Operations

• Operations
• Technical reports

Operations

Berg Aukas

The CPR concludes that the historical non-compliant mineral resource estimate for December 1977, just prior to mine closure, indicates significant, high grade, lead, zinc and vanadium mineral inventory remains in the ground. They are proximal to significant existing infrastructure which will expedite the underground exploration and any re-opening of the mine.

However, currently insufficient data exists to establish the precise location of the remaining mineral resources within the mine or to verify the previous estimation. These can only be established and validated by completing the 3D modelling of available data and diamond drilling.

Work by previous owners to find extensions to the known mineralisation is incomplete (in the opinion of Coffey Mining) and potential remains for increasing the resource base immediately adjacent to the known mineralisation through additional exploration. Coffey Mining states that this should be undertaken by a mixture of surface and underground diamond drilling.

The metallurgy of the mine is complex with multiple product streams. Significant advances in extractive metallurgy have been made in the past 30 years and it is likely that any future metallurgical plant will have a different design, process detail and recovery to that previously in operation.

In 2010, Weatherly commissioned SRK Consulting (UK) Limited (“SRK”), a Cardiff based mining consultancy to prepare a bankable feasibility study for the development of the Berg Aukas mine (“Feasibility Study”). In combination with Coffey Mining (SA) Pty Ltd (“Coffey”), Sedgman Limted (“Sedgeman”) and Synergistics Environmental Services (“Synergistics”), SRK has submitted a proposal which CAR will undertake using the proceeds of the Subscription and Placing. While the scope of the Feasibility Study is restricted to surface drilling and data gathering the Directors are confident that there will be more than sufficient information available for CAR to make a fully informed development decision.

The geological component of the Feasibility Study will be undertaken by Coffey and comprises:

• shallow RC drilling to assess the upper regions adjacent to No.1 shaft;
• diamond drilling of the deeper resources adjacent to the No.2 shaft to validate and hopefully extend the historical resource;
• compilation of the data and subsequent development of a full 3D computer model; and
• reporting of all resources to the JORC standard

Mine design, engineering, capital and operating costs will be covered by SRK in Cardiff. Analysis of metallurgical testing and flow sheet design, engineering and associated capital and operating costs will be undertaken by Sedgman Engineering in Perth. In this respect initial bulk samples have already been sent to the Amdel labs in Perth awaiting the commencement of the metallurgical testwork.

Environmental impact assessments, management programs and related social and permitting issues are being addressed by Synergistics in South Africa.

The overall Feasibility Study will be managed by CAR who will also be responsible for negotiating a number of key access and commercial arrangements that are critical to the development of the project, in particular the water/access rights relating to the dewatering of No.2 shaft and the final product sales agreements.

Total cost of the Feasibility Study is estimated to be approximately US$3 million and to take approximately 18 months to complete. Major cost components are summarised in the table below:

Expenditure Summary - Berg Aukas Feasibility Study

Subject to confirmation by the results of the Feasibility Study, the Directors currently expect to develop the mine in two stages. The first stage would be to take advantage of any low grade oxidised ore that may exist close to surface and that could be extracted via a small open pit. This would be augmented by known high grade reserves adjacent to the old No.1 shaft that may also be accessible from the pit or alternatively via a decline from surface, providing early production while the deeper parts of the mine are dewatered. The second stage would be to rehabilitate the key working areas at a depth of 350-500m below surface where the bulk of the remaining reserves are expected to be located based on historical data. Thereafter, the mine would continue to progress down plunge limited only by the continuation of the ore zones and the ultimate depth of the No.2 shaft.

The overall scale of the operation will be primarily a function of the limitations imposed by the size of the ore pods and the mine's ore handling infrastructure. Even at quite modest levels of ore production (<200,000tpa) the mine is potentially a large producer of metal because of the high grades involved (22% Zn+Pb). Berg Aukas ore is complex and contains an array of minerals in both oxide and sulphide forms. The Directors believe that the key to any successful development is to implement a process that maximises the recovery of all the metals into a saleable product - the key metals/minerals are zinc, lead, silver, and vanadium oxide.

Processing in the past was a function of the technology and the markets at the time. Nothing remains of the original plant and, as a result, a totally new plant employing state of the art processes could be built on the mine site. While this remains a likely option, two other factors that have the potential to greatly enhance the economics of the project now exist. The first is the capacity of the Scorpion zinc refinery in southern Namibia, currently a buyer of zinc oxides, and the second is the availability of the nearby Tsumeb concentrator. Conceptually the cheapest option would be to separate zinc oxides at the minesite (for sale to Scorpion) and to truck the remaining sulphide ore to Tsumeb to produce zinc and lead concentrates. This would of course depend on reaching mutually acceptable agreements with the third parties concerned.