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 an average nominal rate of 1 ,400 t/h and fed into a 10,160 mm dia. x 5,330 mm long (34ft x 17.5 ft) SAG mill driven by dual pinion drives at 6,000 kW (8,000 HP) each. The SAG mill will grind to a P80 of 2 mm. The mill discharge will flow onto two (2) double deck 2,440 mm x 7,320 mm (8 ft x 24 ft) vibrating screens with wash water sprays. The screen oversize, or +9.5 mm material is returned to the SAG mill feed. The screen undersize will flow into the SAG mill discharge pump box and pumped to a distributor to feed the two (2) bali mill discharge pump boxes.

The overflow from the two classifying cyclone clusters is directed to two distributors and feed (4) double drum Low lntensity Magnetic Separators (LI MS) (1 ,200 mm diameter x 3,200 mm long) to remove the titano-magnetite. The feed to the drums is diluted to 30% solids. The LIMS is a double drum, counter current tank unit with permanent magnets. The first drum acts as a rougher to capture as much of the titane-magnetite as possible. The first drum is rated at 1 ,000 gauss. The magnetite material captured in the first drum is reprocessed in the second drum, which has an 800 gauss rating and will operate at a somewhat lower feedl rate to minimize the entrapment of apatite. The LIMS concentrat,e or magnetic product is then thickened in a 23 meters diameter thickener to recover the water, which will be redirected to the process water reservoir. The thickener underflow is pumped to the magnetic tailings ponds.

The non-magnetic material flows by gravity to the dewatering cyclones feed pump box and is pumped to two dewatering cyclone stages. There are two (2) dewatering cyclone clusters per stage; one for each flotation li ne. There are 22 cyclones (254 mm - 10 inch dia.) installedper cluster and 18 cyclones in operation for the first stage. The second stage has 30 cyclones ( 52 mm - 6 inch dia.) installed per cluster and 24 cyclones in operation. The overflow of the second stage is directed to the apatite tailings thickener. The dewatering cyclone underflow, from the both stages, is directed to the pH regulation conditioning tank. The particle size distribution for dewatering cyclone feed has a P80 of 118 to 125 1-1m and a P50 of 54 to 60Jm.

The underflow from the dewatering cyclone clusters, at 50% solids, flows by gravity to six (6) flotation conditioners. There are two (2) parallel lines of three (3) different conditioning stages in series. Sodium hydroxide (Na OH) is added in the first conditioner tank to reach the desired pH of 1 0.8. The addition of NaOH is control led by a pH meter. The pulp exiting the first conditioner will flow to the second conditioner where wheat starch (WW82) will be metered in. Finally, the pulp will flow into a tertiary conditioner where Soybean fatty acid (Liacid 1800) will be metered in. The conditioned pulp will flow to the rougher stage #1 distributor to be diluted to 35% solids using the mill recycle water system and then distributed to rougher stage #1 flotation column cells.

Each line of flotation will have two rougher flotation column cells in parallel followed by a single scavenger column cell. 8oth lines consist of two (2) 4,880 mm x 14,000 mm rougher flotation column cells in parallel. The underflow from the roughers, or tailings is pumped to a single scavenger flotation column cell (4,880 mm x 14,000 mm). Thus the froth or overflow from the rougher and the scavenger (concentrates) is combined in a pump box and feed two (2) 4,880 mm x 8,000 mm cleaner flotation column oells configured in parallel. Tailings from the cleaner stage are pumped to a conditioner tank where starch (WW82) is metered in. The starch is utilized to depress the remaining iron oxides in the pulp. The conditioned pulp then flows to a 3,670 mm x 14,000 mm cleaner/scavenger flotation column cell for recovery of additional apatite. The cleaner/scavenger is mixed with the rougher ~ scavenger concentrates to be recycled to the cleaner stage feed. Tailings from the cleaner/scavenger stage are combined with the scavenger tailings and are pumped to the tailings thickener to eventually be discarded as final tailings.

The cleaner concentrate (final concentrate) should have a grade of 39% P20 5 containing less than 1% Fe+ Al combined with less than 0.3% Mg and a lesser amou nt than 0.1% Cl. The final apatite concentrate is pumped to the apatite concentrate thickener.

Six (6) law-pressure rotary screw compressors rating 186 kW (250 HP) each will provide the air for the flotation circuit. Four (4) compressors will provide the specified air requirement, a fifth compresser is required to meet the design maximum air requirment and the sixth compresser is a stand-by unit.

This area is optional for possible future use. Currently, there is no indication that the WHIMS will be required. Nevertheless, depending on the variability of the ore, WHIMS may be required occasionally ta meet product grade specifications. The envisioned flowsheet for WHIMS processing of cleaner concentrate consists of pumping the concentrate to the WHIMS feed pump box and then to the WHIMS distributor. The non-magnetic product is then pumped ta the final concentrate thickener, and the middling is recycled ta the WHIMS feed pump box. The magnetic product reports ta the final tailings thickener where it is discarded as waste. Currently, no provision is made other than space in the beneficiation plant for the installation of a WHIMS circuit. Space is planned in the mill ta include a WHIMS circuit if ever needed one day, but it is not part of the current process.

The apatite concentrate from the cleaner flotation column cells is pumped to a 20,000 mm diameter apatite concentrate thickener for dewatering. The thickener overflow is directed to the process water reservoir for reuse in the plant. The thickener underflow, at 70% solids, is pumped to two 10,670 mm diameter x 12,800 mm high agitated slurry storage tanks, each providing 8 hours storage capacity.

From the storage tanks, the concentrate slurry is pumped to a horizontal vacuum belt filter. The filter cake, at about 8% moisture, is conveyed to a flash dryer. The belt feeding the dryer surge bin is equipped with a belt scale to monitor the feed rate to the dryer.

Underflow from the magnetite thickener is pumped to the magnetite tailings pumbox followed by a three stage pumping system carrying the magnetite product to the magnetite tailings pond.

Flotation final tailings along with the second stage dewatering cyclones overflow are pumped to the final apatite 40 meter thickener. Thickener overflow reports to the mill process water tank while thickener underflow is pumped via 3 pumps connected in series to the non magnetite tailings pond.