The deposit is hosted in the Sept-Îles Anorthosite Complex (SAC): a large, layered, unmetamorphosed, matie intrusive suite of Cambrian age. The tunnel shaped intrusion displays concentric layering. Mineralization occurs above the Critical Zone in what is termed the Mine Series Stratigraphy. At the base of the deposit massive olivineilmenite magnetite-apatite rocks occur in bands up to several meters thick in gabbro (Nelsonite Layer). Stratigraphically above the Nelsonite horizon, ilmenite, magnetite, and apatite are disseminated, throughout the host gabbros in varying quantities, in three principal layers referred to as the Railroad, Upper and California layers. The layers have shallow dips ( -20 o to -40 °) to the southeast.

Chlorine (Cl), a contaminant in the process of apatite concentrate, is found in the host rock and in the ore composing the Sept-Îles deposit. This particularity is a major concern for Mine Arnaud due to the tact that the Cl content of the produced concentrate cannat exceed 0.14 (VARA specifications). To this date the relationship between the Cl in the head assays and in the concentrate are not perfectlly understood.

A sub-vertical fault system crosses the mineralized body without significant displacement and two other longitudinal, sub vertical faults have displacements that vary from nil up to 50 meters and mimic a horst-and graben type structure. These structures are visible iin the magnetic gradient. Since the apatite encountered appears to be associated with magnetism, and the magnetic anomaly continues to the northeast, there is potential for more mineralization in that direction and will be the target of subsequent exploration efforts. lndeed, four widely-spaced drill holes have been completed along the northeastern strike extension and have intersected the phosphate-bearing stratigraphy.

The Project hasts three types of mineralization. 1) The first is hosted in the stratigraphie footwall to the deposit (i.e. below the footwall contact of the Nelsonite unit) and is composed of numerous oxide-rich zones hosting bands of stratiform, nearly massive magnetite plus ilmenite that are hosted by gabbros. These zones are poor in apatite mineralization. Surface magnetic patterns suggest these rocks have significant lateral extent and thicknesses, up to 50 m. Within the deposit, iron-titanium-phosphorous mineralization takes two forms. 2) At the base of the deposit massive olivine-ilmenite magnetite-apatite rocks occur in bands up to several meters thick in gabbro (Nelsonite Layer). 3) Stratigraphically above the Nelsonite horizon, ilmenite, magnetite, and apatite are disseminated, throughout the host gabbros in varying quantities, in three principallayers referred to as the Railroad, Upper and California layers.

Apatite concentrations are linked to the magmatic differentiations which enhances concentration within residual magma otherwise present as trace elements in the initial magmatic fluid. High phosphate grades are associated with coarse to very coarse grain sizes and high concentrations of iron and titanium oxides. Law phosphate grades are generally associated with fine to very fine grain size and law concentrations of iron and titanium oxides (Met-Chem, 2002).

The near surface resources will be mined by a large open pit, which will have 28 years of production following three years of construction and pre-production period. Mining operations will be conducted by the Project operator. Surface mining will follow the standard practice of an open-pit operation; with conventional drill and blast, load and haul cycle using a drill/truck/shovel mining fleet. The overburden and waste rock material will be hauled to the overburden and waste disposais areas near the pit. The mineralization will be drilled, blasted and loaded by hydraulic excavators and delivered by large mining trucks to the gyratory crusher or stockpiles near the crushing plant A lite-of mine scenario was developed over 365 days per year. The mine plan is calling for a yearly full capacity production of 11,201,120 tonnes processed per year, reached at year 4, and an average stripping ratio of 0.76 over 28 years of mining operation, plus 2.5 years of stockpile processing. The following graph is summarizing the production and the waste removal.

The plant capacity is established at 11,201,120 tpy ROM, based on an ore processing rate of 1,400 tph, a plant availability of 21.92 hours per day and 365 days of operation per year.

The ore will be hauled by 150 tonnes mine trucks (Caterpillar 7850 or equivalent). The trucks will discharge on a grizzly set above an out of mine ore hopper. Ore from the hopper will flow by gravity on a 1,828mm x 16,000mm (6 ft x 52 ft) variable speed apron feeder which in turn will feed a 1 ,372 mm x 1 ,905 mm (54" x 75") primary gyratory crusher driven by a 447 kW (600 HP) motor, with an average feed rate of 2,576 tph. The ore will be crushed to a P80 of 170 mm and stored in a conical stockpile ahead of the grinding circuit. The crusher will discharge on a belt conveyor, which will transport the ore to the conical stockpile containing approximately 30,000 tonnes of live storage. A storage dome for dust control will cover the stockpile.

The ore is retrieved from the stockpile at ........