The sulphide mineral deposits are associated with the ultramafic intrusions within the Pipe Formation, which is part of the Opswagan Group. The sulphide deposits occur as disseminated sulphides within the ultramafics, massive sulphide veins and lenses within the ultramafic and along the contact of the ultramafic with the Pipe Formation, and as massive sulphide veins and lenses within the Pipe Formation. All mineral reserves are contained within the latter two deposit types.

The stratigraphy at the Thompson Mine is overturned and dips 65 degrees to the west. The Archean Gneisses are located in the Thompson Mine hanging wall. Unconformably overlying the gneisses are quartzite, schist, nickel mineralization, calcareous marbles and iron formation. Amphibolite dykes and pegmatites crosscut all lithologies. Ultramafic bodies (locally called peridotite) are associated with the nickel mineralization in areas of Thompson Mine. The majority of sulphide mineralization at the Birchtree Mine is Ultramafic Associated Deposits.

Deposits are generally classified as to their spatial relationship of the mineralization to ultramafic bodies:

Metasedimentary Hosted Deposits
The structurally controlled dilation sulphide matrix mineralized zones are contained within the P2 Schist. Inclusions of wall rocks and ultramafics are common in the massive sulphide. The mineralization is linear and more predictable with widths ranging from 0.3 m to 60 m. Pinch and swell structures are common. The majority of Thompson Mine orebodies fall in under this category.

Ultramafic Associated Deposits
The sulphide mineralized zones tends to concentrate between the footwall or hanging wall rocks and the ultramafic, although it is not uncommon for the ore to completely encompass the ultramafic. The Birchtree Mine 84 Orebody can generally be described as brecciated ultramafic within a sulphide matrix. The ultramafic inclusions, which are randomly distributed, range from centimetres to hundreds of metres in size.

At Pipe 2, mineralization consists of ultramafic associated disseminations, net textured sulphides, semi-massive segregations, and as semi-massive to massive veins and breccias. The sulphide zones extend along strike and dip from the ultramafic host into sediment hosted veins, pods and lenses of massive and breccia sulphide.

Sulphides
The massive sulphides contain inclusions of ultramafics and sediments. On average, massive sulphide consists of 90% pyrrhotite, 10% pentlandite and less than 1% chalcopyrite. Cobalt is contained within the pentlandite.

PGE Mineralization
Recent exploration data from the 1D Lower orebody at Thompson Mine indicates elevated platinum group element levels associated with remobilized, metasediment hosted, sulphide ores. The evaluation of the PGE potential of the TNB is now a part of Vale exploration approach. Several studies are currently underway to better understand PGE mineralization and distribution within ultramafic associated and metasediment hosted sulphide ores.

A positive Pd to Ni correlation exhibited in the 1D Lower data is beneficial in identifying and quantifying the potential PD resource within current ore zones. Data acquisition and evaluation of the PGE potential of metasediment hosted 108 and 109 Orebodies at Birchtree is currently underway.

The Thompson Mine comprises the following orebodies and are illustrated on Figure 2-4.

* 3-Shear - The 3 shear orebody is located along the Thompson #3 zone. The 3 shear orebody extends from surface to a depth of approximately 1,600 ft (488 m). Mineralization within the zone is predominantly hosted by large ultramafic bodies.

* 2-3 Nose - The 2-3 Nose is a south plunging, north fold closure located just east of 3 Shear orebody. This area has been mined down to 3600 Level with current remnant mining taking place between 3200 Level and 2800 Level. Mineralization is proximal to the setting formation contact but is generally confined within the P2 schist with local ultramafic inclusions. It can be attributed to the infilling of dilation zones around an F2 fold closure.

* 2 Shear - The 2 Shear orebody is a sub-vertical northwest/southeast striking zone on the south end of the Thompson Dome structure. The 2 Shear orebody is the connection between the 2-3 Nose and the Nose orebodies. Mining has taken place from surface to a depth of 4,550 ft (1,387 m). Current activities include primary mining in the South End Development (SED) from 4550 to 4050 Level and remnant mining of the 3200 – 234 complex and 2000 Crowns. Future mining opportunities exist as primary mining of the SED below 4550 Level and other remnant areas.

* Nose - The Nose structure is the south-eastern most portion of the Thompson Dome. It consists of a south plunging, south fold closure. Mineralization is a result of infilling of a dilation zone around the fold closure. The orebody has been mined from surface down to 4000 Level. Mineralization continues below 4000 Level but not enough ore grade material has been outlined to make it economic to pursue. Remnant areas above 4000 Level are in the Thompson LOM plan.

* 1A - The 1A Zone is the southern most orebody located entirely on the eastern limb of the Thompson Dome. The 1A Zone is a south plunging orebody located within P2 schist. The 1A orebody has been mined underground from 400 Level to 3600 Level. Mining of the 1A orebody in the TOP is ongoing. There are also potential remnant recovery areas in the 1A orebody.

* 1B - The 1B orebody is located on the eastern limb of the Thompson Dome, just north of the 1A. The orebody can essentially be divided up into two areas based on both mining activities and mineralization. The 1B orebody above 2400 Level is sediment hosted within the P2 schist with minor ultramafic inclusions. This area has essentially been mined out with only a few remnant areas remaining. Below 2400 Level, the orebody becomes ultramafic associated as the ore tends to wrap around large peridotite bodies. This is a primary mining 2802 complex, and is currently being bulk mined between 3100 and 2400 Levels.

* 1C - 1C orebody is centred around the T-3 shaft. It is essentially mined out between 400 and 3300 Levels with a few remnants left. Diamond drilling has cut the orebody off at 3300 Level. South of the T-3 shaft most of the crown pillar ore, above 400 Level has been extracted via open pit. The mineralization is locally associated with ultramafic bodies but is usually referred to as sediment hosted deposit. The ore in the 1-C complex below 2400 Level was the result of sulphide infilling of a large dilation zone adjacent to a F2 fold closure.

* 1D Upper - The 1D orebody is located north of 34500N and is currently a primary mining area. The 1D Upper orebody is overall a linear east dipping structure contained within P2 schist. Mineralization is generally associated with shearing within the P2 schist creating zones of weakness that were conducive for the migration of ore bearing fluids.

* 1D Lower - The 1D Lower orebody is located below 3500 Level and is open at depth. This is a primary mining area and is currently being mined with mechanized Cut-and-Fill methods. The 1D Lower orebody is developed in dilation zones around F2 fold hinges typically below synformal closures (“hang-downs”) in the Thompson Formation skarn, which caused a deflection of the P2 shear zone.

Mining methods primarily use Vertical Block Mining (VBM), a Slot-Slash Method, with vertical blocks averaging 100 ft in height, and Cut and Fill mining. The ore is crushed underground to -15 cm and shipped to the concentrator.

Integrated mining, milling, smelting and refining operations to process ore into finished nickel with a nominal capacity of 38,000 metric tons of refined nickel per year.

Local concentrate is combined with nickel concentrate from the Voisey’s Bay operations for smelting and refining to high quality nickel plate product. The Company expects to decommission one of the two furnaces in Thompson in 2017 and the other in 2018. The Company also expects to cease processing Voisey’s Bay feed in Thompson during the year of 2017 and plans to send the majority of the feed from Thompson to be refined in Long Harbour and Sudbury. The Company intends to phase out smelting and refining activities in Thompson by 2018, due primarily to the capital costs associated with the federal sulfur dioxide emission limits defined under the pollution prevention plan under the Canadian Environmental Protection Act (CEPA), as well as to declining feed availability.