Kylylahti - Mining

SRK Consulting (“SRK”) conducted a full geotechnical analysis of the deposit based on extensive geotechnical logging of oriented drill core and recommended only minimal ground support given excellent ground conditions in drilling and at the historic mines in the area. SRK also prepared the mine design, mining schedule and mining operating cost estimates. The life of mine production over 10 years to give a Proven and Probable Ore Reserve is reported according to the JORC Code as follows:

Tonnes Cu
 Proven 603,714 1.11 0.23 0.20 0.36 0.50
 Probable 6342,095 1.17 0.24 0.20 0.50 0.72
 Total 6,945,809 1.17 0.24 0.20 0.49 0.70

The Reserve estimate is included within the Resource estimate given above.

Dilution is estimated by SRK to be low due to the excellent rock mass conditions, the vertical orientation and large size of stopes. Resource to Reserve conversion is high at 88%.

Mine access will be via a 1:7 5x5 metre decline and stoping will commence from 110 metres below surface to the currently lowest planned production level of 700 metres below surface. Mine development is driven by the requirement to develop the entire vertical extent of the deposit by year 4 to provide access to high grade semi massive sulphides.

Finnish mining consultant, Rockplan Oy, designed a box cut of 12 metres depth which was located after extensive geotechnical and hydrological investigations. In addition, geotechnical drilling has been completed to delineate the optimum location of the first kilometre of the decline. Mine development is anticipated to take 20 months to achieve the first ore production.

Mining will be by longitudinal longhole open stoping with paste and waste rock fill in the upper Wallaby zone. In the lower and thicker portion Wombat Zone mining will be via transverse longhole open stoping where the footwall high grade stopes (semi-massive sulphides) will be extracted first and filled prior to retreating to mine the lower grade secondary hanging wall stopes (disseminated sulphides). Stope dimensions range from 30-60 metres high by 5-25 metres width and 45 metres along strike

The initial three years of mining and development will be by contractors, thereafter owner-operator mining will be complemented by contract underground haulage and services. Mine contract negotiations are well advanced.