Speciality Metals International Limited Annual Report 2019

Page | 12 MINERAL RESOURCES AND ORE RESERVES STATEMENT SUMMARY OF RESULTS OF ANNUAL REVIEW OF RESOURCES AND RESERVES The resources and reserves at Mt Carbine comprise three components: 1. The resources and reserves in mineralised rock proposed to be mined by open pit mining, beneath and adjacent to the existing open pit. 2. The mineralised rock that was mined and stockpiled in what is now termed the Low Grade Stockpile (“LGS”). 3. The tailings from the previous mining operation, principally the tailings in Tailings Storage Facility No 4. There are also other significant mineralised stockpiles and mine dumps, particularly the Optical Ore Sorter Reject (“OOSR”) stockpile from the previous mining operation, estimated to comprise several million tonnes. Except for the OOSR stockpile these have not been quantified nor sampled for grade. 1. Mineralised Hard Rock The resources and reserves estimates for the mineralised hard rock in the Mt Carbine tungsten deposit were updated to comply with the 2012 JORC Code for reporting of reserves and resources in November 2012 (SEI - CNQ ASX announcements 20/11/2013; 24/11/2013 and 9/01/2014). No further sampling or work has been done since this update that impacts on the resource estimate and therefore the resources and reserves estimates for the Mt Carbine tungsten deposit are left unchanged. 2. Low Grade Stockpile Speciality Metals announced an upgrade of the Low Grade Stockpile resources in September 2012. To comply with the 2012 JORC Code a more detailed reporting of the upgrade is provided in Appendix 1 to this report. The Low Grade Stockpile is comprised of mineralised rock extracted during open pit mining operations between 1974 and 1987. Grade control practice during this open pit mining discriminated between ore sent for processing and mineralised rock deemed at the time to be too low grade to justify treatment. Independent research has since established that the grade control practice, based on an estimate of quartz vein percentage as a direct indicator of tungsten grade, was invalid. In the historical records of this mining operation the material consigned to the stockpile is described as “mullock” or “low grade”, but also includes 3.5Mt of “ore”. Geological examination and drilling indicates that the previous mining at Mt Carbine was all in mineralised rock. No sampling or record of possible grade variation was kept of material sent to the stockpile. Historical mine records indicate that there is approximately 12Mt of broken rock in the stockpile. This reconciles with the tonnes consigned to the LGS, derived from the independent estimate of total tonnes of rock mined in the previous open pit of 22Mt, less the 10Mt recorded as having been processed through the mill. The LGS has been bulk sampled (22,000 tonnes), the sample assayed and subjected to extensive sorting trials with a pilot- scale X-ray sorter (SEI - CNQ - III ASX announcement 23 March 2011). The sorter trials indicated that the low grade material could be pre-concentrated by sorting with an optimum 6 times upgrade. The grade of the bulk sample was 0.075% WO 3 . This compares very favourably with a back-calculation from historic mine records of production and mill recovery and based on the recent resource estimate which took account of the resource mined during the previous open pit operation, of a global average grade of 0.07% WO 3 for the Low Grade Stockpile. Further sampling of the LGS for environmental permitting purposes involved taking 80 grab samples from the surface of the stockpile. Each sample was approximately 20kg of minus ~100mm material. The average grade of these samples was 0.088% WO 3 . Following the X-ray sorter trials previously announced, and the costings determined in the Feasibility Study, Speciality Metals has sufficient confidence in the tonnage and global average grade of the stockpile to justify its inclusion in the resource inventory at Mt Carbine as an Indicated Resource. Trials indicated that at optimum settings, the X-ray sorter produces a pre-concentrate product that is approximately 12% of the original feed and has a grade of approximately 0.65% WO 3 at 90% WO 3 recovery, and approximately 88% of the material fed to the sorter was rejected as waste. The loss of WO 3 to waste in this sorting process was only 10% of the total tungsten in the sorter feed. • Speciality Metals does not intend to attempt a further definition of the possible grade and tonnage of mineralised rock in the Low Grade Stockpile, beyond the sampling, assaying and sorter trials already carried out, because of the physical impracticality of attempting to do so. • Local grade distribution within the stockpile is expected to vary and has not been quantified. The plant comprising the X-ray sorter and mill to treat the stockpile material will be the same plant to process ore from the open pit.