ZAR2,166m respectively, using a discount rate of 12%;

• This valuation is sensitive to changes in the modifying factors used to determine the LOM reserve tonnages and grades. A 5% improvement in the tonnage loss factor translates to an increase in the LOM of approximately 6 months;

• A 5% increase in the copper grade loss factors over the LOM translates to a ZAR243m increase in the “fair” attributable value from ZAR2,615m to ZAR2,858;

• Ruashi Mining has an opportunity to extend the LOM by converting Inferred mineral resources into Indicated or Measured mineral resources. This will entail close spaced drilling of the CMN unit in Ruashi I and Ruashi II; and

• The sulphide Inferred mineral resource needs to be converted to a reserve through completion of a feasibility study to determine the viability of mining underground and processing ROM sulphide ore through the moth balled Phase I concentrator plant.

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10.0 REFERENCES (SV T1.11)

Body, K., Lomberg, K. 2009. Site Visit Report – June/July 2009, Standard Bank of South Africa Limited, Ruashi Project. Report No: PRUA01. Coffey Mining (SA) Pty Ltd. Haworth, P.N. 2005. Ruashi Borehole Check Sampling Programme carried out on behalf of Metorex Limited, January 2005. McMullin, M, Dekker, K, Verbeek, J, Hearne, J, Alistair, J, Cunningham, G, Hobbs, M. 2007. Ruashi Phase II Project. Independent Technical Audit of Feasibility Study. December 2006. Report No: PRUA01. RSG Global Consulting Pty Ltd. Metorex (Pty) Ltd. 2006. Ruashi Phase II Feasibility Report, Volume 1 - Project Summary, October 2006. Savage, S. 2009. Ruashi Project Resources Estimation, August 2009. Integrated Geological Solutions (Pty) Ltd. Van Daalen, F. 2009. Project Report, Ruashi Mine – Life- of- Mine 2009. November 2009. VBKom Consulting Engineers (Pty) Ltd. Van der Schyff, W., Shaw, B. 2006. Report on Review of Copper, Cobalt Resources, Ruashi Deposits, Democratic Republic of Congo, June 2006, Report No: 8133/8394/1/G. Golder Associates Africa (Pty) Ltd. Waldeck, H.G., McDonald, A.J. 2007. Independent Engineers Report – High Level Review and Valuation of Metorex. November 2007. SRK Consulting Engineers and Scientists (Pty) Ltd. Woodhead, J. 2007. A Compilation of Active Mines and projects in the Central African Copperbelt, Republic of Zambia and Democratic Republic of Congo.

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GLOSSARY OF TERMS, ABBREVIATIONS AND UNITS

Definitions

aeolian erosion, transport, and deposition of material due to the action of wind at or near the earth’s surface

arenaceous term describing sedimentary rocks with a modal grain size in the sand fraction

argillaceous term describing sedimentary rocks with a modal grain size in the silt fraction

assaying the chemical analysis of mineral samples to determine the metal content

Authorisations Means mining exploration, exploitation and development permits, leases, licences, concessions and regulatory consents

azurite hydrous copper carbonate mineral, Cu3(CO3)2(OH)2 , found mainly in oxide deposits close to surface

basement complex the widespread association of igneous and metamorphic rocks which are covered unconformably by unmetamorphosed sediments

basal conglomerate conglomerate formed at the earliest portion of a stratigraphical unit

basinal basin like depression that may be erosional or structural in origin.

biotite/titic trioctahedral plate silicate mineral bornite copper mineral, Cu5FeS4, found in sulphide deposits

carrolite cobalt mineral, Cu(Co,Ni)2S4, found mainly in the sulphide deposits

chalcocite copper mineral, Cu2S, found mainly in the enriched zones of sulphide deposits

chalcopyrite copper mineral, CuFeS2, found mainly in sulphide deposits

chrysocolla hydrous copper silicate mineral, Cu2H2(Si2O5)2(OH)4, found mainly in oxide deposits close to surface

coefficient of variation the coefficient of variation is a dimensionless number that allows comparison of the variation of populations that have significantly different mean values

concentrate a metal-rich product resulting from a mineral enrichment process such as gravity concentration or flotation, in which most of the desired mineral has been separated from the waste material in he ore.

crushing initial process of reducing ore particle size to render it more amenable for further processing

cut-off grade the grade of mineralised rock which determines as to whether or not it is economic to recover its metal content by further oncentration

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decline a surface or sub-surface excavation in the form of a tunnel which is developed from the uppermost point downwards

detrital a term applied to any particles of minerals, or, more rarely, rocks, which have been derived from pre-existing rock by processes of weathering and erosion

dilution waste which is unavoidably mined with ore dip angle of inclination of a geological feature/rock from the

horizontal dolomites rocks with more than 15% magnesium content drill-hole method of sampling rock that has not been exposed effective date date on which all assumptions in the report were finalised and

the date from which the valuation was done

fault the surface of a fracture along which movement has occurred feldspar/s the most important single group of rock forming silicate

minerals filtration process of separating usually valuable solid material from a

liquid flat flatter dipping areas flotation the process by which the surface chemistry of the desired

mineral particles is chemically modified such that they preferentially attach themselves to bubbles and float to the pulp surface in specially designed machines. the gangue or waste minerals are chemically depressed and do not float, thus allowing the valuable minerals to be concentrated and separated from the undesired material.

Gécamines La Génerale des Carriéres et des Mines geochronological the measurement of time intervals on a geological scale grade the measure of concentration of copper or cobalt within

mineralised rock hangingwall the overlying side of an orebody or slope haulage a horizontal underground excavation which is used to transport

mined ore heterogenite hydrous cobalt oxide mineral, Co3+O(OH), found mainly in

oxide deposits close to surface hydrogeology a science that deals with sub-surface water and with related

geologic aspects of surface water Indicated Mineral Resource

that part of a mineral resource for which tonnage, densities, shape, physical characteristics, grade and mineral content can be estimated with a reasonable level of confidence. it is based on exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drillholes. the locations are too widely or inappropriately spaced to confirm geological and/or grade continuity but are spaced closely enough for continuity to be assumed

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Inferred Mineral Resource

that part of a mineral resource for which tonnage, grade and mineral content can be estimated with a low level of confidence. it is inferred from geological evidence and assumed but not verified geological and/or grade continuity, it is based on information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drillholes which may be limited or of uncertain quality and reliability

intrusives a body of igneous rock which has forced itself into pre-existing rocks, either along some definite structural feature or by deformation or cross-cutting of the invaded rocks

lithology/ical geological description pertaining to different rock types malachite copper carbonate mineral, CuCO3Cu(OH)2, found mainly in

oxide deposits close to surface Measured Mineral Resource

that part of a mineral resource for which tonnage, densities, shape, physical characteristics, grade and mineral content can be estimated with a high level of confidence. it is based on detailed and reliable exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drillholes. the locations are spaced closely enough to confirm geological and grade continuity

metasediment/tory metamorphosed sedimentary rock mica/micaceous layer-lattice minerals of the three-layer type, and may be

divided into the dioctahedral muscovite group and the trioctahedral phiogopite-biotite group

milling a general term used to describe the process in which the ore is crushed and ground and subjected to physical or chemical treatment to extract the valuable metals to a concentrate or finished product

Mineral Reserve the economically mineable material derived from a measured and/or indicated mineral resource. it is inclusive of diluting materials and allows for losses that may occur when the material is mined, appropriate assessments, which may include feasibility studies, have been carried out, including consideration of, and modification by, realistically assumed mining, metallurgical, economic, marketing, legal, environmental, social and governmental factors. these assessments demonstrate at the time of reporting that extraction is reasonably justified. mineral reserves are sub-divided in order of increasing confidence into probable mineral reserves and proved mineral reserve

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Mineral Resource a concentration or occurrence of material of economic interest in or on the earth’s crust in such form, quality and quantity that there are reasonable and realistic prospects for eventual economic extraction. the location, quantity, grade, continuity and other geological characteristics of a mineral resource are known, estimated from specific geological evidence and knowledge, or interpreted from a well constrained and portrayed geological model. mineral resources are sub-divided in order of increasing confidence, in respect of geoscientific evidence, into inferred, indicated and measured categories

mineral rights a right or any share therein acquired, in terms of the minerals act to any right to dig or mine

mining assets the material properties and significant exploration properties mining authorisation any authorisation issued in terms of the minerals act Mining code Law No. 007/2002 adopted on July 11, 2002 and the Decree

No. 038/2003 adopted on March 26, 2003 as a supplement to the Mining Code

on-going capital capital estimates of a routine nature which are necessary for sustaining operations

ore reserve see mineral reserve orogeny an orogeny is a period of mountain building leading to the

intensely deformed belts which constitute mountain ranges.

Probable Mineral Reserve

the economically mineable material derived from a measured and/or indicated mineral resource. It is estimated with a lower level of confidence than a proved mineral reserve. It is inclusive of diluting materials and allows for losses that may occur when the material is mined. Appropriate assessments, which may include feasibility studies, have been carried out, and including consideration of, and modification by, realistically assumed mining, metallurgical, economic, marketing, legal, environmental, social and governmental factors. These assessments demonstrate at the time of reporting that extraction is reasonably justified.

project capital capital expenditure which is associated with specific projects of a non-routine nature

Proterozoic era of geological time between 2.5 billion and 570 million years ago

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Proved Mineral Reserve the economically mineable material derived from a measured mineral resource. it is estimated with a high level of confidence. it is inclusive of diluting materials and allows for losses that may occur when the material is mined, appropriate assessments, which may include feasibility studies, have been carried out, including consideration of and modification by realistically assumed mining, metallurgical, economic, marketing, legal, environmental, social and governmental factors. these assessments demonstrate at the time of reporting that extraction is reasonably justified

pyritic (pyrite) the most widespread sulphide mineral, FeS2

remnant ore blocks left behind as a result of the underground mining method

SAMREC code South African code for reporting of mineral resources and mineral reserves

SAMVAL code South African code for reporting of mineral asset valuations

schist/s a regionally metamorphasised rock characterised by a parallel arrangement of the bulk of the constituent minerals

sedimentary pertaining to rocks formed by the accumulation of sediments, formed by the erosion of other rocks

shaft an opening cut downwards from the surface for transporting personnel, equipment, supplies, ore and waste

smelting a high temperature pyrometallurgical operation conducted in a furnace, in which the valuable metal is collected to a molten matte or doré phase and separated from the gangue components that accumulate in a less dense molten slag phase.

stratigraphy study of stratified rocks in terms of time and space steep steeply dipping areas syncline/clinal/clinorium a basin shaped fold tailings finely ground waste rock from which valuable minerals or

metals have been extracted total cash costs all total cash costs are based on public quoted nominal

production costs, include retrenchment costs, rehabilitation costs, corporate costs, by-product credits for silver, sundry revenues, and exclude amortisation costs and inventory changes

total expenditure all expenditures including those of a operating and capital nature

trust fund a fund required by law to be set up, to which annual contributions are paid so that the remaining environmental liability of the operation is covered

volcanics/volcanics/ volcanoclastics

one of three groups into which rocks have been divided. The vocanic assemblage includes all extrusive rocks and

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associated intrusive ones

Abbreviations

3-D Three Dimensional AAS Atomic absorption spectrophotometry ADTs ArticuIated dump trucks AMC African Mining Consultants (Pty) Ltd BOMZ Black Oxide Marker Zone BH Breche Heterogene B RAT Breche RAT CMN Calcaire Minerais Noirs Capex Capital Expenditure CoSX Cobalt solvent extraction CP Competent Person CPI Consumer Price Index CuSX Copper solvent extraction CoG Cut-off grade DFS Definitive Feasibility Study DRC Democratic Republic of Congo DCF Discounted cash flow DStrat Dolomite Stratifie EW Electrowinning EAP Environmental Adjustment Plan EIA Environmental Impact Assessment EIS Environmental Impact Statement EMP Environmental Management Programme EMPR Environmental Management Programme Report FS Feasibility Study HT high tension IGS Integrated Geological Solutions (Pty) Ltd JV Joint Venture LML Large scale mining licence, Zambia LOM Life of Mine LDV Light Delivery Vehicle ISO lnternationaI Standards Organisation LHD Load haul dump LME London Metal Exchange LSE London Stock Exchange LT Low Tension NPV Net present value Opex Operating Expenditure OEM Original Equipment Manufacturer PE Permit Exploitation, DRC

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PER Permit Exploration, DRC RAT Roches Argilleuses Talceuse RATGR RAT Grises RSA Republic of South Africa RSF Roches Siliceuse Feuilletees RSC Roches Siliceuses Cellularies Roan Roan Supergroup RoM Run-of-Mine SDB Schistes de Base SSC Sediment-hosted stratiform Copper SDS Shales Dolomitiques Superieure SG Specific gravity SNEL Societe Nationale’d Electricite SNCC Congolese National Railways Sx Solvent Extraction SAMREC South African Mineral Resource Committee SRK SRK Consulting (South Africa) (Proprietary) TE Models Technical Economic Models TEMs Technical Economic Models TEPs Technical Economic Parameters WACC Weighted average cost of capital XRD X-Ray Diffraction ZAMTEL Zambian Telephone Company ZESCO Zambian Electricity Supply Commission ZCCM-IH Zambian Consolidated Copper Mines - Investment

Holdings

Units

cm 1 centimeter cfm cubic feet per metre g grams ha hectare hrs hours K one thousand units Kg kilogram Km kilometer Kt thousand metric tons Ktpm thousand metric tons per month Ktpa thousand metric tons per annum kW Kilo Watt Mm 1 millimeter M 1 metre m2 square metre

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m3 cubic metre

m3/hr cubic meters per hour

m% meters percent metal—a measure of metal accumulation

m/s metre per second Mt Million metric tonnes Mtpa 1 Million metric tonnes per annum MVA 1 million volt-amperes MW 1 million watts Ma Mega annum Pa Per annum Pa 1 Pascal—a measure of pressure Ppm parts per million T 1 metric tonne Tpa metric tons per annum Tpd metric tons per day Tpm metric tons per month USDm million United States Dollars USD or $ United States Dollar USD/lb United States Dollars per pound USD/t United States Dollars per tonne yr year ZAR South African Rand ZARm South African Rand million ZAR/t Rand per tonne oC degrees centigrade

% percentage

Chemical elements

ASCo Acid Soluble Cobalt ASCu Acid Soluble Copper CaO Calcum Oxide Co Cobalt Cu Copper Mg Magnesuim Si Silicon Ca CaIcium Mn Manganese Ni Nickel Zn Zinc Pb Lead Al Aluminium

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Cr Chrome CuO Copper Oxide Fe Iron MgO Magnesium Oxide Na2S2O5 Sodium Metabisulphite

NaHS Sodium hydrosulphide SO2 Sulphur Dioxide

TCo Total Cobalt TCu Total Copper

Metorex_Ruashi_CPR

Documents

smaller fragment

detrital marine

roches argileuses

gnrale des

average monthly

residual risk

central african

integrated