The Property is located within the north-western portion of the IPB. The IPB is one of the most prolific European metallic provinces, hosting one of the largest concentrations of MS in the Earth’s crust.

The entire property is covered by a paleo-fluvial fan that ranges in thickness up to 200 m within the Tertiary Sado Basin and averages 135 m over the LS Project. The Tertiary sedimentary rocks unconformably overlie rocks of the Volcano-Sedimentary Complex of the IPB.

The LS Project currently has three known deposits; the North, Central and South deposits. The deposits are folded, faulted, and interpreted to occur mostly on the subvertical-overturned and intensely faulted limb of a southwest-verging anticline. The North deposit is further offset by an east-west-trending Alpine-age fault in the north, with a 50-m downthrow of the northern block but whose horizontal amount and sense of displacement is unknown.

There are four types of mineralization at the LS Project: primary MS mineralization, GO mineralization resulting from weathering of the primary mineralization, copper-rich stringer / fissure / stockwork mineralization, and gold-rich silicified zones which appear to be structurally controlled. To date, the mineralized system of the North deposit has been drill tested over a strike extent of approximately 500 m and appears to be open to the south and east. Recent geophysical surveys have found three anomalies, similar in signature to that of the North deposit (former LS-1), continuing to the south-east along strike, over a distance of 900 m. The furthest of these anomalies has been drill tested and it is the South deposit (former LS-1 Central deposit).

LS Project remains open in all directions but with a stronger signature on the eastern side of the currently drilled / known linear trend of about 1.7 km. The geometry of the MS domain of the North deposit appears to suggest that the main vent of the volcanic activity that gave rise to the LS deposit may be located at the north-western end where the plunge swings westwards. However, this remains speculative until proven by additional drilling.

Currently, the greatest contribution to the Mineral Resources is from the North deposit. However, all deposits have the potential to delineate more resources with additional drilling. The stringer / fissure type mineralization of the South and Central deposits appears to be more amenable to metallurgical processing than the massive mineralization of the North deposit and future priority drilling will depend on progress in metallurgical testwork.

Geological reasoning suggests that the subdivision of the LS Project into the North, Central and South deposits is arbitrary, being based on the existing drill pattern. With further concerted systematic drilling, the three deposits are likely to coalesce into a single zinc-lead-copper VMS system, manifesting / displaying its macro-genetic features from secondary GO to primary MS and ending with peripheral primary / secondary stringer / fissure type mineralization in the waning phases of volcanic activity. This interpretation is backed by geophysics which shows that all three deposits lie on a continuous coincidental IP chargeability anomaly with an estimated geological strike length of 1.7 km in an SSE to NNW direction from the South deposit to beyond the North deposit and terminating against the Alpine fault.

The geometry of the deposit is relatively simple, and the deposit is fairly shallow.

The mine design is based on a single decline access from surface at a 12.6% gradient. Decline access is via a 30 m deep boxcut. Stopes are accessed from level access drives in the north and the south of the deposit. Interlevel spacing varies between 24 m and 35 m. All mineralized material and waste development are mined with a 4.5 m by 4.5 m end profile.

The deposit is planned to be mined using transverse sub-level open stoping (SLOS) with paste fill at a production rate of approximately 1 million tonnes per annum (Mtpa). Crosscuts will access the deposit with drives developed laterally across the mineralization. Drives in mineralization will be placed 12.5 m apart along strike, with stopes approximately 25 m to 35 m high, 12.5 m wide and 25 m in length.

Stope heights in the Gossan (GO) tend to be generally less, approximately 20 m high. A slot will be cut at the end of the mineralization and consecutive rings blasted in a retreating fashion over the full stope length back to the crosscut. Uphole drill rings from the existing drives in the MS will be drilled to extract the mineralization from the overlying GO deposit. Ore and waste will be hauled to surface using 30 tonne (t) trucks.

Unplanned dilution due to the extraction of the stope was assumed to be 8% for the GO zone and 5% for the MS zone. Mining recovery of 90% was assumed for the GO and 93% for the MS. Approximately 55% of tailings (up to 540,000 tonnes per annum (tpa) at a dry bulk density of 1.4) will be placed underground as paste fill to meet an annual demand of 400,000 cubic metres (m3) of void and the remaining tailings placed in the dry stack Tailings Storage Facility (TSF).

The paste plant will have an annual utilization of just below 50%. Paste fill will be transported underground using a combination of pumping and gravity via boreholes and high-pressure pipelines to the stopes. The geometry of the deposit is relatively simple, and the deposit is fairly shallow. AMC considers the use of SLOS mining method to be suitable for the deposit and will result in high productivities.

The average haulage distance is approximately 1,600 m which is relatively short and will ensure low cost haulage and high productivity. Mining takes place primarily over three sub levels spaced 25 m to 35 m apart. The mine is very compact and as such equipment use will be highly efficient and manpower numbers low. The mine will operate on a five-day week, three eight-hour shifts per day, with essential services manning only on weekends.

The mine design leads to a low-cost mining operation with relatively high production throughput of 1.0 Mtpa that is well supported by the production schedule. The mine will use paste fill to backfill the stopes reducing the size of the surface tailings facility significantly.

Paste fill will be delivered underground using a combination of pumping and gravity via boreholes and high-pressure pipelines to the stopes.

The metallurgical work completed to date is of a reconnaissance nature and no firm conclusions can be drawn therefrom. Detailed testwork is in progress. The PEA assumes a processing rate of 3,000 tpd of polymetallic ore. The following conclusions can be drawn from the scoping level metallurgical study:

•The deposit has two major ore types, namely, massive sulphide and Gossan. The Gossan consists of oxidized material.
•The metals of interest in the deposit are copper, lead, zinc, gold, silver, and tin.
•The MS has tin which may not be recoverable whereas Gossan has uneconomic quantities of zinc. Hence, the process flowsheet needs to be flexible to recover these minerals.
•The mineralogy of the deposit indicates that very fine grind will be required to produce saleable concentrates.
•A typical polymetallic process flowsheet may produce copper, lead, and zinc concentrates with some gold and silver. Copper concentrate is not considered in this study.
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