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Project Number: 2012-021
NI 43-101 REPORT
TECHNICAL REPORT ON THE
PRELIMINARY ECONOMIC ASSESSMENT
LAC GUÉRET GRAPHITE PROJECT
QUEBEC – CANADA
Prepared for
MASON GRAPHITE
Prepared by
Edward Lyons, P. Geo.
Tekhne Research
Martin Magnan, Eng.
Guy Saucier, Eng.
Roche Ltd, Consulting Group
Jeffrey Cassoff, Eng., Lead Mining Engineer
Stéphane Rivard, Eng., General Manager Mineral Processing
Michel L. Bilodeau, Eng., M.Sc. (App.), Ph. D., Economic Analyst
Mary Jean Buchanan, Eng., M. Env., Senior Project Manager
Met-Chem Canada Inc.
Nicolas Skiadas, Eng., M. Eng.
Journeaux Assoc., Division of Lab Journeaux Inc.
Effective Date: April 22, 2013
Issue Date: June 6, 2013
MASON GRAPHITE Lac Guéret Graphite Project – PEA NI 43-101 Technical Report
June 2013
QPF-009-12/B
P:\2012-021\Texte\Rapports\PEA 43-101 Technical Report\2012-021 PEA 43-101 FINAL 2.docx
IMPORTANT NOTICE
This Report was prepared as a National Instrument 43-101Technical
Report for Mason Graphite (“Mason”) by Met-Chem Canada Inc. (“Met-
Chem”). The quality of information, conclusions and estimates contained
herein is consistent with the level of effort involved in Met-Chem’s
services, based on: i) information available at the time of preparation, ii)
data supplied by outside sources, and iii) the assumptions, conditions, and
qualifications set forth in this Report. This Report is intended for use by
Mason subject to the terms and conditions of its contract with Met-Chem.
This Report can be filed as a Technical Report with Canadian Securities
Regulatory Authorities pursuant to National Instrument 43-101,
Standards of Disclosure for Mineral Projects. Except for the purposes
legislated under Canadian securities laws, any other uses of this Report by
any third party are at that party’s sole risk.
MASON GRAPHITE Lac Guéret Graphite Project – PEA NI 43-101 Technical Report
June 2013
QPF-009-12/B
P:\2012-021\Texte\Rapports\PEA 43-101 Technical Report\2012-021 PEA 43-101 FINAL 2.docx
DATE AND SIGNATURE PAGE - CERTIFICATES
Effective Date: April 22, 2013
Issue Date: June 6, 2013
Michel L. Bilodeau, Eng., M.Sc. (App.), Ph.D.
Independent Consultant
22, Labrador Street
Kirkland, QC, H9J 3W8
Telephone: 514-426-4210
Email: [email protected]
CERTIFICATE OF AUTHOR
To Accompany the Report entitled:
“NI 43-101 Technical Report on the Preliminary Economic Assessment Lac Guéret Graphite
Project, Québec-Canada” dated June 6th
, 2013 with effective date of April 22nd
, 2013.
I, Michel L. Bilodeau, Eng., do hereby certify that:
1) I am a retired (June 2009) Associate Professor from the Department of Mining and
Materials Engineering of McGill University, 3450 University St., Montréal, QC, Canada
H3A 2A7, and have taught on a contract basis the mineral economics course of the
mining engineering program at McGill in the Winter terms of 2010, 2011 and 2012;
2) I am a graduate of École Polytechnique de Montréal with a B.Eng. in Geological
Engineering (1970), and of McGill University with a M.Sc. (App.) in mineral exploration
(1972) and a Ph.D. in mineral economics (1975);
3) I am a member in good standing of the “Ordre des ingénieurs du Québec” (23799);
4) I have taught continuously in the areas of engineering economy, mineral economics and
mining project feasibility studies in the mining engineering program dispensed by McGill
University since my graduation from university, and have carried out in the capacity of
independent consultant several assignments related to the economic/financial analysis of
mining projects;
5) I have read the definition of "qualified person" set out in National Instrument 43-101 (NI
43-101) and certify that by reason of my education, affiliation with a professional
association (as defined by NI 43-101) and past relevant work experience in the mineral
industry that includes teaching for more than 30 years and consulting activities over the
past 20 years, I fulfill the requirements to be a “qualified person” for the purposes of NI
43-101;
6) I have participated in the preparation of the report entitled " NI 43-101 Technical Report
on the Preliminary Economic Assessment Lac Guéret Graphite Project, Québec-
Canada” dated June 6th
, 2013, as an Economic/Financial Analyst Consultant. I am
responsible for Section 22, part of Section 1 and part of Section 26;
7) I have not visited the site;
8) I have not had prior involvement with Mason Graphite and its Lac Guéret Graphite
Project and property that is the subject of the Technical Report;
9) I state that, as of the date of this certificate, to the best of my knowledge, information and
belief, the Technical Report contains all scientific and technical information that is
required to be disclosed to make the Technical Report not misleading.
10) I have no personal knowledge, as of the date of this certificate, of any material fact or
material change which is not reflected in this Technical Report;
11) I am independent of the issuer as defined in section 1.5 of NI 43-101;
12) I have read National Instrument 43-101 and Form 43-101F1, and the Technical Report has
been prepared in compliance with that instrument and form;
This 6th
day of June, 2013.
Original signed and sealed
(Signed) “Michel Bilodeau”
Michel L Bilodeau, Eng., M.Sc. (App.), Ph.D.
Economic/Financial Analyst
Consultant for Met-Chem Canada Inc.
Mary Jean Buchanan, Eng. M.Env.
Met-Chem Canada Inc.
555 René-Lévesque Blvd. West
Suite 300
Montreal, QC H2Z 1B1
Telephone: 514-288-5211 ext 246
Fax: 514-288-7937
Email: [email protected]
CERTIFICATE OF AUTHOR
To Accompany the Report entitled:
“NI 43-101 Technical Report on the Preliminary Economic Assessment Lac Guéret Graphite
Project, Québec-Canada” dated June 6th
, 2013 with effective date of April 22nd
, 2013.
I, Mary Jean Buchanan, Eng., M.Env. do hereby certify that:
1) I am a Senior Project Manager and Senior Environmental Engineer with Met-Chem
Canada Inc. (Met-Chem) with an office situated at Suite 300, 555 René-Lévesque Blvd.
West, Montréal, Canada;
2) I am a graduate of Université du Québec à Chicoutimi with B.Eng. in Geological
Engineering in 1983 and of the Université de Sherbrooke with a M.Env. (Master degree in
Environment) in 1997;
3) I am a member in good standing of the “Ordre des Ingénieurs du Québec” (38671);
4) I have practiced my profession for the mining industry continuously since my graduation
from university;
5) I have read the definition of "qualified person" set out in National Instrument 43-101 (NI
43-101) and certify that by reason of my education, affiliation with a professional
association (as defined by NI 43-101) and past relevant work experience that includes 27
years in consulting practice related to resource estimates, mine engineering and
environmental assessment, I fulfill the requirements to be a “qualified person” for the
purposes of NI 43-101;
6) I have supervised and participated in the preparation of the report entitled " NI 43-101
Technical Report on the Preliminary Economic Assessment Lac Guéret Graphite
Project, Québec-Canada” dated June 6th
, 2013 and am responsible for Sections 1, 2, 3,
18, 19, 20.5, 21, 24, 25, 26, 27, and part of 22;
7) I have not visited the site;
8) I have not had prior involvement with Mason Graphite and its Lac Guéret Graphite
Project and property that is the subject of the Technical Report;
9) I state that, as of the date of this certificate, to the best of my knowledge, information and
belief, the Technical Report contains all scientific and technical information that is
required to be disclosed to make the Technical Report not misleading.
10) I have no personal knowledge, as of the date of this certificate, of any material fact or
material change which is not reflected in this Technical Report;
11) I am independent of the issuer as defined in section 1.5 of NI 43-101;
12) I have read National Instrument 43-101 and Form 43-101F1, and the Technical Report has
been prepared in compliance with that instrument and form;
This 6th
day of June 2013.
Original signed and sealed
(Signed) “Mary Jean Buchanan”
Mary Jean Buchanan, Eng., M.Env.
Senior Project Manager
Met-Chem Canada Inc.
Jeffrey Cassoff, Eng.
Met-Chem Canada Inc.
555 René Lévesque Blvd. West
Suite 300
Montréal QC, H2Z 1B1
Telephone: 514-288-5211 ext 275
Fax: 514-288-7937
Email: [email protected]
CERTIFICATE OF AUTHOR
To Accompany the Report entitled:
“NI 43-101 Technical Report on the Preliminary Economic Assessment Lac Guéret Graphite
Project, Québec-Canada” dated June 6th
, 2013 with effective date of April 22nd
, 2013.
I, Jeffrey Cassoff, Eng, do hereby certify that:
1) I am the Lead Mining Engineer presently with Met-Chem Canada Inc. with an office
situated at Suite 300, 555 René-Lévesque Blvd West, Montréal, Canada;
2) I am a graduate of McGill University in Montréal with a Bachelor’s in Mining
Engineering obtained in 1999;
3) I am a member in good standing of the Ordre des Ingénieurs du Québec (Reg. 5002252);
4) I have worked as a mining engineer continuously since graduation from university in
1999;
5) I have read the definition of “qualified person” set out in National Instrument 43-101
(NI 43-101) and certify that by reason of my education, affiliation with a professional
association (as defined by NI 43-101) and past relevant work experience, I fulfill the
requirements to be a "qualified person" for the purposes of NI 43-101;
6) I have participated in the preparation of the report entitled " NI 43-101 Technical Report
on the Preliminary Economic Assessment Lac Guéret Graphite Project, Québec-
Canada” dated June 6th
, 2013, under Met-Chem consultation company as Lead Mining
Engineer. I have participated, and I am responsible for sections 15 and 16 and part of
sections 1, 25 and 26;
7) I have not visited the site;
8) I have not had prior involvement with Mason Graphite and its Lac Guéret Graphite
Project and property that is the subject of the Technical Report;
9) I state that, as the date of the certificate, to the best of my qualified knowledge,
information and belief, the Technical Report contains all scientific and technical
information that is required to be disclosed to make the Technical Report not misleading;
10) I have no personal knowledge, as of the date of this certificate, of any material fact or
material change which is not reflected in this Technical Report;
11) I am independent of the issuer as defined in section 1.5 of NI 43-101;
12) I have read National Instrument 43-101 and Form 43-101F1, and the Technical Report has
been prepared in compliance with that instrument and form;
This 6th
day of June, 2013.
Original signed and sealed
(Signed) “Jeffrey Cassoff”
Jeffrey Cassoff, Eng.
Lead Mining Engineer
Met-Chem Canada Inc.
CERTIFICATE OF AUTHOR
I, Edward Lyons, P.Geo., as an author of the technical report entitled “NI 43-101 Technical Report on the Preliminary Economic Assessment Lac Guéret Graphite Project, Québec-Canada” dated June 6
th, 2013 with
effective date of April 22nd
, 2013 prepared for Mason Graphite, do hereby certify that:
1) I am currently employed as a Geological Consultant and Director of Tekhne Research Inc. with the office at 1067 Portage Road, Victoria, BC V8Z 1L1.
2) I graduated with a Bachelor of Science (Honours) degree in Geology from the University of Missouri at Rolla in 1970.
3) I am a Professional Geoscientist enrolled with the Association of Professional Engineers and Geoscientists of British Columbia (APEGBC) (Member # 122136) and a géologue enrolled with the Ordre des géologues du Quebec (OGQ) (Member # 701).
4) I have worked as a geologist for a total of 42 years since my graduation from university.
5) I have read the definition of “qualified person” set out in National Instrument 43-101 (“NI 43-101”) and certify that, by reason of my education, affiliation with a professional association as defined in NI 43-101 and past relevant work experience, I fulfill the requirements to be a “qualified person” for the purposes of NI 43-101.
6) I am responsible for Sections 4 to 12, 14, and 23 technical report entitled “NI 43-101 Technical Report on the Preliminary Economic Assessment Lac Guéret Graphite Project, Québec-Canada” dated June 6, 2013;
7) I visited the Lac Guéret Property for one day on October 27, 2012. I visited the Lac Guéret Property for one day on 11 May 2012 for another report entitled ‘’Technical Report on the Lac Guéret Property’’ dated July 3, 2012. In the period September 2007-to October 2009. I visited the property various times, as well as having four campaigns of direct field experience on the property between August 2002 and to the end of May 2006.
8) I have prior involvement with the property that is the subject of the Technical Report. From August 2002 to June 2006, I developed the project for Quinto Mining Corp., including writing four NI 43-101 Technical Reports on the exploration results. Between 28 September – 9 October 2007, I relogged the core drilled in 2006 and conducted supplementary mapping for Quinto; on 7 October 2009, I visited the property for Quinto Mining as a subsidiary of Consolidated Thompson Iron Mines with potential project participants and subsequently wrote an in-house, unpublished version of this report for them.
9) As of the date of the certificate Technical Report, to the best of my knowledge, information, and belief, the Technical Report contains all scientific and technical information that is required to be disclosed to make the Technical Report not misleading.
10) I have no personal knowledge, as of the date of this certificate, of any material fact or material change which is not reflected in this Technical Report.
11) I am independent of Mason Graphite applying all the tests in section 1.5 of the NI 43-101.
12) I have read NI 43-101 and Form 43-101F1, and the Technical Report has been prepared in compliance with that instrument and form.
Victoria, June 6, 2013
Original signed and sealed
"Edward Lyons"
Edward Lyons, P.Geo.
OGQ #701
CERTIFICATE OF AUTHOR
I, Martin Magnan, Eng., as an author of the technical report entitled “NI 43-101 Technical Report on the Preliminary Economic Assessment Lac Guéret Graphite Project, Québec-Canada” dated June 6
th, 2013 with
effective date of April 22nd
, 2013 prepared for Mason Graphite, do hereby certify that:
1) I am currently employed as Project Manager – Environment Division of Roche Ltd, Consulting Group, 735, 5th
Street, Shawinigan, Québec (Canada) G9N 1G2;
2) I graduated from Laval University of Québec, Canada with a B. Sc. A. in Geological Engineering in 1990 and from Université du Québec à Chicoutimi of Québec, Canada with a M. Sc. A in Geology in 1994. I have practiced my profession continuously since my graduation;
3) I am a registered member of the Ordre des Ingénieurs du Québec (#126033);
4) I am a specialist in environment sciences since 13 years with a 10 years previous experience in exploration geology. My expertise includes environmental site assessment study, environmental impact assessment and rehabilitation plan. I have also been involved in scoping studies and feasibility studies. I have participated in gold, base metals and industrial minerals projects;
5) I have read the definition of "qualified person" set out in National Instrument 43-101 (NI 43-101) and certify that by reason of my education, and past relevant work experience, I fulfill the requirements to be a "qualified person" for the purposes of NI 43-101;
6) I am responsible for Section 20.0 except for 20.5 of the technical report entitled “NI 43-101 Technical Report on the Preliminary Economic Assessment Lac Guéret Graphite Project, Québec-Canada” dated June 6, 2013;
7) I have not visited the site;
8) I have had no prior involvement with the properties that are the subject of this Technical Report.
9) I am an independent of Mason Graphite as defined in section 1.5 of NI 43-101.
10) I have read NI 43-101 and Form 43-101F1, and the Technical Report has been prepared in compliance with that instrument and form.
11) As of the date of the Technical Report, to the best of my information, knowledge and belief, the Technical Report contains all scientific and technical information that is required to be disclosed to make the Technical Report not misleading;
12) I have no personal knowledge, as of the date of this certificate, of any material fact or material change which is not reflected in this Technical Report.
Shawinigan, June 6, 2013
Original signed and sealed
Signed "Martin Magnan"
Martin Magnan, Eng. Environmental Projects Manager OIQ # 126033
Stephane Rivard, Eng.
Met-Chem Canada Inc.
555 René-Lévesque Blvd. West
Suite 300
Montreal, QC H2Z 1B1
Telephone: 514-288-5211 ext 216
Fax: 514-288-7937
Email: [email protected]
CERTIFICATE OF AUTHOR
To Accompany the Report entitled:
“NI 43-101 Technical Report on the Preliminary Economic Assessment Lac Guéret Graphite
Project, Québec-Canada” dated June 6th
, 2013 with effective date of April 22nd
, 2013.
I, Stephane Rivard, Eng. do hereby certify that:
1) At the time of the effective date of the Technical Report, I was General Manager Mineral
Processing department and a Senior Metallurgical Engineer with Met-Chem Canada Inc.
(Met-Chem) with an office situated at Suite 300, 555 René-Lévesque Blvd. West,
Montréal, Canada;
2) I am a graduate of Université LAVAL, Québec withd a B.Sc Eng. in Metallurgical and
Material Science Engineering in 1994;
3) I am a member in good standing of the “Ordre des Ingénieurs du Québec” (118538);
4) I have practiced my profession for the mining industry continuously since my graduation
from university;
5) I have read the definition of "qualified person" set out in National Instrument 43-101 (NI
43-101) and certify that by reason of my education, affiliation with a professional
association (as defined by NI 43-101) and past relevant work experience that includes
more than 12 years in concentrators and operating plants and more than 5 years in
consulting practice related to mineral processing, I fulfill the requirements to be a
“qualified person” for the purposes of NI 43-101;
6) I have participated in the preparation of the report entitled " NI 43-101 Technical Report
on the Preliminary Economic Assessment Lac Guéret Graphite Project, Québec-
Canada” dated June 6th
, 2013 and am responsible for Sections 13, 17 and part of Section
1, 25 and 26;
7) I have not visited the site;
8) I have not had prior involvement with Mason Graphite and its Lac Guéret Graphite
Project and property that is the subject of the Technical Report;
9) I state that, as of the date of this certificate, to the best of my knowledge, information and
belief, the Technical Report contains all scientific and technical information that is
required to be disclosed to make the Technical Report not misleading.
10) I have no personal knowledge, as of the date of this certificate, of any material fact or
material change which is not reflected in this Technical Report;
11) I am independent of the issuer as defined in section 1.5 of NI 43-101;
12) I have read National Instrument 43-101 and Form 43-101F1, and the Technical Report has
been prepared in compliance with that instrument and form;
This 6th
day of June 2013.
Original signed and sealed
(Signed) “Stéphane Rivard”
Stéphane Rivard, Eng.
General Manager Mineral Processing
Met-Chem Canada Inc.
CERTIFICATE OF AUTHOR
I, Guy Saucier, Eng., as an author of the technical report entitled “NI 43-101 Technical Report on the Preliminary Economic Assessment Lac Guéret Graphite Project, Québec-Canada” dated June 6
th, 2013 with effective date of
April 22nd
, 2013 prepared for Mason Graphite, do hereby certify that:
1) I am Vice President, Mining and Mineral Processing and carried out this assignment as author/reviewer of Roche Ltd, Consulting Group, Suite 1500, 630, René-Lévesque West, Montréal, QC, Canada, H3B 1S6.
2) I am a graduate of École Polytechnique, University of Montréal, located in Montréal with a B. Ing in Geological Engineering in 1983;
3) I am a Senior Geological Engineer, Member of the Ordre des Ingénieurs du Québec (#37711), and a member of the Canadian Institute of Mining, Metallurgy and Petroleum (CIM), PDAC and SME;
4) I have worked as a geological engineer in the mineral industry for 29 years. My technical expertise includes resources evaluation, projects evaluation, mine design, and mine planning. I have been involved in several scoping studies and feasibility studies. I have participated in worldwide projects in gold, base metals, iron, coal, bauxite and industrial minerals;
5) I have read the definition of "qualified person" set out in National Instrument 43-101 (‘’NI 43-101’’) and certify that by reason of my education, affiliation with a professional association (as defined by NI 43-101) and past relevant work experience, I fulfill the requirements to be a "qualified person" for the purposes of NI 43-101;
6) I have supervised the Sections 4 to 12, 14, 20 except for Section 20.5, and 23 technical report entitled “NI 43-101 Technical Report on the Preliminary Economic Assessment Lac Guéret Graphite Project, Québec-Canada” dated June 6, 2013;
7) I have not visited the site;
8) I have had no prior involvement with the properties that are the subject of this Technical Report.
9) I am independent of Mason Graphite as defined in section 1.5 of NI 43-101.
10) I have read NI 43-101 and Form 43-101F1, and the Technical Report has been prepared in compliance with that instrument and form.
11) As of the date of the Technical Report, to the best of my information, knowledge and belief, the Technical Report contains all scientific and technical information that is required to be disclosed to make the Technical Report not misleading;
12) I have no personal knowledge, as of the date of this certificate, of any material fact or material change which is not reflected in this Technical Report.
Montreal, June 6, 2013
Original signed and sealed
Signed "Guy Saucier"
Guy Saucier, Eng. OIQ # 37711
Nicolas Skiadas, Eng. M.Eng.
Journeaux Assoc., Division of Lab Journeaux Inc.
801 Bancroft
Pointe-Claire, QC H9R 4L6
Telephone: 514-630-4997 ext 223
Fax: 514-630-8937
Email: [email protected]
CERTIFICATE OF AUTHOR
To Accompany the Report entitled:
“NI 43-101 Technical Report on the Preliminary Economic Assessment Lac Guéret Graphite
Project, Québec-Canada” dated June 6th
, 2013 with effective date of April 22nd
, 2013.
I, Nicolas Skiadas, Eng., M.Eng. do hereby certify that:
1) I am a Senior Project Manager and Senior Geotechnical Engineer with Journeaux Assoc,
Division of Lab Journeaux Inc. with an office situated at 801 Bancroft, Pointe-Claire,
Quebec, Canada;
2) I am a graduate of McGill University with B.Eng. in Civil Engineering and Applied
Mechanics in 1977 and Master of Engineering in Civil Engineering and Applied
Mechanics (Geotechnical) in 1982;
3) I am a member in good standing of the “Ordre des Ingénieurs du Québec” (117881);
4) I have practiced my profession for the mining industry for more than 20 years since my
graduation from university;
5) I have read the definition of "qualified person" set out in National Instrument 43-101 (NI
43-101) and certify that by reason of my education, affiliation with a professional
association (as defined by NI 43-101) and past relevant work experience that includes
more than 20 years in consulting practice related to geotechnical engineering, tailings
deposition and materials quantities and cost estimates, I fulfill the requirements to be a
“qualified person” for the purposes of NI 43-101;
6) I have participated in the preparation of the report " NI 43-101 Technical Report on the
Preliminary Economic Assessment Lac Guéret Graphite Project, Québec-Canada”
dated June 6th
, 2013, as a Tailings Consultant. I am responsible for Section 18.5 and part
of Sections 1 and 26;
7) I have not visited the site;
8) I have not had prior involvement with Mason Graphite and its Lac Guéret Graphite
Project and property that is the subject of the Technical Report;
9) I state that, as of the date of this certificate, to the best of my knowledge, information and
belief, the Technical Report contains all scientific and technical information that is
required to be disclosed to make the Technical Report not misleading.
10) I have no personal knowledge, as of the date of this certificate, of any material fact or
material change which is not reflected in this Technical Report;
11) I am independent of the issuer as defined in section 1.5 of NI 43-101;
12) I have read National Instrument 43-101 and Form 43-101F1, and the Technical Report has
been prepared in compliance with that instrument and form;
This 6th
day of June 2013.
Original signed and sealed
(Signed) “Nicolas Skiadas”
Nicolas Skiadas, Eng., M Eng.
Tailings Specialist
Journeaux Assoc., Division of Lab Journeaux Inc.
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TABLE OF CONTENTS
DATE AND SIGNATURE PAGE – CERTIFICATES
1.0 EXECUTIVE SUMMARY .............................................................................................................................. 1 1.1 Introduction ............................................................................................................................................. 1 1.2 Geology and Exploration ........................................................................................................................ 1 1.3 Issuer’s Interest ....................................................................................................................................... 1 1.4 Accessibility ............................................................................................................................................ 2 1.5 Climate .................................................................................................................................................... 2 1.6 Local Resources and Infrastructure ......................................................................................................... 2 1.7 History ..................................................................................................................................................... 2 1.8 Geology ................................................................................................................................................... 4 1.9 Mineralisation ......................................................................................................................................... 5 1.10 Mineral Processing and Metallurgical Testing ........................................................................................ 5 1.11 Mineral Resource Estimates .................................................................................................................... 6 1.12 Mineral Reserve Estimates ...................................................................................................................... 7 1.13 Mining Methods ...................................................................................................................................... 7 1.14 Recovery Methods .................................................................................................................................. 8 1.15 Infrastructure ........................................................................................................................................... 8 1.16 Market Studies and Contracts ................................................................................................................. 9 1.17 Environmental Studies, Permitting, Social or Community Impacts ........................................................ 9 1.18 Capital and Operating Costs .................................................................................................................. 11 1.19 Economic Analysis................................................................................................................................ 13 1.20 Important Caution Regarding the Economic Analysis .......................................................................... 13 1.21 Conclusions and Recommendations ...................................................................................................... 14
2.0 INTRODUCTION .......................................................................................................................................... 16 2.1 Terms of Reference – Scope of Work ................................................................................................... 16 2.2 Source of Information ........................................................................................................................... 18 2.3 Site Visit ................................................................................................................................................ 18 2.4 Units and Currency ............................................................................................................................... 18 2.5 Abbreviations ........................................................................................................................................ 18
3.0 RELIANCE ON OTHER EXPERTS ........................................................................................................... 21 4.0 PROPERTY DESCRIPTION AND LOCATION ....................................................................................... 22
4.1 Property Description ............................................................................................................................. 22 4.2 Property Location .................................................................................................................................. 22 4.3 Claim Titles ........................................................................................................................................... 23 4.4 Issuers Interest ....................................................................................................................................... 30 4.5 Legal Survey ......................................................................................................................................... 30 4.6 Environmental Liabilities ...................................................................................................................... 30 4.7 Significant Factors and Risks ................................................................................................................ 31
5.0 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND
PHYSIOGRAPHY ......................................................................................................................................... 32 5.1 Accessibility .......................................................................................................................................... 32 5.2 Climate .................................................................................................................................................. 32 5.3 Local Resources and Infrastructure ....................................................................................................... 32 5.4 Physiography ......................................................................................................................................... 32
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6.0 HISTORY ....................................................................................................................................................... 34 6.1 General Overview ................................................................................................................................. 34 6.2 Historical Mineral Resources ................................................................................................................ 35
7.0 GEOLOGY SETTINGS AND MINERALIZATION ................................................................................. 36 7.1 Regional Geology ................................................................................................................................. 36 7.2 Local Geology ....................................................................................................................................... 40 7.3 Mineralization ....................................................................................................................................... 44
8.0 DEPOSIT TYPES........................................................................................................................................... 46 9.0 EXPLORATION ............................................................................................................................................ 48
9.1 Exploration Work .................................................................................................................................. 48 10.0 DRILLING ...................................................................................................................................................... 49
10.1 Previous Drilling ................................................................................................................................... 49 10.2 Recent Drilling ...................................................................................................................................... 50
11.0 SAMPLE PREPARATION, ANALYSIS AND SECURITY ...................................................................... 51 11.1 Sample Collection ................................................................................................................................. 51 11.2 Sample Preparation ............................................................................................................................... 51 11.3 Quality Assurance and Quality Control ................................................................................................ 53 11.4 Security ................................................................................................................................................. 53
12.0 DATA VERIFICATION ................................................................................................................................ 55 12.1 Field Verification .................................................................................................................................. 55 12.2 Database Verification ............................................................................................................................ 55
13.0 MINERAL PROCESSING AND METALLURGICAL TESTING ........................................................... 56 13.1 Introduction ........................................................................................................................................... 56 13.2 Previous Test Work Results .................................................................................................................. 56 13.3 Recent Test Work Results ..................................................................................................................... 56
14.0 MINERAL RESOURCES ESTIMATES ..................................................................................................... 61 14.1 Introduction ........................................................................................................................................... 61 14.2 Previous Mineral Resource Estimates ................................................................................................... 61 14.3 Exploration Database ............................................................................................................................ 61 14.4 Statistics ................................................................................................................................................ 69 14.5 Mineral Resource Estimation ................................................................................................................ 79
15.0 MINERAL RESERVE ESTIMATES ........................................................................................................... 81 16.0 MINING METHODS ..................................................................................................................................... 82
16.1 Mineral Resources ................................................................................................................................. 82 16.2 Mining Method ..................................................................................................................................... 84 16.3 Pit Optimization .................................................................................................................................... 84 16.4 Mine Design .......................................................................................................................................... 86 16.5 Mine Planning ....................................................................................................................................... 90 16.6 Mine Equipment Fleet ........................................................................................................................... 92 16.7 Mine Dewatering ................................................................................................................................... 94 16.8 Manpower Requirements ...................................................................................................................... 94
17.0 RECOVERY METHODS .............................................................................................................................. 96 17.1 Process Plant ......................................................................................................................................... 96 17.2 Flow sheets and Process Description .................................................................................................... 97 17.3 Utilities ................................................................................................................................................ 102 17.4 Plant Layout ........................................................................................................................................ 103
18.0 PROJECT INFRASTRUCTURE ............................................................................................................... 104 18.1 Main Access Road .............................................................................................................................. 104 18.2 Power .................................................................................................................................................. 104
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18.3 Camp Site Accommodations ............................................................................................................... 104 18.4 Site Roads ........................................................................................................................................... 106 18.5 Tailings Storage Facility ..................................................................................................................... 106 18.6 Buildings ............................................................................................................................................. 109 18.7 Site Power and Communication .......................................................................................................... 109 18.8 Site Services ........................................................................................................................................ 110
19.0 MARKET STUDIES AND CONTRACTS ................................................................................................ 111 19.1 Market Information ............................................................................................................................. 111 19.2 Price Forecast ...................................................................................................................................... 112
20.0 ENVIRONMENTAL STUDIES, PERMITTING AND SOCIAL OR COMMUNITY IMPACT ........ 114 20.1 Environmental Baseline Study (EBS) ................................................................................................. 114 20.2 Mineralization, Waste and Tailings Characterization ......................................................................... 115 20.3 Regulatory Framework ........................................................................................................................ 116 20.4 Territorial Claims and Regional Relations .......................................................................................... 119 20.5 Mine Closure and Rehabilitation ......................................................................................................... 120
21.0 CAPITAL AND OPERATING COSTS ..................................................................................................... 122 21.1 Capital Cost ......................................................................................................................................... 122 21.2 Operating Cost .................................................................................................................................... 129
22.0 ECONOMIC ANALYSIS ............................................................................................................................ 132 22.1 General ................................................................................................................................................ 132 22.2 Assumptions ........................................................................................................................................ 132 22.3 Financial Model and Results ............................................................................................................... 134 22.4 Sensitivity Analysis ............................................................................................................................. 137 22.5 Important Caution Regarding the Economic Analysis ........................................................................ 141
23.0 ADJACENT PROPERTIES ........................................................................................................................ 142 24.0 OTHER RELEVANT DATA AND INFORMATION .............................................................................. 143 25.0 INTERPRETATION AND CONCLUSIONS ............................................................................................ 144 26.0 RECOMMENDATIONS ............................................................................................................................. 145 27.0 REFERENCES ............................................................................................................................................. 147
27.1 Geology ............................................................................................................................................... 147 27.2 Process ................................................................................................................................................ 148
LIST OF TABLES
Table 1.1 – Preliminary Test Work Results (LCT#2) .................................................................................................... 6 Table 1.2 – Mineral Resource Estimate (4% Cgr Cut-Off) ........................................................................................... 6 Table 1.3 – Graphite Price ............................................................................................................................................. 9 Table 1.4 – Summary of Life of Mine Costs Estimate (50,000 tpy Concentrate)........................................................ 11 Table 1.5 – Summary of Life of Mine Average Operating Cost Estimate................................................................... 12 Table 1.6 – Total Personnel Requirement ................................................................................................................... 12 Table 1.7 – Macro-Economic Assumptions................................................................................................................. 13 Table 1.8 – Technical Assumptions ............................................................................................................................. 13 Table 1.9 – Estimated Cost for Next Study Phase ....................................................................................................... 15 Table 2.1 – Qualified Persons and their Respective Sections of Responsibility .......................................................... 17 Table 2.2 – List of Abbreviations ................................................................................................................................ 18 Table 4.1 – Mineral Claim Titles ................................................................................................................................. 24 Table 6.1 – Summary of Exploration Work on the Lac Guéret Property by Quinto ................................................... 34 Table 7.1 – Regional Stratigraphic Column ................................................................................................................ 36 Table 7.2 – Property Stratigraphic Column (Youngest to Oldest) ............................................................................... 40 Table 10.1 – Drillholes Details .................................................................................................................................... 49 Table 13.1 – Sampling Sites Location ......................................................................................................................... 57
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Table 13.2 – Sample Remaining at SGS Minerals ...................................................................................................... 57 Table 13.3 – Preliminary Test Work Results (Test # F3) ............................................................................................ 59 Table 13.4 – Preliminary Test Work Results (LCT#2) ................................................................................................ 59 Table 14.1 – Density .................................................................................................................................................... 63 Table 14.2 – Drill Core Samples – Statistics ............................................................................................................... 65 Table 14.3 – Geological Units Definition .................................................................................................................... 68 Table 14.4 – Downhole Composites vs. Raw Assay Data ........................................................................................... 71 Table 14.5 – Semi-Variogram Parameters ................................................................................................................... 71 Table 14.6 – Mineral Resource Estimate (4% Cgr Cut-Off) ....................................................................................... 79 Table 16.1 – Mineral Resource Estimate (4% Cgr Cut-Off) ....................................................................................... 82 Table 16.2 – Pit Optimization Parameters ................................................................................................................... 85 Table 16.3 – Material Properties.................................................................................................................................. 86 Table 16.4 – Mine Production Schedule (in ‘000 t) ..................................................................................................... 91 Table 16.5 – Mining Equipment Fleet ......................................................................................................................... 92 Table 16.6 – Truck Productivities (Year 5) ................................................................................................................. 93 Table 16.7 – Mine Manpower Requirements .............................................................................................................. 95 Table 17.1 – Design Criteria ........................................................................................................................................ 96 Table 17.2 – Lac Guéret Process Mass Balance .......................................................................................................... 97 Table 19.1 – Monthly Prices for Crystalline Graphite as published in Industrial Minerals and 24 months average
(between April 2011 and April 2013) .............................................................................................................. 112 Table 19.2 – Graphite Price Forecasts ....................................................................................................................... 113 Table 20.1 –Accumulation Areas for Waste Rock Dump and Tailings Storage Facility .......................................... 121 Table 21.1 – Summary of Life of Mine Costs Estimate (50,000 tpy Concentrate).................................................... 123 Table 21.2 – Summary of Life of Mine Average Operating Cost Estimate............................................................... 129 Table 21.3 – Total Personnel Requirement................................................................................................................ 129 Table 21.4 – Summary of Estimated Mine Operating Costs by Type of Material..................................................... 130 Table 21.5 – Summary of Average Annual Process Plant Operating Costs .............................................................. 130 Table 21.6 – Summary of Annual Plant Administration and Services Costs............................................................. 131 Table 22.1 – Graphite Price Forecasts ....................................................................................................................... 132 Table 22.2 – Macro-Economic Assumptions............................................................................................................. 133 Table 22.3 – Technical Assumptions ......................................................................................................................... 133 Table 22.4 – Project Evaluation Summary ................................................................................................................ 136 Table 26.1 – Estimated Cost for Next Study Phase ................................................................................................... 146 LIST OF FIGURES
Figure 4.1 – Location Map .......................................................................................................................................... 22 Figure 4.2 – Claims Map ............................................................................................................................................. 23 Figure 7.1 – Regional Geology .................................................................................................................................... 39 Figure 7.2 – Mason Graphite Property Geology .......................................................................................................... 43 Figure 7.3 – GC-GR Graphite Zones Compilation ...................................................................................................... 44 Figure 14.1 – % Cgr vs. Density .................................................................................................................................. 64 Figure 14.2 – % S (tot) vs. Density.............................................................................................................................. 64 Figure 14.3 – Normal Histogram -% Cgr in All Samples Used in Model ................................................................... 65 Figure 14.4 – Cumulative Frequency - % Cgr in All Samples Used in Model ............................................................ 66 Figure 14.5 – Drill Grid Location ................................................................................................................................ 67 Figure 14.6 – Distribution of Sample Lengths............................................................................................................. 69 Figure 14.7 – Cumulative Probability Plot .................................................................................................................. 70 Figure 14.8 – Major Axis Semi-Variogram ................................................................................................................. 72 Figure 14.9 – Semi-Minor Axis Semi-Variogram ....................................................................................................... 72 Figure 14.10 – Vertical Section 1000NE of the Interpolated Grade Looking N40E ................................................... 74 Figure 14.11 – Plan View of the Interpolated Grade (-40m from the Surface) ........................................................... 75 Figure 14.12 – Vertical Section 1100 NE of the Categories Looking N40E ............................................................... 77 Figure 14.13 – Plan View of the Categories (at the Surface)....................................................................................... 78 Figure 16.1 – Mine General Layout............................................................................................................................. 83
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Figure 16.2 – Pit Optimization Results ........................................................................................................................ 86 Figure 16.3 – Pit Wall Configuration .......................................................................................................................... 87 Figure 16.4 – Lac Guéret Pit Design ........................................................................................................................... 89 Figure 17.1 – Water Balance ....................................................................................................................................... 98 Figure 17.2 – Simplified Flow Sheet of Crushing and Processing Plant ..................................................................... 99 Figure 18.1 – General Site Layout ............................................................................................................................. 105 Figure 18.2 – Selected Tailings Storage Facility ....................................................................................................... 108 Figure 22.1 – Cash Flow Statement ........................................................................................................................... 135 Figure 22.2 – Before-Tax NPV8%: Sensitivity to Capital Expenditure, Operating Cost and Price ........................... 137 Figure 22.3 – Before-Tax NPV10%: Sensitivity to Capital Expenditure, Operating Cost and Price ........................... 138 Figure 22.4 – Before-Tax IRR: Sensitivity to Capital Expenditure, Operating Cost and Price ................................. 138 Figure 22.5 – After-Tax NPV8%: Sensitivity to Capital Expenditure, Operating Cost and Price .............................. 139 Figure 22.6 – After-Tax NPV10%: Sensitivity to Capital Expenditure, Operating Cost and Price ............................. 140 Figure 22.7 – After-Tax IRR: Sensitivity to Capital Expenditure, Operating Cost and Price ................................... 140 Figure 23.1 – Adjacent Claims to Lac Guéret Property ............................................................................................. 142
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1.0 EXECUTIVE SUMMARY
1.1 Introduction
This NI 43-101 Technical Report (Report) on the Lac Guéret Graphite Project has been
prepared at the request of Mason Graphite (Mason), a Montreal based company, to
present the Preliminary Economic Assessment (PEA) major findings. The PEA is based
on the Mineral Resources prepared by Roche Ltd. in July 2012. The effective date of the
Technical Report is April 22, 2013.
The Lac Guéret property is located approximately 300 km North of Baie-Comeau,
Quebec. Main access to Lac Guéret is from the paved all-weather Road 389 from Baie-
Comeau. The property is about 95 km on a main-haul gravel road, located about 200 km
North of Baie-Comeau.
Met-Chem was requested by Mason to provide a PEA Study for the exploitation of the
Lac Guéret graphite deposit. Met-Chem was to provide leadership for the mining, process
design, tailings, infrastructure, compilation of capital and operating cost estimates at a
confidence level of ± 35%, economic analysis and report preparation integrating
metallurgical testing for which information was provided by other consultants. The PEA
Report is intended to demonstrate the potential viability of the Project at a production rate
of about 50,000 tonnes per year of graphite concentrate in order to justify proceeding
with other phases of project development.
Process flowsheets were developed from a recent metallurgical testing program
performed by SGS Minerals Services. The capital cost and the operating cost estimates
have been developed for a 500 tonnes per day milling rate based on the 50,000 tonnes of
graphite concentrate per year target.
1.2 Geology and Exploration
The Lac Guéret Property is located in the Côte-Nord-Nouveau-Québec region in
northeastern Québec on the southwestern shore of the Manicouagan Reservoir. It is
centered at 51°07’N and 69°05’W. The property is named Lac Guéret, located in the
south-central part of the group. No other named topographic features on NTS topographic
sheet 22N/03 (1:50,000 scale) occurs on the property. It consists of 215 CDC claims
covering 11,630.34 hectares, all of which are 100% in the interest of Mason Graphite
with the claims in good standing until 17 July 2013. Previous option and joint venture
agreements have been successfully completed. No mineral royalty, net smelter return, or
any other residual interests are recorded.
1.3 Issuer’s Interest
Mason and Quinto entered a purchase agreement whereby the Issuer acquired a 100%
interest in the Lac Guéret Property. The total purchase price for the acquisition was
US$15,000,000 in cash, payable in instalments based on the achievement of certain
milestones over a five year period and the issuance of 2,041,571 warrants to Quinto, each
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warrant being exercisable for Mason Shares at an exercise price of CAD $0.75 until
April 5, 2014. An aggregate of $7,500,000 was paid on closing, with US$2,500,000 due
following the completion of a feasibility study and US$5,000,000 due on achievement of
commercial production (as defined below). If the feasibility study is not completed by
April 5, 2015, Mason Graphite is required to pay (a) US$1,250,000 on April 5, 2015, and
(b) US$1,250,000 on the earlier of (i) the fifth business day following the day on which a
feasibility study is completed; and (ii) October 5, 2015. If commercial production is not
achieved by October 5, 2016, Mason Graphite is required to pay (a) US$2,500,000 on
October 5, 2016; and (b) US$2,500,000 on the earlier of (i) the fifth business day
following the day on which commercial production is achieved; and (ii) April 5, 2017.
“Commercial Production” means the first 10,000 metric tonnes of graphite that has been
mined, sold and shipped from the Lac Guéret Property.
1.4 Accessibility
Access is by the all-weather Highway 389, 211 km north of Baie-Comeau, Québec, to the
logging road turnoff at the Manic-5 camp. Good gravel logging roads lead another 76 km
northwest to the property. An old main logging road crosses the graphite zones under
review.
1.5 Climate
The climate is typical boreal forest, with summer temperatures 15-30°C and winter to -
50°C. The spring and autumn are short with changeable weather. Precipitation occurs as
rain in the summer and snow in the winter, while spring and autumn are often mixtures of
both.
1.6 Local Resources and Infrastructure
The property is located 300 kilometres by road north-northwest of Baie-Comeau,
Québec, the nearest major population and service centre. The northeast corner of the
claim block lies on the southwestern shore of the Manicouagan Reservoir, commonly
known as the Manic 5 dam, owned by Hydro Québec. The hydroelectric dam is about
85 km southeast of the centre of the property.
Logging operations created access into the area. The main logging roads, designed for
100-tonne logging haul trucks; give good access throughout the claims. Logging ceased
in 2006 and the roads have not been maintained but remain in good condition overall as
of May 2012.
1.7 History
Historical work consists of exploration for iron in the late 1950s by Québec Cartier Mines
Ltd. Quinto Mining Corp. has conducted exploration programs since 2002 focusing on
the zones under review. No resource estimation has been published on either the graphite
deposit(s) or on the iron deposits. Quinto has explored only on the graphite stratigraphy,
since the iron deposits are appear to be too small to be economic in this region.
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Following several exploration campaigns, Quinto conducted a drill program on the
northeast part of the GC Graphite Zone to define a tonnage and grade of the graphite in
order to continue studies towards initiating an open pit mine. Twenty-four (24) NQ
drillholes totalling 2,149 metres were drilled at 50-m spacing on a grid 250 x 250 metres
The grid was superimposed on four existing trenches (2004); an existing drillhole, LG07
(2003), was also used. All drilling was done for Quinto.
The 2006 drill program included 24 inclined NQ holes totalling 2,146 m of core; one hole
from 2003 located in the centre of the grid, was also used for this study. The sites were
located along four established trenches which ahs channel samples cut in 2004. Casing
was pulled and the sites marked with wooden 1 x 2”stakes with the hole number
inscribed on aluminum tags stapled to the stakes. Ed Lyons observed eight of these sites
on his visit in May 2012. After the 2006 program, the core from the 2003 and 2006
programs was moved into a locked warehouse near Baie-Comeau, Québec, Ed Lyons
logged the 2006 core in the storage warehouse in 2007. Sample rejects and pulps are
stored at the PRA warehouse in Richmond, BC.
In the 2006 program, the typical core handling procedures were followed. The drill core
was logged on site, and sampled at intervals from 3.0-m maximum to 0.5-m, with the
average sample length of 2.35- m. Of the 2,284 m of core used for this study, 908
samples representing 2,135 m or 93.5% of the total core drilled was sampled. Samples
were saw-cut, bagged in plastic bags with numbered tags then packed into 20-L plastic
pails with secured closures. No blanks or standards were added in the field. The pails
were sent in four shipments by truck from Baie-Comeau, Québec to Process Research
Associates (PRA) in Richmond, BC for preparation and analysis by IPL Labs of
Richmond, BC. Samples from the 2003, 2004, and 2006 exploration programs were all
analysed at PRA.
Samples were received, logged in per the routine method at PRA, weighed and dried in a
specially made low-temperature oven to reduce potential volatilisation of carbon in the
samples. They were crushed and prepared for analysis using the standard LECO furnace
method. For graphite samples over 35%, PRA developed an alternative test technique A
check on the values of high-grade (>35% Cgr) was tested on all 2006 samples using a
differential loss on ignition (DLOI) method to compare with the standard LECO
techniques. They concluded that the LECO method at high concentrations tended to
overstate the % Cgr values somewhat. All the high-grade graphite samples used in the
resource model, except those in DDH LG-07, were analysed by the DLOI method.
Sulphur analyses were done on 124 samples using the standard LECO furnace method.
Standards were used by PRA as blind check samples in the sample stream sent to IPL. In
2004 samples were (in % Cgr with + precision): 12.96% (+0.59%), 15.64% (+0.44%),
19.62% (+0.57%), 32.36 % (+0.86%), and 89.44% (+1.90%). In 2006, a new standard,
Composite-3, was prepared by the lab from samples selected by Michel Robert for the
trenches TR27, TR62, TR67, and TR68 in the drill grid. The purpose was to add a mid-
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range reference material. PRA conducted round-robin assays by IPL, ACME labs
(Vancouver, BC) and COREM (QC). The value was 24.1% Cgr.
In Lyons’ opinion, the field handling, sampling and analytical procedures were properly
followed to industry standard practice.
1.8 Geology
The regional geology includes the most southwesterly of several elongate anticlinoria of
Gagnon Group metasediments that include the traditional iron formation stratigraphy of
the Wabush-Mont- Reed iron district. These units are metamorphosed equivalents of the
Labrador Trough (New Québec Orogen) sediments that occur around Schefferville,
Québec and north. The Southwest Manicouagan Anticlinorium shows a core of Denault
Fm dolomitic marble which lies beneath the Sokoman iron formation level on a platform
of Katsao Fm pelitic metasediments. Quartz-rich non/low oxide, iron-oxide, and iron-
silicate facies of the Sokoman Fm form infolded synclines and anticlines. The Sokoman
Fm quartzite non-oxide facies overlies the iron oxide-bearing facies. The upper portion
has a diachronous, transitional contact with the overlying Menihek pelitic sediments. The
basal part of the Menihek Formation unit, also called the “Upper Gneiss” by Clarke
(1977), forms the informal member, here named Lac Guéret Member of the Menihek Fm.
Both the Katsao and Menihek Fm gneisses have significant potassium feldspar, whereas
the paragneiss and schist of the Gagnon Group are deficient in K₂O.
Graphitic metasediments are concentrated in the Lac Guéret Member above and
separated from the Sokoman Fm iron deposits. Graphite also occurs in minor amounts in
the adjoining formations near the contact, but most of the potentially economical graphite
lies within the Member. This relationship is common in the district with examples at Lac
Knife (QC) and Kami iron deposit (Labrador City, NL). Graphite formed as beds within
clastic sedimentary basinal deposition under anoxic conditions that preserved the organic
carbon and precipitated primary sulphides, mainly pyrrhotite intimately intermixed with
the graphite. Sulphides are limited to this depositional regime and do not occur in the host
rocks outside of the deposits. Upper amphibolite (kyanite facies) metamorphism affected
all the rocks.
The conformation of the formations, including the graphite and iron oxide deposits, was
modified by upward of five periods of Grenville-related deformations. The second and
third events most strongly control the placement of the deposits into belts aligned
northeast and dipping moderately to steeply southeast. Gentle cross-folding created
interference fold patterns that affected the foliation dips. The deposits are essentially
foliation-parallel. Late extension caused local recrystallisation of host rocks, but with no
significant remobilisation of minerals. At this time, pyrite was formed from some of the
original pyrrhotite.
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1.9 Mineralisation
Graphite occurs as lenses and beds up to 2000 m long and 10-80m thick deposited in the
original sedimentary rocks at the start of basinal deposition at ~1.75 billion years (Ga),
based on age-dating (Clark and Wares 2004). They have been folded and metamorphosed
during the Grenville Orogeny ~1.12 Ga. Graphite grades range from minor to 53.50%
Cgr (carbon-as-graphite). Carbonate was not observed in the gangue. Two general types
of graphite were observed. In samples grading below ~25% Cgr, the flakes are discrete
medium to coarse groups and crystals to 3-mm in crystalline quartz-rich feldspar-biotite
gneiss (QFB_GN) matrix. It is not known if the flakes show a consistent size range
relative to the Cgr grade. These were called Units 1 and 2 in the resource estimation
below. Above ~25% Cgr, the graphite changes its character to include a significant
portion of very fine-grained graphite that appears to not have recrystallised during the
high metamorphism. This has been described in several deposits and arises from an
abundance of potential recrystallisation centres with diffuse attraction gradients
(Marshall, et al., 2000). This unit, called Unit 3 in the estimation, often shows a distinct
crush or cataclastic breccia texture where large clasts of fine-grained graphite schist up to
35-cm long have their foliations rotated. The “matrix” is very coarsely recrystallised pure
graphite flake-books to 8-mm long growing more or less perpendicular from the clast
margins. The economic potential of this unit is likely the extraction of the “matrix”
graphite. The origin of the breccia, which is only found in this high-graphite rock, is
likely the rheological weakness of the unit due to graphite that permits early ductile
failure during deformation. It forms a distinctive steep axial plunge atypical of the
deformations in the other rocks.
1.10 Mineral Processing and Metallurgical Testing
The purpose of the test work program was to characterise the Lac Guéret deposit and to
produce a flow sheet that would allow for the production of saleable graphite concentrate
with a graphite grade greater than 96% carbon while maximising graphite recovery and
graphite flake size.
To develop the optimal flow sheet, several grinding, flotation and polishing tests were
performed at the SGS Mineral Services facility in Lakefield, Ontario. Overall, the test
program was successful in terms of demonstrating that a good product can be made from
Lac Guéret graphite mineralisation.
The mineralogical characterisation conducted at SGS confirmed that the graphite
occurred as crystalline and flaky graphite. Graphite flakes ranged in size from 50 microns
to 1 mm, with an average particle size of 300 microns.
Lac Guéret mineralisation does not require complex treatment for successful
beneficiation. Graphite mineralisation is upgraded by flotation and polishing grinding.
The scouring action during polishing grinding ensures that the final concentrate grade is
maximised.
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A conceptual flow sheet capable of producing a graphite concentrate meeting the graphite
markets’ requirements was developed.
Table 1.1 lists lock-cycle test (LCT) #2 results sorted into final product categories.
Table 1.1 – Preliminary Test Work Results (LCT#2)
Concentrate Particle Size Weight
%
Assay
% C(t)
Distribution
% C(t)
Plus 50 mesh (+300 micron) 18.6 96.9 19.0
Plus 80 mesh (+180 micron) 14.1 96.2 14.4
Plus 150 mesh (+105 micron) 13.1 96.2 13.3
Minus 150 mesh (–105 micron) 54.2 91.7 53.3
Total Concentrate 100.0 93.7 100.0 Source: SGS Project 13838-001, Final Report – May 21, 2013 – Table was modified by recalculation.
The test work sample was of lower grade than the actual mineral deposit. The test work
indicated a progressive improvement in the results and the test work results are therefore
considered reproducible.
1.11 Mineral Resource Estimates
The Mineral Resource estimation for the NE GC Zone graphite drill grid on the Lac
Guéret Property is summarised in the table below with a 4% cut-off. The geological
interpretation and model included eight units (four units with two subdivisions): Unit 1 is
defined by % Cgr between 4-10%; Unit 2 has 10-27% Cgr, while Unit 3 contains 27%
Cgr or more. Waste has less than 4% Cgr. The calculated amount of sulphides below and
above 20% nominal total sulphides (pyrrhotite + pyrite) formed the two subdivisions to
account for density differences. The units sensibly interlayer, and since there may be
metallurgical difference among them, it seemed prudent to carry the complexity through
the model. The reported units are the weighted averages of the low- and high-sulphide
units. Hence, Unit 1 includes Units 1a and 1 b, etc.
Table 1.2 – Mineral Resource Estimate (4% Cgr Cut-Off)
Resource Estimate (4% Cgr cut-off)
Categories Unit Tonnes Grade
(% Cgr)
Measured (M)
Unit 1 (4 to 10% Cgr) 31,200 7.82
Unit 2 (10 to 27% Cgr) 122,800 14.85
Unit 3 ( > 27 % Cgr) 144,900 36.72
All units 298,900 24.39
Indicated (I)
Unit 1 (4 to 10% Cgr) 2,672,500 8.09
Unit 2 (10 to 27% Cgr) 2,089,200 16.83
Unit 3 ( > 27 % Cgr) 2,535,300 36.20
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Resource Estimate (4% Cgr cut-off)
Categories Unit Tonnes Grade
(% Cgr)
All units 7,297,000 20.24
M + I
Unit 1 (4 to 10% Cgr) 2,703,700 8.67
Unit 2 (10 to 27% Cgr) 2,212,000 18.30
Unit 3 ( > 27 % Cgr) 2,680,200 36.96
All units 7,595,900 20.40
Inferred
Unit 1 (4 to 10% Cgr) 1,272,600 7.56
Unit 2 (10 to 27% Cgr) 714,200 17.54
Unit 3 ( > 27 % Cgr) 771,500 33.10
All units 2,758,300 17.29
Notes:
- Effective as of June 22, 2012. - Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.
- Numbers may not add up due to rounding.
1.12 Mineral Reserve Estimates
No mineral reserve estimates can be produced based on a Preliminary Economic
Assessment.
1.13 Mining Methods
Met-Chem evaluated the potential for an open pit mine at Lac Guéret to produce
50,000 tonnes of graphite concentrate per year. The Mineral Resources used for the PEA
are based on the July 3, 2012 “NI 43-101 Report, Technical Report on the Lac Guéret
Graphite Project” completed by Roche Ltd.
Since this study is at a PEA level, NI 43-101 guidelines allow inferred mineral resources
to be used in the optimization and mine plan.
The mining method selected for the Project is a conventional open pit drill and blast
operation with articulated haul trucks and wheel loaders. Vegetation, topsoil and
overburden will be stripped and stockpiled for future reclamation use. The mineralization
and waste rock will then be drilled, blasted and loaded into articulated haul trucks with
front end wheel loaders. The mineralized material will be hauled roughly 1.4 km to the
primary crusher and the waste rock will be hauled to the waste rock dump.
The mine will operate year round, four (4) days per week, ten (10) hours per day. Since
the mill will operate seven (7) days per week, a run of mine stockpile will be maintained
to provide a constant supply of feed to the crusher. During the three (3) days when the
mine is not operating, the crusher will be fed by one of the mine’s front end loaders from
the stockpile.
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The pit that has been designed for the Lac Guéret deposit is approximately 400 m long
and 220 m wide at surface with a maximum pit depth of 100 m. The pit includes 3,871 kt
of Mineral Resources with an average Cgr grade of 27.4% and has a strip ratio of 0.8:1
with 328 kt of overburden and 2,619 kt of waste rock. The proportion of Inferred Mineral
Resources that are contained within this pit shell is 13%. The remaining Mineral
Resources that were not included in the pit design for the 22 year mine life has an
average Cgr grade of 15.3%. These resources can be mined at a strip ratio of 1.8:1.
A production schedule (mine plan) was developed for the Project to produce
50,000 tonnes of graphite concentrate per year. Using the mill recovery of 96.6% and a
targeted concentrate grade of 93.7% results in an average run of mine feed of 176,000
tonnes per year at an average Cgr of 27.4%.
The fleet of equipment will include two (2) articulated haul trucks (28.1 tonne payload),
two (2) wheel loaders (7.8 tonne bucket), one (1) drill, one (1) track dozer, one (1) road
grader and one (1) boom truck.
1.14 Recovery Methods
The graphite concentrate will be recovered by a flotation process. The combination of
primary coarse and rougher flotation followed by cleaner column flotation will recover
96.6% of the graphite at an average graphite grade of 93.7% carbon.
The processing area can be divided into crushing, grinding, beneficiation, dewatering,
product screening and packaging, and tailings disposal. The concentrator is designed to
produce 50,000 dry tonnes per year of saleable graphite concentrate in four (4) basic size
classes, +50 mesh (300 microns), –50+80 mesh (180 microns), +150 mesh (105 microns)
and –150 mesh. It is expected that other size classes will be available as needed once the
plant is operating.
1.15 Infrastructure
Mining equipment, tailings storage facility, as well as infrastructure and services have
been added to complete the investment cost of the project.
Lac Guéret Project is located about 90 km from the closest Hydro-Québec infrastructure.
Power will be supplied by five (5) Diesel Generators: the total power requirement is
estimated at 4 MW.
A tailings storage facility, located about 3 km from the plant, was designed to contain a
22 year operation. The scheme of operation proposes the transfer of free water from the
tailings pond to a polishing pond to allow for sedimentation of fine particles and other
minerals. Water will be then transferred from the polishing pond to the plant to be used in
processing.
Provision has been made for ancillary buildings and facilities such as maintenance garage
and storage, office complex, change house and canteen and permanent camp.
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1.16 Market Studies and Contracts
An independent market study is expected to be carried out as the project will proceed to
Feasibility Studies. However, no independent analysis of the market for graphite
concentrate or price survey have been conducted to date for the Lac Guéret Graphite
Project. Similarly, no sales contract has been secured at this early stage of the project.
A 24-month average has been developed based on the last two (2) years minimum,
maximum and average prices for coarse, medium and fine crystalline graphite as
published by Industrial Minerals. After reaching a record high for the most part of 2011
and 2012, graphite prices have been decreasing in recent months. An average price
developed on this basis for the economic analysis is given in Table 1.3 for Lac Guéret
graphite concentrate.
Table 1.3 – Graphite Price
Product Classification Proportion (%) Average Grade (%Cgr) Price (CAD/t)
+50 mesh 18.4% 96.30% 2,200
-50 mesh +80 mesh 12.2% 96.40% 2,000
-80 mesh +150 mesh 14.3% 95.60% 1,500
-150 mesh 55.1% 91.70% 1,200
Average 100% 93.70% 1,525
1.17 Environmental Studies, Permitting, Social or Community Impacts
Environmental baseline studies have been carried out in summer 2012. The following
environmental components have been characterized/described: climatology, soil quality,
surface water quality, sediment quality, groundwater quality, vegetation and wetlands,
fish and fish habitats, herpetofauna, archaelogical potential, social and economic aspects.
Large and small mammal surveys have been carried out in winter 2013 and avifauna
surveys will be carried out in spring and summer 2013.
Surface waters were neutral to weakly acidic and showed low hardness and very low
concentrations for most metals. Groundwater were weakly acidic with moderate hardness
and low conductivity and metals concentrations.
The flora is dominated by evergreen forests (93 %, including 71 % of balsam fir with
black spruce forest type). Important forest fire in 1996 and important forest harvesting
between 2000 and 2004 have resulted in regeneration forests in 67 % of the study area.
No rare or endangered species were observed. The large mammal species present in the
study area are the Black bear, the Moose and the Woodland caribou. The habitats present
in the property are of low potential for caribou but caribou groups are located nearby and
mitigation and follow-up measures for this protected species should be put in place.
Four lakes and 13 streams were characterized for fishes and fish habitats potential. A
total of 468 fishes were caught from four species: Brook trout, Pearl dace, White sucker
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and Longnose sucker. All lakes and ten streams showed fish habitats potential. No rare or
endangered species were caught.
Preliminary archeological study has identified 25 potential archaeological sites based on
availability of chert and quartzite as well as land use of the territory by the Innus.
An environmental characterization (acid generation potential and metal leaching
potential) of mineralization, waste (and if possible tailings) will be carried out in summer
2013.
According to Section 2 of the Regulation respecting environmental impact assessment
and review, the construction of a graphite processing plant with processing capacity of
500 metric tons or more per day is subjected to the environmental impact assessment and
review procedure (BAPE procedure). The average processing rate is 176,000 t/y or
482 t/d. Throughout the mine life there will be days when the processing rate exceeds
500 t/d because of the variation of the feed grade. As a result of this production rate, an
application for an ESIA and review procedure is required. However, if the mine plan is
maintained below 500 t/d during the subsequent Feasibility Study, only an application for
a certificate of authorization under Section 22 of the Environment Quality Act (EQA)
would be necessary.
At the federal level, the Regulations Designating Physical Activities prescribe the
physical activities that constitute a “designated project” which may require an
environmental assessment under the Canadian Environmental Assessment Act (CEAA).
The threshold is 1,500 t/d for a graphite mine. However, if it was determined that it is
required to pump more than 200,000 m³/y of groundwater for keeping dry the open pit
and for freshwater needs at the processing plant, the CEAA process would be triggered
The Regulations modifying the Regulations Designating Physical Activities was issued
on April 20th
, 2013. Among modifications are exclusions of groundwater extraction
activities and industrial mineral mines, including graphite. Consequently, and considering
that the adoption of those amendments is much likely to be done rapidly, it is highly
probable that the CEAA 2012 process would not be triggered and that therefore no
federal permitting would be required other than an Authorization to Alter Fish Habitat
under Section 35 of the Fisheries Act.
The Project is located on the traditional territory of the Innu Nation. The Lac Guéret
project is located on the ancestral territory of the Nitassinan of Pessamit. On their
traditional territory (Nitassinan), the Innu claim Uashaunnuat Indian title: aboriginal and
treaty rights to the land and all its natural resources.
Important negotiations involving both the federal and provincial governments are
currently underway with some of the Innu communities of Quebec, which follows the
signature of an Agreement-In-Principle (AIP), which was entered into March 31, 2004.
At this time, the Innu of Pessamit (west of Baie-Comeau), Uashat mak Mani-Utenam
(Sept-Îles) and Matimekush-Lac John (near Schefferville) are not part of any agreement,
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as they intend to settle their own land claims directly with both levels of government. The
communities of Uashat mak Mani-Utenam and Matimekosh-Lac-John are part of the
Ashuanipi Corporation, which has represented them in the comprehensive territorial
negotiations since 2006.
Furthermore, in 2008, Ekuanitshit, Matimekush-Lac John, Pessamit, Uashat mak Mani-
Utenam and Unamen Shipu founded the Alliance stratégique Innue (Innu Strategic
Alliance), which consists of an Innu population of approximately 12,000 and represents
70% of the total members of the Innu Nation living in Quebec. The mandate of the
alliance is to enable the parties to defend their rights, common interests, and to conduct
joint initiatives to achieve political, economic and judicial results in a cooperative
manner.
Mason Graphite will have to conduct consulting session, directly with the local Innu First
Nation to establish sustainable relationships with all local and regional stakeholders. On
April 18, 2012, Mason received consent from the Pessamit Innu First Nation to proceed
with the exploration program. This is a complex process governed by existing treaty and
non-treaty rights. A large step to the project’s success depends on thoughtful engagement.
This will lead to an Impact Benefits Agreement.
1.18 Capital and Operating Costs
1.18.1 Capital Cost
The capital cost estimate of Mason’s Lac Guéret graphite project is based on Met-Chem’s
standard methods applicable for a Preliminary Economic Assessment study to achieve the
accuracy level of ± 35%.
The initial capital cost for the scope of work is estimated as $ 129.7 M including
$ 89.9 M for direct costs, $ 21.8 M for indirect costs and $ 18 M for contingency (all
monetary figures in CAD). The total life of mine capital cost is estimated at $140.5 M of
which $129.7 M is initial capital and $10.8 M is sustaining capital. The sustaining capital
cost covers for closure and rehabilitation of the site and replacement of mine fleet
equipment as well as costs related to the construction of the tailings storage facility and
waste rock stockpiling area to their final design. The capital cost is summarized in Table
1.4.
Table 1.4 – Summary of Life of Mine Costs Estimate (50,000 tpy Concentrate)
Item Description
Initial Capital
(Total Rounded)
($)
Sustaining Capital
(Total Rounded)
($)
Total Capital
(Total Rounded)
($)
Direct Cost
Open Pit Mine 8,026,000 1,819,000 9,854,000
Process 55,264,000 55,264,000
Tailings and Water Management 4,271,000 4,463,000
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Item Description
Initial Capital
(Total Rounded)
($)
Sustaining Capital
(Total Rounded)
($)
Total Capital
(Total Rounded)
($)
Infrastructure Mine Site 16,478,000 16,478,000
Power and Communication 5,300,000 5,300,000
Service Vehicles 595,000 595,000
Total Direct Cost 89,935,000 96,216,000
Indirect Costs 21,768,000 21,768,000
Closure and Rehabilitation 4,493,000 4,493,000
Contingency 17,987,000 17,987,000
Total Capital Cost 129,689,000 10,775,000 140,464,000
1.18.2 Operating Cost
Operating costs have been developed for Mining, Processing, Tailings Management, Site
Services and Administration.
The life of mine average operating cost estimate is evaluated at 390 $/tonne of
concentrate (see Table 1.5 for a summary of average operating cost estimate).
Table 1.5 – Summary of Life of Mine Average Operating Cost Estimate
Area Average Operating Cost
($/tonne of concentrate)
Mining 35.74
Processing 221.21
Tailings Management Included in Processing Costs
Plant Administration, Infrastructure & Tech. Serv. 132.66
Total Average Operating Costs 389.61
Table 1.6 presents the estimated personnel requirements for the Project. This workforce
level accounts for duplication of staff employees on rotation.
Table 1.6 – Total Personnel Requirement
Area Number
Mine 11
Processing 52
Management, Administration and Technical
Services 17
Total Manpower 80
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1.19 Economic Analysis
The financial results indicate positive before-tax Net Present Values (NPV) of
CAD 363.7 M and CAD 282.6 M at discount rates of 8 % and 10 % per year,
respectively. The before-tax Internal Rate of Return (IRR) is 33.7 % and the payback
period is 2.5 years.
The after-tax Net Present Values are CAD 217.4 M and CAD 165.4 M at discount rates
of 8% and 10% respectively. The after-tax Internal Rate of Return is 27.0% and the
payback period is 2.8 years. The main macro-economic assumptions used are given in
Table 1.7.
Table 1.7 – Macro-Economic Assumptions
Item Unit Base Case Value
Average Graphite Concentrate Price CAD/tonne 1525
Exchange Rate CAD/USD 1.00
Life of Mine years 22
Discount Rate 1 % per year 8.0%
Discount Rate 2 % per year 10.0%
The main technical assumptions used in the economic analysis are given in Table 1.8.
Table 1.8 – Technical Assumptions
Total Mineral Resources Mined (Life Of Mine) M tonnes 3.87
Average Mineral Resources Mined per Year tonnes per year 176,000
Processing Design Rate tonnes/day 500
Average ROM Grade to Mill % Cgr 27.4
Average Concentrate Grade % Cgr 93.7
Average Process Recovery over Mine Life % 96.6
Average Tonnes of Concentrate Produced per year tonnes per year 50,000
Total Tonnes of Concentrate Produced over Mine Life M tonnes 1.09
Average Mining Operating Cost ($ / tonne mined) 6.00
Average Mining Operating Cost ($ / tonne concentrate) 35.74
Average Process Operating Cost ($ / tonne milled) 62.59
Average Process Operating Cost ($ / tonne concentrate) 221.21
Average General & Administration Cost ($ / tonne concentrate) 132.66
1.20 Important Caution Regarding the Economic Analysis
The economic analysis contained in this report is preliminary in nature. It incorporates
inferred mineral resources that are considered too geologically speculative to have the
economic considerations applied to them that would enable them to be categorized as
mineral reserves. It should not be considered a prefeasibility or feasibility study. There
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can be no certainty that the estimates contained in this report will be realized. In addition,
mineral resources that are not mineral reserves do not have demonstrated economic
viability.
The results of the economic analysis are forward-looking information that is subject to a
number of known and unknown risks, uncertainties and other factors that may cause
actual results to differ materially from those presented here.
1.21 Conclusions and Recommendations
Considering the positive results of the PEA, Met-Chem recommends that the project
continues to the next phase of development, the Feasibility Study.
Met-Chem recommends a series of additional studies and tests to advance to the next
phase and minimize risks. The main recommendations include:
• Obtain detailed topography contour to improve design and location of infrastructure
and tailings storage facility and in order to reach Feasibility Study level of cost
estimate.
• Perform rock mechanics as well as hydrogeological studies to further confirm rock
slopes, rock permeability, ground and underground water flows and water balance
in order to validate the open pit mining technical parameters.
• Complete metallurgical testing to bring the project to a Feasibility Study level. The
next phase will include pilot plant test work to verify the robustness of the flow
sheet. The optimization of the graphite flakes sizes recovery will also be looked
into. Settling and filtration testing will be done on pilot plant concentrate. The
sulphide removal from mill tailings will be looked into again.
• Perform geotechnical field work for the Feasibility Study to confirm assumptions
used for the tailings storage facility design and waste piles in this PEA report. A
series of boreholes and test pits will be required for determination of soil and
bedrock horizons and mechanical properties beneath the tailings pond dykes to
permit study of the short and long term stability of the dykes and permeability of
underlying soils and rocks as well as determine the soil types and their permeability
below the deposited tailings. All test pits and boreholes shall be surveyed for
northing, easting and ground elevation. Standpipes or piezometers shall be installed
to record the ground water table in the proposed tailings pond area.
• Perform laboratory analysis of the samples retrieved in tailings storage area such as
grain size analysis, water content and soil identification according to the Unified
Soil Classification System (USCS). If soil samples are cohesive (clay) additional
testing shall include Atterberg limits and consolidation tests. Unconfined
compression tests shall be done on selected bedrock cores.
• Perform field investigation to locate borrow banks for suitable materials for
construction of the various dykes, pads and roads as well as concrete aggregates
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during the Feasibility Study to determine quantities available and distance from the
various facilities.
• Perform condemnation drilling for Lac Guéret mine site and infrastructure location
such as the tailings storage facility, waste rock stockpile, primary crusher, process
plant, buildings, etc.
• Carry out soil geotechnics fieldwork and testing in order to provide foundations
design parameters as the project will advance to feasibility studies.
• Carry out thorough environmental characterisation of overburden, run of mine,
waste rock material as per Guideline 019;
• Carry out testing of the tailings and waste rock lithology for geochemical properties
such as ABA (acid base accounting), humidity cell or kinetic tests (coarse and fine
fractions), fresh and aged supernatant analysis (coarse and fine fractions) and
physical/mechanical properties such as size distribution, specific gravity, Atterberg
limits, proctor maximum dry density and optimum water content, maximum density
by vibrator and by drying, minimum density, settling, low and overburden stress
consolidation settlement.
• Conduct consulting sessions with local Innu First Nation.
• Carry out a detailed market study on the graphite product situation by a specialized
firm as the project advances to Feasibility Study. With this market study, the
analysis of the future price trend of graphite concentrate should be addressed.
The estimated cost for the next study phase has been estimated and is provided in Table
1.9.
Table 1.9 – Estimated Cost for Next Study Phase
Study Phase Cost Estimate
($ M)
Additional Geological Work 1.2
Feasibility Study 2.0
Metallurgical Testwork 1.0
Other Site Studies 0.8
Environmental Studies 1.0
Total 6.0
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2.0 INTRODUCTION
Mason Graphite (Mason) is a Montreal based company contemplating a project for the
construction, installation and operation of a graphite processing facility (the Lac Guéret
Graphite Project) to be located approximately 300 km North of Baie-Comeau, Quebec
(the Project).
Mason has recently received (July 2012), the Mineral Resources Technical Report on the
Lac Guéret Project prepared by Roche Ltd. Consulting Group (Roche Ltd). The report
reviewed the work completed by Mason to date and recommended further actions by
Mason to take the project to the Preliminary Economic Assessment stage.
This NI 43-101 Technical Report (Report) on the Lac Guéret Project has been prepared at
the request of Mason to present the Preliminary Economic Assessment (PEA) major
findings. The PEA is based on the Mineral Resources (effective date June 22nd
, 2012) as
issued by Roche Ltd in the July 3rd
, 2012 Technical Report.
The PEA Report was prepared by Met-Chem and was completed May 31, 2013.
The effective date of the Technical Report is April 22nd
, 2013.
2.1 Terms of Reference – Scope of Work
Met-Chem was requested by Mason to provide a PEA Study for the exploitation of the
Lac Guéret graphite deposit. Met-Chem was to provide leadership for the mining, process
design, tailings, infrastructure, compilation of capital and operating cost estimates at a
confidence level of ± 35%, economic analysis and report preparation integrating
metallurgical testing for which information was provided by other consultants.
Process flowsheets were developed from a recent metallurgical testing program
performed by SGS Minerals Services. The capital cost and the operating cost estimates
have been developed for a 500 tonnes per day milling rate.
The PEA Report is intended to demonstrate the potential viability of the Project at a
production rate of about 50,000 tonnes per year of graphite concentrate in order to justify
proceeding with other phases of project development.
Services from specialized firms were retained in the execution of the scope of work.
Table 2.1 provides a list of qualified persons and their respective sections of
responsibility. The certificates for people listed as Qualified Persons can be found at the
beginning of the Report under Date and Signature – Certificates.
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Table 2.1 – Qualified Persons and their Respective Sections of Responsibility
Section Title of Section Qualified Person (QP)
1.0 Summary Met-Chem – Mary Jean Buchanan
2.0 Introduction Met-Chem - Mary Jean Buchanan
3.0 Reliance on Other Experts Met-Chem - Mary Jean Buchanan
4.0 Property Description and Location Tekhne Research - Edward Lyons
Roche Ltd. – Guy Saucier
5.0 Accessibility, Climate, Local Resources,
Infrastructure and Physiography
Tekhne Research - Edward Lyons
Roche Ltd. – Guy Saucier
6.0 History Tekhne Research - Edward Lyons
Roche Ltd. – Guy Saucier
7.0 Geological Setting and Mineralization Tekhne Research - Edward Lyons
Roche Ltd. – Guy Saucier
8.0 Deposit Types Tekhne Research - Edward Lyons
Roche Ltd. – Guy Saucier
9.0 Exploration Tekhne Research - Edward Lyons
Roche Ltd. – Guy Saucier
10.0 Drilling Tekhne Research - Edward Lyons
Roche Ltd. – Guy Saucier
11.0 Sample Preparation, Analyses and Security Tekhne Research - Edward Lyons
Roche Ltd. – Guy Saucier
12.0 Data Verification Tekhne Research - Edward Lyons
Roche Ltd. – Guy Saucier
13.0 Mineral Processing and Metallurgical Testing Met-Chem - Stephane Rivard
14.0 Mineral Resource Estimates Tekhne Research - Edward Lyons
Roche Ltd. – Guy Saucier
15.0 Mineral Reserve Estimates LEFT BLANK FOR PEA STUDY
16.0 Mining Methods Met-Chem - Jeffrey Cassoff
17.0 Recovery Methods Met-Chem - Stephane Rivard
18.0 Project Infrastructure (with exception of 18.5) Met-Chem - Mary Jean Buchanan
18.5 Tailings Storage Facility Nicolas Skiadas (Journeaux &Assoc.)
19.0 Market Studies and Contracts Met-Chem - Mary Jean Buchanan
20.0 Environment Studies Permitting and Social or
Community Impact (with the exception of 20.5)
Roche Ltd. – Martin Magnan
Roche Ltd. – Guy Saucier
20.5 Mine Closure and Rehabilitation Met-Chem - Mary Jean Buchanan
21.0 Capital and Operating Costs Met-Chem – Mary Jean Buchanan
22.0 Economic Analysis Michel L. Bilodeau Consultant Met-Chem
23.0 Adjacent Properties Tekhne Research - Edward Lyons
Roche Ltd. – Guy Saucier
24.0 Other Relevant Data and Information Met-Chem – Mary Jean Buchanan
25.0 Interpretation and Conclusions Met-Chem – Mary Jean Buchanan
26.0 Recommendations Met-Chem – Mary Jean Buchanan
27.0 References Met-Chem – Mary Jean Buchanan
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In addition to their respective sections, the qualified persons are also responsible for their
portions included in the Summary, the Capital and Operating Costs, the Interpretation and
Conclusions and the Recommendations.
2.2 Source of Information
The information presented in this Technical Report has been derived from Met-Chem’s
Preliminary Economic Assessment report titled: “Preliminary Economic Assessment of
the Lac Guéret Graphite Project, Québec, Canada, May 31st 2013” and excerpts from
Roche Ltd Technical Report titled: “NI 43-101 Report, Technical Report on the Lac
Guéret Project, July 3rd
2012”.
The Technical Report summarizes various studies and fieldwork done by Mason and
Consultants for the development of the Project. The reports are listed in Section 27.
2.3 Site Visit
The following persons have visited the site:
• Edward Lyons, P. Geo, Tekhne Research visited the site for one day on
May 11, 2012 and October 27, 2012.
• Yves A. Buro, Eng., Met-Chem visited the site on August 6, and 7, 2012.
2.4 Units and Currency
In this report, all prices and costs are expressed in Canadian Dollars (CAD or $).
Quantities are generally stated in Système International d’Unités (SI) metric units, the
standard Canadian and international practice, including metric tonnes (tonnes, t) for
weight, and kilometer (km) or meters (m) for distance.
2.5 Abbreviations
Abbreviations used in this report are listed in Table 2.2.
Table 2.2 – List of Abbreviations
Description Abbreviation
Acid Rock Drainage ARD
Bureau d’Audience Publique sur l’Environnement BAPE
Canadian dollar CAD or $
Canadian Environmental Assessment Act CEAA
Canadian Environmental Protection Act CEPA
Carbon as graphite Cgr
Certificate of Authorization CofA
Cubic meter m3
Cubic meter per hour m3/h
Environmental Impact Assessment EIA
Environmental Impact Statement EIS
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Description Abbreviation
Engineering Procurement Construction Management EPCM
Environmental Quality Act EQA
Feet ft
General and Administration G & A
Gross Combined Weight GCW
Government of Québec GQ
Gram per liter g/L
Grams g
Grams/tonne or parts per million g/t
Hectare ha
Heating, ventilation, and air conditioning HVAC
Horsepower hp
Kilogram per liter kg/L
Kilograms kg
Kilometers km
Kilotonnes kt
Kilovolt kV
Kilowatt kW
Kilowatt hour per tonne kWh/t
Liter per hour L/h
Low voltage LV
Motor control centre MCC
Medium voltage MV
Megawatt MW
Megawatt hour per day MWh/d
Metal Leaching ML
Metal Mining Effluent Regulation MMER
Meters m
Metric tonnes Tonnes or t
Microns m
Milligram per liter mg/L
Millions of cubic meter Mm3
Millions of metric tonnes Mt
Millions of metric tonnes per year Mtpy
Ministère Développement Durable, Environnement,
Faune et Parcs MDDEFP
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Description Abbreviation
Ministry of Natural Resources and Wildlife MNR
Ministère des ressources naturelles Service du
développement et du milieu miniers MRN
Ministry of Sustainable Development, Environment,
Fauna and Parks MSDEFP
Minus 150 mesh -150 mesh
National Instrument 43-101 NI 43-101
Non Acid Generating NAG
Parts per million, parts per billion ppm, ppb
Preliminary Economic Assessment PEA
Regional County Municipality RCM
Mason Graphite Mason
Run of Mine ROM
Specific gravity s. g.
Square meter m2
Tonnes per cubic meter t/m3
Tonnes per day tpd
Tonnes per hour tph
Tonnes per month tpm
Tonnes per year tpy
US dollar USD or US$
Volt V
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3.0 RELIANCE ON OTHER EXPERTS
This Report has been prepared by Met-Chem for Mason. The information, conclusions,
opinions, and estimates contained herein are based on:
• Information available to Met-Chem at the time of the preparation of this Report
with an effective date of April 22, 2013;
• Assumptions, conditions and qualifications as set forth in this Report; and
• Data, reports, and opinions supplied by Mason and other third party sources.
The Reports supplied and forming the basis of this Technical Report are listed in Section
27.
Met-Chem believes that information supplied to be reliable but does not guarantee the
accuracy of conclusions, opinions, or estimates that rely on third party sources for
information that is outside the area of technical expertise of Met-Chem. As such,
responsibilities for the various components of the Summary, Conclusions and
Recommendations are dependent on the associated sections of the Report from which
those components were developed.
Met-Chem relied on the following reports and opinions for information that is outside the
area of technical expertise of Met-Chem:
• Tailings Storage Facility: Journeaux Assoc., Division of Lab Journeaux Inc.
• 3-Dimensional Geological Block Model (effective date June 22, 2012): Roche Ltd.
• Metallurgical testing: SGS Minerals Services.
• Information on Graphite Concentrate Pricing provided by Mason.
The PEA is preliminary in nature and it includes Inferred Mineral Resources, as allowed
in the NI 43-101 guidelines for such a study, that are considered too speculative
geologically to have the economic considerations applied to them that would enable them
to be categorized as mineral reserves. There is no certainty that the conclusions reached
in the PEA will be realized. Mineral resources that are not mineral reserves do not have
demonstrated economic viability.
This Report is intended to be used by Mason as a Technical Report with Canadian
Securities Regulatory Authorities pursuant to provincial securities legislation. Except for
the purposes contemplated under provincial securities laws, any other use of this Report
by any third party is at the party’s sole risk.
Permission is also given to use portions of this Report to prepare advertising, press
releases and publicity material, provided such advertising, press release and publicity
material does not impose any additional obligations upon, or create liability for, Met-
Chem.
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4.0 PROPERTY DESCRIPTION AND LOCATION
4.1 Property Description
The property covers a total of 11,630.34 hectares in 215 CDC claims on NTS topographic
map sheets 22K14 and 22N03.
4.2 Property Location
The claim group is in the Côte-Nord-Nouveau-Québec region in northeastern Québec
approximately 260 km north of Baie-Comeau, QC on the southwestern shore of
Reservoir Manicouagan. It is centered at 51°07’N and 69°05’W. The property is named
for Lac Guéret, located in the south-central part of the group. No other named
topographic features on NTS map 22N03 (1:50,000 scale) occurs on the property.
Figure 4.1 – Location Map
Mason Graphite Corp. MASON GRAPHITE
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4.3 Claim Titles
Table 4.1 lists the details of the registered claims, based on information from the
MRNF’s Gestim website updated as June 22, 2012. Figure 4.2 shows the location of
individual claims within the registered claim group. The claims were consolidated into
groups with common anniversary dates in 2007. Quinto has maintained them in good
standing by payment of taxes and payment in lieu of work. The assessment report for the
2006 drilling and related expenditures was not been filed with MRNF for assessment
credit. On June 20, 2012, the claims were registered in the name of Mason Graphite.
Mason provided Roche with the Opinion of Title by Heenan Blaikie dated April 4, 2012.
Mason is the registered holder of a 100% interest in the claims which comprise the Lac
Guéret Property with no registered encumbrances or royalties.
Since the publishing of the NI 43-101 Technical Report on the Lac Guéret Graphite
Project issued on July 3, 2012, no renewals of the Mineral Claim Titles was provided to
Roche. However, requests for renewal have been sent to the Ministère des Ressources
naturelles du Québec on May 14, 2013. For the time being, the expiration is due on
July 17, 2013 as stipulated. Figure 4.2 shows the claims and the claim numbers.
Figure 4.2 – Claims Map
MASON GRAPHITE
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Table 4.1 – Mineral Claim Titles
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4.4 Issuers Interest
Mason and Quinto entered a purchase agreement whereby the Issuer acquired a 100%
interest in the Lac Guéret Property. The total purchase price for the acquisition was
US$15,000,000 in cash, payable in instalments based on the achievement of certain
milestones over a five year period and the issuance of 2,041,571 warrants to Quinto, each
warrant being exercisable for Mason Shares at an exercise price of CAD $0.75 until
April 5, 2014. An aggregate of $7,500,000 was paid on closing, with US$2,500,000 due
following the completion of a feasibility study and US$5,000,000 due on achievement of
commercial production (as defined below). If the feasibility study is not completed by
April 5, 2015, Mason Graphite is required to pay (a) US$1,250,000 on April 5, 2015, and
(b) US$1,250,000 on the earlier of (i) the fifth business day following the day on which a
feasibility study is completed; and (ii) October 5, 2015. If commercial production is not
achieved by October 5, 2016, Mason Graphite is required to pay (a) US$2,500,000 on
October 5, 2016; and (b) US$2,500,000 on the earlier of (i) the fifth business day
following the day on which commercial production is achieved; and (ii) April 5, 2017.
“Commercial Production” means the first 10,000 metric tonnes of graphite that has been
mined, sold and shipped from the Lac Guéret Property.
4.5 Legal Survey
The claims have not had any legal surveys.
4.6 Environmental Liabilities
Environmental liabilities related to exploration activities are limited to reclamation of
trenches as necessary. No mining activity has occurred in this area. Limited surface
excavation for road materials occurs in several locations on the property; they are each
less than 0.5 ha and are the responsibilities of the registered claim owner, such as Kruger
Forestry for dolomite and road gravel. Reclamation costs are the responsibility of Kruger,
while the dolomite pits are the responsibility of Mason.
The ownership of surface rights over the Property was not ascertained by Roche nor
provided by Mason. Historical forestry permits were actively used through 2007 by
Kruger Forestry over the Lac Guéret Property. The current status is not known.
11,630.34 ha
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4.7 Significant Factors and Risks
There are no other significant factors and risks other than as disclosed herein that may
affect access, title, or the right or ability to perform work on the property.
Mason has requested the usual permit from the MRNF and the SOPFEU.
There are no known legal or title risks which may affect access, or the right or ability to
perform work on the property.
The known socio-economic risks which may affect access can affect the ability to
perform work on the property is the obligation to reach agreements with Pessamit Innu
First Nation. On April 18, 2012, Mason received consent from the Pessamit Innu First
Nation to proceed with the exploration program.
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5.0 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND
PHYSIOGRAPHY
5.1 Accessibility
Access to the property is via the paved all-weather Route 389 from Baie-Comeau,
Québec to Wabush, Labrador. At Km 200.5, south of the Manicouagan 5 Dam, a main-
haul gravel logging road turns northwest from the paved road. It continues about 95 km
north-northwest from the highway toward the southwest shore of Lac Manicouagan. The
Lac Guéret property is located in a system of logging roads that are not maintained at this
time, but were in sound condition in May 2012. Numerous logging roads cross and
around the property and give good access to the claim block.
5.2 Climate
The northern boreal forest region receives an extreme range of weather conditions
throughout the year. Summers are short, from June to September with variably dry to wet
with local storms, which may give heavy rainfall. Humidity ranges from very dry to quite
humid. Lightning from thunderstorms is a frequent cause of forest fires, which are a
normal hazard in any 10-year period. Autumn is quite changeable with abrupt shifts from
almost summery conditions to frost and back in 48 hours. As the autumn progresses,
colder days are more frequent, and snow may start as early as late September, but more
commonly, snow stays on the ground after mid-November. Winter is cold with very short
days and temperatures to -40°C. Snow may come in storms with 30 cm snowfalls. Spring
is the opposite of autumn in the variability of daily temperatures and precipitation. It lasts
from April to June. However, frost may occur in any month of the year as well as above
freezing temperatures. The weather affects exploration work by restricting the mapping
and trenching and other activities where access to the soil surface is required to summer
and fall. Drilling and geophysical surveys can be conducted year-round.
5.3 Local Resources and Infrastructure
The property is located 300 kilometres by road north-northwest of Baie-Comeau,
Québec, the nearest major population and service centre. The northeast corner of the
claim block lies on the southwestern shore of Reservoir Manicouagan, a large circular
lake impounded by Barrage Daniel Johnson, more commonly known as the Manic 5 dam,
owned by Hydro Québec. The hydroelectric dam is about 85 km southeast of the centre
of the property.
Logging operations between 1998 and 2006 created access into the area. The resulting
logging roads, designed for 100-tonne logging haul trucks, created new outcrops and give
good access throughout the claims. Logging ceased in 2006 and the roads have not been
maintained but remain in good condition overall as of May 2012.
5.4 Physiography
Elevations range from 1175 m on the reservoir to just over 2150 m on a ridge some
10.5 km southwest of the lakeshore. The topography is mainly undulating glacial
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landforms, which thinly cover the outcrop surface. Glacial outwash plains and kame
deposits are common. The glaciers moved from the north and scoured the pre-existing
north- and northeast-trending structures to create linear valleys now filled with streams,
lakes, bogs, and glacial materials. Locally, linear low rounded cliffs occur.
The boreal forest covers the area. The two dominant plant communities, typified by the
black spruce – fir and black birch – hemlock association, are common through the region.
The understory plants for both communities are several rhododendron species called
labrador tea, tag alder, ash, pin cherry, and various types of berry bushes, of which
blueberry is ubiquitous. Forest fire is part of the boreal forest ecology. In the early 1990s,
a particularly dry summer led to numerous natural fires. About 30% of the forest on the
property was burned in various degrees.
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6.0 HISTORY
6.1 General Overview
6.1.1 Prior Ownership
Prior to the access developed by logging companies in the region in the late 1990s, the
geographical isolation of this area has hindered exploration. The author researched the
Québec Ministry of Natural Resources website for assessment files. The only assessment
reports on claims situated near or on the Lac Guéret claims were filed by Québec Cartier
Mining Co. in 1962. They had two claim blocks totalling 100 quarter-mile claims in the
area of the property from 1959 until at least 1971. Roche does not know when these
claims expired. They were acquired based on regional airborne magnetometer mapping
that picked up anomalies indicating significant iron formation in geology similar to the
Mt. Reed – Mt. Wright iron deposits about 150 km to the northeast. Québec Cartier
maintained their interest to at least 1971. The Lac Guéret claim group covers their former
holdings. No other assessment reports filed with the Ministry of Natural Resources
Québec are available for the property area since at least 1935.
6.1.2 Historical Exploration Work
Québec Cartier conducted their major work in 1962 (Ferreira 1962a, 1962b). Baselines
were cut on three grids-cutting with lines turned at 300 ft intervals for a total of 61
(98.5 km). Geological mapping and dip-needle magnetometer surveys were carried out at
1:2400 scale on the grids. Six inclined AX-size diamond drill holes were drilled for a
total of 2,301 ft. (701.3 m). Most of the footage (1,820 ft. or 554.7 m) was drilled in five
holes around “Iron” and “Barrage” Lakes. Québec Cartier reported a global average of all
samples at 36% Fe. The individual samples range from 12.9% to 40.5% Fe in mainly
magnetite and lesser specular hematite iron oxide facies formation. Intervals range from
138 ft. (42.1 m) to 420 ft. (128.0 m). No further work appears to have been done after
1962.
Following the discovery of graphite at the GR (graphite road) showing on a logging road
by Phil Boudrias, Quinto optioned a block of claims that forms the core of the present
Lac Guéret Property from Exploration Esbec (Sept-Îles, QC) in 2002 and added claims
on its own account to cover the favourable stratigraphy around the iron formation as well
as the iron formation core itself.
Table 6.1 – Summary of Exploration Work on the Lac Guéret Property by Quinto
Year Works Trench (m) Drilling (m)
2002
Initial evaluation, discovery of GC Zone,
prospecting, 17 line-km grid; 12 line-km VLF-
mag ground survey
7 (643 m)
2003 Trench mapping, property reconnaissance 50 (4,409 m) w/1,023
channel samples
10 NQ DDH
(1,206m w/421
samples)
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Year Works Trench (m) Drilling (m)
2004
Joint Venture with SOQUEM; airborne EM-mag
survey; Field verification of anomalies; detailed
stripping and trenching with detailed geological
mapping
18 trenches & stripping
(2087 m) 1584 m
channel-sampled w/ 407
samples
2005 Property mapping (assessment work)
2006 Drilling
24 NQ DDH
(2,149 m);
w/901 samples
2007 Technical studies: met testwork, resource model
started; studies incomplete
The 2006 exploration program included trenching two trenches northeast of TR68, named
TR69 and TR70, and a diamond drill program of 24 NQ holes totalling 2,148.6 metres.
Three holes totaling 235.8 m were also drilled in the graphite stratigraphy outside of the
GC-GR area for assessment purposes, but are not discussed herein. The trenches were
channel sampled using a concrete saw, but no records are available of the number of
samples, where they were taken are available, nor the analytical results. Lyons observed
the trenches in May 2007 and noted that they extended the TR68 geology to the NE some
80 metres.
6.2 Historical Mineral Resources
Québec Cartier Mining Co. included an in-house “resource estimation” for iron oxides
which occur in the centre of the current property in their assessment reports (Ferreira
1962a, 1962b). These were based on six AX drill holes scattered over several kilometres.
These estimates are not cited here as they are not within the CIM guidelines for resources
nor do these reports discuss graphite mineralisation.
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7.0 GEOLOGY SETTINGS AND MINERALIZATION
7.1 Regional Geology
The results of the 2004 field campaign (Lyons 2004b) and the 2006 drilling (not reported)
improved our understanding of the regional, as well as property geology. In addition, the
lithotectonic synthesis of the Labrador Trough by Clark and Wares (2004) revised the
standard stratigraphy of the Labrador Trough, which is the protolith of the Gagnon Group
on the property. The synthesis also changes some fundamental perspectives and
interpretations applicable to the subject property.
The regional geology is shown in compilation maps by the Geological Survey of Canada
(Davidson, 1996) and the Québec Ministry of Natural Resources (Marcoux and
Avramtchev, 1990) and is summarised by Hocq (1994). The regional stratigraphic section
around the property, shown on Figure 7.1 with the Québec government regional mapping
codes, is (from youngest to oldest).
Table 7.1 – Regional Stratigraphic Column
CENOZOIC
Quaternary
Q Pleistocene glacial deposits, unconsolidated
MESOZOIC
Triassic
Mcc Manicouagan impact crater complex (monzonite, latite, breccia)
MIDDLE PROTEROZOIC
G16 Shabogamo mafic intrusives
G15 Monzonite – granodiorite intrusives (? klippes)
G14 Gabbro (nappé – klippes?)
PALEOPROTEROZOIC – ARCHEAN
Gagnon Group
HBG_GN Hornblende-garnet gneiss – basalt sill-dyke complex coeval with Menihek Fm (small scale)
G12 Menihek Fm. (quartzofeldspathic gneiss) also called Upper Paragneiss (Clarke, 1977)
G12a Lac Guéret Member (informal) of Menihek Fm (graphite-quartz schist and graphite- quartz-feldspar-biotite-(garnet) gneiss)
------------------- diachronous contact -------------------------------
G11a Sokoman Fm. non-Fe oxide member (quartzite-rich sediments )
G11 Sokoman Fm. (iron formation) Age 1885 – 1878 Ma
------------------- unconformity -----------------------------------------
G9 Denault Fm. (dolomitic marble with calcsilicates + quartz) Age < 2060 Ma
------------------- unconformity -----------------------------------------
G8 Katsao Fm. (granite gneiss, minor amphibolite) Age 2170 - 2140 Ma
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The Grenville Province rocks characteristically have been subjected to medium to high
metamorphism and multiple periods of deformation. Metamorphism in the region is the
upper amphibolite facies (kyanite subfacies).
Pre-Grenville and possibly early-Grenville deformation appears to have been destroyed
by intense middle-Grenville orogenies. Dr. Réal Daigneault (Daigneault, 2004) made a
structural field study on the graphite area on the property while Ed Lyons was mapping
the area. He noted that the central two periods of deformation (D2 and D3) control the
present distribution of the lithology, but there is evidence for one prior and at least two
later deformation events, as well.
The property covers most of the most southwesterly exposures of the Gagnon Group
stratigraphy related to the Sokoman iron formation in the Gagnon Terrane. The Gagnon
Terrane on the property includes most of the broad anticlinorium elongated north-
northeast. The oval shaped structure is compressed from the southeast to its present form.
The core of the anticlinorium is mainly Denault Fm crystalline dolomitic marble. The
typical footwall to the Sokoman Fm, the Wishart Fm quartzite, appears not to be present
as a mappable unit. The Sokoman Fm iron formation outcrops mainly in both the centre
and edges, where they occur as linear, doubly folded (interference folds) anticlines and
synclines on the scale of 0.5 to 2.5 km. Silicate facies of the Wabush were recognized in
recently logged areas in the southern part of the anticlinorium, but have not been mapped
historically. The quartzite mapped near the graphite zones appears to be the upper, non-
oxide, facies of the Sokoman Fm, not the Wishart quartzite.
The Sokoman Fm quartzite and the overlying Menihek Fm contact can be traced around
the margins of the anticlinorium by airborne EM conductors with variable magnetic
signatures. Little mapping has been done in the northwest. Foliations are steep SE-
dipping to vertical in the northwest, while on the southeastern margin, foliations dip from
steep to more commonly moderate to shallow toward the SE. The major D2 deformation
was caused by collision from the southeast, as is common throughout the Gagnon
Terrane, leading to overturned folds and thrust faults dipping SE. The anticlinorium
generally occupies a low plateau delimited by steep flanks to the SE and NW in
particular.
The Lac Guéret Nord sector property covers most of the outlier of iron formation Gagnon
Group as a plateau described above. Work by SOQUEM Inc. in 2003-04 on the southern
block of the Lac Guéret Property shows folded bands of silicate-rich iron formation with
minor Fe-oxide and sulphide facies probably interbedded with other non-iron formation
metasediments, but not the dolomitic marble. The graphitic horizon is present as linear
bands to 10-m wide. The folds are dominantly strike E-W to WNW with steep south dips.
The two zones, distinct in regional detailed aeromagnetic survey (SOQUEM, 2002),
appear to be the most southwesterly outlier of Gagnon Group. It appears to be separated
by erosion from the core Gagnon Group package on the Lac Guéret Nord property. The
southern units mark the south limit of the Gagnon Terrane where the Allochthonous
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Boundary Thrust Fault (ABT) that marks the Parautochthon – Polycyclic Allochthon
boundary.
Post-Grenville folding and extensional brittle faulting occurred with mainly modest
vertical offsets. This pattern has been noticed by Ed Lyons in the iron belt between Mont-
Reed and Wabush. These are shown as thrust faults in Figure 7.1.
The Middle Proterozoic units in the region are shown by Marcoux and Avramtchev
(1990) as a group of basic to intermediate intrusives. However, Hocq (1994) shows them
as regional-scale (tens of kilometres) klippes transported by subhorizontal nappé folding
and thrust displacement on decollément planes.
The most significant known geological event in the area since the end of the Grenville
event was the impact of a large (~ 5-km diameter) bolide 214 + 1 million years ago in the
Triassic Period (Monastersky, 1998). The impact created the Manicouagan Crater with a
floor diameter of 55 km and final rim diameter of 86-95 km (Grieve, 1983). Part of the
eroded annular ring of collapsed impact crater walls is now filled by the Reservoir
Manicouagan. The base of the impacted centre underlies Île Réne-Levasseur. The current
floor is estimated at 230 m deep by 55 km diameter (Morris et al., 1993). The shock ring
outside the crater probably extends several to ten kilometres outside of the crater. This
would affect much of the rocks underlying the Lac Guéret Property, including the
graphite zone, although no shocked quartz has been noted in the graphite zones in thin
section. This transient, high-speed event likely did not affect the graphite flake size.
The last geological event was the Pleistocene glaciation and deglaciation. Where outcrops
of softer graphite-biotite schist trend north to northeast, the glaciers cut cliffs and cross-
cut the schistosity. The melting of the ice formed sandy outwash plains with isolated
large erratics, kames, drumlins, and a few eskers. Moraine development in the area of the
property seems minor.
The economic geology in the Gagnon Group historically lies in the Gagnon Group
metasediments. They host the Sokoman iron formation mined at Mt. Reed – Lac Jeannine
– Mt. Wright area near Fermont, as well as the deposits at Wabush. The graphite deposits
occur in the basal part of the Menihek Fm pelitic schist and gneiss overlying the
Sokoman Formation and can be considered as marking the final deposition in the
Sokoman. This stratigraphy also hosts the Lac Knife graphite deposit as well as graphitic
paragneiss units south and west of the Fire Lake iron mine; the basal graphite lenses also
occur above the Kami deposit in Labrador City, NL.
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Figure 7.1 – Regional Geology
Mason Graphite Corp. Mason Graphite Corp.
MASON GRAPHITE
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7.2 Local Geology
7.2.1 Stratigraphy
The stratigraphy of the GC and GR graphite zones is shown schematically in Table 7.2.
Table 7.2 – Property Stratigraphic Column (Youngest to Oldest)
The Denault and Sokoman Formations in the core of the synclinorium are overlain by the
non-oxide facies of the Sokoman noted elsewhere in the Gagnon Terrane near the iron
mines. The quartzite is thin to thick bedded with locally well-preserved bedding features,
including rare graded beds. Thin beds also include 1-10% magnetite crystals at a
stratigraphic level only slightly below the start of the major graphite deposition. The
quartzite locally has interbeds of white coarsely crystalline diopside (calc-silicate) and
white tremolite as well as pale green amphibole and red-brown garnet (species unknown).
Diopside, identified by MRNFP geologists by XRD, occurs in monomineralic lenses to
two metres thick. Graphite occurs as rare isolated flakes and thin beds in quartzite (not in
the marble) near the top of the unit. The quartzite is up to 140 m true thickness but often
is less, especially with the iron formations near the core of the synclinorium. The
Sokoman quartzite complex forms the footwall of the major graphite intervals in the GC
and GR zones.
The informally named Lac Guéret Member (G11a) of the Menihek Fm is the basal facies
of the Nault paragneiss (the Upper Paragneiss of Clarke (1977)). The Member is quartz-
rich towards the base and gradually increases in plagioclase, biotite, muscovite, and
garnet up section. Clarke (1977) reported graphite occurring sporadically through the
Nault (Upper Paragneiss). On the property, it is concentrated towards the base, although
graphite also occurs in minor amounts (< 1% Cgr) throughout the Menihek. In the Lac
Guéret Member, graphite more typically occurs as beds and bands of 4% to 51% Cg over
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widths of 2 to 200 metres. This is discussed in more detail under Mineralisation. Graphite
can also occur as isolated narrow beds in the quartzite proper. Overall, the Member
appears to represent a transitional depositional environment from dominantly chemical
Sokoman to dominantly clastic Menihek sediments. The diachronous contact shows the
interlayering of quartzite-rich and micaeous rocks typical of a contemporaneous change
in deposition styles
Hornblende-garnet-amphibole coronitic gneiss is another distinct rock type that is
localised in the Lac Guéret Member. Clarke (1977) noted this unit, named Hornblende-
Biotite Garnet Gneiss (HBG-GN) as occurring at the base of his the Upper Paragneiss
unit and remarks that it appears to be formational at the transition from quartzite to
paragneiss near Mt-Reed and Mt Wright iron mines. At Lac Guéret, It forms thin
continuous bands and domal dykes in the GC graphite zone. In core, the mafic and
sedimentary beds at interbanded on the decimeter scale locally; the mafic contains no
graphite. The lateral extent is usually several hundred metres. Ed Lyons interprets these
as metamorphosed basalt or andesite sill-dyke complexes that intruded the
metasediments. The same pattern is common near the Kami iron deposit at Labrador
City, NL.
The Menihek Fm paragneiss hangingwall is variable with leucosomic and melanosomic
bands that typically contain medium to coarse quartz, plagioclase, cinnamon-coloured
biotite, muscovite, garnet, and dark green amphibole. Occasionally, sillimanite needles
were noted, marking the upper amphibolite facies. The coarse banding and biotite colour
are typical in the examples shown by Clarke (1977) for his Upper Paragneiss near
Gagnon, QC. The unit also includes minor bands of bright dark to medium green
amphibolite with dark cinnamon garnet and/or black-brown biotite. Minor graphite +
biotite-rich bands occur throughout the unit. Other units observed but not mapped include
light-coloured, iron-deficient quartzofeldspathic gneiss with muscovite and pale rose
garnets, and hornblende-biotite amphibolite bands.
7.2.2 Structure
The Labrador Trough protolith had two and possibly three tectonic events before the
Grenville deformation. These were probably destroyed or severely modified beyond
recognition during the Grenville orogeny. Locally, some remnant features may survive in
isolated outcrops. At least four periods of deformation during the Grenville affected the
property. The first deformation, D1 with rare examples of preserved as tubular folds
(Daigneault, 2004).
The second deformation, D2 was the formation of the foliation F1 It is the most prominent
and likely earliest folding related to the Grenville Orogeny. The regional lineation axis is
oriented 055°. Plunges are variable from flat to shallow (< 20°) to the southwest. The
plunges change in several domains of approximately 400-m length. From the northeast to
southwest, the graphite zone from L22+50N to L17+50N plunges shallowly SW. From
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L13+50N to L17+50 N, it is flat plunging. The shallow plunge continues from L13+50N
through L8+00N where trenching ends.
D3 deformation folded the F1 schistosity into tight subvertical to moderately dipping
isoclinal folds striking northeast to east-northeast and dipping southeast. This is the major
control of the conformation of the graphite beds. A number of late, small-scale pegmatite
dykes, previously thought to be migmatite, in graphite schist have been folded and
transposed by this event
Within the graphite zones, the “high grade” beds (HiG type in previous reports) with
>25% graphite appears to form crushed or cataclastic breccias in local bands. Fragments
of the host generally form 80-90% of the unit with rotation of foliated clasts subparallel
with the main trend. The “matrix” is recrystallised graphite flakes up to 8-mm length
approximately perpendicular to the clast margins with no associated minerals. It also
shows an unusual deformation, here called D3. The foliation strikes parallel with F1 but
shows a steep plunge to the southwest. Lyons interprets this feature as the result of
rheologically weak ductile high-grade graphite bands that absorbed most of the
compression and transpression associated with the D2 and D3 events. This deformation is
restricted to the HiG graphite bands in the GC and GR zones.
The fourth major deformation, D4, folded of the D3 structures. It is aligned around a
~308° axis with a steep southeast plunge. It is expressed as shallow crenulations on tight
D3 folds, as a kink of the quartzite-graphite contact on L13N, and the open flexure on
L16N that changes the trend of the GC graphite zone form NE to ENE across the 2006
drill grid. It also accounts for the more northerly flexure on the GR Zone. It forms the
interference folds of the Sokoman Fm package in the centre of the synclinorium on the
scale of 1-km.
A key element of the anticlinorium model is that it is relatively shallow, probably less
than 250 metres. The exact depth is unknown. Drilling by QCM (Ferriera 1962a) showed
that the anticline tested by drill holes on both flanks changed from tight to open folding in
120-m depth. The style of folding and the limited drill results on the GC Zone indicates
that the graphite beds continue down beyond 100-m depth with some flattening (see
sections in 2006 drill program).
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Figure 7.2 – Mason Graphite Property Geology
Mason Graphite
Corp.
MASON GRAPHITE
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Figure 7.3 – GC-GR Graphite Zones Compilation
7.3 Mineralization
Graphite of Unit 1 (4-10% Cgr) and Unit 2 (10-25% Cgr) forms fine to coarse crystal
flakes (<0.01 to >4-mm diameter) in quartz and quartzofeldspathic gneiss and schist. The
in-situ organic material was concentrated during post-Labrador Trough deposition and
Mason Graphite
Corp.
MASON GRAPHITE
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recrystallised during the Grenville orogeny. It does not appear to have been enriched by
tectonics or hydrothermal remobilisation.
Unit 3 (+25% Cgr) is characterised by a distinct pattern in flake distribution. The
tendency is for clasts or non-recrystallised centres of the original very fine to amorphous
pre-metamorphic graphite schist to be enveloped by recrystallised very coarse (2 to -+8-
mm length) and pure graphite flakes as a result of ductile brecciation. The coarse flake
graphite visually forms 7-12% of the total rock and constitutes the potentially
economically viable product. The rest of the HiG material may have more amorphous
graphite.
Sulphides are present mainly as pyrrhotite and less frequently as pyrite. Pyrrhotite occurs
commonly with graphite, especially at grades greater than 10% Cg, as 3-5% fine-grained,
disseminated to blebs and patches 0.3- to 4-mm long aligned parallel with the schistosity.
It is visible in drill core, but less so in outcrop. Outcrops rarely show significant iron
oxidation when trenched and show minor white ferric sulfate efflorescence on fresh
surfaces. Pyrite occurs locally as coarse recrystallisation of associated with late
northwesterly extensional gashes seen in several trenches and in drill core in the GC
Zone. It is not associated with other hydrothermal minerals such as quartz or calcite in the
late open-space veinlets. In core, pyrite crystals occur adjacent to finer-grained pyrrhotite
blebs with sharply defined crystal margins for the pyrite and no local change in
crystallinity in the pyrrhotite. Chalcopyrite, sphalerite, and molybdenite have been
observed in thin section (Rioux, 2008). The first two occur as late and fairly clean
sulphide grains interstitial to pyrrhotite and pyrite. Molybdenite occurs locally within
graphite flakes with the lamellae aligned with the basal planes of both minerals; the
molybdenite was formed during the genesis of graphite and predates micro-folding of
graphite. No other sulphide minerals have been noted. ICP chemical analyses of 120
samples in 2004 showed no geochemically significant amounts of metals associated with
the graphite.
The depth of the mineralisation is uncertain, as was mentioned under Structure above. It
is probable that the folded graphite bands are constrained within a broad vertical
envelope. This envelope is the actual outline of the deposit.
Interpretation of the sections for the Mineral Resource shows the effects of structure on
localising the graphite deposits. The general trend shows the ~20° SW plunge. The
continuity of the structures between 50 metre sections shows rapid changes particularly in
the Unit 3 (HiG) type. This is interpreted as the result of the focusing of compression on
the higher graphite beds which have a predilection for ductile folding and sliding. The
graphite can glide readily, thus moving but with little fault brecciation. The HiG units
observed to the SW in cleaned outcrops show intense isoclinal folds with amplitudes
often less than 5 metres, where the adjacent lower grade graphite schist and quartz-rich
sediment bands are folded in the scale of 10-100 m amplitudes. This ductility makes
interpreting the higher grade units more difficult.
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8.0 DEPOSIT TYPES
The graphite beds form an integral part of the sediments of the informally named Lac
Guéret Member of the Menihek Formation. The graphite originated in part as carbon-rich
sediments in arenaceous and pelitic turbidite beds that were part of a marine basin of
increasing depth relative to earlier deposition. The protolith in the Labrador Trough has
low levels of kerogen (sedimentary carbon) associated with a variety of lithologies, but
none are nearly as high in carbon as even the medium grade graphite at Lac Guéret
(T. Clark, pers comm, 2004).
Graphite is chemically stable over a wide range of pressure and temperature conditions
and is only very poorly reactive with other common hydrothermal solutes. The potential
for concentration of grade by plastic flow is minimal since dry minerals do not flow
plastically under the metamorphic high pressures and temperatures. (Thickness can
change due to sectional compression or attenuation.) Remobilisation of sulphides during
metamorphism is facilitated by local-scale hydrothermal solution and redeposition
(Marshall, et al., 2000). Thus, the most probable carbon concentration mechanisms
occurred before the first level of metamorphism sealed the rock porosity. Two
possibilities may account for the graphite. One could be the result of exceptionally high
initial organic deposition concurrent with sedimentation. The second model derives the
carbon from the movement of hydrocarbons during diagenesis, when the rocks were
being compressed and lithified. However, the origin of the beds of abnormally rich
graphite (locally over 50% Cg) cannot be derived from simple bio-organic sediments,
even if they are 100% biological materials. It is possible that a paleo-petroleum process
during diagenesis may have upgraded the carbon content. One model that was proposed
involved reduction of carbonate to graphite. Dolomite and calcite contain 13% and 12%
carbon, so they could be potential carbon sources for deposits generally 12% Cgr or less
assuming total carbon transformation of a fixed amount to carbonate. However, most of
the Lac Guéret graphite grades tend to exceed that limit.
The value of a graphite deposit depends only partly on the graphite grade. More
important is the quality and purity of the graphite crystal (flake) that can be extracted. A
potentially economic graphite deposit must demonstrate that the degree of
recrystallisation is high. The recrystallisation dynamics of graphite is poorly understood.
When carbon/graphite levels are over ~20%, the graphite apparently resists
recrystallisation (B. Marshall, pers. comm. 2004). In the high-grade material (HiG) at Lac
Guéret, zones of fine-grained graphite, interpreted locally as crushed or cataclastic
breccia clasts, are surrounded by recrystallised coarse flake graphite. Where graphite
grades are less than 25%, recrystallisation is more complete. Thus, the apparently lower
grade, non-HiG material may have an economic value similar to richer grade material.
Metallurgical testing is needed to verify these factors.
The same conditions that controlled the carbon deposit also controlled sedimentary or
diagenetic iron sulphide. The original sulphide was probably pyrrhotite deposited as fine
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grains with the carbon and in lenses with quartz and negligible carbon. Both occur in the
same horizon but probably in a semi-independent relationship. Sulphides known to date
on the property are located within the graphite horizons, not isolated in
hangingwall/footwall stratigraphy. One area on the horizon several kilometres north of
the drill grid shows sulphide in high-quartz gneiss with only minor graphite. Thus, the
reductive sedimentary basin environment appears to show a range of sulphur-carbon
relationships.
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9.0 EXPLORATION
9.1 Exploration Work
To the exception of the drilling campaign conducted in 2012 (see Section 10.2), Mason
has not conducted any exploration work on the Lac Guéret Property.
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10.0 DRILLING
10.1 Previous Drilling
Table 10.1 lists the drillhole data for the 2006 holes plus LG-07 (2003) which form the
basis of the Mineral Resources estimation.
Table 10.1 – Drillholes Details
Hole ID Zone Length (m) Azi Dip UTM N UTM E Elev Drill Dates Section
LG-07 GC 136.00 326 -45 5663785.4 495766.97 530.9 24-27/09/03 1050
LG-11 GC 120.20 320 -60 5663738 495818 524 12-13/07/06 1050
LG-12 GC 129.10 320 -45 5663720 495822 536 16-16/07/06 1050
LG-13 GC 74.60 320 -45 5663759 495796 525 14/07/06 1050
LG-14 GC 75.80 320 -45 5663707 495860 512 14/07/06 1050
LG-15 GC 81.00 320 -45 5663810 495730 546 16-19/07/06 1050
LG-16 GC 56.20 320 -45 5663836 495697 552 19/07/06 1050
LG-17 GC 141.00 320 -42.5 5663685 495808 509 20-22/07/06 1000
LG-18 GC 83.70 320 -48 5663716 495765 512 22-23/07/06 1000
LG-19 GC 140.20 320 -46 5663747 495731 535 23-24/07/06 1000
LG-20 GC 90.00 320 -44 5663784 495698 537 24-25/07/06 1000
LG-21 GC 75.00 320 -45 5663818 495662 546 19-20/07/06 1000
LG-22 GC 84.00 320 -44 5663794 495863 517 26/07/06 1100
LG-23 GC 132.40 320 -45 5663794 495822 544 27-29/07/06 1100
LG-24 GC 78.00 320 -45 5663826 495783 533 29-30/07/06 1100
LG-25 GC 85.20 320 -45 5663861 495749 541 30-31/07/06 1100
LG-26 GC 74.10 320 -45 5663730 495892 522 6-7/08/06 1100
LG-28 GC 139.50 320 -45 5663808 495895 511 1/08/06 1150
LG-29 GC 75.90 320 -45 5663877 495863 528 02/08/06 1150
LG-30 GC 74.30 320 -45 5663866 495823 538 2-3/08/06 1150
LG-31 GC 60.00 320 -45 5663866 495787 544 03/08/06 1150
LG-32 GC 57.00 320 -46 5663933 495752 548 3-4/08/06 1150
LG-34 GC 72.00 320 -44 5663819 495949 508 5-6/08/06 1200
LG-35 GC 74.40 320 -45 5663858 495914 519 05/08/06 1200
LG-37 GC 75.00 320 -45 5663925 495844 535 4-5/08/06 1200
24 DDH 2006 2,148.60 UTM = NAD83 Z19
1 DDH 2003 136.00
TOTAL 2,284.60
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Of the 2,284.60 metres cored, 2,135.5 m were sampled and analysed (93.5% of the core).
Recovery was very good (+98%) with moderate to high RQD values typical of these
rocks. 908 samples were taken with 2.35 m average sample length. Cores were placed in
wooden half-diameter trays used in the region; were covered with a second tray and
transported to the geology logging area. The length of the run was marked by wooden
blocks typically from run to run (3.0 metres).
Drilling was performed by Forages La Virole of Rimouski QC under the guidance of
Daniel Lapointe, P.Geo.
10.1.1 Reliability of Work
Lyons, as a Qualified Person, has visited the project site at the start of the program in
June 2006 as well as subsequently in May 2007 and October 2009, and on 14 May 2012
for this report. In his opinion, after reviewing the data results, the works were reliably
executed as reported.
10.2 Recent Drilling
Since the last Mineral Resource Estimate dated June 22, 2012, an intensive drilling
program was conducted from July 2012 to November 2012. As provided by Mason
Graphite (“Mason”), 163 new drill holes were drilled totaling 26,548 metres. Close to
17,000 samples were selected for chemical analysis and sent to Agat Lab. The analysis
results are not yet available for compilation. Since no new data in the existing mineral
resource area are available, the 2012 data did not change the data on which the Mineral
Resource was based. Once all data analysis of the July-November 2012 drilling program
will be available, an update of the Mineral Resource Estimate will be performed.
The current PEA report is based on the Mineral Resource Estimate effective as of
June 22, 2012.
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11.0 SAMPLE PREPARATION, ANALYSIS AND SECURITY
11.1 Sample Collection
11.1.1 Sampling Approach and Methodology
Core sampling in 2003 (LG-07), done by Lyons, had maximum sample length of 2.0 and
minimum of 0.75 m with breaks at major lithological changes. Sample lengths in the
2006 program had the maximum length of 3.0 and minimum of 0.5 m with less than 25
samples less than 1.0 m long.
Trench channel sampling of trenches TR27, TR62, TR67, and TR68 done in 2004 was
done to match the width and diameter of NQ diamond drill core (Lyons, 2004b). Lyons
observed similar sample channels in TR69 and TR70 of 2006.
Samples were saw-cut parallel with the core axis. Three-part sample tags with unique
numbers were used. One part was stapled in the corebox at the start of the sample run.
One half of the sample was placed into plastic bags with a second tag. The third part, in
the sample book, was preserved for the company’s records.
Samples were shipped in 20-litre sealed plastic pails in four shipments by truck from
Baie-Comeau, QC to Process Research Associates (Richmond, BC) for analysis.
Inspectorate Exploration and Mining Services Ltd. (Inspectorate) acquired in Sept. 2008
Process Research Associates (PRA) Group; Vancouver, Canada which also included
International Plasma Laboratories (IPL). Inspectorate is ISO 9001:2008 certified.
ALS Chemex is as well ISO 9001:2008 certified.
The data from both core and trench samples were used in the geological and block model
and in the resource estimation.
11.2 Sample Preparation
11.2.1 Relation of Issuer to Sample Analysis
No one related to the Issuer, Mason as an employee, officer, director, or associate was
involved with the samples at any time during sampling, transportation, sample
preparation, or assaying.
Mason has no relationship with Process Research Associates, International Plasma
Laboratory Ltd., ALS Chemex, or Assayers Canada Ltd and is totally independent of
these companies.
11.2.2 Sample Preparation, Assaying, and Analytical Procedures
The sampling crew brought the daily production of samples to the camp where they were
stored in a trailer. The samples were checked for agreement between the enclosed sample
tags and the number written on the outside of the bag; bag closures were also checked
and repaired as needed. Samples were stored in a closed cube van rented specifically for
sample handling. Periodically, they packaged the samples for shipment in plastic 20-L
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pails. The foreman and another worker prepared and double-checked a list of which listed
sample numbers in each container and their weights. The samples were driven in the
locked van to Transport Thibodeau Inc. in Baie-Comeau, Québec for shipment by truck
to Process Research Associates in Vancouver.
Upon receipt at Process Research Associates (PRA) at 9145 Shaughnessy St., Vancouver,
BC, the samples were checked against the delivery documents, which included a detailed
list of sample numbers in each bag, for completion. PRA maintains a reception list with a
description of each sample for integrity of packaging, largest particle size, and moisture
content. All documents are stored in the main contract file at PRA.
Samples preparation is initiated with an Instruction and Handling Sheet prepared by the
laboratory manager. Details, including sample identification, air-dried weight, and
approximate riffled out weight, are recorded. Each sample is first weighed and the weight
recorded. It is then put into a steel pan for handling with an identification tag attached.
The sample is dried in a custom-made furnace at low temperatures specifically not to
damage other organics that might be associated with graphite.
The sample is crushed in a jaw crusher (and cone crusher, if required) set at 6 mesh
(Taylor) or 3.3 mm. The crusher(s) is thoroughly cleaned before and after each sample.
The crushed sample is quartered with a 0.75 in (1.91 cm) riffle and a subsample of 200 to
300 grams is placed into another clean steel pan with an identification tag.
The subsample is pulverised in a stainless steel rotary shatter box to 95% minus
74 microns. The shatter box is cleaned with silica sand before and after each sample. The
subsample is mixed and quartered again to about 50 gr. in a stainless steel riffler. Rejects
are combined with the original sample.
The main sample is bagged in a polyethylene bag and stored in a covered 5-gallon plastic
container. The contract number and sample numbers are written on the sample bag and
container. The 50-gr subsample is bagged in a polyethylene bag and marked with the
contract and identification numbers and is sealed.
PRA prepares a purchase order for the assayer, listing all samples. The information is
kept in the client’s contract file and is registered in PRA’s central purchase order ledger.
The assayer, International Plasma Laboratory Ltd. (IPL) at #200 – 11620 Horseshoe
Way, Richmond, BC, picks up the samples. Upon receipt, the samples are logged in their
system with purchase order and list of sample numbers. The 50-gr samples were analysed
for graphite following the ASTM 1915-01 method with some modifications. The method
has two steps: one is the removal of all non-graphite carbon by heating and leaching with
aqua regia; the second is the complete combustion of the sample using a LECO CS-300
carbon-sulphur analyzer in an oxygen-rich atmosphere with a catalyst to convert all
carbon to CO2. The CO2 is detected with an infrared absorption spectrometer and
compared with standards to calculate the carbon content of the sample.
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A check on the values of high-grade (>35% Cgr) was tested on all 2006 samples using a
differential loss on ignition (DLOI) method to compare with the standard LECO
techniques. They concluded that the LECO method at high concentrations tended to
overstate the %Cgr values somewhat. All the high-grade graphite samples used in the
resource model, except those in DDH LG-07, were analysed by the DLOI method.
IPL reports the assay results to PRA email and by signed certificate. PRA evaluates the
data with reference to their standards and internal checks. Once PRA completes its
review, it sends the results to the client.
Canadian Association of Environmental Analytical Laboratories and the BC Ministry of
Environment Land and Parks have certified international Plasma Laboratory Ltd. In
1997, IPL participated in the CANMET Proficiency Testing Program for Mineral
Analysis Laboratories. The laboratory is certified under ISO 9002.1994 and is audited on
a regular basis.
Michel Robert, P. Eng., the Qualified Person at Process Research Associates, stated that
International Plasma Laboratory Ltd., the primary assayer and ALS Chemex Canada Ltd.
(AC), the referee laboratory, are independent of Process Research Associates and offers
their services on a commercial basis only.
Rejects and pulps are stored at the PRA warehouse on a continuing basis.
11.3 Quality Assurance and Quality Control
Quality control was done at two levels for the samples. Process Research Associates adds
two duplicate samples and two standards with non-indicative labels in each run of 20
samples for a total batch of 24 samples. International Plasma Labs of Vancouver, BC,
following the ISO 9002.1994 requirements, adds an internal standard as the 21st sample
in a batch of 40 samples. Each 1st and 20
th client samples are also duplicated. These are in
addition to the four unidentified standards and duplicates introduced into the batch by
PRA. Every 10th
determination, defined as sample, duplicate, or standard, is a blank
sample supplied by PRA.
In addition, PRA send one of the duplicate samples and one of the standard samples from
each batch to Assayers Canada Inc. for analysis as an independent check.
Blanks enter the sample stream when PRA sends the sample to IPL for analyses.
No blanks or standards were added in the sample stream in the field.
11.4 Security
The samples were close control from the drill to shipment. They were stored in the van
used for transportation of the shipments from the field to delivery to the shipper’s office
in Baie-Comeau, QC. While it is remotely possible to change the samples, in fact, during
the period of sampling, no one, except the geologist, knew which material had the higher
grades. The visual estimates made by the geologist were only approximations of actual
grades. I believe that the potential for sample manipulation in the field to be very low.
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Following the drill program in 2006, the drill core was moved from the field site to a
secure warehouse at Baie-Comeau, QC.
At present, no blank samples are included with the sample sent from the field to PRA. In
order to increase the quality control, this should be done in future programs.
In Lyons’ opinion, the sampling procedures and handling in the field, sample preparation,
sample and data security, and the analytical procedures were sufficient to maintain the
integrity of the samples as representative of the material sampled.
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12.0 DATA VERIFICATION
12.1 Field Verification
Lyons directed the Lac Guéret exploration work in the field from 2002 through mid-2006
and helped establish the 2006 drill program executed by Daniel Lapointe, P. Geo. He
relogged the 2006 core in May 2007 in the secure storage site at Baie-Comeau, QC
following which he visited the drill grid site. He also consulted with Quinto during 2006
and 2007 related to metallurgical issues and initial efforts to make a geological model in
2007. The 2006 drill sites are marked with wooden stakes and the casing has been pulled
out. Locations were made with a hand-held GPS unit. He recommends that a Total
Station survey be done of the drill grid to tie in the 2006 drill collars, which should be
marked more permanently and the trenches and roads.
Lyons knows of no known limitations regarding the field data besides the normal data
ranges inherent in the methods described.
12.2 Database Verification
Database verification is discussed in Section 14.0 Mineral Resource Estimates.
Lyons knows of no known limitations regarding the field data besides the normal data
ranges inherent in the methods described.
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13.0 MINERAL PROCESSING AND METALLURGICAL TESTING
13.1 Introduction
The purpose of the test work program was to characterise the Lac Guéret deposit and to
produce a flow sheet that would allow for the production of saleable graphite concentrate
with a graphite grade greater than 96% carbon while maximising the weight recovery.
To develop the optimal flow sheet, several grinding, flotation and polishing tests were
performed at the SGS Mineral Services facility in Lakefield. Overall, the test program
was successful in terms of demonstrating that a good product can be made from Lac
Guéret graphite mineralisation.
The mineralogical characterisation conducted at SGS confirmed that the graphite
occurred as crystalline and flaky graphite. Graphite flakes ranged in size from 50 microns
to 1 mm, with an average particle size of 300 microns.
Lac Guéret mineralisation does not require complex treatment for successful
beneficiation. Graphite concentrate is upgraded by flotation and polishing grinding. The
scouring action during polishing grinding ensures that the final concentrate grade is
maximised.
A conceptual flow sheet capable of producing a graphite concentrate meeting the graphite
markets’ requirements was developed.
13.2 Previous Test Work Results
Process Research Associates Ltd. (PRA) reported to Quinto Technology Inc. in 2005 on
the Lac Guéret deposit, that there was an “absence of deleterious non-flake graphite” and
that the test work “demonstrated the ease of production of a high value material”.
13.3 Recent Test Work Results
13.3.1 Collection of the Samples for Test Work Purposes
The Lac Guéret Project site was visited on August 6 and 7 of 2012 by Yves A. Buro,
Eng., Met-Chem; in order to identify sampling sites for test work purposes. The
following is a summary of the visit and sampling recommendations.
Following a review of geology and types of mineralisation from available drillhole,
several outcrops with existing channel samplings location were visited. The
mineralisation variations, changes in sulfides content and surface oxydation were
observed on outcrops.
The following recommendations were made for the collection of the samples:
• Selected lines for sampling:
– LG208 to LG210 (100 m of channel sampling), 17 m West of LG118 to
LG125 (60 m of channel sampling), 17 m West of LG134 to LG141 (20 m of
channel sampling) and from outcrops close to LG49.
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• Remove a few centimeters from the oxidised surface before sampling.
The final location of the samples collected, were provided by the client on
August 25, 2012 with the following list. Table 13.1 lists the sample location. Final
location and size of some of the sampling sites were somewhat modified for easier
accessibility.
Table 13.1 – Sampling Sites Location
Name East North Elevation
S1-DEBUT 495874 5663903 529
S1-FIN 495917 5663864 516
S2-DEBUT 495709 5663686 532
S2-FIN 495672 5663705 536
S3-DÉBUT 495393 5663345 541
S3-FIN 495426 5663234 527
S4-DÉBUT 495321 5663277 552
S4-FIN 495313 5663291 540
The sample was received in three shipments at the SGS Minerals site in September and
October 2012.
A total of four batches, Batch #1 to Batch #4 weighing around 1,250 kg in total, were
received for testing at SGS. Batch #1 comprised of channel samples between holes LG-
208 and LG-210. Batch #2 had samples from nearby hole LG-49. Batch #3 consisted of
channel samples between holes LG-118 and LG-125 while Batch #4 channel samples
between holes LG-134 and LG-141. Batch #1 and Batch #2 were selected for initial
testing maintaining a 50:50 weight ratio. The remaining samples along with Batch #3 and
Batch #4 were stored in a freezer to minimize sample oxidation, a list of which is
provided in Table 13.2.
Table 13.2 – Sample Remaining at SGS Minerals
Project # Label # Net Weight
(kg) Sample Description
13838-001 12-8748 248.6 Batch #1 – 1¼” Reject – Drum 1 of 2
13838-001 12-8728 82.2 Batch #1 – 1¼” Reject – Drum 2 of 2
13838-001 12-8749 279.2 Batch #2 – 1¼” Reject – Drum 1 of 2
13838-001 12-8729 103.4 Batch #2 – 1¼” Reject – Drum 2 of 2
13838-001 12-8750 142.8 Batch #3 – as received
13838-001 12-8751 73.5 Batch #4 – as received
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13.3.2 Summary of the Test Work Program
SGS Mineral Services is a mineral test center located in Lakefield, Ontario, Canada. SGS
conducted mineralogical characterisation, preliminary metallurgical test work including
grinding, flash flotation, conventional flotation, magnetic separation and heavy liquid
separation tests.
13.3.3 Comminution Test Work
The MacPherson grindability test is an indication of the amount of energy required in an
autogenous grinding system. AWi averaged 6.4 kWh/t, which is very low.
The Bond Rod Mill Work Index is an indication of the amount of energy required in rod
mill grinding system. RWi averaged 8.7 kWh/t, which is very low.
The Bond Ball Mill Work Index is an indication of the amount of energy required in ball
mill grinding system. BWi averaged 13.2 kWh/t, which is medium.
13.3.4 Heavy Liquid Separation Test Work
A heavy liquid separation test conducted on the Lac Guéret composite sample showed
that the sample is not amenable to dense media separation. The aim of the test work was
to evaluate the possibility of pre-concentrating graphite concentrate prior to grinding.
13.3.5 Flotation Test Work
Nineteen bench scale tests and three lock-cycle tests were conducted. For tests F1, F2 and
F3, minus 10 mesh graphite was ground in a rod mill for one minute floated in two stages
to produce a coarse concentrate. The coarse tailings were ground with steel media and
floated to produce a rougher concentrate. The rougher tailings are the main part of final
tailings.
This approach was selected to minimize breakage of graphite flakes. Coarse flotation was
conducted to recover coarser flakes. The tailings from the coarse flotation were ground to
float graphite which may have had a layer of gangue on it. The grinding step on the
coarser tailings was to liberate finer graphite locked with the gangue minerals.
Sulphide flotation tests were performed on the rougher tailings to verify the possibility of
producing non acid generating (NAG ) tailings, which could be stored in a separate pond.
The initial tests were not successful in lowering the rougher tailings to the NAG level. As
the total amount of final tailings is not very large it was decided to use one tailings pond
and further test work was stopped.
All flotation tests used kerosene and methyl isobutyl carbinol (MIBC) as collector and
frother respectively. Both are typical reagents for flotation of graphitic mineralisation.
Table 13.3 shows the results of flotation test F3. The total graphite recovery was 99.5%.
The coarse flotation concentrate had a particle size distribution where 80% of the
particles are smaller than (P80 of) 230 microns.
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Table 13.3 – Preliminary Test Work Results (Test # F3)
Preliminary Flotation
Products
Weight
%
Assay
% C(t)
Distribution
% C(t)
Coarse Concentrate 39.2 48.2 82.8
Rougher Concentrate 16.8 22.7 16.7
Rougher Tailings 44.0 0.23 0.5
Head (calculated) 100.0 22.8 100.0
Head (direct)
22.7
Source: SGS Project 13838-001, Final Report - May 21, 2013 – Table was modified.
For later tests F6 and F10, the combined coarse and rougher concentrates were subjected
to open circuit cleaner flotation tests. The open cleaner flotation tests consisted of five
cleaner flotation steps to produce a primary cleaner concentrate. Prior to cleaner flotation,
the combined concentrate sample was polished for liberating gangue minerals. Polishing
is typically adopted in graphite flotation for improving graphite concentrate grade
without destroying the graphite flakes. Ceramic rather than steel grinding media are used
for minimizing graphite flake breakage. The fifth cleaner concentrate produced a
concentrate over 85% C (t).
This primary cleaner concentrate was screened and underwent secondary cleaning as
required. The coarse particles plus 50 mesh (300 microns) were considered final graphite
product. The finer particles were re-polished and refloated to produce a saleable final
product for each size distribution class. The Lock Cycle Tests (LCT) performed two
separate cleaning steps. The primary cleaners produced again a fifth cleaner concentrate.
This fifth cleaner concentrate was upgraded in separate secondary cleaner stages.
The fifth cleaner concentrate was classified into three size fractions, using a 50 mesh and
an 80 mesh screens. The plus 50 mesh is considered final product. The –50+80 mesh and
–80 mesh fractions are separately re-polished and re-floated. The +80 mesh concentrate is
a final product. The –80 mesh concentrate is screened using a 150 mesh screen into two
fine fractions, both fractions are final products. Table 13.4 lists LCT#2 test work results
are sorted into final product categories.
Table 13.4 – Preliminary Test Work Results (LCT#2)
Concentrate Particle Size Weight
%
Assay
% C(t)
Distribution
% C(t)
Plus 50 mesh (+300 micron) 18.6 96.9 19.0
Plus 80 mesh (+180 micron) 14.1 96.2 14.4
Plus 150 mesh (+105 micron) 13.1 96.2 13.3
Minus 150 mesh (–105 micron) 54.2 91.7 53.3
Total Concentrate 100.0 93.7 100.0 Source: SGS Project 13838-001, Final Report – May 21, 2013 – Table was modified by recalculation.
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The test work sample was of lower grade than the actual mineral deposit. The test work
indicated a progressive improvement in the results and the test work results are therefore
considered reproducible.
13.3.6 Conclusions
Lock cycle test #2 produced a graphite concentrate with 45% of the graphite flakes
coarser than 105 microns.
The Lac Guéret deposit produced a concentrate grade of above 96 percent for the
fractions coarser than 105 microns; the finer fraction was about 92% while the overall
carbon recovery was above 95 percent.
Sulphide flotation did not yield clean enough sulphide tailings to set up a separate
sulphide removal process section.
13.3.7 Future Test Work
The next phase will include pilot plant test work on the Lac Guéret mineral deposit to
verify the robustness of the flow sheet.
The optimization of the recovery of the graphite flake sizes will be looked into.
Settling and filtration testing will be done on pilot plant concentrate.
Further, the sulphide removal from mill tailings should be looked into again.
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14.0 MINERAL RESOURCES ESTIMATES
14.1 Introduction
The Mineral Resource estimation is based on the Quinto Mining Corp. exploration data
and the geological model provided by Lyons working with Geospark Consulting
(Nanaimo, BC) based on a Quinto in-house study in 2009. The current model was
simplified by them to include three mineralized units and one waste unit defined by the
graphite content. All data provided by Geospark was imported in Gemcom (GEMS).
Grade interpolation was done with ordinary kriging in the GEMS mining software
module.
Interpretation of the sections for the Mineral Resource shows the effects of structure on
localising the graphite deposits. The general trend shows the ~20° SW plunge. The
continuity of the structures between 50 metre sections shows rapid changes particularly in
the Unit 3 (HiG) type. This is interpreted as the result of the focusing of compression on
the higher graphite beds which have a predilection for ductile folding and sliding. The
graphite at higher grades can glide readily, thus moving with little fault brecciation. The
HiG units observed to the SW in cleaned outcrops show intense isoclinal folds with
amplitudes often less than 5 metres, where interlayered mafic sills and the adjacent lower
grade graphite schist and quartz-rich sediment bands are folded in the scale of
10-100 metres amplitudes. This anisotropic ductility makes interpreting the higher grade
units more difficult.
14.2 Previous Mineral Resource Estimates
No previous mineral resource estimations were made on the graphite deposits.
14.3 Exploration Database
The database used for this resource estimation was provided by Geospark Consulting in a
digital format. Following the receipt of the database, Roche validated that all data was
imported by cross-checking with Geospark. All relevant data was imported in GEMS, the
following files were imported in the GEMS database:
• Assay.csv
• DHColl.csv
• DHsurvey.csv
• Lith.csv
The database contained results from 24 diamond drill holes and four trenches. The
following information was extracted in GEMS from the files mentioned above:
• DHColl: 24 diamond drillhole collars and 4 trench coordinates from DHColl.
Easting, northing, elevation and the maximum depth of each holes was the
information extracted from this files
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• DHsurvey: 24 records associated to the drill holes were extracted from these files.
The fields included following information: hole identification, depth, azimuth, and
dip.
• Assay: 906 records of intervals inside drillholes or trenches for Cgr % were
imported in GEMS database.
The database was built by Geospark for Quinto over several years in Access (2007-2009).
It was imported to the Minesight™ software workspace where multiple tables can be
manipulated in one workspace.
Following measures were followed by Geospark to create the Roche database:
1. Comparing original electronic (PDF) copies of the signed analytical certificates
for graphite, ICP element analyses, sulphur, and density were compared with the
existing database; Minor corrections and additions were made.
2. Validation of overlaps between interval units in assay and geological intervals
were done.
3. Checks of the drill collar coordinates, including elevations, inclinations, and
azimuths, were done. Several collars plotted in unexpected places; these were
adjusted to fit the known field conditions and a separate set of coordinates was
kept in the database noting these adjustments.
4. Checking for inconsistencies in the geological codes as well as verifying
minimum-maximum field values. These were verified independently by Caroline
Vallat of Geospark Consulting.
5. The assay data matched the database with the exception of two data entry errors
that were corrected. The sample interval checks encountered three examples
arising from keypunch errors, which were amended.
6. Collar elevations of original collar coordinate data were based on hand-held GPS
readings. No DGPS surveying was done.
7. A digital contour map made in 2006 by GPR (Montréal, QC) for Quinto was
contoured on 1-m intervals; the elevations were interpolated from this topography
and added to the database as corrected coordinate information.
No other errors were discovered that would impact the Mineral Resource estimation.
14.3.1 Density
Density data was compiled by Geospark. A fix value of density was attributing to each
block for each unit. For the block model, the average between low and high value was
given to each bloc inside the units. The densities assigned to the units are tabulated below
(Table 14.1).
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Table 14.1 – Density
Unit Density
Unit 1 2.675
Unit 2 2.575
Unit 3 2.5
Waste 2.725
Specific gravity measurements were taken on 40 samples of crushed core from the 2006
samples in March 2007. The immersion method was used on samples weighing 285 to
315 grams. Total sulphur analyses were done on 38 of the 40 samples by the LECO
method at the same time. The original list of samples selected by AMEC, during the
initial resource estimation in 2007 for Quinto, included 60 samples. Many of the ones not
tested included the higher grade (>10% Cgr) that would have been useful; the reason for
the change is unknown.
The measured density ranges from 2.37 to 3.03 kg/m2. The interplay of density between
increasing graphite, which ranges from 1 to 53.80% Cgr, and sulphur, which ranges from
nil to 15.7%, affect the density used in the model units.
Figure 14.1 shows the relation between %Cgr and density for the 40 measured samples.
The populations for low and high sulphide are distinct albeit close as would be expected,
with a gradual decrease in SG as graphite increases more rapidly than sulphide.
The 2009 model used both high- and low-sulphur variants as units yielding more
complexity than was manageable. The current model was simplified from that data and
included both high- and low-sulphur variants as one unit. The density of the present units
was the simple average of the two sets.
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Figure 14.1 – % Cgr vs. Density
Figure 14.2 shows the same parameters for % S (tot) and density for 38 sample pairs. The
sulphur vs. density shows a variable correlation with increasing % S (tot). The increase in
density is due to the higher proportion of sulphides % vs. Cgr% with lower graphite
grades including more sulphides.
Figure 14.2 – % S (tot) vs. Density
%Cgr vs. Density
0
0.5
1
1.5
2
2.5
3
3.5
0 10 20 30 40 50 60
% Cgr
De
ns
ity
(g
/cc
)
High sulfide = +20%
Low sulfide= < 20%
?
Unit 1b Unit 2b Unit 3b
N = 40 sample pairs
Figure 8
Unit 3a Unit 2a Unit 3a
%S (tot) vs. Density
0
0.5
1
1.5
2
2.5
3
3.5
0 2 4 6 8 10 12 14 16 18
% S (tot)
De
ns
ity
(g
/cc
)
N = 38 sample pairs
Figure 9
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14.3.2 Sample Distribution
The statistics of the graphite samples used in the modeled volumes are shown in Table
14.2 and the grade distribution is shown in Figure 14.3 (normal histogram) and Figure
14.4 (cumulative frequency).
Table 14.2 – Drill Core Samples – Statistics
Sample Count Min Max Mean Median Std. Dev. Var.
Cgr% All Units 599 0.02 52.59 19.13 14.8 15.13 228.99
Cgr% Unit 1 143 0.15 24.47 7.50 6.12 4.88 23.86
Cgr% Unit 2 131 0.06 38.41 15.93 15.94 6.95 48.26
Cgr% Unit 3 228 5.25 52.59 35.00 36.89 10.16 103.18
Cgr% Waste 97 0.02 23.38 3.29 2.15 3.84 14.73
Figure 14.3 – Normal Histogram -% Cgr in All Samples Used in Model
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Figure 14.4 – Cumulative Frequency - % Cgr in All Samples Used in Model
The samples plotted are not the statistical representation of the entire GC zone deposit,
but, form only a subset that was included within the NE GC model. Samples from the
same drill holes that tested rocks outside the model were not included.
The population appears to be two normally distributed groups: one from 0 to ~10% and
the other above 10%, based on the cumulative frequency plot. The histogram shows a
small second population of +31% Cgr material in Units 3a and 3b. The extent of this
population is unknown outside the drill grid. Unit 3 rock elsewhere typically is between
27% and 45% Cgr; the values above 45% Cgr are uncommon.
14.3.3 Geological section and Geological interpretation
Geological model was provided by Lyons and Geospark to Roche as four AutoCAD files
(.dxf). The four units included in that model are based on the graphite content. All units
were imported as a triangulation in GEMS. No errors which will affect the volume
calculation were detected during the interpretation. Due to the complexity of the deposit
and the differences in ductility of the high-grade graphite Unit 3, the geological model
shows a variable continuity between sections. For estimation purpose, the different units
in the geological model have been only used for grade interpolation and not used for the
geostatistics. Geostatistics have been performed in all units together within the deposit
envelope.
The geological modeling procedures included:
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• Geological interpretation and digitizing of lithological boundaries;
• Creation of 3D TIN (triangulated irregular net) solids model;
• Database manipulation;
• Block and grade estimation;
• Classification and reporting of Mineral Resources.
14.3.4 Geological Interpretation and Digitising
a) Section Definitions
The drilling was done on a grid aligned 310, even though the holes themselves
were oriented at 320. Five lines were spaced notionally 50 m apart and were
actually drilled adjacent to or in trenches TR27, TR62, and TR68. Two grid lines
1100NE and 1150 NE straddled TR67 to maintain the 50-m spacing. Holes were
spaced about 50-m notionally apart horizontally on section (Figure 14.5).
Figure 14.5 – Drill Grid Location
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b) Geological Interpretation
Five vertical cross sections at 50-m spacing and four level plans at 50-m elevations
were created by Caroline Vallat with the drill traces, % Cgr, visual% pyrrhotite and
pyrite as colour range bars and lith-codes in text. The sections were in a ± 25-m
depth from the section plane. The boundaries of the geological and mineralised
units were interpreted manually by Lyons. Vallat digitized them in Minesight ™
then created intermediate vertical cross sections at 10-m intervals, synthetic long
sections at 25-m spacing and level plans at 25-m spacing. After initial adjustments,
Lyons and Vallat adjusted the model together.
One of the persistent problems with using lithologies as controls distinct from
mineralisation in this deposit is that the graphite is an integral component of the
host lithology. The beds are visually distinct, but the boundaries are defined over
some width by ranges of grade. The graphite host rock, a quartz-rich quartz-
feldspar-biotite gneiss, does not have any distinctive “key horizons” internal
between the footwall and hanging wall stratigraphy. These give good limits to the
graphite stratigraphy overall, but don’t necessarily resolve potential folds and/or
fault displacements. The graphite lithologies tend to show more folding than
neighbouring rocks do, but there are few controls in the neighbouring rocks to
demonstrate folding in them, either, except at the centimetre- to meter-scale. Thus
the interpretation depended mainly on correlation of graphite rich units with
interspersed internal waste bands (%Gr <4%). These turned out to be relatively
continuous and internally consistent in thickness and extent. Experience from
extensive trenching supports the confidence in the lateral continuity along strike.
However, grades perpendicular to the bedding planes change abruptly and the units
can change rapidly in the dip-plane.
Six units with characteristics are tabulated below:
Table 14.3 – Geological Units Definition
Unit Name % Cgr
Range Flake characteristic (visual) Lithologic Host
Unit 1 4-10 mainly coarse>200µ Qzt, QFB gneiss
Unit 2 >10-27 significant coarse>200µ Qzt, QFB gneiss
Unit 3 >27 very coarse in bands/veinlets; most Gr
is very fine QFB gneiss
Waste <4 isolated medium to coarse Qzt, QFB gneiss
FW – QZT variable generally medium to coarse Qzt±marble, calcsilicate,
gneiss
HW –
QFB_GN variable generally medium to coarse
Variable gneiss w/cinnamon
phlogopite
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Units 1-3 are based primarily on the range of %Cgr grade. The stratigraphic units
are bounding units to the graphite stratigraphy and only are included in the resource
if the mineralisation is in the adjacent Units 1-3. Waste is internal to the Units 1-3
boundaries.
c) Topographic Surface
The GPR topographic model, commissioned by Quinto in 2006, was used to limit
the top of the model.
14.4 Statistics
14.4.1 Length
Basics statistics were run through the model for samples length. The histogram of Figure
14.6 showed the distribution of the sample length. More than 85% of the samples have a
length below 3 metres. The calculated mean for the samples length is 2.35 metres.
Figure 14.6 – Distribution of Sample Lengths
14.4.2 Distribution
Cumulative plot were generated from the raw assays of the Lac Guéret database. A break
in the trend at the Figure 14.7 is observed around 46 Cgr%. This value was used as the
capping grade for the grade interpolation.
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Figure 14.7 – Cumulative Probability Plot
14.4.3 Composite
Composites were calculated from top to bottom of the drillholes. The composites were
calculated for a maximum of 3 metres inside the modeled units .The units are based on
Cgr grades. The composite database was generated with the mining software GEMS.
Composite were calculated from the raw Cgr assay value.
To avoid the creation of small composite interval inside the mineralized zone, a minimal
value of 50% of the composite size of 3 metres was needed to create the composite. As a
result, all composites with a length value under 1.50 metres were excluded from the
database.
Table 14.4 shows the comparison of the basics statistics between raw assay and the
3 metres selected composite, in both case only value inside the geological model were
used.
Composite data were exported as a point value corresponding to the middle of the
interval. A zero value was attributed to interval with no data (no Cgr assay recorded in
the database).
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Table 14.4 – Downhole Composites vs. Raw Assay Data
Down Hole Composites vs. Raw Assays inside geological units
3 metres composites Raw assays
Number of samples 719 906
Minimum Value 0 0
Maximum Value 53.79 53.89
Average 19.65 18.66
Standard Deviation 14.66 14.81
14.4.4 Spatial analysis: Variography
Variography was run on the composite and includes all units. Semi-variograms were
created using the geostatstical tools in GEMS. Due to the geology provided, different
techniques were considered to analyse the variance of the grade throughout the model.
All composite data were analysed together. This was done to allowed the analysis to take
as much data available and this without the possible bias imposed by the units already
base graphite content.
The variography study was performed on all composites. Variography was run in all
directions with GEMS to find the best semi-variograms. Search orientation of the ellipse
was determined by the semi-variogram as a result of a principal azimuth of 165, a
principal dip of -20 deg and intermediate azimuth of 150 deg. Anisotropy was interpreted
with the semi variogram and set to 60 metres along the x axis, 40 metres along the y and
50 metres along the z axis. To interpolate the search ellipse, a minimum of one octant
with a maximum of three samples by octant was used. This rule allowed the search
ellipse to interpolate a maximum of blocks, these parameters was taken to classify the
resource later in the process. All relevant parameters of the search ellipse are in the Table
14.5. Two methods were used: inverse distance (ID) and ordinary kriging (OK). The two
methods gave the same results with respects to resource categories, grade, and tonnes.
The ordinary kriging method yielded a smoother continuity that conformed better to
Lyons’ geological experience with Lac Guéret and other graphite deposits in the Gagnon
Terrane.
Table 14.5 – Semi-Variogram Parameters
Semi-Variogram Parameters
Number of structures 1
Nugget 30
Sill 215
Range in X 60
Range in Y 40
Range in Z 50
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Semi-Variogram Parameters
Principal Azimut 165
Principal Dip -20
Intermediate Azimut 150
Figure 14.8 – Major Axis Semi-Variogram
Figure 14.9 – Semi-Minor Axis Semi-Variogram
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14.4.5 Block Model
A 3D block model was constructed in GEMS based on the exploration database and the
geological domains furnished by Geospark. The block model is aligned on the general
trend of the geological units. Parameters of the block models are listed below:
• Origin: 49 53 25 E, 56 63 775 N, 700 Elev.;
• Rotation: 40 degrees counter clockwise;
• Number of blocks: 220 columns, 225 rows, 130 level;
• Block size: 3 metres * 3 metres * 3 metres.
The following attributes are used in the block model: rock type, density, Cgr%, class,
distance, drilling, octant, samples. Rock type and density value were assigned during the
block creation with the given geological units. An air value with a density of 0 was
attributed to all blocks above the rock surface. Rock type was used during the
interpolation as boundaries.
14.4.6 Grade Interpolation
The grade interpolation was completed by using the 3 metres composites for Cgr% in
GEMS. Composites were assigned a rock type corresponding to the unit. Only
composites tagged with the rock type were used to interpolate the same unit. All units
were interpolated with the method of ordinary kriging. Interpolation was restricted inside
the search ellipse defined with the parameters of the variogram (see Table 14.5). All
grade values exceeding 46% Cgr were capped at 46% Cgr. A minimum of two samples
and a maximum of 25 samples were used to estimate the grade. Figure 14.10 and Figure
14.11 show a typical vertical section and plan view of the interpolated grade.
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Figure 14.10 – Vertical Section 1000NE of the Interpolated Grade Looking N40E
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Figure 14.11 – Plan View of the Interpolated Grade (-40 m from the Surface)
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14.4.7 Mineral Resource Classification
The mineral resource was classified inside the block model in GEMS. The Mineral
Resource is classified under the Measured, Indicated, and Inferred categories according
to the CIM guidelines. Resource is classified according to the confidence of the
geological continuity. Following the recommendation of Lyons, the resource
classification inside GEMS was done following statistical information by blocks
combined with field experience. All the following attributes have been gives to each
block during the interpolation: number of drillholes used to interpolated, number of
octants used for interpolate, number of composites used, and the distance of the
composites used. Relevant factors such as confidence in the density and topographic
surface was considered as well during the process. Figure 14.12 and Figure 14.13 show a
typical vertical section and plan view of the categories.
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Figure 14.12 – Vertical Section 1100 NE of the Categories Looking N40E
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Figure 14.13 – Plan View of the Categories (at the Surface)
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14.5 Mineral Resource Estimation
14.5.1 Global Mineral Resource Estimates
The mineral resource estimate presented in this report is effective as of 21 June 2012. The
following classifications were used: Measured, Indicated, and Inferred. Inferred,
Indicated, and Measured categories of Mineral Resources are recognized in order of
increasing geological confidence. Mineral Resources are not equivalent to Mineral
Reserves as no economic viability has been demonstrated. In addition, there can be no
assurance that Mineral Resources in a lower category may be converted to a higher
category, or that Mineral Resources may be converted to Mineral Reserves.
All mineralised zones were used in this estimate. Table 14.6 shows the Mineral
Resources estimated inside the mineralised zones with a 4% cut-off.
Table 14.6 – Mineral Resource Estimate (4% Cgr Cut-Off)
Resource Estimate (4% Cgr cut-off)
Categories Unit Tonnes Grade
(% Cgr)
Measured (M)
Unit 1 (4 to 10% Cgr) 31,200 7.82
Unit 2 (10 to 27% Cgr) 122,800 14.85
Unit 3 ( > 27 % Cgr) 144,900 36.72
All units 298,900 24.39
Indicated (I)
Unit 1 (4 to 10% Cgr) 2,672,500 8.09
Unit 2 (10 to 27% Cgr) 2,089,200 16.83
Unit 3 ( > 27 % Cgr) 2,535,300 36.20
All units 7,297,000 20.24
M + I
Unit 1 (4 to 10% Cgr) 2,703,700 8.67
Unit 2 (10 to 27% Cgr) 2,212,000 18.30
Unit 3 ( > 27 % Cgr) 2,680,200 36.96
All units 7,595,900 20.40
Inferred
Unit 1 (4 to 10% Cgr) 1,272,600 7.56
Unit 2 (10 to 27% Cgr) 714,200 17.54
Unit 3 ( > 27 % Cgr) 771,500 33.10
All units 2,758,300 17.29
Notes:
- Effective as of June 22, 2012.
- Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability. - Numbers may not add up due to rounding.
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14.5.2 Potential Liabilities affecting Mineral Resource Estimation
There are no known environmental risks which can affect the Mineral Resource
estimates.
There are no known permitting risks which can affect the Mineral Resource estimates.
There are no known legal risks which can affect the Mineral Resource estimates.
There are no known title risks which can affect the Mineral Resource estimates.
There are no known taxation risks which can affect the Mineral Resource estimates.
The known socio-economic risks which can affect the Mineral Resource estimates is the
obligation to reach agreements with Pessamit Innu First Nation.
The known marketing risks involve demonstration that the deposits and metallurgy can
supply markets with desired products.
There are no known political risks or other risk factors that can affect the Mineral
Resource estimates.
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15.0 MINERAL RESERVE ESTIMATES
No Mineral Reserves have been estimated for the Lac Guéret Graphite Project.
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16.0 MINING METHODS
Met-Chem evaluated the potential for an open pit mine at Lac Guéret to produce
50,000 tonnes of graphite concentrate per year. This section of the report discusses the pit
design, mine plan and fleet requirements that were estimated for the PEA and which form
the basis for the Mine Operating and Capital Cost estimate presented in Section 21.
Figure 16.1 provides a general layout of the mine.
16.1 Mineral Resources
The Mineral Resources used for the PEA are based on the July 3, 2012 “NI 43-101
Report, Technical Report on the Lac Guéret Graphite Project” completed by Roche Ltd.
Table 16.1 summarizes the Mineral Resource estimate.
Table 16.1 – Mineral Resource Estimate (4% Cgr Cut-Off)
Categories Tonnes (All
units)
Grade
(% Cgr)
Measured (M) 298,900 24.39
Indicated (I) 7,297,000 20.24
M + I 7,595,900 20.40
Inferred 2,758,300 17.29
A 3-Dimensional Geological Block Model for the Lac Guéret Graphite Project was
supplied to Met-Chem by Roche Ltd. in the form of a comma delimited text file. The text
file contained the coordinates of each block in the model as well as their graphite grade
value, density and resource classification. The block model is composed of blocks that
are 3 m x 3 m x 3 m high. Met-Chem imported this information into MineSight®
Version
7.0 to create a 3-Dimensional mine planning block model. MineSight® is commercially
available software that has been used by Met-Chem for the past 25 years. The mine
planning model was checked to ensure the validity and the integrity of the import.
Roche Ltd. also supplied a topographic surface and a surface representing the bottom of
the overburden contact. All blocks between these surfaces were considered as
overburden. Overburden is defined as loose sand and gravels that can be excavated
without the need for drilling and blasting.
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Figure 16.1 – Mine General Layout
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16.2 Mining Method
The mining method selected for the Project is a conventional open pit drill and blast
operation with articulated haul trucks and wheel loaders.
Vegetation, topsoil and overburden will be stripped and stockpiled for future reclamation
use. The mineralization and waste rock will then be drilled, blasted and loaded into
articulated haul trucks with front end wheel loaders. The mineralized material will be
hauled roughly 1.4 km to the primary crusher and the waste rock will be hauled to the
dump.
To properly manage water infiltration into the pit, a sump will be established at the
lowest point on the pit floor. Water collected in this sump will be pumped to a collection
point at surface.
The mine will operate year round, four (4) days per week, ten (10) hours per day. Since
the mill will operate seven (7) days per week, a run of mine stockpile will be maintained
to provide a constant supply of feed to the crusher. During the three (3) days when the
mine is not operating, the crusher will be fed by one of the mine’s front end loaders from
the stockpile. The mine fleet requirements and manpower are based on this work
schedule.
16.3 Pit Optimization
Open pit optimization was conducted on the deposit to determine the economic pit limits.
The optimization was carried out during the initial stage of the Project using the initial
cost, sales price and pit and plant operating parameters. The pit optimization was re-
evaluated after a preliminary mine plan was completed and the cost, sales price and pit
and plant operating parameters were better defined.
The pit optimization was done using the Economic Planner optimizer of MineSight®
. The
optimizer operates on a net value calculation for all the blocks in the model, i.e. revenue
from sales of graphite concentrate less operating cost. The formula is presented below:
Concentrate Tonnage = Mineralized Tonnage x Recovery x Grade of Feed /
Concentrate Grade.
Revenue = Concentrate Tonnage x Sales Price.
Net Value = Revenue – (Mining Cost + Processing Cost + Transportation Cost + General
& Administration Cost).
Since this study is at a PEA level, NI 43-101 guidelines allow inferred mineral resources
to be used in the optimization and mine plan. Table 16.2 presents the pit optimization
parameters.
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Table 16.2 – Pit Optimization Parameters
Item Value Units
Mining Cost – Overburden 5.00 $/t (mined)
Mining Cost – Mineralization / Waste Rock 6.00 $/t (mined)
Processing Cost 50.00 $/t (milled)
Concentrate Transport Cost 20.00 $/t (conc.)
General, Admin & Infrastructure Cost 60.00 $/t (conc.)
Sales Price 1,275 $/t (conc.)
Plant Recovery 96.6 %
Concentrate Grade 93.7 %
Overall Pit Slope 45 Deg
* The cost parameters are preliminary estimates for developing the economic pit and should not be
confused with the operating costs subsequently developed for the PEA and given elsewhere in this
report.
16.3.1 Cut-off Grade
Using the economic parameters presented above, Met-Chem calculated a cut-off grade of
4.1% Cgr for the Project. The cut-off grade is used to determine whether the material
being mined will generate a profit after paying for the processing, transportation and
administrative costs. Material that is mined below the cut-off grade is sent to the waste
dump.
The cut-off grade of 4.1% confirms the minimum grade of 4.0% used for the Mineral
Resource estimate.
16.3.2 Pit Optimization Results
The optimized pit shell contains 10.1 Mt of mineralization with an average Cgr grade of
19.9%. The proportion of Inferred Mineral Resources that are contained within this pit
shell is 25%.
The optimized pit shell does not account for mining dilution and mining recovery, nor
does it provide an access ramp into the pit. These items are discussed in the Mine Design
section of this report.
Figure 16.2 presents a typical section through the deposit showing the optimized pit shell.
Upon completion of the PEA, Met-Chem confirmed that the pit optimization exercise
was still valid using the updated cost estimate developed in the Study.
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Figure 16.2 – Pit Optimization Results
At an annual production rate of 50,000 tonnes of graphite concentrate, this mineralization
would be sufficient for a 40 year mine life. The mine plan has been limited to 22 years
for this PEA since the extra duration has little effect on the Project’s economics.
16.4 Mine Design
Met-Chem designed a pit that resulted in a 22 year mine life for the Project. The
following section provides the parameters that were used for the detailed pit design.
16.4.1 Material Properties
Table 16.3 defines the material properties used for the mine design and mine plan. The
densities for the mineralization and waste rock were supplied by Roche Ltd. with the
block model while the remaining parameters were taken from Met-Chem’s internal
database. These properties are important for determining the mine equipment fleet
requirements.
Table 16.3 – Material Properties
Material Type
In-Situ Dry
Density
(t/m3)
Moisture
Content (%)
Swell
Factor (%)
Overburden 2.10 5 30
Waste 2.75 5 30
Mineralization 2.5 – 2.675 5 30
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16.4.2 Geotechnical Pit Slope Parameters
Met-Chem used an overall pit slope of 45° for the final pit walls. The final pit wall
includes an 8.8 m catch bench for every two (2), 6 m high benches and accounts for a 75°
face angle. This design is based on Met-Chem’s internal database for similar deposits in
the region. Met-Chem recommends a complete pit slope analysis if the Project advances
to the Feasibility stage. The pit wall configuration is illustrated in Figure 16.3. A
minimum mining width of 30 m has been considered for in the pit design for working
areas.
Figure 16.3 – Pit Wall Configuration
16.4.3 Haul Road Design
The ramps and haul roads were designed with an overall width of 15 m. For double lane
traffic, industry practice indicates the running surface width to be a minimum of 3 times
the width of the largest truck. The overall width of a 28 tonne articulated haul truck is
2.9 m which results in a running surface of 8.6 m. The allowance for berms and ditches
increases the overall haul road width to 15 m.
A maximum ramp grade of 10% was used. This grade is acceptable for a 28 tonne
articulated haul truck.
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16.4.4 Mine Dilution and Mining Recovery
During the mining operation, material at the mineralization and waste rock contacts will
not be separated perfectly. This effect is accounted for as either dilution, mining recovery
or a combination of both. A mining recovery of 98% has been applied to account for this.
In other words, it was assumed that 2% of the mineralized material within the pit will be
sent to the waste dump rather than the plant.
16.4.5 Pit Design
The pit that has been designed for the Lac Guéret deposit is approximately 400 m long
and 220 m wide at surface with a maximum pit depth of 100 m. The total surface area of
the pit is roughly 7 ha. The overburden thickness averages 2 m with a range of 0 m to
6 m.
The ramp accesses the pit at the 502 m elevation on the East side. The ramp descends
down the South wall and incorporates switchbacks at the 484 m and 460 m elevations.
The lowest point in the pit is at the 448 m elevation.
The pit includes 3,871 kt of Mineral Resources with an average Cgr grade of 27.4% and
has a strip ratio of 0.8:1. 328 kt of overburden and 2,619 kt of waste rock are included in
the pit. The proportion of Inferred Mineral Resources that are contained within this pit
shell is 13%.
The remaining Mineral Resources that were not included in the pit design for the 22 year
mine life has an average Cgr grade of 15.3%. These resources can be mined at a strip
ratio of 1.8:1. Figure 16.4 shows the Lac Guéret pit design.
16.4.6 Dump Design
A waste rock dump was designed on the northeast side of the pit beyond the limits of the
mineralized zone. The waste dump was designed with an overall slope of 25° to account
for the revegetation that is required with the closure plan. The dump has a capacity of
1.2 million m3, a top elevation of 544 m and a footprint area of 8.5 ha. The maximum
height of the dump is 40 m.
An area of roughly 4 ha on the northwest side of the pit has been dedicated for the topsoil
and overburden stockpiles. These stockpiles will be 15 m high. The dump and stockpile
layouts are shown on Figure 16.1.
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Figure 16.4 – Lac Guéret Pit Design
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16.5 Mine Planning
A production schedule (mine plan) was developed for the Project to produce 50,000
tonnes of graphite concentrate per year. Using the mill recovery of 96.6% and a targeted
concentrate grade of 93.7% results in an average run of mine feed of 176,000 tonnes per
year (482 tpd) at an average Cgr of 27.4%.
A pre-production phase of eight (8) months has been planned to achieve the following
objectives:
• Clear vegetation and topsoil;
• Supply road construction material;
• Supply construction material for the tailings dyke;
• Strip overburden and waste rock to expose the mineralization;
• Stockpile 5,000 tonnes of feed ahead of the crusher.
The schedule produces 45,000 tonnes of concentrate in the first year of production which
accounts for a plant ramp up.
The mine plan has been developed by advancing several benches concurrently. This will
allow for the blending of higher and lower grade material. An average of 1,580 tonnes of
material will be mined each day during the 22 year mine life.
The mine production schedule is presented in Table 16.4. End of period maps showing
the pit and dump advances are provided in the May 2013 Preliminary Economic
Assessment Report.
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Table 16.4 – Mine Production Schedule (in ‘000 t)
Description Units Pre Year Year Year Year Year Year Year Year
Total Prod 01 02 03 04 05 6 - 10 11 - 15 16 - 22
Concentrate kt 0 45 50 50 50 50 250 250 350 1,094
44
ROM to Plant kt 5 164 183 184 187 188 961 838 1,161 3,871
Cgr % 26.4 26.4 26.3 26.2 25.8 25.8 25.2 28.9 29.2 27.4
Total Waste kt 294 212 146 203 244 203 693 517 434 2,947
Overburden kt 219 0 0 109 0 0 0 0 0 328
Waste Rock kt 75 212 146 93 244 203 693 517 434 2,619
Total Material
Moved kt 299 376 329 387 431 391 1,653 1,356 1,595 6,817
Strip Ratio
n/a 1.3 0.8 1.1 1.3 1.1 0.7 0.6 0.4 0.8
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16.6 Mine Equipment Fleet
The mine will be operated with an owner fleet. Table 16.5 presents the mine equipment
fleet that is required for the Project. The table identifies the Caterpillar equivalent to give
the reader an appreciation for the size of each machine. Fleet selection and requirements
are discussed in this section of the report.
Table 16.5 – Mining Equipment Fleet
Equipment Model Description Units
Haul Truck CAT 730 Payload – 28.1 tonne 2
Loader CAT 966K Payload – 7.8 tonne (3.9 m3) 2
Production Drill CAT MD5050 Hole Diameter – 102 mm 1
Track Dozer CAT D6T Power – 250 kW 1
Road Grader CAT 160M Power – 163 kW 1
Boom Truck1 n/a n/a 1
Pickup Truck n/a n/a 4
Lighting Plant n/a 8 kW 4
1 The boom truck will be equipped with a water tank to spray the roads for dust suppression.
16.6.1 Haul Trucks
The haul truck selected for the Project is an articulated off road truck with a nominal
payload of 28.1 tonnes. This size truck was selected since it matches well with the
production requirements and offers the durability that is required for a mining operation.
The following parameters were used to calculate the number of trucks required to carry
out the mine plan. These parameters result in 1,458 working hours per year for each
truck.
• Mechanical Availability – 90%;
• Utilization – 90%;
• Nominal Payload – 28.1 tonnes (16.9 m3 heaped);
• Shift Schedule – One (1), ten (10) hour shift per day, four (4) days per week;
• Operational Delays – 55 min/shift (this includes 15 minutes for equipment
inspection and 40 minutes for lunch and coffee breaks. Refuelling will done during
breaks or at the end of the shift);
• Job Efficiency – 95% (57 min/h; this represents lost time due to queuing at the
shovel and dump as well as interference along the haul route);
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• Rolling Resistance – 3%.
Haul routes were generated for each period of the mine plan to calculate the truck
requirements. These haul routes were imported in Talpac©
, a commercially available
truck simulation software package that Met-Chem has validated with mining operations.
Talpac©
calculated the travel time required for a 28.1 tonne haul truck to complete each
route.
Haul productivities (tonnes per work hour) were calculated for each haul route using the
truck payload and cycle time. The load time is calculated using a wheel loader with a
3.9 m3 (7.8 tonne) bucket as the loading unit. This size wheel loader which is discussed in
the following section loads a 28.1 tonne haul truck in four (4) passes.
Table 16.6 shows the cycle time and productivity for the mineralization and waste haul
routes in Year 5 as an example.
Table 16.6 – Truck Productivities (Year 5)
Material Cycle Times (min) Productivity
Travel Spot Load Dump Total Loads/h t/h
Mineralization 8.70 0.75 3.00 1.00 13.45 4.46 163
Waste 3.30 0.75 3.00 1.00 8.05 7.45 272
Truck hour requirements were calculated by applying the tonnages hauled to the
productivity for each haul route.
16.6.2 Loaders
The main loading machine selected for the Project is a wheel loader with a 3.9 m3
(7.8 tonne) bucket. This size loader is a good match for a 28.1 tonne haul truck and is a
suitable loader to handle the production requirements as well as the face heights
expected. Although one (1) loader is sufficient to mine the tonnages presented in the
mine plan, a second loader has been added to the fleet to manage the stockpile rehandling
and as a backup machine. For mine planning purposes, Met-Chem assumed that 65% of
the run of mine feed will be stockpiled and rehandled. This assumption is based on the
following:
• Since the mine will only be operating four (4) days per week, 43% of the material
must be fed to the crusher during the other three (3) days;
• Since the operation is very small, there may be extended periods of waste stripping.
During this time, the crusher will be fed from the stockpile.
The stockpile will be located close to the crusher pad and will have a capacity of 5,000
tonnes (10 days). A loader cycle time of 3.0 minutes has been assumed for the rehandle
calculations.
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16.6.3 Drilling and Blasting
The mineralized material and waste rock will be drilled and blasted. Blast patterns have
been identified for the Project. Production drilling will be done using a hydraulic track
drill with 102 mm (4 inch) diameter holes. One (1) drill is required for the Project,
assuming an 85% mechanical availability, a 90% utilization and a penetration rate of
25 m/h. There will typically be one blast per week for approximately 6,000 t of material.
Blasting will be carried out by the mine operator using both packaged explosives and
ANFO bags that will be transported to site by the supplier. It was assumed that 60% of
the explosives will be packaged and 40% will be ANFO. The explosives, detonators,
boosters and cord will be stored in the explosives magazine. The location of the magazine
is shown on Figure 16.1.
16.7 Mine Dewatering
Prior to mining activities, a ditch will be established around the perimeter of the pit to
intercept water before it infiltrates into the pit. Rain water and ground water that is
collected in the pit will be collected in an in-pit sump and pumped to a settling pond at
surface.
A ditch system will be established around the footprint of the waste dump and stockpiles.
Water collected in these ditches will be directed to settling ponds. All water that is
collected in the ditches and sumps will be sampled prior to discharge into the
environment or treated if required.
Met-Chem recommends that a hydrogeological study be carried out if the Project
advances to the Feasibility stage. This study will provide an estimate of the quantity of
water that is expected to be encountered during the mining operation.
16.8 Manpower Requirements
The mine workforce for the Project is 11 employees. These employees will work four (4)
days per week, ten (10) hours per day. The operators will be versatile employees so they
can operate all types of equipment. Table 16.7 summarizes the mine manpower
requirements.
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Table 16.7 – Mine Manpower Requirements
Description # Employees
Truck Operator 2
Loader Operator 2
Drill Operator / Blaster 1
Dozer / Grader Operator 1
Mechanic1 2
Mining Engineer / Superintendent 1
Geologist 1
Surveyor 1
Total Mine Workforce 11 1 The number of mechanics is increased to 3 in Year 6.
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17.0 RECOVERY METHODS
The graphite concentrate will be recovered by flotation process. The combination of
primary coarse and rougher flotation followed by cleaner column flotation will recover
96.6% of the graphite at an average graphite grade of 93.7% carbon.
17.1 Process Plant
The processing area can be divided into crushing, grinding, beneficiation, dewatering,
product screening and packaging, and tailings disposal. The concentrator is designed to
produce 50,000 dry tonnes per year of saleable graphite concentrate in four (4) product
size classes, +50 mesh (300 microns), –50+80 mesh (180 microns), +150 mesh
(105 microns) and –150 mesh. It is expected that other size classes will be available as
needed once the plant is operating.
17.1.1 Design Criteria
All throughput rates are based on the concentrate production of 50,000 dry tonnes of
graphite concentrate. The graphite recovery of 96.6 percent is based on test work results,
carried out as part of preliminary metallurgical test work for flow sheet development.
The beneficiation plant will operate for 24 hours per day, seven (7) days per week,
52 weeks per year. For the processing facilities the operating percentage is 92%, while
the crusher will operate at 33.3%. The concentrator capacity has been established at an
average rate of 482 dry tonnes per day or at a nominal throughput rate of 21.8 dry tonnes
of run of mine material per hour.
The crusher, concentrator and the product packaging facilities have been sized to meet
the parameters in Table 17.1 as well as the mass balance and the water balance that were
prepared.
Table 17.1 – Design Criteria
Plant Capacity
Parameter Units Value
Total ROM processing rate dry tonnes per year 176,000
Crusher operating time percentage 33.3
Nominal crushing rate dry tonnes per hour 60.3
Concentrator operating time percentage 92.0
Nominal processing rate dry tonnes per hour 21.8
Design concentrate production rate dry tonnes per year 50,000
Combined graphite grade percentage 93.7
Total graphite recovery percentage 96.6
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17.1.2 Mass Balance and Water Balance
The process plant mass balance has been calculated based on the flow sheet developed
and the design criteria previously discussed. Table 17.2 below shows a summary of the
Mass Balance in terms of throughput rate in “wet” tonnes per hour.
Figure 17.1 shows a more detailed water balance. The throughput and flows are nominal
rates in tph and m3/h. One (1) m
3/h is one (1) tph for water.
Table 17.2 – Lac Guéret Process Mass Balance
Streams Entering the System Streams Exiting the System
Streams
Dry
Solids
(tph)
Water
(m3/h)
Total
Mass
(tph)
Streams
Dry
Solids
(tph)
Water
(m3/h)
Total
Mass
(tph)
SAG Mill Feed to
Concentrator 21.8 1.2 23
Evaporation from
Dryer - 1.1 1.1
Fresh Water From
Lac Galette - 12.0 12.0 Final Concentrate 6.2 0.0 6.2
Reclaim Water
from Tailings Pond - 28.1 28.1 Final Tailings 15.6 40.2 40.2
Total Entering 21.8 41.3 63.1 Total Exiting 21.8 41.3 63.1
17.2 Flow sheets and Process Description
A simplified flow sheet of the process is presented in Figure 17.2 summarizes the
different steps of the processing plant.
This flow sheet, being very general, is included to follow the detailed description of the
process areas.
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D
Area IN OUT DIFF
25.4 Crushing & FOB 25.4 25.4 0.0
Run Of Mine 1st
Grind & Coarse 786.7 786.7 0.0
2nd
Grind & Rougher 701.0 701.0 0.0
LEGEND Pol ishing & Cleaner 576.7 576.7 0.0
25.4 Average flow in m3/d Conc. Dewatering 266.2 266.2 0.0
Water in slurry stream Bagging System 0.1 0.1 0.0
Water stream Final Ta i l ings 887.3 887.3 0.0
25.4 Mi l l feed bin discharge Process Water Tank1128.1 1128.1 0.0
Process Plant 911.5 911.5 0.0
Differences may be due to rounding
761.4
Water to Primary Grinding
Coarse Concentrate 351.0
435.7 Coarse Ta i l ings
Fresh Water Make-up
265.0
265.3 Tota l Recycled Water
Water to Secondary Grinding 863.1
20
Rougher Ta i l s 574.3
126.7 Rougher Concentrate
98.9
Di lution water
Cleaner Ta i l s 313.0
263.7 Cleaner Concentrate
Di lution water
Dryer Evaporation 2.5
24.0
242.0
6 Thickener O / F
0.1 Dry Concentrate
Final Tailings 887.3
0.1
Final Screened Concentrate
Tailings Pond 621.1 Recla im Water
266.2 Accumulation within Ta i l ings
Revision:
April 24 th 2013
WATER BALANCE
2012-021
Preliminary Economic Assessment - Lac Guéret Project
Mason Graphite
Evaporation / Precipi tation
1128.1
Process
Water Tank
Crushing and
Mill Feed Bin
Primary Grinding
and Coarse Flotation
Secondary Grinding
and Rougher Flotation
Polishing
and Cleaner Flotation
Concentrate Dewatering (Thickening,
Filtering and Drying)
Dry Screening
and Bagging Systems
Figure 17.1 – Water Balance
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Figure 17.2 – Simplified Flow Sheet of Crushing and Processing Plant
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17.2.1 Crushing
The Run of Mine (ROM) material, containing 27.4% graphite, with a moisture content of
5%, will be dumped into a feed hopper by the mine trucks. A grizzly on top of hopper
minimizes oversize boulders going to the Jaw crusher. A rock breaker, on the hopper
breaks the oversize boulders. A vibrating grizzly feeder feeds a Jaw crusher and the
crushed material, with a maximum size of 155 mm, falls onto a sacrificial conveyor,
which discharges the crushed material onto the SAG mill feed bin conveyor. The crushed
material from the crushing plant will have a particle size of 80% less than (P80) 93 mm.
There will be provision for a ten (10) days ROM of mine stockpile at the crusher.
17.2.2 Primary Grinding and Coarse Flotation
A SAG mill grinds the crushed material received from the SAG mill feed bin via two belt
feeders under the bin. The SAG mill operates in closed circuit with a screen. SAG mill
discharge is pumped to a vibrating screen with 2.0 mm sieve openings. The screen
oversize falls by gravity back into the SAG mill. The screen undersize (P80 = 840
microns) is pumped to the coarse flotation circuit. The concentrate from the coarse
material flotation is pumped to the primary cleaner circuit (the Polishing mill #1
discharge pump box), while the tailings are pumped to the secondary grinding circuit (the
ball mill discharge pump box).
The SAG mill will use five-inch steel grinding balls. Lime will be added to the mill as pH
modifier. The flotation reagents are kerosene as collector and MIBC as frother.
Coarse flotation is a modified flash flotation and is done to maximize the recovery of
large graphite flakes.
17.2.3 Secondary Grinding and Rougher Flotation
The ball mill operates in closed circuit with a screen having screen apertures of 0.50 mm.
The oversize returns to the ball mill for grinding, while the undersize is pumped to the
rougher flotation cells. The rougher concentrate is pumped to the same location as the
coarse concentrate to the primary cleaner circuit (the Polishing mill #1 discharge pump
box). The rougher tailings are the main part of the final tailings and are pumped to the
tailings pond.
The ball mill will use three-inch steel grinding balls. The ball mill ground product has a
P80 = 185 microns and is pumped to the rougher flotation circuit.
17.2.4 Primary Cleaning Flotation circuit
The upgrading process consists of staged polishing, sorting and column flotation. The
concentrate from coarse flotation and the rougher concentrates combined in the polishing
mill #1 pump box and then are pumped to the polishing mill#1 cyclone cluster. The
cyclone underflow feeds polishing mill #1. The cycloning step controls the desired pulp
density at the polishing mill. The polishing discharge is re-combined with the polishing
mill #1 cyclone overflow and is pumped to the first primary cleaner column. The first
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cleaner concentrate is pumped to the second primary cleaner column. The second primary
cleaner column concentrate is pumped to the secondary cleaning circuit. The tailings
from both primary cleaning columns are pumped to the primary cleaner scavenger
flotation cells for scavenging unrecovered graphite from the cleaner columns. The cleaner
scavenger concentrates are pumped back to the polishing mill #1 cyclone feed pump box,
while the primary cleaner scavenger tailings join the rougher tailings to be pumped to the
tailings pond.
Polishing mills will use a one half-inch ceramic media which scour the surfaces of the
minerals with minimal size reduction.
17.2.5 Secondary Cleaning Flotation Circuit
The second primary cleaner column concentrate is sorted for separate upgrading in the
secondary cleaning flotation circuit. The concentrate is pumped to a screen with 50 mesh
(300 microns) screen openings. The screen oversize, +50 mesh, is part of the final
product and is pumped to the final graphite concentrate holding tank, while the undersize,
–50 mesh, will get upgraded in two separated size fractions. Therefore the undersize
feeds a second screen with 80 mesh (180 microns) apertures.
The second screen oversize, +80 mesh, is sent to the polishing mill #2, while the
undersize (–80 mesh) is pumped to polishing mill #3 cyclone feed pump box. The
polishing mill #2 discharge is cleaned in a single-stage cleaning step using a flotation
column. The concentrate from the +80 mesh column is final product and is pumped to the
graphite concentrate thickener. The +80 mesh column tailings are reprocessed using +80
mesh secondary cleaner scavenger flotation cells. The +80 mesh scavenger concentrate
return to polishing mill #2, while the tailings are pumped to the polishing mill #3 cyclone
feed pump box.
The second screen undersize, –80 mesh, flows into the polishing mill #3 cyclone pump
box. The cyclone feed pump box feeds the polishing mill #3 cyclone cluster. The cyclone
underflow enters polishing mill #3 and will be scoured, while the overflows by-passes
polishing mill #3 and is combined with the polishing mill discharge. This combined
discharge is pumped to two-stage cleaning process using two (2) secondary cleaner
flotation columns operating in series. The –80 mesh column concentrate is pumped to the
concentrate thickener. The tailings from both cleaner columns are sent to –80 mesh
secondary cleaner scavenger flotation cells. The –80 mesh scavenger concentrate is sent
back to the polishing mill #3 for more scouring. The –80 mesh cleaner scavenger tailings
are pumped to the rougher tailings pump box before being pumped to the tailings pond.
17.2.6 Dewatering (Thickening, Filtration and Drying)
Graphite concentrates, from both +80 mesh cleaner column and –80 mesh second cleaner
column, are pumped to the concentrate thickener. The thickened underflow pulp is
pumped to the final graphite concentrate holding tank, where it is combined with the
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coarser +50 mesh concentrate. The thickener overflow is sent to the process water tank
for water recycling.
The holding tank feeds the pressure filter for further moisture reduction. The filtered
concentrate is fed to a flash dryer for reducing the moisture to 0.1%. The dried
concentrates are stored in a bulk graphite concentrate holding bin prior to screening into
different sized products.
17.2.7 Dry Screening or Product Sorting
Graphite will be sold in four (4) size fractions, +50 mesh, +80 mesh, +150 mesh and –
150 mesh. Therefore dried graphite concentrates are sorted in three (3) stages. Stage 1
uses a vibrating screen with 50 mesh openings. The +50 mesh product is stored in a
graphite flake bin while the –50 mesh product is further screened on vibrating screen 80
mesh openings. Now the +80 mesh product is stored in coarse graphite bin while the –80
mesh product is screened on a vibrating screen with 150 mesh openings. The +150 mesh
product is stored in intermediate graphite bin, while the –150 mesh product is stored in
fine graphite bins.
The graphite flake (+50 mesh), the coarse graphite (–50 mesh +80 mesh) and the
intermediate graphite (–80 mesh +150 mesh) products contain more than 96% carbon.
The fine graphite (–150 mesh) contains 91.7% carbon. The overall graphite recovery is
over 96.6%.
17.2.8 Final Product Packaging
Graphite concentrate bagging circuit is required for preparing the concentrates for
shipping. Concentrates are bagged in two (2) customised bags, the 1-tonne super sack and
the 25-kg bags prior to shipping to the clients. The bagging system will have two (2)
1-tonne super sack packaging units and one (1) 25-kg bagging unit. All bags will be
weighed and stretch wrapping will be available when required.
17.2.9 The Final Tailings
The final tailings are pumped to the tailings pond approximately 3.5 km from the
processing plant. Seventy percent of the water in tailings slurry is returned to the process
water tank via polishing pond and reclaim water pumps.
17.3 Utilities
17.3.1 Concentrator Water Services
The water consumption is based on concentrator plant average water consumption per
day.
a) Fresh Water
Lac Galette will be the main water source of fresh water for the camp, office
building and as make-up water for the concentrator. Fresh water flow rate to the
concentrator will be 265 m3/d.
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b) Process Water
There are three (3) sources contributing to the process water; concentrate thickener
overflow, reclaim water from the polishing pond and fresh water make-up from Lac
Galette. The total process water is approximately 1,128 m3/d, of which about
242 m3/d is thickener overflow, about 631 m
3/d reclaim water is recycled from the
polishing pond and the remainder, approximately 265 m3/d, comes from fresh
water.
c) Gland Water
The gland water system has a separate 3.0 m diameter by 3.6 m high gland water
tank. The gland water will be distributed using high pressure horizontal water
pumps.
17.3.2 Concentrator Compressed Air
Air systems will support the air requirement for the process plant. High pressure air will
be required for plant air, flotation columns and pressure filter. Medium and low pressure
air will be required for flotation.
17.4 Plant Layout
The crusher building is located to the northeast of the process plant. The jaw crusher is
installed in a concrete and steel structure building, approximately 18 m long by 12 m
wide.
The crusher discharge conveyor is inclined at an angle of 15° to reach the crushed
material bin and process plant.
The concentrator building is conventional and is divided into three (3) main areas:
• Grinding and classification area;
• Flotation, Thickening and Filtration area;
• Concentrate Drying, Graphite Screening, Bagging and Load Out area.
The main building is L shaped, with the Grinding/Flotation area about 73 m long by 34 m
wide and the Drying / Screening / Bagging area of approximately 49 m long by 28 m
wide.
The plant laboratory, offices, dry and lunch room are located in the concentrator, adjacent
to the flotation area. The size of this area is approximately 56 m long x 10 m wide and is
three (3) stories high.
Provision has been made in the design to isolate the dried graphite concentrate area in
order to ensure effective graphite dust control and venting.
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18.0 PROJECT INFRASTRUCTURE
This section summarizes infrastructure, buildings, other facilities and services that are
required to complement the processing of graphite mineralization required to produce
50,000 tonnes per year of graphite concentrate.
All topographic information for the location of infrastructure was gathered from readily
available data from Government of Canada and 5 m contours were used. It is understood
that a more detailed topographic map will be required for the Feasibility Study phase of
the project.
There have been no geotechnical investigations for surface infrastructure performed to
date. It is understood that appropriate field geotechnical investigations will be required
for the Feasibility Study phase of the project.
An overall general site layout and access is provided on Drawing A1-2012-021-0101-L
and Figure 18.1 below. General layouts of the processing plant are provided in the
May 2013 Preliminary Economic Assessment Report.
18.1 Main Access Road
Main access to Lac Guéret property is from the paved all-weather Highway 389 from
Baie-Comeau (Quebec). At km 200.5, South of Manicouagan 5 Dam, a main-haul gravel
logging road turns Northwest from the paved road. The property is located about 95 km
North-Northwest on the main-haul gravel road towards the Southwest shore of the
Reservoir Manicouagan. The Lac Guéret property is located off the main-haul gravel
road in a system of logging roads.
Provision has been made to upgrade part of the gravel access road.
18.2 Power
Lac Guéret Project is located about 90 km from the closest Hydro-Québec infrastructure.
The Project power requirements will be met by diesel generators located on site.
18.3 Camp Site Accommodations
The Camp will be located on the East shore of Lac Galette approximately 2 km from the
plant site (see Figure 18.1 and Drawing A1-2012-021 0101-L). Permanent housing will
be built to accommodate 65 persons in the camp. It will include accommodations for
managing and office staff as well as employees on rotation, staff for support services and
some additional rooms for subcontractors and visitors.
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Figure 18.1 – General Site Layout
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Personnel transportation by bus from the Baie-Comeau area will be contracted out. A 15
passenger minivan will be used for transportation between camp and plant / mine area.
18.4 Site Roads
Site and service roads will be 10 m wide, except for the mine roads. They will take
advantage of existing forest road network whenever possible and will provide access to:
• Process facility from the existing gravel road network towards Highway 389;
• Permanent camp and fresh water pumping station;
• Tailings storage facility;
• Explosive depot;
• Mine roads to crusher, waste rock stockpiling area and maintenance facility.
18.5 Tailings Storage Facility
18.5.1 General
A PEA level assessment of tailings disposal requirements to store and manage the tailings
and process water for the life of mine of the Lac Guéret project was performed by
Journeaux & Associates.
The scope of work for the study was the estimation of the quantities of materials required
for the construction of confinement dykes for the proposed tailings impoundment and
polishing pond. A continuous operation of 22 years is projected for the proposed mine
and a total of 2.8 M tonnes of tailings will be pumped to the tailings park during mine
life. The scheme of operation proposes the transfer of free water from the tailings pond to
a polishing pond to allow for sedimentation of fine particles and other minerals. Water
will be then transferred from the polishing pond to the plant to be used in processing.
Consideration was made in the design for the acid generating potential of the tailings.
18.5.2 Tailings Storage Options
Various areas within a radius of 4 km from the processing plant and inside mining claims
were examined in order to optimize the location of the tailings park (minimize the height
of the various dykes and hence material quantities and costs) considering within others
the distance from the processing plant and environmental conditions such as water bodies
and watersheds. The site located north of the plant, on a plateau was eventually selected
for having less impact on streams with potential fish habitat (see Figure 18.2). The pond
locations and construction scenarios examined were based on topographic information
made available for the project.
18.5.3 Selected Tailings Storage Facility
The fill plan was developed for 1.77 M m3 of tailings over a 22 year operation period
(based on a production of 128,500 tonnes of tailings production per year at about 28% by
weight of solids with 330,600 m3 of water pumped to the tailings pond yearly). A tailings
deposition final dry density of 1.60 t/m3 was assumed in the estimates based on
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information available on particle size distribution of the tailings and a specific gravity of
the tailings solids of 3.02. The polishing pond was sized for a maximum capacity of
49,000 m3 of water corresponding to about one (1) month including precipitation. The
tailings retention dams were designed with an impervious core to retain the fine tailings.
A freeboard of 1.4 meters was allowed for the tailings pond to account for extreme
precipitation events (water or snow) or waves due to high winds or icing during the
winter. An additional 0.6 m was allowed for emergency spillways. Analysis of
temperature, precipitation and wind data indicate that the freeboard assigned to the
various dykes is sufficient for extreme event situations.
The geometry of the dyke construction material layers permits downstream construction
using the method of raised embankments where a dyke is constructed in phases over the
lifetime of the mine plan.
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Figure 18.2 – Selected Tailings Storage Facility
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18.5.4 Water Volumes Estimate
Based on water balance estimates made available by Met-Chem, the water volume
pumped into the tailings ponds is expected to be 906 m3 per day at 28% solids. It is
estimated that tailings will retain about 11.5% of the pumped water while 88.5% will be
released, i.e. 802 m3 per day will be available.
A net precipitation of 0.476 m per year or 1.3 mm per day was considered for the project.
Considering an average net daily precipitation over the total area of the tailings pond
evaluated at 511 m3 per day, the daily average available volume of water will be in the
order or 1,313 m3 per day. This quantity will be reduced during the winter months due to
freezing.
More detailed water balance estimates will be prepared during Feasibility Study. They
will be calculated on a per month basis accounting for variations of average monthly
precipitation, evaporation and/or freezing of the pond surface water in the winter for a
normal, dry and a wet year, with the worst condition being that of a dry year. This will
assist in the determination of water availability for process and volume of water to be
released to environment following testing and treatment if required.
18.6 Buildings
In addition to the concentrator building which will house, besides the processing
equipment, the change house and laboratory, the site will include the following:
• An administration building (complete with offices, nursing station, conference
room and lunch room) located adjacent to the concentrator;
• A mine equipment maintenance facility;
• A lightweight dome type structure cold warehouse.
18.7 Site Power and Communication
The power requirement of the Lac Guéret Project was developed based on a preliminary
single line diagram and power demand. Power will be supplied by five (5) Diesel
Generators (DG) units. Each DG unit will be 1360 kWe / PF=0.8 / 4.16kV and is
installed in its own walk-in shelter.
The DG configuration will be four (4) DG in operation (5.44 MW for total operating
power) and one (1) DG standby (6.8 MW as total installed power). Provision to connect
an emergency rented generator in case of major failure of a diesel generator is included.
The total power demand is estimated at 4.0 MW with 2.5 MW for the process. The
remaining 1.5 MW are necessary to cover requirements for electric rooms, lighting &
heating for concentrator and related buildings as well as for as losses in transformers and
feeders.
A detailed Power Demand requirement, by areas, as well as a general single line diagram
of the plant were included in the May 2013 Preliminary Economic Assessment Report.
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Provision is made for two (2) electrical rooms to feed the crusher and process areas. The
power demand of the plant facilities will be fed at 4.16 kV from the main switchgear
installed in the concentrator electrical room.
Pole lines will feed the administration building, garage, diesel storage and pumping
station, reclaim water pumping station, fuelling station, permanent camp, communication
tower, mine open pit and the fresh water pumping station.
No additional emergency diesel generator is provided in this design. Provision is however
made to include at the Camp a Manual Transfer Switch to connect a mobile Emergency
Diesel Generator (600V) that can be rented from outside in case of emergency.
Provisions were also made to include a connection to the Main LV Switchgear to
connect a mobile Emergency Diesel Generator (600V) that can be rented from outside in
case of emergency.
18.8 Site Services
Provision has been made in the project for the following site services:
• Mine dewatering system and provision for pumping system towards plant if further
treatment with lime is required;
• Lined waste rock pad with collection ditch system and provision for pumping
towards plant if further treatment with lime is required;
• Fresh water intake system from Lac Galette for the mill fresh water and fire
protection water tank;
• Reclaim water system from the tailings polishing pond to the process plant;
• Water treatment system in sustaining capital for tailings excess water discharge;
• Potable water treatment;
• Sewage waste treatment;
• Fuel storage and fuelling station;
• Allowances for plant mobile equipment (15 passengers minivan, an IT14G type
loader, two (2) fork lifts, a HDPE pipe fusion machine and a multipurpose rescue
truck);
• Mine explosive storage.
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19.0 MARKET STUDIES AND CONTRACTS
An independent market study is expected to be carried out as the project will proceed to
Feasibility Studies. However, no independent analysis of the market for graphite
concentrate or price survey have been conducted to date for the Lac Guéret Graphite
Project. Similarly, no sales contract has been secured at this early stage of the project.
A summary of market information that was provided with the “NI 43-101 Technical
Report on the Lac Guéret Graphite Project”, submitted by Roche Ltd. on July 3, 2012, is
given in section 19.1. The price forecast that was developed for the PEA is given in
section 19.2.
19.1 Market Information
This market information was, at the time, derived from several sources, including the
Industrial Minerals website. The Industrial Minerals magazine is the reference journal for
the global industrial minerals sector. General market information may not necessarily
reflect the actual conditions of the project and it is the reason why an independent market
study is required.
Natural graphite is used in various industrial applications due to its unique combinations
of physical properties such as its light weight, resistance to chemicals, high melting point
as well as electrical and thermal conductivity.
Global consumption of natural graphite has doubled between 2000 and 2011 from
600,000 to 1,200,000 metric tons, showing a growth rate of over 6% for that period.
Natural graphite comprises several different products that are sold based on purity, size,
shape, etc. Principal end uses for graphite are:
• Steel Manufacturing: Crucibles, electrodes, foundry additives and refractories;
• Carbon brushes: Electrical contacts;
• Batteries and Expanded graphite: Battery material, foil, heat sinks;
• Castings and powder metallurgy;
• Brakes;
• Lubricants and Catalysts: Carbon additives, fibers, nuclear reactors;
• Material Technology: Clothes, paints, plastic and resins.
Flake graphite can be subdivided in 3 categories: fine, medium and large. Steady growth
of hybrid and electric cars and mobile electronics is fueling the demand for natural flake
graphite with forecast growth rate of approximately 15% annually, rising from 125,000 to
500,000 metric tons. For the 2020 horizon, global demand for natural graphite is expected
to reach 2,000,000 metric tons per year.
Graphite production is highly segmented with numerous small producers, with China
controlling roughly 75% of global supply in 2011. Amorphous graphite still accounts for
60% of total production and flake graphite for essentially the remaining 40%. Due to its
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Coarse +80, 94-97 C Medium 80x100, 94-97 C Fine M100, 94-97 C
USD/t, CIF EU port USD/t, CIF EU port USD/t, CIF EU port
Month min AVG max min AVG max min AVG max
2011-01 1,450 1,725 2,000 1,350 1,625 1,900 1,250 1,475 1,700
2011-02 1,750 2,025 2,300 1,500 1,750 2,000 1,400 1,625 1,850
2011-03 1,800 2,150 2,500 1,600 1,800 2,000 1,500 1,675 1,850
2011-04 2,000 2,250 2,500 1,800 2,050 2,300 1,750 1,950 2,150
2011-05 2,275 2,638 3,000 2,075 2,238 2,400 1,800 2,000 2,200
2011-06 2,500 2,750 3,000 2,200 2,350 2,500 2,000 2,200 2,400
2011-07 2,500 2,750 3,000 2,200 2,350 2,500 2,000 2,200 2,400
2011-08 2,500 2,750 3,000 2,200 2,350 2,500 2,000 2,200 2,400
2011-09 2,500 2,750 3,000 2,200 2,350 2,500 2,000 2,200 2,400
2011-10 2,500 2,750 3,000 2,200 2,350 2,500 2,000 2,200 2,400
2011-11 2,500 2,750 3,000 2,200 2,350 2,500 2,000 2,200 2,400
2011-12 2,500 2,750 3,000 2,200 2,350 2,500 2,000 2,200 2,400
2012-01 2,500 2,750 3,000 2,200 2,350 2,500 2,000 2,200 2,400
2012-02 2,500 2,750 3,000 2,200 2,350 2,500 2,000 2,200 2,400
2012-03 2,500 2,750 3,000 2,200 2,350 2,500 2,000 2,200 2,400
2012-04 2,500 2,750 3,000 2,200 2,350 2,500 2,000 2,200 2,400
2012-05 2,500 2,750 3,000 2,200 2,350 2,500 2,000 2,200 2,400
2012-06 2,200 2,450 2,700 1,875 2,038 2,200 1,900 2,100 2,300
2012-07 2,200 2,450 2,700 1,875 2,038 2,200 1,900 2,100 2,300
2012-08 1,800 2,000 2,200 1,300 1,600 1,900 1,200 1,500 1,800
2012-09 1,800 2,000 2,200 1,600 1,750 1,900 1,200 1,350 1,500
2012-10 1,300 1,550 1,800 1,100 1,400 1,700 1,150 1,300 1,450
2012-11 1,400 1,600 1,800 1,050 1,225 1,400 900 1,050 1,200
2012-12 1,400 1,600 1,800 1,050 1,225 1,400 900 1,050 1,200
2013-01 1,400 1,600 1,800 1,050 1,225 1,400 900 1,050 1,200
2013-02 1,400 1,600 1,800 1,050 1,225 1,400 900 1,050 1,200
2013-03 1,400 1,600 1,800 1,050 1,225 1,400 900 1,050 1,200
2013-04 1,400 1,450 1,500 1,100 1,200 1,300 900 1,050 1,200
Average 24 months 2,082 2,314 2,546 1,774 1,941 2,108 1,606 1,794 1,981
numerous and wide applications, flake graphite is usually commanding premiums for its
large flake products. By 2020, increasing global consumption is projected to require an
additional 800,000 metric tons of supply, 200,000 metric tons coming from expanded
production of existing mines and 600,000 metric tons from new mines.
Graphite is not an openly traded commodity. Prices are negotiated between end users and
producers for annual and some multi-year contracts. Prices do vary according to different
parameters such as carbon content (purity), size (flake and fines), impurities and shape.
Before 2006, prices were flat, with amorphous graphite sold at an average of 150 $ per
metric ton and at an average of $600 for flake. After 2006, prices rose steadily after
China experienced supply constraints (export tariffs, environmental regulations, etc.) and
demand shifted towards high end uses and products.
19.2 Price Forecast
Table 19.1 gives, for each month of the last two (2) years, the minimum, maximum and
average prices for coarse, medium and fine crystalline graphite. As indicated in this table,
after reaching a record high for the most part of 2011 and 2012, graphite prices have been
decreasing in recent months. A 24-month average has been calculated and is presented at
the bottom of Table 19.1.
Table 19.1 – Monthly Prices for Crystalline Graphite as published in Industrial Minerals
and 24 months average (between April 2011 and April 2013)
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Based on this information, a price forecast was developed with Mason Graphite for the
economic analysis. It is indicated in Table 19.2 below for Lac Guéret Graphite
Concentrate.
Table 19.2 – Graphite Price Forecasts
Product Classification Proportion (%) Average Grade (%Cgr) Price (CAD/t)
+50 mesh 18.4% 96.30% 2,200
-50 mesh +80 mesh 12.2% 96.40% 2,000
-80 mesh +150 mesh 14.3% 95.60% 1,500
-150 mesh 55.1% 91.70% 1,200
Average 100% 93.70% 1,525
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20.0 ENVIRONMENTAL STUDIES, PERMITTING AND SOCIAL OR COMMUNITY
IMPACT
20.1 Environmental Baseline Study (EBS)
Environmental baseline studies have been carried out in summer 2012. The following
environmental components have been characterized/described:
• Climatology;
• Soil quality;
• Surface water quality;
• Sediment quality;
• Groundwater quality;
• Vegetation and wetlands;
• Fish and fish habitats;
• Herpetofauna;
• Archaelogical potential;
• Social and economic aspects.
Large and small mammal surveys have been carried out in winter 2013 and avifauna
surveys will be carried out in spring and summer 2013.
Surface waters are neutral to weakly acidic and have low hardness characterized. Most
metals showed concentrations below aquatic life protection criteria, except for iron,
aluminum, copper and lead in some samples. High levels of metals are often reported for
water and sediments in mineralized areas. Groundwater were weakly acidic with
moderate hardness and low conductivity. All measured metals were below analytical
detection limit, except for iron and manganese.
Metals contents in soils were lower than background level for Grenville geological
Province, except for one sample showing higher content for chromium, manganese and
arsenic.
The flora is dominated by evergreen forests (93 %, including 71 % of balsam fir with
black spruce forest type). Important forest fire in 1996 and important forest harvesting
between 2000 and 2004 have resulted in regeneration forests in 67 % of the study area.
Many small wetlands are present in the study area. They show low species richness and
no rare or endangered species were observed.
Concerning herpetofauna, the low proportion of deciduous forests, the high altitude and
the degradation of the original forest can explain the absence of species.
The large mammal species present in the study area are the Black bear, the Moose and
the Woodland caribou. The woodland caribou is considered a threatened species by
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Canada’s Species at Risk Act (S.C. 2002, c. 29) and a vulnerable species by Québec’s
Act respecting threatened or vulnerable species (E-12.01). According to the winter track
survey, habitats present in the property (mostly cutover and regenerating habitats)
particularly favour moose. In fact, moose density is relatively high for this northern
region (15 moose/100 km²). In the study area covered for the caribou aerial survey (a
20 m radius circle centered on the property), a total of 45 woodland caribou were
observed or a density of 4,1 caribou/100 km². This value is comparable to previous
surveys completed in this area by the MSDEFP. The habitats present in the property are
of low potential for caribou but caribou groups are located nearby and mitigation and
follow-up measures for this protected species should be put in place as part of the ESIA.
The most abundant small mammal species found on the Lac Guéret property, according
to the winter track survey, is the American hare, the red squirrel and ptarmigans. Riparian
and closed forest habitats presented a higher abundance and diversity species in
comparison to cutover and regenerating habitats.
Four lakes (8 stations) and 13 streams (15 stations) were characterized for fishes and fish
habitats potential. A total of 468 fishes were caught from four species: Brook trout, Pearl
dace, White sucker and Longnose sucker. All lakes and ten streams showed fish habitats
potential. No rare or endangered species were caught. Arsenic, lead and selenium
contents measured in flesh samples were below analytical detection limit. Some studied
fishes showed mercury level in flesh higher than the Canadian Food Inspection Agency.
Up to now, no archaeological survey has been done for the area. Preliminary
archeological study has identified 25 potential archaeological sites based on availability
of chert and quartzite as well as land use of the territory by the Innus. Field surveys must
be carried out after issuance of the final project lay-out and before construction activities
as well as before major exploration activities. Guidelines for archaeological chance find
management is to be produced in due time.
20.2 Mineralization, Waste and Tailings Characterization
An environmental characterization of mineralization, waste (and if possible tailings)
should be carried out in summer 2013. This is particularly important for the Lac Guéret
project since sulphides are present in the mineralization and possibly the waste rocks.
The following tests must be performed:
• Elements content by partial acid digestion (aqua regia);
• Acid Generation Potential (Modified Acid Base Accounting) ;
• Static leaching tests (TCLP-USEPA1311, SPLP-USEPA1312, Environment
Canada CTEU-9) and characterization of leachates.
Kinetic tests could be necessary to confirm the results of the static tests.
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20.3 Regulatory Framework
20.3.1 Provincial Government (Quebec)
This section presents the environmental laws and regulations that could apply to the Lac
Guéret Project. Although the project is only at a preliminary stage of design, the
components that may trigger an environmental review procedure requiring specific
environmental authorizations or permits, or subject to norms, criteria or guidelines have
been identified and are presented in the current section.
a) Regulation falling under the responsibility of the Ministry of Sustainable
Development, Environment, Fauna and Parks (MSDEFP)
Environmental impact assessment and review procedure (BAPE procedure)
In the Province of Quebec, the environmental requirements are defined in the
Environment Quality Act (Q-2), which is under the responsibility of the Ministry of
Sustainable Development, Environment and Parks (Ministère du Développement
durable, de l’Environnement, de la Faune et des Parcs, MDDEFP). The major
sections of the Environment Quality Act relevant to the obtainment of certificates of
authorization or environmental authorizations are sections 22 (general case), 31.1
(Environmental impact study), 32 (sewage treatment and waterworks), 48
(atmospheric emission) and 54 (solid waste management system).
Section 2 of the Regulation respecting environmental impact assessment and
review (Q-2, r.9) list the types of projects that are subjected to the environmental
impact assessment and review procedure (BAPE procedure) in order to obtain an
authorization issued by the government in accordance with section 31.5 of the Act.
The list of relevant projects includes the followings:
(n.8) The construction of an ore processing plant for:
– Metalliferous ore or asbestos ore, where the processing capacity of the
plant is 7,000 metric tons or more per day;
– Any other ore, where the processing capacity of the plant is 500 metric
tons or more per day;
(p) The opening and operation of:
– A metals mine or an asbestos mine that has a production capacity of
7,000 metric tons or more per day;
– Any other mine that has a production capacity of 500 metric tons or
more per day.
Graphite production falls into the ‘’other ore’’ classification. Therefore, if
production rate is higher than 500 metric tons or more per day, the Environmental
and Social Impact Assessment and review procedure (BAPE) will apply to the Lac
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Guéret project in accordance with Section 31.1 of the Environment Quality Act
(EQA).
The main steps in the Environmental and Social Impact Assessment procedure are:
1 Tabling of project notification;
2 Issue of the directive (MSDEFP);
3 Completion of the Environmental and Social Impact Assessment
(ESIA);
4 Tabling of impact assessment;
5 Receipt of notice of acceptability of content of ESIA;
6 Public consultation of the ESIA;
7 Public hearings ;
8 Report of the Bureau d’audiences publiques sur l’environnement
(BAPE)
9 Government decision.
The Project has a 15 month deadline set by these regulations. However, MSDEFP
aims to utilise only 12 months instead of the 15, which is set by the regulation
respecting environmental impact assessment and review (RREIAR). This includes
public hearings, if applicable, but does not include the time that the proponent
requires to prepare the impact assessment and to provide additional information as
per the environmental department requests. By experience, a period of
approximately 24 months is expected between commencing to prepare the Project
notice and obtaining government permission.
Following positive issuance of the Government’s decision, a Certificate of
Authorisation, in accordance with Section 22 of the EQA, must be obtained from
the Regional Office of the MSDEFP. The application for authorization must
include plans and project specifications, precise location, and the quantity or
concentration of contaminants expected to be emitted, deposited, issued or
discharged into the environment.
The average processing rate is 176,000 t/y or 482 t/d. Throughout the mine life
there will be days when the processing rate exceeds 500 t/d because of the variation
of the feed grade. As a result of this production rate, an application for a ESIA and
review procedure is required. However, if the mine plan is maintained below 500
t/d during the subsequent Feasibility Study, only an application for a certificate of
authorization under Section 22 of the Environment Quality Act (EQA) would be
necessary.
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Other specific Certificates of Authorisation must be obtained according to Section
32 (sewage treatment and waterworks), Section 48 (equipment to control
atmospheric emissions) and Section 54 (solid waste management system).
b) Regulations Falling Under the Responsibility of the MNR
A rehabilitation plan must be provided before the beginning of operation to
conform to the Mining Act requirements. The rehabilitation plan must include a
description of the financial guarantee that will serve to ensure completion of the
work required by the plan. The amount of the financial guarantee corresponds to
70% of the cost estimate for the rehabilitation work on the accumulation areas (i.e.
tailings, waste dumps, and overburden dumps). This amount is accumulated over
several years following a defined schedule.
Condemnation studies must also be carried out to ensure that no mineral resource
will be negatively affected by the presence of a mill, overburden dumps, waste
dumps and tailings area. A condemnation study must be produced for each of these
mining infrastructures in accordance with the Mining Act and the Regulation
respecting Mineral Substances other than Petroleum, Natural Gas and Brine. To
operate the mine, Mason Graphite must also obtain a mining lease.
Further, in accordance with the Forest Act, a Forest Intervention Permit issued by
the MNR is required for Crown forests, prior to any forest development activity,
which implies wood or tree cutting. Forest development includes, among other
activities, cutting and harvesting work and the implementation and maintenance of
infrastructures.
20.3.2 Federal Government
Canadian Environmental Assessment Act
Since August 19th 2012, the Canadian Environmental Assessment Act, 2012 (CEAA
2012) and its accompanying regulations provide a new legislative framework for federal
environmental assessment. Environmental assessments under the CEAA 2012 are
conducted on proposed projects that are “designated,” either through regulation or by the
Minister of the Environment. The Regulations Designating Physical Activities prescribe
the physical activities that constitute a “designated project” which may require an
environmental assessment under the CEAA 2012.
A schedule to the Regulations sets out the physical activities associated with the carrying
out of projects. Each item in the schedule includes a description and in most cases a
corresponding threshold (often production capacity). With regards to a graphite mine, the
threshold is 1,500 tpd.
At the federal level, the actual mining rate considered (500 t/d) does not trigger the
existing CEAA 2012 process. However, following the Regulations Designating Physical
Activities, if it was determined that, as part of mine operation, it was required to pump
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more than 200,000 m³/y of groundwater for keeping dry the open pit and for freshwater
needs at the processing plant, the CEAA 2012 process would be triggered since such
groundwater extraction is also a designated physical activity.
However, on April 20th 2013, the federal government issued the Regulations modifying
the Regulations Designating Physical Activities. Among modifications are exclusions of
groundwater extraction activities and industrial mineral mines, including graphite.
Consequently, and considering that the adoption of those amendments is much likely to
be done rapidly (public consultation will be terminated on May 20th 2013), it is highly
probable that the CEAA 2012 process would not be triggered and that therefore no
federal permitting would be required other than an Authorization to Alter Fish Habitat
under Section 35 of the Fisheries Act.
The Metal Mining Effluent Regulations does not apply to graphite mine. Therefore, it is
not possible to ask for inclusion in Appendix 2 of the Regulations for disposal of mining
waste in a fish habitat.
20.4 Territorial Claims and Regional Relations
The Project is located on the traditional territory of the Innu Nation. The Innu traditional
territory is the Boreal Forest, which covers all of the administrative regions of the
Saguenay – Lac-Saint- Jean and North Shore (Côte-Nord), and overlaps part of Northern
Quebec (Nord-du-Québec) and the National Capital (Capitale-Nationale) regions. The
Innu mainly live within nine communities, located primarily along the Saint Lawrence
River coastline with the exception of the communities of Mashteuiatsh (Lac-Saint-Jean)
and Matimekush-Lac John (Schefferville in Northern Quebec, near the Labrador border).
A people of hunters and gatherers, the Innu, formerly known as the Montagnais, are
nomads who have been forced to settle. The Innu spend most of the year deep in the
interior of Quebec and Labrador, where until recently, they lived as nomadic hunters,
only visiting coastal trading posts for brief periods.
The Lac Guéret project is located on the ancestral territory of the Nitassinan of Pessamit.
On their traditional territory (Nitassinan), the Innu claim Uashaunnuat Indian title:
aboriginal and treaty rights to the land and all its natural resources. The property is
located inside the limits of two traplines (P-23 and P-33).
This project is located inside the area of the Manicouagan-Uapishka World Biosphere
Reserve (RMBMU) where sustainable development and dialogue hold top priority.
Important negotiations involving both the federal and provincial governments are
currently underway with some of the Innu communities of Quebec, which follows the
signature of an Agreement-In-Principle (AIP), which was entered into March 31, 2004.
At this time, the Innu of Pessamit (west of Baie-Comeau), Uashat mak Mani-Utenam
(Sept-Îles) and Matimekush-Lac John (near Schefferville) are not part of any agreement,
as they intend to settle their own land claims directly with both levels of government. The
communities of Uashat mak Mani-Utenam and Matimekosh-Lac-John are part of the
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Ashuanipi Corporation, which has represented them in the comprehensive territorial
negotiations since 2006.
Furthermore, in 2008, Ekuanitshit, Matimekush-Lac John, Pessamit, Uashat mak Mani-
Utenam and Unamen Shipu founded the Alliance stratégique Innue (Innu Strategic
Alliance), which consists of an Innu population of approximately 12,000 and represents
70% of the total members of the Innu Nation living in Quebec. The mandate of the
alliance is to enable the parties to defend their rights, common interests, and to conduct
joint initiatives to achieve political, economic and judicial results in a cooperative
manner.
Mason Graphite will have to conduct consulting session, directly with the local Innu First
Nation to establish sustainable relationships with all local and regional stakeholders.
20.5 Mine Closure and Rehabilitation
20.5.1 Introduction
As stipulated in the current Mining Act, a rehabilitation plan will have to be prepared.
The rehabilitation and restoration plant will have to be developed in compliance with the
provincial Guidelines1 for preparing a mining site rehabilitation plan and general mining
site rehabilitation requirements (MNR, 1997).
Provisions were made in the economic analysis of the Project for the disbursement of
100% of the estimated cost of rehabilitation. The disbursement schedule used, reflects the
requirements of the Mining Act and the timelife of the project. For a project with a
timelife exceeding 15 years, no money has to be put in the financial guarantee before
Year 4 and the last payment is in Year 14.
The closure plan, that will require approval before the onset of the operations, will
address the following items:
• Securing the mining area;
• Dismantling the infrastructures;
• Reclamation of waste rock disposal areas;
• Reclamation of tailings management facility;
• Contaminated waste characterisation and disposal;
• Waste water management;
• Emergency plan and monitoring.
20.5.2 Closure Costs
The preliminary cost estimate of the rehabilitation and closure plan is based on the re-
sloping and re-vegetation of the tailings storage facility and the re-vegetation of the top
1 Guidelines for preparing a mining site rehabilitation plan and general mining site rehabilitation requirements”
published by the Québec Ministry of Natural Resources in collaboration with the Ministry of Environment
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and berms of the waste rock dump, which usually represents the largest proportion of
rehabilitation costs.
Once the Lac Guéret pit is depleted, it is expected that it will fill with water through
underground seepage until it eventually reaches the water table level. Whenever possible,
diverted streams (if any) will recover their original flow paths.
At this time, revegetation of the berms and top of the waste rock dumps was considered
while a multi-layer cover system was considered for the tailings storage facility
rehabilitation. Considering that sulfides tailings are expected and there could be a
potential to generate acid rock drainage, a multi-layer cover system can act as a barrier to
limit contact with water and oxygen.
Based on the accumulation areas identified in Table 20.1, the total cost for the
rehabilitation of the tailings storage facility and waste rock dumps has been estimated at
CAD 4.5 M. This will need to be re-evaluated as the project advances through the
environmental assessment and permitting process.
Table 20.1 –Accumulation Areas for Waste Rock Dump and Tailings Storage Facility
Accumulation Areas Unit Area
Tailings Storage Facility (Years 1 to 22) m2 392,000
Waste Rock Dump Area m2 85,000
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21.0 CAPITAL AND OPERATING COSTS
21.1 Capital Cost
This capital cost estimate covers the Project for an annual production capacity of 50,000
tonnes of natural graphite. Location of the facilities is in a greenfield area located about
300 km North of Baie Comeau in the Province of Québec, Canada. The site is accessible
by all-weather Highway 389 and existing forest roads. A 600 m new road will complete
access to site.
The capital cost estimate includes the material, equipment, labour and freight required for
the mine pre-development, mine services and facilities, mine equipment, processing
facilities, tailings storage and management, as well as infrastructure and services
necessary to support the operation.
The estimate is based on Met-Chem’s standard methods applicable for a Preliminary
Economic Assessment study to achieve the accuracy level of ± 35%.
21.1.1 Summary of the Estimate
All amounts are expressed in Canadian dollars (CAD) unless otherwise noted.
The initial capital cost for the scope of work is estimated as $129,689,000 including
$89,935,000 for direct costs, $21,768,000 for indirect costs and $17,987,000 for
contingency.
The total life of mine capital cost is estimated at $140,464,000 of which $129,689,000 is
initial capital and $10,775,000 is sustaining capital. The sustaining capital cost includes
$4,493,000 for closure and rehabilitation of the site and $6,281,000 to cover for
replacement of mine fleet equipment, expansion of tailings storage and waste rock
stockpiling area and for the provision of a wastewater treatment plant.
The capital cost is summarized in Table 21.1.
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Table 21.1 – Summary of Life of Mine Costs Estimate (50,000 tpy Concentrate)
Item Description
Initial
Capital
Total
Rounded
($)
Sustaining
Capital
Total
Rounded
($)
Direct Cost
Open Pit Mine
Mine Development 2,468,000
Mine Services and Facilities 1,921,000 1,050,000
Mining Equipment 3,637,000 769,000
Open Pit Mine Total 8,026,000 1,819,000
Process
ROM Stockpile & Crusher 7,573,000
Concentrator 47,691,000
Process Total 55,264,000
Tailings and Water Management
Tailings Storage Facilities 3,013,000 4,228,000
Tailings Pipeline and Spigot 171,000
Effluent Treatment Station (sustaining capital) 235,000
Reclaim Water Pumping and Pipeline 1,088,000
Tailings and Water Management Total 4,271,000 4,463,000
Infrastructure Mine Site
Industrial Site Prep. And Drainage, Site Roads 4,835,000
Main Road 1,000,000
Ancillary Buildings 440,000
Permanent Camp 4,205,000
Office Complex 1,235,000
Mine Vehicles Maintenance Building 2,278,000
General Services Mine Site 2,486,000
Infrastructure Mine Site Total 16,478,000
Power and Communication
Main Power 5,165,000
Communication 135,000
Power and Communication Total 5,300,000
Service Vehicles
Light Vehicles 60,000
Earthwork Vehicles 150,000
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Item Description
Initial
Capital
Total
Rounded
($)
Sustaining
Capital
Total
Rounded
($)
Material Handling Vehicles 134,000
Service Equipment 50,000
Emergency Rescue Truck 200,000
Service Vehicles Total 595,000
Total Direct Cost 89,935,000
Indirect Costs 21,768,000
Closure and Rehabilitation 4,493,000
Contingency 17,987,000
Total Capital Cost 129,689,000 10,775,000
21.1.2 Basis of Estimate – General
a) Base Date, Currency, Escalation
The base date for the cost estimate is the first quarter of 2013. The estimate is
expressed in CAD dollars. The exchange rate used is $1.00 USD/$1.00 CAD when
quotations were received in US dollars. No allowance for currency fluctuation is
included.
b) Labour, Installation
Most of the installation costs are included in the unit rates or were estimated by
factor. However, some installation costs are estimated by man hours (from in-house
database or from construction estimating standards), productivity loss factor and
labour rate.
The labour productivity loss for the Project was established at 1.15 considering
impact of major criteria only such as working calendar, availability of skilled
labour and supervision, as well as remote site conditions. The labour rate was
established as an all-inclusive, mixed crew, average hourly cost to the owner of $
130, based on Commission de la Construction du Québec (CCQ) schedule of labour
cost and the hourly rates published by the Association de la Construction du
Québec (ACQ). The working calendar is assumed 7 days per week, 10 hours per
day, and 4 weeks in, 1 week out turnaround.
c) Basis of Estimate – Mining
The mine development costs were estimated using the unit rates developed for the
production and the quantities for the pre-development of the open pit mine were
taken from the mine schedule for the project.
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The haul road construction cost was estimated based on typical rate for road
construction and preparation from similar projects.
Mine services and facilities include the waste rock disposal, the explosives storage
and power line to the mine area. Mine change house facility is included in the
concentrator.
The waste rock disposal area will be lined with a geomembrane. The estimation
was based on the area from the layout and unit rates from recent similar projects.
Explosives will be transported to site by the supplier. Provision is included in the
estimate for site preparation and fencing of the explosive magazines. The
estimation was based on similar projects.
Provisions were also made for electrical power supply to the mining area.
Preliminary requirements were established and estimation was based on in-house
database.
Preliminary requirements for major mining equipment, support and service
equipment were established based on the mining plan. Estimation was based on
budget proposals from qualified suppliers and an in-house database from recent
similar projects.
d) Basis of Estimate – Processing Areas
• Process Buildings
Process buildings include the crusher building and the concentrator building.
The process and mine employees change house and laboratory are located in
the concentrator.
Preliminary layouts were established and estimation was based on unit area
from recent similar projects. Site preparation and ancillary buildings are
included in the infrastructure section below.
• Process Equipment
The process equipment list was derived from the flow sheets and equipment
sizing was based on the design criteria. More than 65% of the process
equipment value is based on single source budget proposals obtained from
qualified suppliers for major equipment. The remaining equipment was
estimated from recent in-house databases of similar projects.
Equipment installation was estimated by factor based on recent similar
projects. An allowance of 4% of the material and equipment value was also
provided for special lifts, sub-contracts and construction material. Freight was
established at 12% of the material and equipment value.
• Process Piping
Process piping cost was estimated by factor based on recent similar projects.
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• Electrical
Preliminary electrical power demand and single line diagram were developed.
Estimation was based on broad assessment of requirements and database from
recent similar projects.
• Automation and Instrumentation
Automation and instrumentation for the process were estimated by factors
based on recent similar projects.
• Buildings Services and Supplies
Buildings services include mainly HVAC and dust collecting ducting, local
fire protection as well as plant air and water services distribution. Buildings
supplies include mainly living quarter’s furniture, equipment and supplies,
small shops tools and storage equipment, safety and security systems as well
as special coatings, if required.
Buildings services and supplies for the process were estimated by factors
based on recent similar projects.
An allowance was provided in the concentrator for laboratory finishes and
facilities as well as supplies and lab equipment.
e) Basis of Estimate – Tailings Management
Preliminary requirements were established for the tailings storage facility.
Consideration was given to environmental constraints. A geomembrane core was
considered for the impermeable dykes design. Preliminary quantities were
calculated and cost estimation was done with unit rates based on recent similar
projects.
Tailings pipeline and water reclaim pipeline were sized with preliminary data and
quantities were derived from the site plans. The cost was estimated with unit rates
from construction estimating standards.
Preliminary requirements were established for the water treatment and the cost
estimation was based on quotations received for recent similar projects. The cost
for the water treatment is included in sustaining capital.
f) Basis of Estimate – Concentrator Infrastructure and Services
• Industrial Site Preparation and Roads
Preliminary requirements were established for site preparation based on
available topography maps from the government. The costs were estimated
based on recent similar projects.
Site roads will be required from existing main road to the concentrator and
also to tailings storage facility, to the explosive magazines and to the camp.
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Lengths of site roads were derived from layouts and estimation was based on
recent similar projects.
A general allowance was provided for improvement work on the main access
road.
• Anciliary Buildings and Facilities
Provision was made for a cold warehouse storage facility for spare and
maintenance parts, consumables as well as general storage needs. Preliminary
requirements were established and estimation was based on unit area from
recent similar projects.
No specific warehousing facility is provided for graphite concentrate bags.
The bags will be stretch wrapped for protection against weather and stored
outside.
Preliminary requirements were established for the permanent camp facilities
including potable water and sanitary treatment as well as fire protection.
Estimation was based on allowances and unit cost from recent similar
projects. The construction camp cost is considered to be included in the
indirect costs.
Preliminary requirements for office complex were established including
services as well as equipment, supplies and furniture. The cost was estimated
based on unit area and rates from recent similar projects.
Preliminary requirements were established for the mine vehicles maintenance
building including services, equipment and supplies such as tire handler,
overhead crane, washing facilities and also tools and storage equipment. The
cost was estimated based on recent similar projects and coordinated with the
maintenance requirements of the mining equipment of this project.
• General Services
The industrial site general services include fuel storage for 14 days and fuel
distribution facilities, fresh water supply from Lac Galette, sanitary and waste
management as well as fire protection general systems such as pumps and
detection & alarm systems. Preliminary requirements were established and
the costs were established based on recent similar projects.
g) Basis of Estimate – Power and Communication
Preliminary requirements were established for electrical power based on power
demand and single line diagram. Process equipment as well as mine, services and
general power needs was considered. Power supply includes five (5) diesel
generators (4 in operation and 1 stand by unit). Power distribution includes
electrical and control material and hardware as well as pole lines to each facility.
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Allowances were made for the graphite concentrate drying and bagging area to
comply with requirements of the Canadian Electrical Code (Section 18 Hazardous
Location).
Budgetary proposals were obtained for the diesel generators. Preliminary quantities
were derived from the single line diagrams for the electrical material, equipment
and accessories and estimations were done based on recent similar projects.
Provision was made for communication to include a main tower. Estimation was
based on recent similar projects.
h) Basis of Estimate - Service Vehicles and Equipment
Preliminary requirements were established for service vehicles and equipment and
the costs were estimated based on budgetary quotes from recent similar projects
and in-house database.
Service vehicles include a 15 passenger minivan, an IT14G type loader, 2 fork lifts,
an HDPE pipe fusion machine and a rescue truck. Other service vehicles and
equipment are included in the mining equipment such as track dozer, road grader,
boom truck, pick-up trucks, and lighting plants. Maintenance of the main access
road will be sub-contracted.
i) Basis of Estimate – Indirect Costs
The provisions for indirect costs and contingency were established by factors
applied to direct cost.
Indirect costs typically cover for the following major items: project development
(permitting, exploration and drilling, feasibility studies, metallurgical testing, pre-
production operation group, etc.), project implementation (EPCM, capital spares,
first fills, commissioning, construction indirect costs such as construction camp,
room & board and transportation of workers, etc.) and financial costs (insurances).
Taxes and duties, escalation and interests incurred during construction are excluded
from the capital cost. Working capital is also excluded from the capital costs but
provision for 3 months of operation cost is considered in the economic analysis.
The provision for contingency was established in consideration of the engineering
development level, the available technical information required for design and the
estimation methods of the project.
j) Closure Costs
Provisions are made for closure and rehabilitation costs in the sustaining capital. It
is assumed that the equipment and facilities salvage value will cover rehabilitation
costs related to dismantling of process building and infrastructure. For the waste
rock dump and the tailings storage facility, quantities were derived from the layouts
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and estimation was based on current legislation with unit rates from recent similar
projects. Details are provided in Section 20.5 of the Report.
21.2 Operating Cost
21.2.1 Introduction
This section provides information on the estimated operating costs of the Project and
covers Mining, Processing, Tailings Management, Site Services and Administration.
The sources of information used to develop the operating costs include in-house
databases and outside sources particularly for materials, services and consumables. All
amounts are in Canadian dollars (CAD), unless specified otherwise.
21.2.2 Summary Operating Costs
The life of mine average operating cost estimate is summarised in Table 21.2.
Table 21.2 – Summary of Life of Mine Average Operating Cost Estimate
Area Average Operating Cost
($/tonne of concentrate)
Mining 35.74
Processing 221.21
Tailings Management Included in Processing Costs
Plant Administration, Infrastructure & Tech. Serv. 132.66
Total Average Operating Costs 389.61
21.2.3 Summary of Personnel Requirements
Table 21.3 presents the estimated personnel requirements for the Project. This workforce
is comprised of staff as well as hourly employees. The mine workforce as well as the
administration employees will work on a 4 days per week basis. The hourly workforce at
the plant will provide 24 hour per day coverage, 7 days per week, and will work on a
2 weeks on, 2 weeks off rotation.
Table 21.3 – Total Personnel Requirement
Area Number
Mine 11
Processing 52
Management, Administration and Technical
Services 17
Total Manpower 80
Total annual costs for the above manpower including base salary, bonus and fringe
benefits have been estimated at $ 6.7 M.
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The above manpower costs are detailed in the following sections.
21.2.4 Mining
The mine operating cost was estimated for each period of the mine plan. This cost is
based on operating the equipment, the manpower associated with operating the mine, the
cost for explosives as well as dewatering, road maintenance and other activities.
In order to determine the operating cost, the following assumptions were used:
• Diesel Fuel Price: $ 1.00 / L;
• Explosives Cost: $ 0.66 / t (based on supplier pricing).
The mine operating cost was estimated to average $ 6.00 / t mined for the life of the open
pit mine. This cost is divided into $ 3.66 / t for mineralization, $ 0.06 / t for overburden,
$ 2.11 / t for waste and $ 0.16 / t for rehandling (see Table 21.4).
Table 21.4 – Summary of Estimated Mine Operating Costs by Type of Material
Type of material
Average
Annual Cost
($)
Total
($/t mined)
Total
($/t concentrate)
Total
(%)
Overburden 397,5592 0.06 0.36 1%
ROM 1,085,489 3.66 21.84 61%
Waste 625,349 2.11 12.58 35%
Rehandling 47,938 0.16 0.96 3%
Total 2,156,335 6.00 35.74 100%
21.2.5 Processing
For a typical year at design processing rate, the operating costs for the process plant,
which includes the crushers, are summarized in Table 21.5, which show the breakdown
for the four (4) major components of labour cost, electrical power, consumables &
reagents and maintenance supplies. These costs were derived from supplier information,
Met-Chem’s database or factored from similar operations. The unit cost of on-site
generated electricity was established at $ 0.25/kWh.
Table 21.5 – Summary of Average Annual Process Plant Operating Costs
Description
Total
Annual Cost
(CAD)
Unit Cost
(CAD/tonne
milled)
Unit Cost
(CAD/tonne
concentrate)
% of Total
Costs
Manpower 3,772,964 21.32 75.43 34.1%
Electrical Power 4,061,116 22.94 81.18 36.7%
Grinding Media, Reagent & Dryer
Fuel Consumption 1,523,216 8.61 30.53 13.8%
2 In Year 3
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Description
Total
Annual Cost
(CAD)
Unit Cost
(CAD/tonne
milled)
Unit Cost
(CAD/tonne
concentrate)
% of Total
Costs
Bagging System 1,274,781 7.20 25.44 11.5%
Consumables Consumption 177,004 1.00 3.54 1.6%
Spare Parts and Miscellaneous 268,783 1.52 5.31 2.4%
Total 11,077,865 62.59 221.21 100.0%
21.2.6 Plant Administration and Technical Services Costs
This section regroups the manpower costs for Management, Administration &
Accounting, Purchasing & Stores and Human Resources as well as costs related to
technical services, environment, laboratory, and infrastructure. The operating cost
summary is given in Table 21.6.
Table 21.6 – Summary of Annual Plant Administration and Services Costs
Description
Total annual
Cost
(CAD/year)
Unit cost
(CAD/tonne
of
concentrate)
General Administration -Manpower
Administration - Manpower (Lac Guéret) 1,827,000 36.54
Administration - Material & Services
Administration - Material & Services 2,645,975 52.92
Infrastructure
Access road maintenance & miscellaneous 435,000 8.70
Power for heating and general services 1,725,000 34.50
Total 6,632,975 132.66
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22.0 ECONOMIC ANALYSIS
It is to be noted that the following includes results of a Preliminary Economic
Assessment study that uses mineral resources that are not mineral reserves and therefore
have not demonstrated economic viability.
Therefore, the following economic analysis is limited to the potential viability of the
Project and will serve as a decision tool to proceed or not with additional field work and
studies on the Project.
22.1 General
An economic analysis of the Project, for a concentrate production rate of 50,000 tonnes
per year (FOB site), has been carried out using a cash flow model prepared in Microsoft
Excel. The model is constructed using annual cash flows in constant money terms (first
quarter 2013). No provision is made for the effects of inflation. As required in the
financial assessment of investment projects, the evaluation is carried out on a so-called
“100% equity” basis, i.e. the debt and equity sources of capital funds are ignored. Results
are presented before and after taxation.
The model reflects the base case macro-economic and technical assumptions given in this
report on the basis that the owner will own and operate the mining equipment.
22.2 Assumptions
22.2.1 Price
The sales price that was used for the economic analysis is based on the average of the last
24 months graphite concentrate price as published in Industrial Minerals. More details are
provided in Section 19 of the Report.
Based on this information, Mason Graphite has provided the price forecasts given in
Table 22.1 below for Lac Guéret Graphite Concentrate.
Table 22.1 – Graphite Price Forecasts
Product Classification Proportion (%) Average Grade (%Cgr) Price ($/t)
+50 mesh 18.4% 96.30% 2,200
-50 mesh +80 mesh 12.2% 96.40% 2,000
-80 mesh +150 mesh 14.3% 95.60% 1,500
-150 mesh 55.1% 91.70% 1,200
Average 100% 93.70% 1,525
22.2.2 Macro-Economic Assumptions
The main macro-economic assumptions used in the base case are given in Table 21.2.
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Table 22.2 – Macro-Economic Assumptions
Item Unit Base Case Value
Average Graphite Concentrate Price CAD/tonne 1525
Exchange Rate CAD/USD 1.00
Life of Mine years 22
Discount Rate 1 % per year 8.0%
Discount Rate 2 % per year 10.0%
The current Canadian tax system applicable to mining income is used to assess the
Project’s annual tax liabilities. This consists of federal and provincial corporate taxes as
well as provincial mining taxes (revised in the 2010 budget). The revisions announced in
the March 21st 2013 federal budget speech concerning the reclassification of mine
development expenses from Canadian Exploration Expenses (CEE) to Canadian
Development Expenses (CDE), and the elimination of the provision for accelerated
depreciation for class 41A assets have been accounted for. These changes will be made
progressively over periods of several years. It is assumed that Quebec will follow suit
with the same changes in the provincial corporate tax rules. The federal and provincial
corporate tax rates currently applicable over the project’s operating life are 15.0 % and
11.9 % of taxable income, respectively. The rate applicable for the purpose of assessing
Quebec mining taxes is 16 % of taxable income. The discount rate variants used to
determine the net present value of the project are assumed to represent the weighted-
average cost of capital.
22.2.3 Mineral Royalties
No provision for mineral royalties is included in the present cash flow analysis.
22.2.4 Technical Assumptions
The main technical assumptions used in the base case are given in Table 22.3.
Table 22.3 – Technical Assumptions
Total Mineral Resources Mined (Life Of Mine) M tonnes 3.87
Average Mineral Resources Mined per Year tonnes per year 176,000
Processing Design Rate tonnes/day 500
Average ROM Grade to Mill % Cgr 27.4
Average Concentrate Grade % Cgr 93.7
Average Process Recovery over Mine Life % 96.6
Average Tonnes of Concentrate Produced per year tonnes per year 50,000
Total Tonnes of Concentrate Produced over Mine Life M tonnes 1.09
Average Mining Operating Cost ($ / tonne mined) 6.00
Average Mining Operating Cost ($ / tonne concentrate) 35.74
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Average Process Operating Cost ($ / tonne milled) 62.59
Average Process Operating Cost ($ / tonne concentrate) 221.21
Average General & Administration Cost ($ / tonne concentrate) 132.66
On average, 176,000 tonnes of run of mine will be supplied per year to the process plant
when full production is reached. The amount of concentrate produced is a function of
head grade, process recovery and concentrate grade, and is on average 50,000 tonnes per
year.
22.3 Financial Model and Results
The cash flow statement for the base case is given in Figure 22.1.
A summary of the base case cash flow results is given in Table 22.4.
This summary indicates that the total pre-production capital expenditure was evaluated at
CAD 129.7 M and the sustaining capital requirement was evaluated at CAD 6.3 M for a
total project capital expenditure over the project life of CAD 136.0 M.
For taxation purposes, all contingencies as well as owner’s and contractor’s indirects
were redistributed by area in the cash flow statement of Figure 22.1. The cash flow
statement shows a capital cost breakdown by area and provides a preliminary capital
spending schedule over a 2-year pre-production period.
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Figure 22.1 – Cash Flow Statement
Years -2 -1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Total
Run of Mine (t) 4,900 164,261 182,522 183,982 186,595 187,765 192,191 192,191 192,191 192,191 192,191 167,690 167,690 167,690 167,690 167,690 165,875 165,875 165,875 165,875 165,875 165,875 170,775 3,870,553
Overburden (t) 218,667 109,086 327,753
Waste (t) 75,100 212,235 146,500 93,503 244,210 203,426 138,507 138,507 138,507 138,507 138,507 103,490 103,490 103,490 103,490 103,490 62,010 62,010 62,010 62,010 62,010 62,010 62,010 2,619,031
Total Waste (t) 293,767 212,235 146,500 202,589 244,210 203,426 138,507 138,507 138,507 138,507 138,507 103,490 103,490 103,490 103,490 103,490 62,010 62,010 62,010 62,010 62,010 62,010 62,010 2,946,784
293,000
Stripping ratio (w : o) 1.292 0.803 1.101 1.309 1.083 0.721 0.721 0.721 0.721 0.721 0.617 0.617 0.617 0.617 0.617 0.374 0.374 0.374 0.374 0.374 0.374 0.363 0.761
Graphite Concentrate Average Sale Price ($/tonne) 1,525 1,525 1,525 1,525 1,525 1,525 1,525 1,525 1,525 1,525 1,525 1,525 1,525 1,525 1,525 1,525 1,525 1,525 1,525 1,525 1,525 1,525
Grade Cgr (%) 26.4 26.4 26.3 26.2 25.8 25.8 25.2 25.2 25.2 25.2 25.2 28.9 28.9 28.9 28.9 28.9 29.2 29.2 29.2 29.2 29.2 29.2 29.2 27.4
Process Recovery (%) 96.6% 96.6% 96.6% 96.6% 96.6% 96.6% 96.6% 96.6% 96.6% 96.6% 96.6% 96.6% 96.6% 96.6% 96.6% 96.6% 96.6% 96.6% 96.6% 96.6% 96.6% 96.6% 96.6%
Price Ex-works (F.O.B. Site)
+50 mesh 18.4% 2,200 18,101,762 20,062,733 20,137,916 20,101,708 20,211,355 20,251,491 20,251,491 20,251,491 20,251,491 20,251,491 20,254,502 20,254,502 20,254,502 20,254,502 20,254,502 20,223,797 20,223,797 20,223,797 20,223,797 20,223,797 20,223,797 20,821,215 443,309,440
50x80 mesh 12.2% 2,000 10,911,141 12,093,149 12,138,467 12,116,642 12,182,734 12,206,926 12,206,926 12,206,926 12,206,926 12,206,926 12,208,741 12,208,741 12,208,741 12,208,741 12,208,741 12,190,234 12,190,234 12,190,234 12,190,234 12,190,234 12,190,234 12,550,337 267,212,212
80x150 mesh 14.3% 1,500 9,591,966 10,631,068 10,670,907 10,651,720 10,709,821 10,731,089 10,731,089 10,731,089 10,731,089 10,731,089 10,732,685 10,732,685 10,732,685 10,732,685 10,732,685 10,716,414 10,716,414 10,716,414 10,716,414 10,716,414 10,716,414 11,032,981 234,905,818
M150 mesh (fines) 55.1% 1,200 29,567,403 32,770,452 32,893,257 32,834,114 33,013,211 33,078,770 33,078,770 33,078,770 33,078,770 33,078,770 33,083,688 33,083,688 33,083,688 33,083,688 33,083,688 33,033,535 33,033,535 33,033,535 33,033,535 33,033,535 33,033,535 34,009,357 724,101,290
Concentrate Production (t) 93.7% 44,718 49,562 49,748 49,658 49,929 50,028 50,028 50,028 50,028 50,028 50,036 50,036 50,036 50,036 50,036 49,960 49,960 49,960 49,960 49,960 49,960 51,436 1,095,132
Total Graphite Revenue ($) 68,172,273 75,557,403 75,840,548 75,704,185 76,117,121 76,268,276 76,268,276 76,268,276 76,268,276 76,268,276 76,279,616 76,279,616 76,279,616 76,279,616 76,279,616 76,163,980 76,163,980 76,163,980 76,163,980 76,163,980 76,163,980 78,413,891 1,669,528,760
Total Revenue ($) 68,172,273 75,557,403 75,840,548 75,704,185 76,117,121 76,268,276 76,268,276 76,268,276 76,268,276 76,268,276 76,279,616 76,279,616 76,279,616 76,279,616 76,279,616 76,163,980 76,163,980 76,163,980 76,163,980 76,163,980 76,163,980 78,413,891 1,669,528,760
Mine Operating Cost Overburden ($) 397,559 397,559
Mine Operating Cost Overburden ($/t) 3.64 3.64 3.64
Mine Operating Cost Waste ($) 1,038,887 807,127 491,152 1,076,016 966,503 735,082 735,082 735,082 735,082 735,082 649,539 649,539 649,539 649,539 649,539 350,699 350,699 350,699 350,699 350,699 350,699 350,699 13,757,679
Mine Operating Cost Waste ($/t) 5.41 4.89 5.51 5.25 4.41 4.75 5.31 5.31 5.31 5.31 5.31 6.28 6.28 6.28 6.28 6.28 5.66 5.66 5.66 5.66 5.66 5.66 5.66 5.41
Mine Operating Cost ROM ($) (rehandling included) 890,438 1,062,074 973,073 943,305 996,199 1,253,419 1,253,419 1,253,419 1,253,419 1,253,419 1,242,928 1,242,928 1,242,928 1,242,928 1,242,928 1,084,083 1,084,083 1,084,083 1,084,083 1,084,083 1,084,083 1,084,083 24,935,403
Mine Operating Cost ROM ($/t) (rehandling included) 6.45 5.42 5.82 5.29 5.06 5.31 6.52 6.52 6.52 6.52 6.52 7.41 7.41 7.41 7.41 7.41 6.54 6.54 6.54 6.54 6.54 6.54 6.35 6.45
Process Operating Cost ($/t ROM) 62.59 10,281,080 11,424,056 11,515,450 11,678,977 11,752,215 12,029,206 12,029,206 12,029,206 12,029,206 12,029,206 10,495,739 10,495,739 10,495,739 10,495,739 10,495,739 10,382,104 10,382,104 10,382,104 10,382,104 10,382,104 10,382,104 10,688,795 242,257,920
Concentrate Transportation Cost ($)
Concentrate Transportation Cost ($/t)
General & Administration Cost ($) 132.66 5,932,262 6,574,907 6,599,545 6,587,679 6,623,613 6,636,766 6,636,766 6,636,766 6,636,766 6,636,766 6,637,753 6,637,753 6,637,753 6,637,753 6,637,753 6,627,690 6,627,690 6,627,690 6,627,690 6,627,690 6,627,690 6,823,474 145,280,213
Average Mine Operating Cost ($/t mined) 5.12 5.68 4.82 4.69 5.02 6.01 6.01 6.01 6.01 6.01 6.98 6.98 6.98 6.98 6.98 6.30 6.30 6.30 6.30 6.30 6.30 6.16 6.00
Total Operating Costs ($) 18,142,666 19,868,164 19,976,778 20,285,977 20,338,529 20,654,472 20,654,472 20,654,472 20,654,472 20,654,472 19,025,959 19,025,959 19,025,959 19,025,959 19,025,959 18,444,576 18,444,576 18,444,576 18,444,576 18,444,576 18,444,576 18,947,051 426,628,774
Total Operating Costs ($) 18,142,666 19,868,164 19,976,778 20,285,977 20,338,529 20,654,472 20,654,472 20,654,472 20,654,472 20,654,472 19,025,959 19,025,959 19,025,959 19,025,959 19,025,959 18,444,576 18,444,576 18,444,576 18,444,576 18,444,576 18,444,576 18,947,051 426,628,774
Operating Profit ($) 50,029,606 55,689,238 55,863,769 55,418,207 55,778,592 55,613,804 55,613,804 55,613,804 55,613,804 55,613,804 57,253,658 57,253,658 57,253,658 57,253,658 57,253,658 57,719,404 57,719,404 57,719,404 57,719,404 57,719,404 57,719,404 59,466,840 1,242,899,986
Pre-production Capital Expenditure (includes
Indirects and Contingencies)
MINE DEVELOPMENT – Pre-stripping 3,493,935 3,493,935
OPEN PIT MINE 4,873,983 3,147,373 8,021,356
PROCESS 48,462,721 31,294,789 79,757,511
TAILINGS AND WATER MANAGEMENT FACILITIES 6,046,434 6,046,434
INFRASTRUCTURE – MINE SITE 14,450,071 9,331,129 23,781,200
POWER AND COMMUNICATIONS 7,746,225 7,746,225
SERVICE VEHICLES AND EQUIPMENT 842,339 842,339
Total 75,533,000 54,156,000 129,689,000
Indexed for Sensitivity 75,533,000 54,156,000 129,689,000
Working Capital
W.C. (includes Spare Parts) 3.00 4,535,667 431,375 27,154 77,300 13,138 78,986 -407,128 -145,346 125,619 -4,736,763
Sustaining Capital Expenditure
Tailings 1,004,090 955,944 1,074,166 1,193,874 4,228,074
Concentrator 600,000 235,000 450,000 1,285,000
Mine 768,500 768,500
Total 600,000 1,239,090 450,000 955,944 768,500 1,074,166 1,193,874 6,281,574
Indexed for Sensitivity 600,000 1,239,090 450,000 955,944 768,500 1,074,166 1,193,874 6,281,574
Total Capital Expenditure ($) 75,533,000 58,691,667 431,375 27,154 677,300 1,252,228 528,986 955,944 -407,128 768,500 1,074,166 -145,346 1,193,874 125,619 -4,736,763 135,970,574
Mine Closure and Rehabilitation Payments ($) 35,947 112,335 184,230 260,618 332,513 408,901 480,795 557,183 633,571 705,466 781,854 4,493,414
Federal Corporate Income Tax 35,085 3,888,823 6,893,810 7,201,777 7,185,330 7,146,333 7,087,710 7,072,218 7,059,057 7,231,583 7,226,823 7,188,824 7,191,013 7,190,197 7,354,288 7,323,447 7,336,190 7,345,965 7,353,450 7,359,171 7,583,243 141,254,338
Provincial Corporate Income Tax 27,834 3,085,133 5,469,089 5,713,410 5,700,362 5,669,424 5,622,917 5,610,626 5,600,186 5,737,056 5,733,279 5,703,134 5,704,870 5,704,223 5,834,402 5,809,935 5,820,044 5,827,799 5,833,737 5,838,275 6,016,039 112,061,774
Quebec Mining Tax 1,070,626 3,853,971 5,160,755 5,953,524 6,648,860 7,082,078 7,400,692 7,573,666 7,737,686 7,848,330 8,148,337 8,207,386 8,193,493 8,232,381 8,255,432 8,479,579 8,439,557 8,468,847 8,489,351 8,503,703 8,513,750 8,803,505 161,065,506
Total Corporate Income and Mining Taxes ($) 1,070,626 3,916,889 12,134,711 18,316,424 19,564,046 19,967,769 20,216,449 20,284,293 20,420,530 20,507,573 21,116,976 21,167,488 21,085,451 21,128,264 21,149,853 21,668,268 21,572,939 21,625,081 21,663,115 21,690,890 21,711,196 22,402,787 414,381,618
BEFORE-TAX CASH FLOW -75,533,000 -58,691,667 49,598,232 55,662,085 55,186,469 54,130,032 55,137,271 55,429,574 55,353,186 54,325,347 55,204,903 55,540,137 55,927,974 56,620,086 55,474,026 56,471,804 57,399,003 57,719,404 56,525,530 57,719,404 57,719,404 57,719,404 57,593,785 64,203,602 1,102,435,997
Cumulative B-T CF -75,533,000 -134,224,667 -84,626,435 -28,964,350 26,222,120 80,352,151 135,489,422 190,918,996 246,272,182 300,597,529 355,802,432 411,342,569 467,270,543 523,890,630 579,364,655 635,836,459 693,235,462 750,954,866 807,480,397 865,199,801 922,919,205 980,638,609 1,038,232,395 1,102,435,997
Payback period work area 1.00 1.00 1.00 0.52
AFTER-TAX CASH FLOW -75,533,000 -58,691,667 48,527,606 51,745,195 43,051,758 35,813,608 35,573,224 35,461,805 35,136,737 34,041,054 34,784,373 35,032,564 34,810,998 35,452,599 34,388,575 35,343,539 36,249,150 36,051,136 34,952,591 36,094,323 36,056,289 36,028,514 35,882,590 41,800,816 688,054,379
Cumulative A-T CF -75,533,000 -134,224,667 -85,697,060 -33,951,865 9,099,894 44,913,501 80,486,726 115,948,530 151,085,267 185,126,321 219,910,694 254,943,259 289,754,257 325,206,855 359,595,430 394,938,969 431,188,120 467,239,256 502,191,847 538,286,170 574,342,459 610,370,974 646,253,563 688,054,379
Payback period work area 1.00 1.00 1.00 0.79
F.O.B. SITE
FINANCIAL INDICATORS
Before Tax
Payback Period (years) 2.52
NPV @ ... ($) 8.0% 363,672,772
NPV @ ... ($) 10.0% 282,629,651
Internal Rate of Return 33.7%
After Tax
Payback Period (years) 2.79
NPV @ 8% ($) 8.0% 217,442,189
NPV @ 10% ($) 10.0% 165,384,529
Internal Rate of Return 27.0%
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A working capital equivalent of 3 months of total annual operating costs is maintained
throughout the production period.
A total of CAD 4.5 M is added for mine closure reclamation purposes. The total
operating cost was estimated at CAD 426.6 M for the life of the mine or $ 110 / tonne
milled or $ 390 / tonne of concentrate.
The financial results indicate positive before-tax Net Present Values (NPV) of
CAD 363.7 M and CAD 282.6 M at discount rates of 8 % and 10 %, respectively. The
before-tax Internal Rate of Return (IRR) is 33.7 % and the payback period is 2.5 years.
The after-tax Net Present Values are CAD 217.4 M and CAD 165.4 M at discount rates
of 8% and 10%, respectively. The after-tax Internal Rate of Return is 27.0% and the
payback period is 2.8 years.
Table 22.4 – Project Evaluation Summary
50,000 tonnes of concentrate per year (million CAD)
Initial Capital Cost 129.7
Sustaining Capital Cost 6.3
Total Direct Capital Cost 136.0
Mine Closure and Rehabilitation 4.5
Total Mining Operating Cost (LOM) 39.1
Total Process Operating Cost (LOM) 242.3
Total General & Administration Operating Cost (LOM) 145.3
Total Operating Cost (LOM) 426.6
BEFORE TAX
Total Cash Flow 1,102.4
NPV@ 8% 363.7
NPV @ 10% 282.6
IRR (%) 33.7
Payback Period (years) 2.5
AFTER TAX
Total Cash Flow 688.1
NPV@ 8% 217.4
NPV @ 10% 165.4
IRR (%) 27.0
Payback Period (years) 2.8
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22.4 Sensitivity Analysis
A sensitivity analysis has been carried out, with the base case described above as a
starting point, to assess the impact of changes in graphite concentrate price (all four (4)
price categories are varied together), total pre-production capital costs and operating costs
on the project’s NPV (@ 8% and 10%) and IRR. Each variable is examined one-at-a-
time. An interval of 30% with increments of 10% was used for all three (3) variables.
The before-tax results of the sensitivity analysis, as shown in Figure 22.2 to Figure 22.4,
indicate that the Project’s before-tax viability is not significantly vulnerable to the under-
estimation of capital and operating costs, when taken one at-a-time. The net present value
is marginally more sensitive to variations in operating costs than it is to capital costs, as
shown by the steeper curves. As expected, the net present value is most sensitive to
variations in price. In contrast with Figure 22.2 and Figure 22.3 which show linear
variations in net present value for the three (3) variables studied, variations associated
with internal rate of return shown in Figure 22.4 are not linear. The internal rate of return
is more sensitive to variations in capital costs than it is to operating costs, and as in the
case of net present value, it is most sensitive to variations in price.
Figure 22.2 – Before-Tax NPV8%: Sensitivity to Capital Expenditure,
Operating Cost and Price
0
100
200
300
400
500
600
-30 -20 -10 0 10 20 30
B-T
NP
V @
8%
($
mil.
)
RELATIVE VARIATION (%)
CAPEX OPEX PRICE
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Figure 22.3 – Before-Tax NPV10%: Sensitivity to Capital Expenditure,
Operating Cost and Price
Figure 22.4 – Before-Tax IRR: Sensitivity to Capital Expenditure,
Operating Cost and Price
0
100
200
300
400
500
-30 -20 -10 0 10 20 30
B-T
NP
V @
10
% (
$ m
il.)
RELATIVE VARIATION (%)
CAPEX OPEX PRICE
20.0
25.0
30.0
35.0
40.0
45.0
50.0
-30 -20 -10 0 10 20 30
B-T
IR
R (
%)
RELATIVE VARIATION (%)
CAPEX OPEX PRICE
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The after-tax results of the sensitivity analysis are shown in Figure 22.5 to Figure 22.7.
The same conclusions as those made for the before-tax case concerning the sensitivity of
NPV and IRR to variations in capital costs, operating costs and price can be drawn here.
Figure 22.5 – After-Tax NPV8%: Sensitivity to Capital Expenditure,
Operating Cost and Price
0
100
200
300
400
-30 -20 -10 0 10 20 30
A-T
NP
V @
8%
($
mil.
)
RELATIVE VARIATION (%)
CAPEX OPEX PRICE
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Figure 22.6 – After-Tax NPV10%: Sensitivity to Capital Expenditure,
Operating Cost and Price
Figure 22.7 – After-Tax IRR: Sensitivity to Capital Expenditure,
Operating Cost and Price
0
100
200
300
-30 -20 -10 0 10 20 30
A-T
NP
V @
10
% (
$ m
il.)
RELATIVE VARIATION (%)
CAPEX OPEX PRICE
10.0
15.0
20.0
25.0
30.0
35.0
40.0
-30 -20 -10 0 10 20 30
A-T
IR
R (
%)
RELATIVE VARIATION (%)
CAPEX OPEX PRICE
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22.5 Important Caution Regarding the Economic Analysis
The economic analysis contained in this report is preliminary in nature. It incorporates
inferred mineral resources that are considered too geologically speculative to have the
economic considerations applied to them that would enable them to be categorized as
mineral reserves. It should not be considered a prefeasibility or feasibility study. There
can be no certainty that the estimates contained in this report will be realized. In addition,
mineral resources that are not mineral reserves do not have demonstrated economic
viability.
The results of the economic analysis are forward-looking information that is subject to a
number of known and unknown risks, uncertainties and other factors that may cause
actual results to differ materially from those presented here.
These risks will be subject to further definition and mitigation in the next phase of the
project to eliminate or minimize their potential impact on the Lac Guéret Project.
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23.0 ADJACENT PROPERTIES
With the current interest in graphite, the Lac Guéret Property is completely surrounded
by new claim-holders since early 2012. The principal ones are: Focus Metals Inc. to the
north and west; Global Graphite Inc. to the southeast; the Griesbach-Ashto-9248-7792
Québec Inc. (25%-25%-50%) to the east and south are the principal neighbours.
Figure 23.1 – Adjacent Claims to Lac Guéret Property
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24.0 OTHER RELEVANT DATA AND INFORMATION
No other relevant information.
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25.0 INTERPRETATION AND CONCLUSIONS
The processing plant is designed to process 500 t/d of run of mine to produce
approximately 50,000 tonnes per year of graphite concentrate grading at about 93.7% Cgr
based on a concentrate recovery of 96.6%. A suitable process flowsheet includes
crushing, grinding, flotation, regrind and concentrate thickening, filtering and drying.
Mining equipment, tailings storage facility, concentrate transportation and load-out
facilities as well as infrastructure and services have been added to complete the
investment cost of the project.
The total capital cost for the project life, at an accuracy level of ± 35%, is estimated at
CAD 136.0 M where the pre-production initial capital cost is evaluated at CAD 129.7 M
while the sustaining capital requirement is CAD 6.3 M.
The life of mine average operating cost estimate is evaluated at 390 $/tonne of
concentrate.
Mine closure and rehabilitation cost have been estimated at CAD 4.5 M.
The economic analysis of the project has demonstrated the potential viability of the
project with recommendations to proceed to next level of Feasibility studies. At an
average sale price of graphite concentrate of $1,525/tonne, the financial results indicate a
before-tax Net Present Values (NPV) of CAD 363.7 M and CAD 282.6 M at discount
rates of 8% and 10%, respectively. The before-tax Internal Rate of Return is 33.7% with
a payback period of 2.5 years. The after-tax Net Present Values are CAD 217.4 M and
CAD 165.4 M at discount rates of 8% and 10% respectively. The after-tax Internal Rate
of Return is 27.0% and the payback period is 2.8 years.
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26.0 RECOMMENDATIONS
Considering the positive results of the PEA, Met-Chem recommends that the project
continues to the next phase of development, the Feasibility Study.
Met-Chem recommends a series of additional studies and tests to advance to the next
phase and minimize risks. The main recommendations include:
• Obtain detailed topography contour to improve design and location of infrastructure
and tailings storage facility and in order to reach Feasibility Study level of cost
estimate.
• Perform rock mechanics as well as hydrogeological studies to further confirm rock
slopes, rock permeability, ground and underground water flows and water balance
in order to validate the open pit mining technical parameters.
• Complete metallurgical testing to bring the project to a Feasibility Study level. The
next phase will include pilot plant test work to verify the robustness of the flow
sheet. The production of a coarser graphite concentrate will be looked into. Settling
and filtration testing will be done on pilot plant concentrate. The sulphide removal
from mill tailings will be looked into again.
• Perform geotechnical field work for the Feasibility Study to confirm assumptions
used for the tailings storage facility design and waste piles in this PEA report. A
series of boreholes and test pits will be required for determination of soil and
bedrock horizons and mechanical properties beneath the tailings pond dykes to
permit study of the short and long term stability of the dykes and permeability of
underlying soils and rocks as well as determine the soil types and their permeability
below the deposited tailings. All test pits and boreholes shall be surveyed for
northing, easting and ground elevation. Standpipes or piezometers shall be installed
to record the ground water table in the proposed tailings pond area.
• Perform laboratory analysis of the samples retrieved in tailings storage area such as
grain size analysis, water content and soil identification according to the Unified
Soil Classification System (USCS). If soil samples are cohesive (clay) additional
testing shall include Atterberg limits and consolidation tests. Unconfined
compression tests shall be done on selected bedrock cores.
• Perform field investigation to locate borrow banks for suitable materials for
construction of the various dykes, pads and roads as well as concrete aggregates
during the Feasibility Study to determine quantities available and distance from the
various facilities.
• Perform condemnation drilling for Lac Guéret mine site and infrastructure location
such as the tailings storage facility, waste rock stockpile, primary crusher, process
plant, buildings, etc.
• Carry out soil geotechnics fieldwork and testing in order to provide foundations
design parameters as the project will advance to feasibility studies.
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• Carry out thorough environmental characterisation of overburden, run of mine,
waste rock material as per Guideline 019;
• Carry out testing of the tailings and waste rock lithology for geochemical properties
such as ABA (acid base accounting), humidity cell or kinetic tests (coarse and fine
fractions), fresh and aged supernatant analysis (coarse and fine fractions) and
physical/mechanical properties such as size distribution, specific gravity, Atterberg
limits, proctor maximum dry density and optimum water content, maximum density
by vibrator and by drying, minimum density, settling, low and overburden stress
consolidation settlement.
• Conduct consulting sessions with local Innu First Nation.
• Carry out a detailed market study on the graphite product situation by a specialized
firm as the project advances to Feasibility Study. With this market study, the
analysis of the future price trend of graphite concentrate should be addressed;
The estimated cost for the next study phase has been estimated and is provided in Table
26.1.
Table 26.1 – Estimated Cost for Next Study Phase
Study Phase Cost Estimate
($ M)
Other Geological Work 1.2
Feasibility Study 2.0
Metallurgical Testwork 1.0
Other Site Studies 0.8
Environmental Studies 1.0
Total 6.0
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27.0 REFERENCES
27.1 Geology
Clark, T, 1994. Géologie et gîtes de l’Orogène du Nouveau-Québec et de son arrière-pays
in: Géologie du Québec, Gouvernment de Québec, MM 94-10, p. 47-65.
Clark, T. and R. Wares, 2004. Lithotectonic synthesis and metallogeny of the New
Québec Orogeny (Labrador Trough), MRNFP, MM 2005-01, 180 p.
Clarke, P.J., 1977. Région de Gagnon, MRN-Geol Expln Serv. Rept RG-178, 89p.
Currie, K.L., 1972. Geology and petrology of the Manicouagan Resurgent Caldera,
Québec, Geol. Surv. Can., Bull. 198.
Daigneault, R, 2004. Projet Lac Guéret – Sommaire des observations structurales, priv
rept. SOQUEM Inc & Quinto Technology Inc., internal rept., 6 p.
Davidson, A., 1996. Geological Compilation of the Grenville Province, Geol. Surv. Can.,
Open File Rept. 3346.
Emslie, R. F. and P.A. Hunt, 1989. The Grenville event: magmatism and high grade
metamorphism: in Current Research, Part C, Geol. Surv. Can., Paper 89-1C, p.11-17.
Ferreira, E.C., 1962a. Report on Geological, Drilling and Dip Needle Survey, Area 24A,
Echo Lake, Québec: unpubl. rept. for Québec Cartier Mining Co., 7 p. plus maps, Min.
Nat. Res. Que., Assessment Report No. 12609.
Ferreira, E.C., 1962b. Report on Geological, Drilling and Dip Needle Survey, Area 24B,
Echo Lake, Québec: unpubl. rept. for Québec Cartier Mining Co., 11 p. plus maps, Min.
Nat. Res. Que., Assessment Report No. 13176.
Geotech Ltd., 2003. Report on helicopter-borne time domain electromagnetic geophysical
survey: Blocks A & B Reservoir Manicouagan Area, Québec, unpubl rept for SOQUEM
Inc.
Grieve, R.A.F., 1983. The Manicouagan Impact Structure: an analysis of its original
dimensions and form, Jour. Geophys. Res., B Suppl. (2), p. A807-A818. (Proc. of the
17th Lunar and Planetary Science Conf., Pt. 2, Mar. 15-19, 1982).
GSC, 1968b. Lac Tétépisca, Geol. Surv. Can., Geophysical Series Maps 4945G.
GSC, 1968a. Lac Manicouagan, Geol. Surv. Can., Geophysical Series Maps 4980G.
Hoqc, M., 1994. Introduction and La Province de Grenville in: Géologie du Québec,
Gouvernment de Québec, MM 94-10, p. 1-6 and p. 75-94.
Leventhal, J.S. and T.H. Giordano, 2000. The nature and roles of organic matter
associated with ores and ore-forming systems: an introduction in Rev Econ Geol, v 9, Ch
1, p1-26.
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Lyons, E.M., 2002. NI43-101Technical Report: Phase 1 – Geology & Sampling on the
Lac Guéret Property, Manicouagan, Region Côte-Nord, Québec, (NTS 22N/3) for Quinto
Technology Inc., 33 p., Oct 2002, SEDAR Company Filings (www.sedar.com).
Lyons, E.M., 2004a. NI43-101 Technical Report: Exploration Phase 2 Geology and
Sampling & Phase 3 Diamond Drilling on the Lac Guéret Property, Manicouagan,
Region Côte-Nord, Québec, (NTS 22N/3) for Quinto Technology Inc., 57 p., Feb 2004
SEDAR Company Filings (www.sedar.com).
Lyons, E.M., 2004b. NI43-101 Technical Report: Exploration Phase 4 Geology,
Stripping & Sampling on the Lac Guéret Property, Manicouagan, Region Côte-Nord,
Québec, (NTS 22N/3) for Quinto Technology Inc., 50 p., Dec 2004 SEDAR Company
Filings (www.sedar.com).
Marcoux, P. and L. Avramtchev, 1990. Feuille Reservoir Manicouagan – 22N (scale
1:250,000), Gîtes mineraux du Québec, Region de la Fosse du Labrador, carte no. M-390
de DV84-01.
Marshall, B., F.M. Vokes, and A.C.L. Laroque, 2000. Regional metamorphism
remobilization: upgrading and formation of ore deposits in Rev Econ Geol, v 11, Ch 2,
p19-38.
Rioux, G., 2008. Contrôle stratigraphique et qualitié minéralurgique des gîtes de graphite
des Lac Guéret et Guinecourt, Terrane de Gagnon, Province de Grenville (Québec),
M.Sc. thesis, no. 10248,UQAM, Montréal, QC, 125 p.
27.2 Process
Met-Chem Canada Inc., Preliminary Economic Assessment of the Lac Guéret Graphite
Project, Québec, Canada, May 31st 2013.
Ministère du Développement durable, de l’Environnement et des Parcs (MDDEP),
Directive 019 sur l’industrie minière, Avril 2005.
Ministry of Natural Resources in collaboration with the Ministry of Environment,
Guidelines for preparing a mining site rehabilitation plan and general mining site
rehabilitation requirements, 1997.
Process Research Associates Ltd., Graphite Recovery from Composite Samples Lac
Guéret Deposit, February 8, 2005.
Roche Ltd. Consulting Group, NI 43-101 Report Technical Report on the Lac Guéret
Graphite Project, July 3, 2012.
SGS Mineral Services, An Investigation into the Flowsheet Development for a Sample
from the Lac Guéret Deposit prepared for Mason Graphite Project 13838-001 Final
Report, May 21, 2013.