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National Instrument 43-101 Technical Report for Terra Firma Resources Inc. Mallawa Exploration Project SOUTH SULAWESI, INDONESIA

Micromine Proprietary Limited ACN 009 214 868 174 Hampden Road, Nedlands Western Australia 6909 Phone: +61 8 94239000 Fax: +61 8 94239001 E-mail: mm@micromine.com http://www.micromine.com.au

PREPARED BY

MR. J.F. ERASMUS, ASSOCIATE GEOLOGIST OF MICROMINE PTY LTD PROFESSIONAL NATURAL SCIENTIST (PR. SCI. NAT), REGISTRATION NUMBER 400099/03, SOUTH AFRICAN COUNCIL FOR NATURAL SCIENTIFIC PROFESSIONS (SACNASP) 42 MAIN ROAD, HOGSBACK, EASTERN CAPE, SOUTH AFRICA

FOR TERRA FIRMA RESOURCES INC. 6TH FLOOR - 890 WEST PENDER ST, VANCOUVER, BRITISH COLUMBIA, V6C 1J9, CANADA AUGUST 11, 2011

1


Table of Contents 1

SUMMARY ....................................................................................................................... 5

2

INTRODUCTION ............................................................................................................ 7

3

RELIANCE ON OTHER EXPERTS ............................................................................. 7

4

PROPERTY DESCRIPTION AND LOCATION ......................................................... 8 4.1 4.2 4.3

LOCATION AND AREA .................................................................................................. 8 EXPLORATION AGREEMENT ...................................................................................... 11 OBLIGATIONS ............................................................................................................ 11

5 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY ................................................................................................................. 12 5.1 5.2 5.3 6

CLIMATE AND PHYSIOGRAPHY .................................................................................. 12 ACCESS ..................................................................................................................... 12 LOCAL RESOURCES AND INFRASTRUCTURE ............................................................... 13

HISTORY........................................................................................................................ 13 6.1

7

EXPLORATION HISTORY SUMMARY ........................................................................... 13

GEOLOGICAL SETTING AND MINERALISATION............................................. 14 7.1 REGIONAL GEOLOGY................................................................................................. 14 7.1.1 Stratigraphy .......................................................................................................... 14 7.1.2 Structural Geology ............................................................................................... 15 7.2 LOCAL GEOLOGY ...................................................................................................... 15 7.3 ALTERATION ............................................................................................................. 15 7.4 MINERALISATION ...................................................................................................... 15

8

DEPOSIT TYPES........................................................................................................... 16

9

EXPLORATION ............................................................................................................ 17 9.1 9.2

EXPLORATION RESULTS ............................................................................................ 17 INTERPRETATION OF EXPLORATION RESULTS ........................................................... 24

10

DRILLING ...................................................................................................................... 24

11

SAMPLE PREPARATION, ANALYSES AND SECURITY .................................... 24 11.1 11.2 11.3 11.4 11.5 11.6

SAMPLING ................................................................................................................. 24 ANALYTICAL METHOD .............................................................................................. 24 BLANKS ..................................................................................................................... 25 STANDARDS............................................................................................................... 25 DUPLICATES .............................................................................................................. 25 LABORATORY INSPECTION ........................................................................................ 25

12

DATA VERIFICATION ................................................................................................ 26

13

MINERAL PROCESSING AND METALLURGICAL TESTING .......................... 26

14

MINERAL RESOURCE ESTIMATES ....................................................................... 26

15

MINERAL RESERVE ESTIMATES .......................................................................... 26

16

MINING METHODS ..................................................................................................... 26

17

RECOVERY METHODS .............................................................................................. 26

18

PROJECT INFRASTRUCTURE ................................................................................. 27 2


19

MARKET STUDIES AND CONTRACTS .................................................................. 27

20 ENVIRONMENTAL STUDIES, PERMITTING AND SOCIAL OR COMMUNITY IMPACT .................................................................................................................................. 27 21

CAPITAL AND OPERATING COSTS ....................................................................... 27

22

ECONOMIC ANALYSIS .............................................................................................. 27

23

ADJACENT PROPERTIES .......................................................................................... 27

24

OTHER RELEVANT DATA AND INFORMATION................................................ 27

25

INTERPRETATION AND CONCLUSIONS.............................................................. 28

26

RECOMMENDATIONS ............................................................................................... 29

27

REFERENCES ............................................................................................................... 31

28

CERTIFICATE OF AUTHOR ..................................................................................... 32

29

CONSENT OF AUTHORS ........................................................................................... 33

30 ADDITIONAL REQUIREMENTS FOR TECHNICAL REPORTS ON DEVELOPMENT PROPERTIES AND PRODUCTION PROPERTIES ....................... 35 31

ILLUSTRATIONS ......................................................................................................... 35

32

APPENDIX 1: PETROGRAPHIC REPORT OF SAMPLES ................................... 36

33

APPENDIX 2: INTERNAL TFR REPORT ON EXPLORATION ACTIVITIES .. 48

34

APPENDIX 3: QAQC CHARTS .................................................................................. 54 34.1 34.2 34.3

STANDARD CONTROL CHARTS .................................................................................. 54 BLANKS ..................................................................................................................... 64 DUPLICATE SCATTER PLOTS...................................................................................... 68

35

APPENDIX 4: INTERTEK LABORATORIES CERTIFICATION ........................ 73

36

APPENDIX 5: RECOMMENDED SAMPLING PROCEDURES ............................ 74 36.1 36.2 36.3 36.4 36.5 36.6 36.7

GEOCHEMICAL (PIT) SAMPLES .................................................................................. 74 TRENCH SAMPLES ..................................................................................................... 74 GEOCHEMICAL (PIT) SAMPLES .................................................................................. 75 TRENCH SAMPLES ..................................................................................................... 75 DIAMOND DRILLING .................................................................................................. 76 RC DRILLING ............................................................................................................ 77 DRILL HOLE AND SAMPLE NUMBERING ..................................................................... 78

LIST OF FIGURES FIGURE 4-1: REGIONAL LOCATION MAP. ..................................................................................... 9 FIGURE 4-2: PROJECT LOCATION. .............................................................................................. 10 FIGURE 4-3: THE LOCATION OF THE CONCESSION BOUNDARY (OUTLINED IN A PURPLE BOX). ... 10 FIGURE 5-1: THE ACCESS ROUTE TO THE PROJECT SITE. ............................................................. 12 FIGURE 5-2: PROXIMITY OF POWER LINES TO THE PROJECT SITE. ............................................... 13 FIGURE 8-1: POLISHED SECTION OF MLW-5A (BO=BORNITE, CHP=CHALCOPYRITE, PY=PYRITE). .......................................................................................................................................... 16 FIGURE 8-1: THE DIFFERENT ALTERATION CONFIGURATIONS IN MINERALISED PORPHYRY SYSTEMS (SEERDORF ET AL 2005). .................................................................................... 17 FIGURE 9-1: LOCATION OF THE SAMPLES COLLECTED IN FEBRUARY AND MAY 2011. ............... 18 FIGURE 9-2: MINERALISATION AT MLW2. ................................................................................ 19 3


FIGURE 9-3: SAMPLE LOCATION MLW5. ................................................................................... 20 FIGURE 9-4: CARBONATE ALTERATION AT LOCATION MLW5. .................................................. 20 FIGURE 9-5: CARBONATISATION OF A GARNET SKARN AT LOCATION MLW5. ........................... 21 FIGURE 9-6: ALTERATION AND MINERALISATION IN A FAULT ZONE AT MLW-05. .................... 21 FIGURE 30-1: RC SAMPLING PROCEDURE. ................................................................................. 78

LIST OF TABLES TABLE 9-1: ASSAY RESULTS FOR THE SAMPLES COLLECTED IN FEBRUARY, 2011. .................... 19 TABLE 9-2: ASSAY RESULTS FOR THE SAMPLES COLLECTED BY MCS IN MAY, 2011. ............... 23 TABLE 11-1: DETAILS OF THE ANALYTICAL METHODS USED BY THE LABORATORY. .................. 25 TABLE 26-1: TFR EXPLORATION PLAN AND BUDGET. ................................................................ 29

APPENDICES APPENDIX 1: PETROGRAPHIC REPORT OF SAMPLES. APPENDIX 2: INTERNAL TFR REPORT ON EXPLORATION ACTIVITIES. APPENDIX 3: QAQC CHARTS. APPENDIX 4: INTERTEK LABORATORY CERTIFICATION. APPENDIX 5: RECOMMENDED SAMPLING PROCEDURES.

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1

Summary This technical report has been prepared by Micromine Consulting Services (MCS, a division of Micromine Pty Ltd) for Terra Firma Resources Inc. (TFR). It is intended to disclose the exploration activities undertaken so far, describe the nature of the geology and mineralisation, and make recommendations on the implementation of further exploration programs. The Mallawa Prospect (Mallawa) lies within mining permit 124/KPPSP/IV/2010 and TFR currently holds the rights to explore within this licence. The Mallawa Prospect is located within the South Celebes Arm (active island arc system) and along the south-western axis of the Walanae Fault Zone (WFZ). The regional geology is typical of this environment and therefore contains highly deformed marine sediments, metamorphic rocks and ultramafic rocks. These types of environments are known to be favourable for the emplacement of porphyry type deposits and the intrusion of mineralised magmas. The local geology predominantly contains terrestrial sediments and intrusive rocks; however there is some minor interbedded limestone. A number of alteration types have been observed at Mallawa and some of these are typical of Porphyry type mineralisation. These include Propylitic alteration, Potassic alteration and Phyllic alteration. The samples collected so far indicate that the mineralisation is contained within an andesite that has in-filled one of the major structural features. Samples were collected in areas showing abundant copper minerals where younger faults cut this andesite. A number of gossanous zones have been observed, as well as float material containing chalcopyrite. In addition to chalcopyrite, a number of the hand samples collected also contained covelite and minor malachite. Mr. Johannes Erasmus, associate MCS geologist, and Mr Achmad Ramdhani of MCS were accompanied by Mr. I.N. Soeriaatmadja, Mr. M.G. Buchanan (both of TFR) as well as a Senior Geologist from the Indonesian Mines Department during a visit to the site from the 4th to the 6th of May, 2011. Mr. Erasmus is the Qualified Person (QP) for the project. In order to ensure the results of the exploration program are compliant with National Instrument (NI) 43101, MCS has made a number of recommendations on the procedures to be followed. The conceptual model being tested during the exploration program is that of a large porphyry copper-gold system. A number of samples had been collected and assayed so far and some of these have returned significant results. The objective of the most recent field trip was to take a new set of samples to confirm the positive grades of the first round of sampling. Two of the earlier high value samples were re-sampled and a number of new samples have also been collected and submitted for analysis. MCS has reviewed the TFR work program which includes geological, structural and alteration mapping as well as ground magnetic and IP geophysical surveys to facilitate the selection of target areas. This will be followed by a more detailed sampling grid of pit/trench sampling, and then by drilling. The field mapping and sampling will be carried out by local geologists under the supervision of Mr. Andri Subandrio, TFR Senior Geologist; with regular reviews of the procedures by the QP. MCS will assist in the creation of mapping and logging templates that may be used for all data collection activities. The proposed TFR exploration work program will include geological, structural and alteration mapping as well as ground magnetic and IP geophysical surveys. While this work is being undertaken, geochemical samples will be collected over the different alteration zones to determine their geochemical and mineralogical profile. This will be followed by a more detailed sampling grid of pit/trench sampling and then by drilling. Regional geological data as well as historic and current sampling results will be transferred onto a working base map and the accuracy of the earlier mapping will be checked. All currency figures are Canadian dollars. The cost of phase 1 exploration is as follows –

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Phase 1 Trenching Sample Assay's 1200 @ $50/sample Consultant Geologist (QP) $12,000/month Local Senior Geologist $1150/month Local Junior Geologist $700/month Local Junior Geologist $700/month starting after 6 months Local Labour and Administrative Support @ $7,000/month Camp, Food, Fuel, Field Supplies Etc. Airfare and Transportation Expenses Contingencies 5% 0 to 6 months and 6 months to 1 year subtotals Total Phase 1

0 to 6 months $30,000 $72,000 $6,900 $4,200

6 months to 1 year $30,000 $72,000 $6,900 $4,200

$0

$4,200

$42,000 $15,000 $7,500 $8,880 $186,480 $377,370

$42,000 $15,000 $7,500 $9,090 $190,890

Phase 2 exploration is dependent upon the results of phase 1 work; expenditure is additional to phase 1 and is as follows –

Phase 2 Ground Magnetic 16 (450m) lines @ $1200/ line Geophysical IP & Resistivity 24 lines @ $1800/line Diamond Drilling (NQ) 1500m @ $190/m Drilling Sample Assay's 600 @ $50/sample Trenching Sample Assay's 200 @ $50/sample Consultant Geologist (QP) $12000/month Local Senior Geologist $1150/month Local Junior Geologist $700/month x 2 Local Labour and Administrative Support @ $10,000/month Camp, Food, Fuel, Field Supplies Etc. Airfare and Transportation Expenses Contingencies 10% Total Phase 2 TOTAL Phase 1 & 2

End of year 1 to end of year 2 $19,200 $43,200 $285,000 $30,000 $10,000 $144,000 $13,800 $16,800 $120,000 $30,000 $24,000 $73,600 $809,600 $1,186,970

The total for phase 1 and phase 2 exploration over a period of 2 years is Canadian dollars, CD$1,186,970. The results of the sample assays and the observations made in the field indicate that the Mallawa Prospect has been subject to varying degrees of alteration and mineralisation. The island arc terrane that characterises the area is another encouraging sign of the potential for mineralisation in the area. This leads the QP to conclude that the area is conducive to the formation of porphyry systems.

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2

Introduction This technical report has been prepared by Micromine Consulting Services (MCS) for Terra Firma Resources Inc. (TFR). It is intended to disclose the exploration activities undertaken so far, describe the nature of the geology and mineralisation, and make recommendations on the implementation of the exploration program. Mr. Johannes Erasmus is the appointed QP for the project and inspected the site from the 4th to the 6th of May 2011, accompanied by Mr. Achmad Ramdhani of MCS, Mr. I.N. Soeriaatmadja, the TFR Country Consultant Manager, Mr. M.G. Buchanan, the Logistics Manager of TFR as well as senior geologists from the Indonesian Mines Department. Mr. Erasmus is independent of each of TFR, Pt. Mutiara Surya Mallawa (Mutiara) and Tirta Winata (Tirta). TFR has a memorandum of understanding (MOU) with both of these companies in relation to the Mallawa project. This MOU will be discussed in detail in Section 4.2 (Exploration Agreement). The data contained in this report was sourced from the results of analytical testing, field observations and geology Feasibility Study (this is a geology study and is not a feasibility study as defined in the National Instrument 43-101 standards of disclosure for mineral projects) previously completed in the area by the local government authorities. The Feasibility Study (this is a geology study and is not a feasibility study as defined in the National Instrument 43101 standards of disclosure for mineral projects) was authored by M.S Mutawakkil and it analysed the suitability of the area for road construction materials. Other information was sourced through verbal communications with the local geologists and from an unpublished report written by Mr. Andri Subandrio, Senior Lecturer at the Applied Geology Research Division, Institut Teknologi Bandung (The Institute of Technology, Bandung City). The requirements during public disclosure according to NI 43-101 are very specific. They have the intention of providing readers with transparency on how the technical results have been derived. The purpose of the initial site visit was for the QP to review the planned exploration and sampling programs and to suggest adjustments to the proposed procedures. This will ensure that future data collection, storage and interpretation methods are compliant with NI43-101 guideline requirements.

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Reliance on Other Experts Much of the current knowledge of the local geology of the project is based on a report in Indonesian language by Mr. Y. Mutawakkil, dated January 4th, 2010, referred to as the Feasibility Study (this is a geology study and is not a feasibility study as defined in the National Instrument 43-101 standards of disclosure for mineral projects). In contracting MCS for the project, the following deliverables were set for the MCS geologist in the scope of works: 

Travel to the project site to verify the work completed so far and to recommend procedures for future exploration activities;

Design the next stages of exploration with the TFR geologists; and

Act as the QP to sign off press releases related to the project.

Information on the local geology of the area such as the observed alteration and mineralisation has been sourced from Mr. Andri Subandrio. This information is in the report sections covering local geology, alteration and mineralisation. Mr. Andri Subandrio is Senior Lecturer at the Applied Geology Research Division, Institut Teknologi Bandung, he is a geologist. Both Mr. Y. Mutawakkil and Mr. Andri Subandrio are non-qualified persons as defined by the NI43-101 guidelines. This information has been sourced both in the form of verbal communication and from an unpublished report written by Mr. Andri Subandrio on the petrography of the rock samples. The samples collected on the property by TFR geologists were analysed by Intertek 7


Laboratories in Jakarta. Intertek is accredited with Komite Akreditasi Nasional (KAN), which is the Indonesian body responsible for laboratory standards. This allows Intertek to meet ISO 17025; General requirements for the competence of testing and calibration laboratories. The information relating to the mineral title on the property was sourced from a company press release titled “Terra Firma Signs MOU for Gold and Copper Property in South Sulawesi, Indonesia”, dated April 19, 2011. This information was used in Section 4.2 (Exploration Agreement). The information relating to the environmental obligations in Section 4.3 (Obligations) was sourced from the Indonesian Ministry of Environment’s document titled Overview of the EIA (translated from Indonesian: Sekilas Tentang Amdal).

4 4.1

Property Description and Location Location and Area The Mallawa Project is located in South Sulawesi, Indonesia. The Malawa Prospect currently is an 800 Ha mining permit located approximately three hours northeast of Makasar, The permit is approximately 20 km north of the Bone Highway which is a major highway connecting Makassar to Bone and other communities, Figure 4-1 and Figure 4-2 show a map of the project location. The mining permit number of Mallawa is 124/KPPSP/IV/2010 and it covers an area of 800 ha. Figure 4-3 shows the location of the permit boundary. The origin of the permit boundary in UTM coordinates (zone 50) is 821,713mE, and 9,463,958mN. For the mining permit the boundaries are surveyed by the Indonesian mines department before the release of the IUP. The method used is that of geodetic GPS with an accuracy of less than 0.5m. IUP is the abbreviation for “Izin Usaha Pertambangan” which is what the mining permit is called in Indonesia. The translation to English is mining permit.

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Figure 4-1: Regional Location map.

The holder of a Mining Authorization for Exploration is obliged to pay royalties of Rupiah 1,000 (thousand rupiah) per hectare / annum; equivalent to 0.114545 Canadian dollars per hectare per annum (source of exchange rate: http://www.xe.com, 9/6/2011).

9


Figure 4-2: Project Location.

Figure 4-3: The location of the concession boundary (outlined in a purple box).

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4.2

Exploration Agreement On April 19th, 2011, TFR entered a memorandum of understanding (MOU) with Pt. Mutiara Surya Mallawa (“Mutiara”) and Tirta Winata (“Tirta”) under which the Company has the option to acquire 75% of the issued and outstanding shares of Mutiara. Mutiara is an Indonesian mineral exploration company that holds the mineral exploration license of Mallawa. In addition, Mutiara is expected to acquire an additional 10,000 hectares of prospective lands (the "Additional Properties") located within the 25 kilometre radius "area of interest" defined in the MOU. In exchange for Mutiara and Tirta entering into the MOU, TFR is required to pay an aggregate of US$100,000 to the shareholders of Mutiara, US$25,000 of which was paid on execution of the MOU and US$75,000 of which is payable within 60 days following acceptance of this NI43-101 report on the Mallawa Property. The MOU states subject to approval of the MOU by the TSX Venture Exchange, the parties will enter into an option agreement (the Option Agreement) granting TFR an option to acquire 75% of the issued and outstanding shares of Mutiara. TFR is required to pay an additional US$100,000 and issue 100,000 common shares to Mutiara's shareholders on execution of the Option Agreement. Under the Option Agreement, to successfully exercise the option to acquire 75% of the outstanding shares of Mutiara, Terra Firma will be required to: 

Pay an additional US$200,000 to Mutiara's shareholders within 18 months of the approval of the MOU by the TSX Venture Exchange;

issue a further 200,000 common shares to Mutiara's shareholders on the later of the date on which Terra Firma exercises the option and the date which is 120 days following execution of the Option Agreement;

issue a further 200,000 common shares to Mutiara’s shareholders on the later of the date on which Terra Firma exercises the option and the date which is 18 months following execution of the Option Agreement; and

fund US$1.75 million in exploration expenditures on the Mallawa Property and the Additional Properties, including at least US$250,000 in expenditures in the first year of the Option Agreement.

The entering into of the MOU and the Option Agreement and the payments of cash (other than the initial US$25,000 payment) and issuances of shares there under are subject to the approval of the TSX Venture Exchange. All shares issuable under the transaction will be subject to a four month hold period.

4.3

Obligations Mutiara is an Indonesian mineral exploration company that holds the mineral exploration license of Mallawa. TFR currently has no obligations for the property at the time when this report was released, all obligations are for Mutiara. Mutiara is required to produce monthly, quarterly and yearly exploration reports for the Mallawa project. In addition to this, Mutiara is required to submit an environmental report every six months. This requirement is associated with the Indonesian Ministry of Environment’s UKL-UPL, which is an abbreviation in Indonesian translating to “Environmental Management Efforts and Environmental Monitoring Efforts”. The only additional permitting that may be required to undertake the exploration activities is a heavy vehicle permit. This may be required when completing the diamond drilling activities that are proposed over the next two years. This permit has not been obtained so far. According to information supplied by TFR, TFR has no obligations under the MOU at this time.

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5 5.1

Accessibility, Climate, Local Resources, Infrastructure and Physiography Climate and Physiography The climate at Mallawa is mainly affected by the extent of rainfall rather than the temperature. The wet season in South Sulawesi occurs between October and March, while the dry season occurs between April and September (Gunawan et al.). Temperatures vary to a lesser degree, with minimums and maximums of approximately 23째and 31째respectively (Sulawesi Weather and Climate). The high tropical rain during the wet season supports the rainforest vegetation. Agricultural activities are mainly the cultivation of rice and cacao beans. The region can be divided into two morphologies. The first is a planar area with low undulating hills and the second the Wavy Hills area with medium sized hills. The Planar area of generally undulating low hills stretches from the east to the west, approximately 50% of the area including the villages of Jampue, Toceppa and Bulubulu where rice and other plantations are cultivated. Wavy Hills generally occupies the northern and southern parts, again approximately 50% of the area. Generally the slope angles of the hills are between 10째to 30째.

5.2

Access The access route to Mallawa is shown in Figure 5-1. Macassar is the closest airport to the project site and there is also a major port with the capacity to handle containers and the importation of major mining equipment. Access to the property is along the sealed road that links Makassar and Bone and then along smaller surfaced narrow roads. The project area is located in a typical island environment with high contrasting elevations but most areas are accessible by narrow surfaced roads, parts of which are in a poor to moderate condition but access with 2-wheel drive vehicles is possible. Many tracks that should be accessible by four wheel drive vehicles were observed, as well as some logging roads which may provide access to future drill sites.

Figure 5-1: The access route to the project site.

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5.3

Local Resources and Infrastructure Other mining activities on Sulawesi include limestone for cement manufacture and small amounts of high sulphur coal used in the cement manufacturing. The closest power lines to the property are approximately 12 Km away, Figure 5-2, high voltage power lines are pink. The towns and cities of Makassar, Maros, Sungguminasa, and Takalar (Mamminasata) are in the general area and may be a source of labour and also have intentions to open a connected rail network by 2013. Some current employees of PT Terra Mineral Resources have been sourced from local towns nearby the project site. Aside from road access the infrastructure at the project site is very limited. There are some residential dwellings on the property where the locals live. These homes are not connected to any power source. The TFR base camp, which is a couple of kilometres from the property boundary, is on the power grid.

Figure 5-2: Proximity of power lines to the project site.

6 6.1

History Exploration History Summary There was no ownership of the property prior to Mutiara. Mutiara first obtained the mineral licence (IUP) on December 23rd, of 2008. IUP is the abbreviation for “Izin Usaha Pertambangan� which is what the mining permit is called in Indonesia. The translation to English is mining permit. The current licence (IUP) is Valid until April 30, 2030. The IUP is able to be extended an additional 10 years, twice, for a total of an additional 20 years, potentially allowing the IUP to be held until 2050. Apart from the limited work performed by the government authorities in compiling the feasibility study (this is a geology study and is not a feasibility study as defined in the National Instrument 43-101 standards of disclosure for mineral projects), no other exploration has been undertaken on the property. The geology feasibility Study (this is a geology study and is not a feasibility study as defined in the National Instrument 43-101 standards of disclosure for mineral projects) refers to earlier work by institutions that analysed the regional resource availability for road building materials, including sand, crusher stone, coal and marble. As Mallawa is an early stage exploration project, no previous resource estimates have 13


been completed and no mining studies have been completed. No previous production has occurred at the site.

7 7.1

Geological Setting and Mineralisation Regional Geology The Mallawa Prospect is situated in the South Celebes Arm (Active Island Arc System) and along the south-western axis of the Walanae Fault Zone (WFZ). It is underlain by the mĂŠlange, metamorphic and ultramafic complexes of Triassic-Cretaceous ages. A mĂŠlange is a metamorphic rock formation created from materials scraped off the top of a downward moving tectonic plate in a subduction zone. They consist of intensely deformed marine sediments and ocean-floor basalts and are characterized by the lack of regular strata, the inclusion of fragments and blocks of various rock types, and the presence of minerals that form only under high pressure and low temperature conditions. These Mesozoic complexes are intruded and covered by Tertiary volcanic units and sedimentary rocks. According to the local geologists, Mallawa has a favourable tectonic and structural position for the emplacement of porphyry type deposits, especially in the western part. It is bounded by major strike slip faults. This type of tectonic activity can create pull-apart basins which are zones that provide high-permeability conduits for the emplacement of mineralized magmas to shallow crustal levels (Appendix 2).

7.1.1 Stratigraphy According to the Feasibility Study (this is a geology study and is not a feasibility study as defined in the National Instrument 43-101 standards of disclosure for mineral projects), the stratigraphy is based on the Geological Map Sheet Pangkajene, South Sulawesi, 1982. The lithostratigraphy can be divided into five units: 7.1.1.1

Balangbaru Formation This unit is a sedimentary unit consisting of alternating sandstone with silt-claystone and black shale and occasional pebble-sized conglomerate. These Late Cretaceous rocks are resting unconformably on the bedrock complex (metamorphic) and occupy the western part of the Tocceppa area and covers less than 10% of the area. This unit is crushed by rocks of the Mallawa Formation.

7.1.1.2

Mallawa Formation This unit is composed of sandstone, arkose, siltstone, claystone, marl and conglomerate with layers or lenses of coal and limestone. This unconformable formation is Early Eocene to Paleocene in age. It covers approximately 5% of the area north-west of Matampa Pole Mallawa.

7.1.1.3

Tonasa Formation The Tonasa Formation consists of calcarenite and thick limestone containing abundant foraminifera fossils and volcanic materials. These Eocene-Middle Miocene aged rocks can be found around Matampapole and covers approximately 65% of the area.

7.1.1.4

Granodiorite Granodiorite intrudes into the limestones and they are Miocene-Early Tonasa in age (Sukamto, 1982) and cover approximately 15% of the area in Matampapole and surroundings. The granodiorite is light grey with primary minerals of quartz, biotite, oligioclase and alkalifeldspar at the base which has been partly altered into propylite and argillite.

7.1.1.5

Basal The basal unit is a dark grey and greenish-black intrusive rock in the form of dykes, sills and stocks. The texture is porphyritic, with phenocrysts of pyroxene roughly 1cm in size. The 14


mafic rock is around 7.5 million years old, or Late Miocene to Late Pliocene. Solution from the acidic magma has entered into the cracks or on the fault zone to form quartz veins, vein calcite and sulphide veins.

7.1.2 Structural Geology The interpretation and determination of geological structures in the area is the result of reconstructing a combination of field data and the interpretation of topographic maps. Much of the structural information was sourced from the Feasibility Study (this is a geology study and is not a feasibility study as defined in the National Instrument 43-101 standards of disclosure for mineral projects). Two main structures were noted: 7.1.2.1

Slump Structures The Feasibility Study (this is a geology study and is not a feasibility study as defined in the National Instrument 43-101 standards of disclosure for mineral projects) defines slump structures where no or very little shifting has taken place. These types of rock fracture can occur due to the cooling process at the time of formation of igneous rock, or a further development of the structure due to forces acting on these rocks. Prominent structures located in this region are open shear zones, indicated by cracks partly filled by quartz veins.

7.1.2.2

Fault Structure Two types of faults are reported in the Matampapole area; strike slip and normal faults. There is a major north-striking normal fault in the centre of the area of investigation. Overall fault structures that dominate the area are controlled by tectonic compression from the northwest to the southeast.

7.2

Local Geology The Mallawa Formation is composed of non-marine sedimentary rocks, including conglomerate, sandstone, claystone and coal. There are also interbedded marine sediments of limestone belonging to the Tonasa Formation. Numerous intrusives are evident ranging from basalt granodiorite, syenite, dolerite and diorite. The intrusive units have the same relative age of the Early to Late Miocene volcanics. There also may be younger volcanic and intrusive rocks on the Mallawa concession but only precise age dating would confirm this. The alteration zone coincides with a circular structure in the northern part of Bukit Maraja that is bounded on the south by a reverse fault which appears to have been formed by an intrusive event along the WFZ. The alteration zone of Mallawa is cut by an extensive network of altered and sheared dykes and late stage breccias.

7.3

Alteration A number of zones of alteration have been identified by Mr. Andri Subandrio. In particular, volcanic and intrusive rocks that are fresh to propylitically altered have been observed at the highway at Mallawa. These are in sharp contact with a lower potassic alteration zone (PAZ), characterized by light pink to milky white K-feldspar alteration with biotite veins, red hematite clay and patchy zones of white gypsum. Below the PAZ zone is a central core of bright white coloured rock exposed in the bottom of a ravine which is composed of quartz, sericite, pyrite and kaolinite. This zone is related to the Phyllic alteration zone characteristic of porphyry style alteration (pers. comm A. Subandrio). In some samples, K-feldspar veining is evident which could be a remnant of an earlier Potassic zone telescoped by later destructive alteration events. Within the alteration where leaching has occurred, mineralization is predictably low due to acid destruction. However anomalous copper values of 0.01-7.53% Cu have been recorded associated with the copper minerals chalcopyrite, covelite and malachite.

7.4

Mineralisation During the recent MCS site visit, it was observed that one of the area’s major structural features, presumed to be a fault, is filled by an andesite intrusion, striking north-south. The andesite unit has an apparent thickness ranging from 10m to 15m, but exposure is often limited by overburden. Two of the higher grading samples taken in February of 2011 were 15


collected where younger faults, showing the same strike, cut the andesite. At both sites, significant copper mineralisation was observed and re-sampled at the time of the May 2011 field visit. The apparent width of the mineralised zones within the andesite was approximately 4m at MLW05. Continuity of the andesite between observation points could not be confirmed due to the topography but there is a high probability of extension. The continuation of the mineralised zone from one observation and sample position to the next is less certain. Suitable outcrops are restricted to the narrow river valleys due to the deep weathering and steep topography. As a result, defining geological continuity through surface observations may be very difficult. According to the TFR documents (Mallawa Porphyry Copper-Gold and Related Deposit Exploration Target) numerous occurrences of copper gossans were found within the alteration zone. These are normally associated with heavily sheared and altered rocks. The mineralisation is disseminated through the silicate groundmass. Pyrite is the dominant sulphide mineral and this is often replaced by chalcopyrite, arsenopyrite, covellite or bornite. Minor galena and sphalerite also occurs within the mineralisation. When observed under microscope, the sulphide crystals are mainly subhedral and it appears that they have been corroded both on their edges and within the crystals. Figure 7-1 shows a photograph of a polished section for sample MLW-5A (Appendix 1).

Figure 7-1: Polished section of MLW-5A (bo=bornite, chp=chalcopyrite, py=pyrite).

8

Deposit Types The geological model being tested at Mallawa is a disseminated porphyry style of mineralisation. There are a number of typical geological characteristics typical to porphyry systems that aid the exploration for mineralisation. The systems commonly occur at plate boundaries and are usually centred on magmatic intrusions. Bands of alteration often emanate from the central pluton, starting from a barren zone near the intrusion and progressing through to sodic-calcic, “potassic, chlorite-sericite, sericitic, to advanced argillic� (Sillitoe 2010). The mineralisation is often associated with the potassic zone of alteration, occurring within aplitic veins and disseminated throughout the adjacent wall rock. Porphyry systems are classified into five groups, according to the dominant contained metal; porphyry Au, porphyry Cu, porphyry Mo, porphyry Sn and porphyry W (Seedorff et al 2005). There are three alteration configurations that commonly occur within all five classes. The first of these configurations can be broken down further into two sub-types. The configurations are shown in Figure 8-1 and they can vary according to the spatial position of alteration around the pluton.

16


Figure 8-1: The different alteration configurations in mineralised porphyry systems (Seerdorf et al 2005).

TFR will aim to use the conceptual model as a guide for the generation of targets. In particular, the alteration assemblages can be used as a directional indicator to focus exploration efforts.

9 9.1

Exploration Exploration Results Two sampling campaigns were conducted within the concession; one in February 2011 and another in May 2011. During the field trip conducted on February 26, 2011, 19 samples were collected from five locations along the Mallawa Creek and these were submitted to the laboratory for analysis. MCS was not part of that field trip and cannot comment on the sampling QA/QC. The Sampling was carried out by local labourers led by TFR Senior geologist Mr. Andri Subandrio. Figure 9-1 shows the sample locations. The samples were hammered off the surface outcrops in the various locations along the creek.

17


Figure 9-1: Location of the samples collected in February and May 2011.

The assay results of the samples collected in February are shown in Table 9-1. The most significant of these include MLW2A, MLW05A and MLW5D. MLW2A was taken from a calc-silicate altered granodiorite that contains chalcopyrite, pyrite and covellite and it returned grades of 1.22ppm Au and 5.22% Cu (Subandrio 2011). The sulphide minerals at location MLW2 are shown in Figure 9-2. MLW05A was sampled from a garnet skarn, with the predominant opaque mineral being pyrite, followed by chalcopyrite, galena and sphalerite (Subandrio 2011). Sample location MLW5 is shown in Figure 9-3. Photographs of the alteration at this site are shown in Figure 9-4, Figure 9-5 and Figure 9-6. The significant results at this location included a copper grade of 7.33% from sample MLW5D and a copper grade of 1.08% for sample MLW05A.

18


Table 9-1: Assay results for the samples collected in February, 2011. Samp ID R001 R002 R003 MLW02B MLW02C MLW2A MLW2B MLW2D MLW03B MLW03C MLW3A MLW05A MLW05B MLW05C MLW5A MLW5C MLW5D MLW5E MLW06

Site Name MLW1 MLW1 MLW1 MLW2 MLW2 MLW2 MLW2 MLW2 MLW3 MLW3 MLW3 MLW5 MLW5 MLW5 MLW5 MLW5 MLW5 MLW5 MLW6

Au1 (ppm) 0.1 0.09 0.05 0.01 0.01 1.22 0.03 0.1 <0.01 <0.01 <0.01 0.1 0.02 0.23 0.15 0.18 0.17 0.02 <0.01

Cu (ppm) >10000 9370 >10000 10 8 >10000 618 6710 9 29 12 >10000 2420 3350 243 884 >10000 8070 17

Pb (ppm) 498 833 586 13 8 >4000 228 1970 17 6 7 850 317 2640 195 2130 1690 119 11

Zn (ppm) 122 145 917 24 18 >10000 823 1110 21 43 36 87 43 148 77 138 1010 47 50

Ag (ppm) 26 34 22 <1 <1 >100 <1 9 <1 <1 <1 27 8 79 6 67 57 4 <1

Cu (%)

Pb (%)

Zn (%)

5.22

9.91

15.4

Ag (%)

127

1.08

7.33

Figure 9-2: Mineralisation at MLW2.

19


Figure 9-3: Sample location MLW5.

Figure 9-4: Carbonate alteration at location MLW5. 20


Figure 9-5: Carbonatisation of a garnet skarn at location MLW5.

Figure 9-6: Alteration and mineralisation in a fault zone at MLW-05. 21


The second round of sampling was undertaken during the MCS QP site visit from the 4th to the 6th of May 2011. The samples were taken as rock chip samples and put in plastic bags. Each sample was triple bagged in an effort to prevent the samples from breaking out and being contaminated. A total of 17 samples were submitted to Intertek Laboratories in Jakarta for analysis. Table 9-2 shows the assay results for the samples collected. The most significant results were received from samples ML-2D, ML-3A, ML-3C and ML-5A. ML-2D returned a result of 0.95ppm for Au and 5.94% for Cu. ML-5A returned the highest Cu concentration, with a value of 7.53%. The elevated gold and copper values at ML5 correlate well with the results received during the February sampling campaign in the same location, particularly MLW2. The anomalous copper values at sample location ML3 have confirmed the results of the February location of MLW5. No significant results were received from the new sample locations.

22


Table 9-2: Assay results for the samples collected by MCS in May, 2011. Samp ID ML-2A ML-2B ML-2C ML-2D ML-2E ML-2F ML-3A ML-3B ML-3C ML-5A ML-5B ML-6 BL2-1 BL2-2 BL2-3 JP3 FL01

Site Name ML5 ML5 ML5 ML5 ML5 ML5 ML3 ML3 ML3 ML5 ML5 ML6 ML2-1 ML2-3 ML2-4 JP3 FL01

Au1 (ppm) <0.01 <0.01 0.01 0.95 0.08 0.04 0.14 0.03 0.08 0.09 <0.01 0.05 <0.01 <0.01 <0.01 <0.01 <0.01

Cu (ppm) 2400 682 454 >10000 559 221 >10000 334 >10000 >10000 214 1760 199 16 26 39 5

Pb (ppm) 248 21 514 >4000 3070 221 390 127 436 >4000 28 718 460 14 13 20 5

Zn (ppm) 1360 672 925 >10000 3420 974 105 45 334 3220 296 130 787 33 39 61 6

Ag (ppm) 1 1 2 61 3 1 23 5 21 55 <1 24 2 <1 <1 <1 <1

Fe (%) 6.06 6.41 5.31 >8.01 5.15 2.85 >8.01 2.69 5.92 >8.01 6.89 2.03 2.56 2.61 2.97 7.41 1.78

Hg (ppm) 0.03 0.02 0.04 0.31 0.09 0.01 <0.01 0.02 0.03 0.09 0.02 0.03 0.05 0.01 0.01 0.1 0.01

As (ppm) 9 10 23 21 32 28 166 258 39 <1 8 6 37 11 2 10 3

Cu (%)

Pb (%)

Zn (%)

Fe (%)

5.94

1.81

1.17

12.5

1.4 1.17 7.53

8.04

1.62

11.6

23


9.2

Interpretation of Exploration Results The assay results from both sampling campaigns indicate that mineralisation occurs within the tenement. The copper mineralisation is associated with disseminated pyrite and chalcopyrite minerals within both granodiorite and garnet skarn host rocks. The alteration and mineralisation of the sampled rocks indicate that the area has been subjected to hydrothermal alteration. Confidence in the assay results is strengthened by the similarity between the two sampling campaigns, where significant results were received at the same sample locations.

10 Drilling Mallawa is an early stage exploration project, no drilling has been conducted by TFR on the concession and no drilling was completed by previous owners.

11 Sample Preparation, Analyses and Security 11.1 Sampling The samples were collected as rock chip samples from exposures underlying a thin amount of overburden. The overburden was scraped away and rock chip samples were taken from the host rock and placed into thin plastic bags. These plastic bags were then labelled and sent to the Intertek Laboratory. There is the minor possibility that the samples could break out of these bags, leading to contamination between them. Recommendations have been given to TFR by the QPs to ensure that all samples collected in the future are triple bagged and that sample tags are placed on two of the bags (Appendix 5). Due to the potential for contamination, the first batch of assay results should only be used as an indication of potential mineralisation. No splitting was undertaken to reduce the size of the samples or take duplicate samples. MCS was not present during the first phase of the sampling program in February of 2011.

11.2 Analytical Method Intertek Laboratories in Jakarta were used to analyse all the samples collected at Mallawa. The laboratory is independent of TFR and MCS. No aspect of the sample preparation was conducted by an employee, officer, director, or associate of MCS or TFR. With regards to sample preparation, the samples submitted were mostly <2Kg, so the entire sample was crushed and pulverised to 95% passing 200 mesh (-75um). The assay split of 200-250g was then grab sampled. The sample was then pulverised prior to final analysis. Table 11-1 shows the methods used to analyse the samples. The first method was a 50g fire assay with an atomic absorption spectrometry (AAS) finish. This was used for the gold analysis. A gravimetric finish was used for gold grades greater than 50ppm. The second analytical method used was a two acid geochemical digest with an AAS finish. Elements that are in ore grade range received a triple acid geochemical digest. The acids used in this digest included HCl, HClO4 and HNO3. The analysis of the mercury was completed using a 24


sulphuric and nitric acid digest with a cold vapour AAS finish. The final method used was xray fluorescence (XRF) for the molybdenum. Table 11-1: Details of the analytical methods used by the laboratory. Laboratory Scheme Code FA51 GA02

GA30

CV02 XR01

Description Fire assay, 50g charge, AAS finish. Two acid digest (HClO4, HCl), AAS finish.

Triple acid attack (HCl, HClO4 and HNO3) with AAS finish.

Two acid digestion (H2SO4 and HNO3) with a cold vapour AAS finish. X-ray fluorescence of a pressed pellet.

Elements Analysed Au Cu

Lower Detection Limit 0.01% 2ppm

Pb Zn Ag Cu

4ppm 2ppm 1ppm 0.01%

Pb Zn Ag Hg

0.01% 0.01% 0.01% 0.05%

Mo

1ppm

11.3 Blanks Blanks were inserted by the analytical laboratory as part of its own QAQC program. Of all the blanks inserted, none returned elevated grades. Charts of the blank results are shown in the appendix 3.

11.4 Standards Fifteen types of standards were submitted by the laboratory as part of its own internal QAQC program. None of the actual results for the standards exceed the action limits, so the accuracy of the analysis for all three batches is within acceptable limits. Charts of the standard results are shown in the appendix 3.

11.5 Duplicates No field duplicates were collected at the point of sampling. Lab repeats were inserted by the laboratory to analyse the reproducibility of the AAS instrument. All the results indicate a very strong positive correlation between the original and duplicate results. Scatter plots of the lab repeats are shown in the appendix 3.

11.6 Laboratory Inspection No inspection of the laboratory has been completed to date. Intertek is accredited with Komite Akreditasi Nasional (KAN), which is the Indonesian body responsible for laboratory standards. This allows Intertek to meet ISO 17025; General requirements for the competence of testing and calibration laboratories. The certification of the laboratory is presented in the appendix 4.

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12 Data Verification The assay results for the samples collected in February were provided to MCS by both Intertek and TFR. Both of these datasets were identical. The MCS field trip undertaken from the 4th to the 6th of May confirmed the presence of mineralisation at the sample locations. Further samples were collected to confirm the previous assay results and additional samples were taken from new areas. The location of the samples collected in May are also shown in Figure 9-1, they have the prefix MI. This batch of samples was delivered to the assay laboratory; all results are shown in Table 9-2. The sampling procedures of the TFR geologists were not observed by the QPs in February because the sampling was completed when the QP was not on site. As a result, no comments on the validity of the sampling can be made. The QP was able to verify the location of the samples during the site visit in May. Data captured in the future will be monitored through regular site visits. MCS will verify that the captured data is collected in a consistent manner on the prescribed templates and then entered correctly into the database. Datasets provided to MCS will be regularly checked for errors and if any are observed, these will be corrected by the company geologist with the assistance from the QP.

13 Mineral Processing and Metallurgical Testing Due to the early development stage of exploration of this project, no mineral processing and metallurgical testing work has been requested or performed on the samples from the Mallawa project.

14 Mineral Resource Estimates Mallawa is an early stage exploration project and no attempt has been made to estimate a Mineral Resource.

15 Mineral reserve Estimates Mallawa is an early stage exploration project and no attempt has been made to estimate a Mineral Reserve.

16 Mining methods Mallawa is an early stage exploration project; no mining study has been conducted for this project.

17 Recovery methods Mallawa is an early stage exploration project; no processing study has been conducted for this project. 26


18 Project infrastructure Mallawa is an early stage exploration project; no infrastructure exists for this project other than rudimentary access roads.

19 Market studies and contracts Mallawa is an early stage exploration project, no market study has been conducted for this project and there are no contracts in place related to mineral sales.

20 Environmental Studies, Permitting and Social or Community Impact TFR do not currently have any environmental permits applied for or approved. Neither do TFR have any formal agreements in place with the local government or community. Mallawa is an early stage exploration project; there are no mine related plans for waste and tailings disposal, site monitoring, and water management; and no mine closure permits, arrangements or plans of any kind.

21 Capital and Operating Costs Mallawa is an early stage exploration project; there is no production at the project site, so there has been no determination of capital and operating costs.

22 Economic Analysis Mallawa is an early stage exploration project, there is no production at the project site, so there has been no economic analysis conducted.

23 Adjacent Properties According to TFR personnel, no base metal or gold concessions by other exploration companies join onto the TFR concession. The technical report states that its qualified person has been unable to verify the information and that the information is not necessarily indicative of the mineralization on the property that is the subject of the technical reportâ&#x20AC;?

24 Other Relevant Data and Information There is no additional relevant data that can supplement the information provided throughout this report.

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25 Interpretation and Conclusions Based on the assay results from reconnaissance sampling and the geological observations made during both site visits, there is good potential for mineralisation on the concession. Island Arc environments are particularly conducive to the formation of porphyry systems. This is due to the culmination of recent volcanic activity and the presence of numerous faults in such environments. A number of key geological traits of porphyry systems have been observed within the concession area. In particular, the porphyritic granodiorite, the occurrence of sulphide mineralisation and characteristic alteration assemblages are all indications that the area could fit the geological model being applied. In addition to the geological observations, the assay results of the samples taken on the concession have confirmed that there are anomalous concentrations of gold and copper. The first round of sampling in February produced significant results from samples containing chalcopyrite, covellite, pyrite and minor malachite. These results were confirmed and verified on site by the QP in May of 2011 when a second round of sampling was completed. The assay results for the May samples confirmed the presence of mineralisation at the February sample locations. Now that anomalies have been identified on the concession, it will be necessary to conduct a detailed mapping and sampling program to characterise the nature of the geology. Effort should be made to determine whether the spatial location of the alteration is typical of porphyry systems and therefore can be used as a guide to exploration. The use of detailed field mapping and geophysical techniques may generate more targets over which further geochemical sampling and drilling can be conducted.

28


26 Recommendations Before any further work is completed, it is essential that a team of experienced geologists be appointed. Currently the only geologist working for TFR is Mr. Subandrio and as he has other commitments as well. He will be using his comprehensive knowledge of the geological and mineralisation environment to guide a group of local geologists on the mapping and sampling. This work will have to be regularly supervised to ensure the results are valid and useful. MCS should also visit the site on a regular basis to ensure the compliance to the prescribed procedures. MCS will assist in creating a geological mapping and logging template that should be used during data collection. This should be the minimum standard used by field geologists for all activities; including field observations, logging core and logging reverse circulation (RC) drill cuttings. Data from hard copies of these templates should be captured electronically into a database and the hard copy should be filed in a safe manner for at least seven years. The proposed TFR exploration budget is shown in Table 26-1. The work program will include geological, structural and alteration mapping as well as ground magnetic and IP geophysical surveys. While this work is being undertaken, geochemical samples will be collected over the different alteration zones to determine their geochemical and mineralogical profile. This will be followed by a more detailed sampling grid of pit/trench sampling and then by drilling. Regional geological data as well as historic and current sampling results will be transferred onto a working base map and the accuracy of the earlier mapping will be checked. All currency figures are Canadian dollars. Table 26-1: TFR exploration plan and budget.

Phase 1 Trenching Sample Assay's 1200 @ $50/sample Consultant Geologist (QP) $12,000/month Local Senior Geologist $1150/month Local Junior Geologist $700/month Local Junior Geologist $700/month starting after 6 months Local Labour and Administrative Support @ $7,000/month Camp, Food, Fuel, Field Supplies Etc. Airfare and Transportation Expenses Contingencies 5% 0 to 6 months and 6 months to 1 year subtotals Total Phase 1

0 to 6 months $30,000 $72,000 $6,900 $4,200

6 months to 1 year $30,000 $72,000 $6,900 $4,200

$0

$4,200

$42,000 $15,000 $7,500 $8,880 $186,480 $377,370

$42,000 $15,000 $7,500 $9,090 $190,890

Phase 2 exploration is dependent upon the results of phase 1 work; expenditure is additional to phase 1 and is as follows â&#x20AC;&#x201C;

Phase 2 Ground Magnetic 16 (450m) lines @ $1200/ line Geophysical IP & Resistivity 24 lines @ $1800/line Diamond Drilling (NQ) 1500m @ $190/m Drilling Sample Assay's 600 @ $50/sample Trenching Sample Assay's 200 @ $50/sample Consultant Geologist (QP) $12000/month Local Senior Geologist $1150/month

1 year $19,200 $43,200 $285,000 $30,000 $10,000 $144,000 $13,800 29


Local Junior Geologist $700/month x 2 Local Labour and Administrative Support @ $10,000/month Camp, Food, Fuel, Field Supplies Etc. Airfare and Transportation Expenses Contingencies 10% Total Phase 2 TOTAL Phase 1 & 2

$16,800 $120,000 $30,000 $24,000 $73,600 $809,600 $1,186,970

The total for phase 1 and phase 2 exploration over a period of 2 years is Canadian dollars, CD$1,186,970. There are a number of key steps and processes that MCS recommends to ensure the exploration program is run as efficiently and effectively as possible. As a first preparatory stage, a base map should be prepared that will form the basis for the initial field work. This should be followed by establishing a base reference line from which all measurements will be taken. Before the field crews are dispatched into the field, a base camp should be established where a secure sampling and sample storage facility must be erected. Sample security and integrity is of the utmost importance and access to this facility must be restricted to a limited number of persons. Communication at the base camp is essential and if the internet connectivity is not strong enough using conventional cellphone networks, it is suggested that a satellite system be installed. Data must be sent through a secure connection to the data management team at MCS. It is the recommendation of the QP that the geophysical surveys should be shifted to Phase 1 of the program to assist in locating areas of high potential that may require additional sampling programs prior to drilling. The initial geophysical traverses need to be done on the areas with the high sample grades. The strike extensions and lateral continuity of these areas should be investigated as a high priority by running parallel traverses ever further from the sample positions in both directions. Starting with a broad geophysical program and generating smaller and smaller targets from this will be the best process to achieve this. The commencement of drilling should be contingent on delineation of significant zones of mineralisation during phase one. Where drill access is not possible due to the steep slopes, a man-portable drill rig may be necessary. Where there is any uncertainty in the exploration procedures, it will be necessary to consult the QP so that NI43-101 compliance can be maintained. When the time comes to disclose the exploration results to the market, the QP needs to be able to verify that every effort has been made to avoid technical errors. A robust procedure for exploration work will give the reader a higher degree of confidence and thus give any reported results greater integrity. The Company will need to implement an internal QA/QC protocol (blanks, standards and duplicates), particularly during the drilling phase. Not only rely on internal lab controls. Following a systematic process during exploration will be the quickest way of finding economic mineralisation. Starting with a broad geophysical program and generating smaller and smaller targets from this will be the best process to achieve this. Given the requirements for NI43-101 disclosure, it is critically important that the procedures detailed above are followed. This will ensure that sufficient data is captured on the samples, that the samples are representative and that the QAQC program has been able to detect and prevent any analytical errors.

30


27 References Gunawan D., Gravenhorst G., Jacob D. and Podzun, R (n.d.). Rainfall Variability Studies in South Sulawesi using Regional Climate Model REMO. Source from http://www.tropentag.de/2003/abstracts/full/413.pdf on May 12, 2011. Mallawa Porphyry Copper-Gold and Related Deposit Exploration Target, n.d. TFR internal report. Mutawakkil, M.S. 2010. Laporan Lengkap Hasil Eksplorasi, Bahan Galian Mineral Logam Cufrun (Cu) Dan Aurun (Au). Seerdorf, E., Dilles, J.H., Proffett, J.M., Einaudi, M.T., Zurcher, L., William, J.A.S, Johnson, D.A., and Barton, M.D. 2005. Porphyry Deposits: Characteristics and Origin of Hypogene Features. Society of Economic Geologists, Inc, Economic Geology 100th Anniversary Volume, pp. 251-298. Subandrio, A.S. 2011. Report on Petrographical and Mineragraphy Analysis of Malawa Rock Samples of Kabupaten Bone, South Celebes. Sukamto 1982, Geological Map of Pangkajene & Watampone Quadrangle Scale 1:250,000 Feasibility Study geology; Mr Andri Subandrio, Senior Lecturer at the Applied Geology Research Division, Institut Teknologi Bandung (this is a geology study and is not a feasibility study as defined in the National Instrument 43-101 standards of disclosure for mineral projects)

31


28 Certificate of Author I, Johannes Erasmus do hereby certify that: I am an associate geologist contracted by Micromine Pty and the Micromine consulting services, a division of Micromine Pty Ltd; 174 Hampden Road, Nedlands, Perth, Western Australia. 1.

I reside at 42 Main Road, Hogsback, Eastern Cape, South Africa.

2.

I graduated in 1980 from the University of South Africa with a Bachelor of Science in geology and a Master of Science (Mining) from the University of the Witwatersrand in 2000.

3.

I visited the Mallawa Project, Licence 124/KPPSP/IV/2010 from May 4th to May 6th 2011.

4.

I am registered with the South African Council for Natural Scientific Professions in terms of the Natural Scientific Professions Act, 2003 in the field of Geological Science, Registration Number 400099/03.

5.

I have practiced my profession continuously for 30 years and have been a consultant to the minerals industry for over 15 years.

6.

I have read the definition of “qualified person” set out in National Instrument 43-101 (NI 43-101) and certify by reason of my education, affiliation with a professional association, and past relevant work experience, I do fulfil the requirements to be a “qualified person’ for the purposes of the NI43-101 for this project.

7.

I am responsible for all sections of the report; “National Instrument 43-101 Technical Report for PT. Terra Mineral Firma Resources Inc. Mallawa Exploration Project” dated August 11, 2011.

8.

I have had no prior involvement with the property that is the subject of this technical report.

9.

As of the date of this certificate, to the best of my knowledge, information and belief, the technical report contains all scientific and technical information that is required to be disclosed to make the technical report not misleading.

10. I am independent of each of Terra Firma Resources, Pt. Mutiara Surya Mallawa (Mutiara) and Tirta Winata (Tirta) applying the tests in Section 1.4 of National Instrument 43-101. 11. I have read National Instrument 43-101 and Form 43-101F1 and the Technical report has been prepared in compliance with that Instrument and form. Prepared August 11, 2011

Johannes F. Erasmus Hogsback, South Africa

32


29 Date and Signature Page

Johannes Erasmus BSc, GDE, MSc (Mining) Associate geologist of Micromine Pty Ltd 42 Main Road, Hogsback, Eastern Cape, South Africa The effective date of the technical report is 11th of August, 2011. Signed by the QP on this day 11th of August, 2011.

Johannes Erasmus Pr. Sci. Nat.

33


30 Consent of Authors

Johannes Erasmus BSc, GDE, MSc (Mining) Associate geologist of Micromine Pty Ltd 42 Main Road, Hogsback, Eastern Cape, South Africa

Consent of Qualified person To TMX Venture Exchange, British Columbia Securities Commission, Alberta Securities Commission and Ontario Securities Commission; I, Johannes Erasmus, do hereby consent to the filing of the written disclosure with the securities regulatory authorities of the technical report titled â&#x20AC;&#x153;National Instrument 43-101 Technical Report for Terra Firma Resources Inc. Mallawa Exploration Projectâ&#x20AC;? dated August 11th 2011 (the Technical Report). Dated this day, 11th of August 2011.

Johannes Erasmus Pr. Sci. Nat.

34


31 Additional Requirements for Technical Reports on Development Properties and Production Properties The concession is not in the development stage and there are no active mining operations. As a result, no information can be provided on technical or economic considerations.

32 Illustrations All illustrations are contained with the relevant sections of the report.

35


33 Appendix 1: Petrographic Report of Samples

REPORT ON PETROGRAPHICAL AND MINERAGRAPHY ANALYSES OF MALAWA ROCK SAMPLES OF KABUPATEN BONE SOUTH CELEBES By Dipl. Ing. Ir. Andri Slamet Subandrio

For TERRA FIRMA RESOURCES INC 2011

36


Sample No. MLW-02A, 02B & 02D MEGASCOPIC CHARACTERISTICS Rock name:

Calc-silicate altered and sericitized Granodiorite

Nature of Sample:

Small rock chip

Minerals Visible:

Calcite, quartz, sericite, muscovite, chlorite minor biotite, hornblende feldspar and chalcopyrite, covelite and pyrite.

Texture:

Possibly relic phaneritic and porphyritic.

Colour:

Creamy white-pale green.

Grain Size:

Medium grained.

Other Comments:

This strongly mineralized (chalcopyrite and pyrite) rock appears under a binocular microscope to be strongly or pervasively metasomatically altered, fractured and quartz carbonate veined, possibly porphyritic, intermediate igneous intrusive with granodioritic norm. Primary silicate minerals appear to be rare as residual grains.

MICROSCOPIC CHARACTERISTICS Constituents: (Percent visual estimate) 60% Calcite, quartz and sericite (muscovite), representing products of silicic, CO2 metasomatic and K-metasomatic alteration processes, occur in about equal abundance as fine interlocking aggregates that in places exhibit the relic porphyritic fabric of a diorite, possibly granodiorite porphyry, as suggested by the rare residual andesine present and chloritized prismatic biotite. Primary quartz is absent. Quartz and calcite also filled irregular microfractures. Sericite pseudomorphs after tabular and lath shaped andesine microphenocrysts are also represented. Epidote present scarcely. 30% Chlorite and epidote of metasomatic origin occurs as tabular and prismatic pseudomorphs after primary biotite and hornblende grains and clusters as well as rare microphenocrysts. Residual hornblende and biotite present as microveinlets cross cut the sericitized KFeldspar. 10% Opaques occur as scattered, discrete, subhedral and euhedral grains and clusters that appear to be predominantly composed of primary chalcopyrite, pyrite and covelite as the anhedral form and yellow metallic lustre suggest. Texture:

Relic porphyritic and granular. Metasomatic Alteration: CO2 metasomatic, sericitic, silicic, and chloritic

Petrogenesis:

A strongly microfractured and pyritized, sillicified, sericitized, carbonatized and chloritized, diorite microporphyry.

Remarks:

The relic igneous, plus the presence of residual andesine and chloritized biotite and hornblende, suggest that the protolith was a granodiorite porhyry. Metasomatic alteration was almost pervasive and selective. The oxide and sulphide opaque phase present can only be positively identified in reflected light.

ROCK NAME:

Strongly microfractured granodiorite porphyry

chloritized,

silicified,

sericitized

of

37


Various images of sample MLWâ&#x20AC;?02 show granodiorite that sericitized, CO2 metasomatized and chloritized and groundmass Hornblende and biotite laths are partly altered to chlorite and secondary quartz, sometime associated with opaque minerals which mostly consist of base metal sulfide. Note: bi = biotite, ca = calcite,ch = chlorite, ep = epidote, Kf = Kâ&#x20AC;?feldspar,ho = hornblende, om = opaque mineral, pl = plagioclase, py = pyrite,qz = quartz, sc = sericite

38


Pyrite (white) shows bright reflectance and porous crystals disseminated in silica groundmass of altered materials. Chalcopyrite (yellow) shows faint reflectance differences (upper right) due to compositional variations. It encloses fineâ&#x20AC;? galena and arsenopyrite crystals (dark grey grey). Chalcopyrite (yellow upper right)is corroded by galena (medium grey). The right photo shows pyrite which is corroded by silicate groundmass. Note: asp = arsenopyrite, chp = chalcopyrite, ga = galena, py = pyrite, sil gm = silica groundmass

39


Sample No. 3A & 3B MEGASCOPIC CHARACTERISTIC Field Name:

Potassic altered diorite

Nature of Sample:

Rock chip

Minerals Visible:

Megacryst of K-feldspar, biotite vein, chlorite, calcite and quartz vein, pyrite, chalcopyrite

Texture:

Biotite vein cross cut diorite

Colour:

Pale grayish-pinkish with black fleck of mafic mineral

Grain Size:

Fine to medium grained

Other Comments:

The sample exhibits vein texture resulting from the interlayering of very fine grained biotite cross cut feldspatic groundmass.

MICROSCOPIC CHARACTERISTICS OF ALTERED ROCKS Constituents: (Percent visual estimate) 90% K-feldspar, quartz and scarcely calcite product of K-metasomatic alteration, occur as fine-medium grained aggregates, hornfelsic and interlocking texture that are seen to replace the intermediate plagioclase and fill irregular microfractures. It is a late metasomatic alteration event, and over prints, and hence masks the earlier sericitic and argillic alteration even. 7% Biotite, products of potassic alteration, occur in about equal abundance as fine crystalline aggregates that are seen to cross cut the primary intermediate plagioclase, and associated alkali feldspar, hornblende to varying degrees, ranging from moderate to almost complete. Late phyllic overprinting by sericite and microfracture filling by sericite can be seen. 3% Opaques occur as scattered, discrete, interstitial and intergranular anhedral to euhedral grains, blebs and clusters that appear to be mainly composed of accessory magnetite. Texture:

Relic of phaneric porphyritic and hornfelsic groundmass Metasomatic Alteration: Potassic with secondary K-feldspar and biotite

Petrogenesis:

A strongly microfractured, strongly silicified, propylitized and argillic altered, fine grained biotite- hornblende-quartz diorite.

Remarks:

The residual andesine and abundant hornfelsic and interlocking texture secondary biotite, K-feldspar and quartz present suggest that the protolith was a medium grained hornblende diorite.

ROCK NAME:

Strongly microfractured and potassic altered of hornblende diorite or Microdiorite

40


Potassic alteration is shown by abundant of feldspar and quartz that cross cut by secondary biotite with the expulsion of fine‐grained disseminated magnetite. Plagioclase feldspar is partly altered to sericite whereas biotite chloritized and silica enrichment giving hornfelsic and interlocking texture Note: b‐1i = primary biotite, bi‐2 = secondary biotite, ch = chlorite, ep = epidote, Kf = K‐feldspar, mg = magnetite, op = opaque mineral, pl = plagioclase, qz = quartz, sc = sericite

41


Sample No. MLW-05A, 05B, & 05C Location:

Mallawa

Rock name:

Garnet Skarn with iron carbonate alteration and base metal sulphide mineralization

Field Description:

Garnet Skarn

Offcut Description:

A porous, pale green to tan brown rock consisting of carbonate (dolomite/siderite) which pseudomorph garnet and chalcopyrite/pyrite

Thin Section Descriptions (Constituent in %) Garnet 5%, Pyrite 3%, Chalcopyrite 2%, Sphalerite 0.5%, Galena 0.5%, Calcite 75%, Sericite 9% and Quartz (5%) Description:

An intensely altered (carbonatized) skarn. Garnet was the originally the primary constituent of this rock, in loosely interlocking mediumcoarse sized euhedral-subhedral grains. Abudant sulphides and minor anhedral quartz have been deposited interstitially to the garnet. The garnet is mostly altered and replaced by very fine-grained iron bearing carbonate (siderite). Pyrite is the most abundant sulphide, forming irregular-shaped, coarse-grain aggregates disseminated through the skarn. These are overgrown and rimmed by a small amount of chalcopyrite. Trace amounts of galena infill small cavities in both sphalerite and chalcopyrite, and sometimes appear to overgrown (and hence postdate) both sphalerite and intergrown rhombic iron carbonate.

Comments:

Garnet skarn with alteration and sulphide deposition as follows

42


Skarn altered diorite consist of mainly mediumâ&#x20AC;?coarse grained calcite, biotite, chlorite, epidote, sericite and garnet. Feldspar and mafic minerals are partly altered to carbonate, biotite, chlorite, epidote secondary quartz, sometime associated with opaque minerals which mostly consist of base metal sulfide. Note:bi = biotite, ca = calcite, ch = chlorite, ep = epidote, ga = garnet, Kf = Kâ&#x20AC;?feldspar, mu = muscovite, om = opaque mineral, pl = plagioclase, py = pyrite, qz = quartz, sc = sericite

43


Pyrite shows bright reflectance and porous crystals disseminated in silica groundmass of altered materials. Chalcopyrite (yellow) shows faint reflectance differences due to compositional variations and partly altered tobornite. The lowest photos shows pyrite which area corroded by silicate groundmass. Note: bo = bornite, chp = chalcopyrite, py = pyrite, sil gm = silica groundmass

44


Sample No. MLW-06 MEGASCOPIC CHARACTERISTICS Rock name:

Muscovite-Sericite Altered Diorite

Nature of Sample:

Small rock chip

Minerals Visible:

Quartz, feldspar, muscovite, sericite minor calcite, and chalcopyrite and pyrite.

Texture:

Possibly relic phaneritic and microporphyritic.

Colour:

Pale grey.

Grain Size:

Fine grained.

Other Comments:

This weakly mineralized (chalcopyrite and pyrite) rock appears under a binocular microscope to be strongly or pervasively metasomatically altered, fractured and cross cut by biotite vein, possibly microporphyritic, intermediate igneous intrusive with diuretic norm. Primary silicate minerals appear to be rare as residual grains.

MICROSCOPIC CHARACTERISTICS Constituents: (Percent visual estimate) 65% Quartz, sericite, muscovite, representing products of silicic, CO2 metasomatic and K-metasomatic alteration processes, occur in about equal abundance as fine interlocking aggregates that in places exhibit the relic microporphyritic fabric of a diorite, possibly a diorite microporphyry, as suggested by the rare residual andesine present and chloritized prismatic hornblende. Hornblende is mostly altered to chlorite, muscovite and sericite. Primary quartz is absent. Quartz and calcite also filled irregular microfractures. Sericite pseudomorphs after tabular and lath shaped andesine microphenocrysts are also represented. Epidote present scarcely, partly associated with biotite vein. 25% Chlorite of metasomatic origin occurs as tabular and prismatic pseudomorphs after primary hornblende grains and clusters and rare microphenocrysts. Residual biotite present as microveinlets cross cut the sericitized K-Feldspar. 10% Opaques occur as scattered, discrete, subhedral and euhedral grains and clusters that appear to be predominantly composed of primary pyrite as the anhedral form and yellow metallic lustre suggest. Texture:

Relic microporphyritic and granular. Metasomatic Alteration: Muscovite, silicic, CO2 metasomatic, sericitic and chloritic.

Petrogenesis:

A strongly microfractured and pyritized, sillicified, sericitized, carbonatized and chloritized, diorite microporphyry.

Remarks:

The relic igneous, plus the presence of residual andesine and chloritized hornblende, suggest that the protolith was a diorite microporhyry. Metasomatic alteration was almost pervasive and selective. The oxide and sulphide opaque phase present can only be positively identified in reflected light.

ROCK NAME:

Strongly microfractured sericitized, chloritized, silicified, of micro diorite porphyry

45


Microphotographs of various point of MLW‐06 display euhdral‐subhedral pyrite which disseminated throughout sericitized groundmass. Note: py = pyrite, sil gm = silica groundmass

46


Micrometer scale for polish and thin section

47


34 Appendix 2: Internal TFR Report on Exploration Activities

Malawa Porphyry Copper â&#x20AC;&#x201C;Gold and Related Deposit Exploration Target 1. Extensive granodioritic-dioritic rocks throughout Malawa until Pangkajene with strongly indication of potassic and propylitic zone alteration that outcropped in the creek near Malawa village. 2. Significant skarn vein type which enveloped by propylitic alteration zone that outcropped on the middle downstream of Malawa creek (MLW-5). The vein is dominated by carbonate mineral consist of coarse to very coarse grained chalcopyrite, pyrite, arsenopyrite and scarcely galena and sphalerite. 3. Discovery of vein that probably as a part of a stockwork system which enclosed by advanced argillic or phyllic (quartz+sericite+pyrite) alteration zone on MLW-2. The geochemistry analysis on the vein sample of MLW-2 shows interesting gold grade of 1.2 ppm Au and 5.2% of Cu. 4. By this first field visiting program is found also in the Malawa area (in observation point of MLW-5) some thin film of malachite. 5. The Malawa area is associated with favorable structural and its tectonic setting of Island Arc environment that bounded by major strike slip faults and shear. The best extension for porphyry copper prospect is to the west and northwest in radius 30-40 km from Malawa until Pangkajene area.

Zones 6. Malawa district lies presumably in the favorable metallogenic belt associated with the ancient calc alkaline volcanic and intrusive rocks of South Celebes. The famous Porphyry Copper and Gold mining recently present in Tombolilato and Messel of Gorontalo Provice in the northern arm of Celebes. 7. Malawa is located on Kabupaten Bone (Bone District) which has easy access to major highway, electricity power and logistic. 8. There are no environmental issues to prevent mining. 9. According to the exploration steps on the Malawa property, there has no drilling data (never have been drilled).

PROPERTY DESCRIPTION The Malawa Prospect currently is a 800 Ha mining permit located approximately three hours northeast of Makasar, in Sulawesi, Indonesia The permit is approximately 20 km north of the Bone Highway which is a major highway connecting Makassar to Bone and other communities.

48


REGIONAL GEOLOGY

Figure 1. Simplified regional geological map of Malawa-Pangkajene area. This map is cropped out from â&#x20AC;&#x153;Geologic Map of the Pangkajene and Western Part of Watampone Quadrangle of Sukamto (1982).

The Malawa Prospect is situated in the South Celebes Arm (Active Island Arc System) and along the southwestern axis of the Walanae Fault Zone (Fig. 1). It is underlain by the mĂŠlange, metamorphic and ultramafic complexes of Triassic-Cretaceous ages. These Mesozoic complexes area intruded and covered by Tertiary volcanic and sedimentary rocks. Malawa has a very favorable tectonic and structural position for the emplacement of porphyry type deposits, especially in the western part until Pangkajene. It is bounded by major strike slip faults Walanae Fault Zone (WFZ). This type of tectonic activity can create pull-apart basins which are zones that provide high-permeability conduits for the emplacement of mineralized magmas to shallow crustal levels.

LOCAL GEOLOGY The Malawa Formation is composed of non-marine of fluviatile sedimentary rock of conglomerate, sandstone, claystone and coal (Tem). There are also interbedded marine sediments of limestone of Tonasa Formation (Temt). Numerous intrusives are evident ranging from basalt (b) granodiorite (gd), syenite (s) and diorite (d) that are placed as coeval with the Early to Late Miocene volcanics. There also may be younger volcanic and intrusive rocks on Malawa but only precise age dating would determine this. The alteration zone is coincident with a circular structure in the northern part Bukit Maraja (bukit=hill) that is bounded on the south by a reverse fault which appears to have been formed by an intrusive event along the WFZ. The alteration zone of Malawa is presumably cut by an extensive network of altered and sheared dikes and also by late stage breccias.

49


Alteration and Mineralization The alteration as seen from the highway is striking. Fresh to Propylitically altered volcanic and intrusive rocks are in sharp contact with a lower Potassic Alteration Zone (PAZ) characterized by light pinkish to milky white K-feldspar altered rock, segregation or biotite vein; red hematite clay altered rock and patchy zones of white gypsum. Below the PAZ zone is a central core of bright white colored rock exposed in the bottom of a ravine which is composed of quartz, sericite, pyrite and kaolinite. This zone is presumably related to the Phyllic alteration zone characteristic of porphyry style alteration. In some samples is identified, K-feldspar veining is evident which could be a remnant of an earlier Potassic zone telescoped by destructive later alteration events. Within the alteration (leached zone) mineralization is predictably low due to acid destruction. However anomalous copper values of 0.01-7.31% Cu have been recorded associated with the copper minerals chalcopyrite, covelite and malachite. Numerous occurrences of copper gossans were found within the alteration zone associated with sheared and intensely altered rocks. Anomalous gold values of up to 1.2 ppm have been found by our chemical analyses on MLW-2. On the periphery of the alteration zone to the east other investigators have found malachite and extensive chalcopyrite veins assaying up to 7.3% Cu. Float in streams drainages contain mainly chalcopyrite. Principle alteration suites associated with preliminary studies of this porphyry copper prospect: Cu, Au, Ag, Pb, Zn Table 1: The geochemical analyses of preliminary field study of Malawa prospect as shown bellow

RECOMMENDATION 1. Detail ground survey of geological and geophysical mapping for 800 Ha Malawa property. 2. The exploration property has to be extend (from only 800 Ha surrounding Malawaâ&#x20AC;&#x2122;s village) to the west and northwest of with radius 30-40km starting from Malawa until Pangkajene. 3. Conduct an Resistivity (R) and Induced Polarization (IP) and ground magnetic survey over the alteration zone to determine drill targets. 4. Drill minimum two deep with approximately 1000 m total length using reverse circulation (RC) holes followed up by another two core holes.

50


51


52


53


35 Appendix 3: QAQC Charts 35.1 Standard Control Charts The standard control charts have been produced according to element and batch. The batch ID is shown in the legend of each chart (e.g. 111463 Results).

STD GBM999-3 Cu 2.2 2.1

Expected Value Lower Warning Limit

Cu (%)

2

Upper Warning Limit

1.9

Lower Action Limit

1.8

Upper Action Limit 111463 Results

1.7 1.6

STD GBM999-3 Pb 1.2 1.15 1.1

Pb (%)

1.05 1 0.95 0.9

Expected Value Lower Warning Limit Upper Warning Limit Lower Action Limit Upper Action Limit

111463 Results

0.85 0.8

54


STD GBM304-13 Cu 11 10.5

Expected Value Lower Warning Limit

Cu (%)

10

Upper Warning Limit

9.5

Lower Action Limit

9

Upper Action Limit 111463 Results

8.5 8

STD GBM304-13 Pb 28 Expected Value

Pb (%)

23

Lower Warning Limit

Upper Warning Limit

18

Lower Action Limit Upper Action Limit

13

111463 Results 8

STD GBM997-6C Zn

Zn (%)

20 18

Expected Value

16

Lower Warning Limit

14

Upper Warning Limit Lower Action Limit

12

Upper Action Limit

10

111463 Results

8

55


STD GBM997-6C Ag 530

Ag (ppm)

510

Expected Value

490

Lower Warning Limit

470

Upper Warning Limit

450

Lower Action Limit

430

Upper Action Limit

111463 Results

410 390

STD GBM995-2 As 250 Expected Value

200

As (ppm)

Lower Warning Limit 150

Upper Warning Limit

100

Lower Action Limit Upper Action Limit

50

110634 Results

0

STD GBM306-8 Cu 6800 6600

Cu (ppm)

6400

Expected Value

6200

Lower Warning Limit

6000

Upper Warning Limit

5800

Lower Action Limit

5600

Upper Action Limit

5400 5200

111826 Results

5000

56


STD GBM306-8 Pb

Pb (ppm)

570 520

Expected Value

470

Lower Warning Limit

420

Upper Warning Limit

370

Lower Action Limit

320

Upper Action Limit

270

111826 Results

220

STD GBM306-8 Zn 1020 920

Expected Value

Zn (ppm)

820

Lower Warning Limit

720

Upper Warning Limit

620

Lower Action Limit

520

Upper Action Limit

420

111826 Results

320 220

STD GBM306-8 Ag 8 7.5 7

Ag (ppm)

6.5 6 5.5 5 4.5 4

Expected Value Lower Warning Limit Upper Warning Limit Lower Action Limit Upper Action Limit 111826 Results

3.5

3

57


STD BM 161 Cu 900 800

Expected Value

Cu (ppm)

700

600

Lower Warning Limit

500

Upper Warning Limit

400

Lower Action Limit

300

Upper Action Limit

200

111463 Results

100 0

STD BM 161 Pb 1200

Pb (ppm)

1000

Expected Value Lower Warning Limit

800

Upper Warning Limit

600

Lower Action Limit

400

Upper Action Limit

200

111463 Results

0

STD BM 161 Zn 1000 800

Expected Value

Zn (ppm)

Lower Warning Limit 600

400

Upper Warning Limit Lower Action Limit Upper Action Limit

200

111463 Results

0

58


STD BM 161 Ag 5 Expected Value

4

Ag (ppm)

Lower Warning Limit 3

Upper Warning Limit Lower Action Limit

2

Upper Action Limit 1

111463 Results

0

STD BM 161 Cu 900 800

Expected Value

Cu (ppm)

700

600

Lower Warning Limit

500

Upper Warning Limit

400

Lower Action Limit

300

Upper Action Limit

200

111826 Results

100 0

STD BM 161 Pb 1200

Pb (ppm)

1000

800 600

Expected Value Lower Warning Limit Upper Warning Limit Lower Action Limit

400

Upper Action Limit

200

111826 Results

0

59


STD BM 161 Zn 1000 Expected Value

800

Zn (ppm)

Lower Warning Limit 600

Upper Warning Limit Lower Action Limit

400

Upper Action Limit 200

111826 Results

0

STD BM 161 Ag 5 Expected Value

4

Ag (ppm)

Lower Warning Limit 3

Upper Warning Limit Lower Action Limit

2

Upper Action Limit 1

111826 Results

0

STD BM 161 Cu 800 750

Expected Value

Cu (ppm)

Lower Warning Limit 700

650

Upper Warning Limit Lower Action Limit Upper Action Limit

600

111826 Results

550

60


STD BM 161 Pb

Pb (ppm)

1250 1150

Expected Value

1050

Lower Warning Limit Upper Warning Limit

950

Lower Action Limit

850

Upper Action Limit

750

110634 Results

650

STD BM 161 Zn 1200

1000

Expected Value Lower Warning Limit

Zn (ppm)

800

Upper Warning Limit

600

Lower Action Limit

400

Upper Action Limit

200

110634 Results

0

STD BM 161 Ag

Ag (ppm)

6

5

Expected Value

4

Lower Warning Limit

3

Upper Warning Limit Lower Action Limit

2

Upper Action Limit

1

110634 Results

0

61


STD BM-16/214 Cu 1.7 Expected Value

1.6

Cu (%)

Lower Warning Limit 1.5

Upper Warning Limit Lower Action Limit

1.4

Upper Action Limit 1.3

111463 Results

1.2

STD BM 161 Cu 1.7 Expected Value

1.6

Cu (%)

Lower Warning Limit 1.5

Upper Warning Limit Lower Action Limit

1.4

Upper Action Limit 1.3

111826 Results

1.2

STD BM 161 Cu 1.7 1.6

Expected Value

Cu (%)

Lower Warning Limit 1.5 1.4

Upper Warning Limit Lower Action Limit Upper Action Limit

1.3

110634 Results

1.2

62


STD NCS DC 73325 Mo 4.5 4

Expected Value

Mo (ppm)

3.5

3

Lower Warning Limit

2.5

Upper Warning Limit

2

Lower Action Limit

1.5

Upper Action Limit

1

111826 Results

0.5 0

STD STSD-3 Mo 10 Expected Value

8

Mo (ppm)

Lower Warning Limit 6

Upper Warning Limit Lower Action Limit

4

Upper Action Limit 2

111826 Results

0

STD ST 441 Au 0.35

Au (%)

0.3

Expected Value

0.25

Lower Warning Limit

0.2

Upper Warning Limit

0.15

Lower Action Limit

0.1

Upper Action Limit

0.05

111463 Results

0

63


STD ST 441 Au 0.3 0.25

Expected Value Lower Warning Limit

Au (%)

0.2

Upper Warning Limit

0.15

Lower Action Limit

0.1

Upper Action Limit 110634 Results

0.05 0

35.2 Blanks

Au1 PPM 0.006 0.005

0.004 0.003 0.002

0.001

110634

110634

110634

110634

110634

111826

111826

111826

111826

111826

111826

111463

111463

111463

111463

111463

111463

111463

0

Batch ID

Cu PPM 1.2 1 0.8 0.6 0.4 0.2

0

Batch ID

64


110634

111826

111826

111826

110634

111826

111826

111826

111463

111463

111463

111463

111463

111463

111463

110634

0

110634

0.001

110634

0.002

110634

0.003

110634

0.004

110634

0.005

110634

0.006

110634

Hg PPM 110634

Batch ID

110634

0

110634

0.2

110634

0.4

110634

0.6

111826

0.8

111826

1

111826

1.2

111826

Zn PPM

111826

111826

111826

111826

111463

111463

111463

111463

111463

111463

111463

Batch ID

111826

111826

111826

111826

111463

111463

111463

111463

111463

111463

111463

Pb PPM

2.5 2

1.5

1

0.5

0

Batch ID

65


110634 110634 110634

110634

110634

110634

111826

111826

111826

111463

111463

111463

111463

111463

111463

111463

110634

0

110634

0.001

110634

0.002

110634

0.003

111826

0.004

111826

0.005

111826

0.006

111826

Cu % 111826

Batch ID

111826

111826

111826

111826

111463

111463

111463

111463

111463

111463

111463

110634

110634

110634

110634

110634

111826

111826

111826

111826

111826

111826

111463

111463

111463

111463

111463

111463

111463

Ag PPM

0.6

0.5

0.4

0.3

0.2

0.1

0

Batch ID

Pb %

0.006

0.005

0.004

0.003

0.002

0.001

0

Batch ID

66


110634

110634

110634

110634

111826

111826

111826

111826

111463

111463

111463

111463

111463

111463

111463

110634

0

110634

0.1

110634

0.2

110634

0.3

110634

0.4

110634

0.5

111826

0.6

111826

Mo PPM 111826

Batch ID

111826

111826

111826

111826

111826

111463

111463

111463

111463

111463

111463

111463

110634

110634

110634

110634

110634

111826

111826

111826

111826

111826

111826

111463

111463

111463

111463

111463

111463

111463

Zn %

0.006

0.005

0.004

0.003

0.002

0.001

0

Batch ID

Ag PPM

2.5

2

1.5

1

0.5

0

Batch ID

67


As PPM 0.6

0.5 0.4 0.3 0.2 0.1

110634

110634

110634

110634

110634

111826

111826

111826

111826

111826

111826

111463

111463

111463

111463

111463

111463

111463

0

Batch ID

35.3 Duplicate Scatter Plots Duplicate Scatter Plot Au 1.40

R² = 0.9999 1.20

Duplicate (ppm)

1.00

0.80

0.60

0.40

0.20

0.00 0.00

0.20

0.40

0.60

0.80 Original (ppm)

1.00

1.20

1.40

68


Duplicate Scatter Plot Cu 10000 R² = 0.9986

9000

8000

Duplicate (ppm)

7000

6000

5000

4000

3000

2000

1000

0 0

1000

2000

3000

4000

5000 Original (ppm)

6000

7000

8000

9000

10000

Duplicate Scatter Plot Pb 3000

R² = 0.9988 2500

Duplicate (ppm)

2000

1500

1000

500

0 0

500

1000

1500 Original (ppm)

2000

2500

3000

69


Duplicate Scatter Plot Zn 1200 R² = 1 1000

Duplicate (ppm)

800

600

400

200

0 0

200

400

600 Original (ppm)

800

1000

1200

Duplicate Scatter Plot Ag 90

80

R² = 0.9992

70

Duplicate (ppm)

60

50

40

30

20

10

0 0

10

20

30

40 50 Original (ppm)

60

70

80

90

70


Duplicate Scatter Plot Hg 4

3.5

R² = 1

3

Duplicate (ppm)

2.5

2

1.5

1

0.5

0 0

0.5

1

1.5

2 Original (ppm)

2.5

3

3.5

4

Duplicate Scatter Plot Mo 1.2

1

Duplicate (ppm)

0.8

0.6

0.4

0.2

0 0

0.1

0.2

0.3 Original (ppm)

0.4

0.5

0.6

71


Duplicate Scatter Plot As 80

70

R² = 0.9992

60

Duplicate (ppm)

50

40

30

20

10

0 0

10

20

30

40 Original (ppm)

50

60

70

80

72


36 Appendix 4: Intertek Laboratories Certification

73


37 Appendix 5: Recommended Sampling Procedures Since the project is in its early stages, the only sampling that has been undertaken, as far as can be determined, is the collection of rock grab samples. In order to ensure compliance to NI43-101 during the exploration program, the following sampling procedures have been suggested:

37.1 Geochemical (Pit) Samples Depending on the density of sampling required, the Project Geologist will select pits to be sampled after consulting with the Company Exploration Manager and the QP. Pits are to be dug down to bedrock where possible or to a depth of 0.5m. Individual pits must be marked with a plastic sample tag tied to a stake, clearly indicating the sample number using a permanent marker pen. The profiling should be undertaken using the following procedure: 

Obtain the 3D coordinates of the surface collar using the GPS. In order to increase the accuracy of the measurement, the GPS should be set to “enabling GPS” so that the values can be averaged.

Record the date, total depth of the pit, the rock type and any alteration.

The dip and strike of any structural features such as joints, veins and faults should also be noted.

Using a small spade or geo-pick, cut a V-shaped channel in the formation while collecting the material into a sample bag.

Samples of approximately 2kg are to be collected.

Samples must be double-bagged in strong plastic bags. One sample tag tied to the inside bag and one to the outside. Plastic bag ties and plastic tags marked with a permanent marker are recommended.

37.2 Trench Samples Trench samples allow for observations to be made of the change in grade or quality on the same lithology or of the change in lithology over the length of the trench. The following methodology is recommended: 

Obtain the 3D surface collar coordinates at each end using a GPS. In order to increase the accuracy of the measurement, the GPS should be set to “enabling GPS” so that the values can be averaged;

Clean one long face with a spade from top to bottom if the side of the trench or rock outcrop is to be sampled. Alternatively clean the bottom of the trench so that it is free from any material that has fallen from the surface;

Record the date and measure the total length and depth of the trench;

Log the trench in as much detail as possible, taking note of any alteration, lithology and structural features as per the prescribed log sheet;

Using spray paint, measure and mark intervals of 1m from across the base of the trench;

Photograph the face/trench;

Number the samples from any end, ensuring this is consistent with other trenches;

Using a diamond saw in hard rock, or a small spade or geo-pick in weathered material, cut a V-shaped channel while collecting the material into a sample bag;

Samples of approximately 2 kg should be collected.

74


Sampling lengths should be adjusted at the discretion of the geologist based on changes in alteration or lithology;

Such changes must be recorded by the geologist on the sample bag and on the log sheet.

In order to ensure compliance to NI43-101 during the exploration program, the following sampling procedures has been suggested.

37.3 Geochemical (Pit) Samples Depending on the density of sampling required, the Project Geologist will select pits to be sampled after consulting with the Company Exploration Manager and the QP. Pits are to be dug down to bedrock where possible or to a depth of 0.5m. Individual pits must be marked with a plastic sample tag tied to a stake, clearly indicating the sample number using a permanent marker pen. The profiling should be undertaken using the following procedure: 

Obtain the 3D coordinates of the surface collar using the GPS. In order to increase the accuracy of the measurement, the GPS should be set to “enabling GPS” so that the values can be averaged.

Record the date, total depth of the pit, the rock type and any alteration.

The dip and strike of any structural features such as joints, veins and faults should also be noted.

Using a small spade or geo-pick, cut a V-shaped channel in the formation while collecting the material into a sample bag.

Samples of approximately 2kg are to be collected.

Samples must be double-bagged in strong plastic bags. One sample tag tied to the inside bag and one to the outside. Plastic bag ties and plastic tags marked with a permanent marker are recommended.

37.4 Trench Samples Trench samples allow for observations to be made of the change in grade or quality on the same lithology or of the change in lithology over the length of the trench. The following methodology is recommended: 

Obtain the 3D surface collar coordinates at each end using a GPS. In order to increase the accuracy of the measurement, the GPS should be set to “enabling GPS” so that the values can be averaged;

Clean one long face with a spade from top to bottom if the side of the trench or rock outcrop is to be sampled. Alternatively clean the bottom of the trench so that it is free from any material that has fallen from the surface;

Record the date and measure the total length and depth of the trench;

Log the trench in as much detail as possible, taking note of any alteration, lithology and structural features as per the prescribed log sheet;

Using spray paint, measure and mark intervals of 1m from across the base of the trench;

Photograph the face/trench;

Number the samples from any end, ensuring this is consistent with other trenches;

Using a diamond saw in hard rock, or a small spade or geo-pick in weathered material, cut a V-shaped channel while collecting the material into a sample bag;

Samples of approximately 2 kg should be collected.

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Sampling lengths should be adjusted at the discretion of the geologist based on changes in alteration or lithology;

Such changes must be recorded by the geologist on the sample bag and on the log sheet.

37.5 Diamond drilling 10.1.1 Drill Core Samples

Drill cores must be packed into metal core boxes. Either the responsible geologist or geological assistant will undertake the following tasks: 

Witness and verify the measuring of the depth of the hole;

Observe the correct packing of the core;

Observe the correct numbering of depth blocks, taking note of core losses or gains;

Ensure that the core is transported to the core yard with the minimum of disturbance;

The length of the core samples should be based on the geology encountered down the hole. The minimum sample interval should be 20cm and the maximum sample interval should not exceed 1.5m;

All core is to be photographed and the output is to be forwarded to the core shed on a regular basis;

One half of the core over the target mineralisation is to be sampled and the remaining half is to be stored for future reference;

Should a request for a duplicate sample be received, the stored half of the core should be quartered and the remaining quarter should again be stored;

Sampling should start 50cm above the mineralised area and end 50cm below;

Record the data onto the computer database on a daily basis;

A permanent core yard geologist is to be responsible for the sawing, sampling and storing of the core. The responsibility of the field geologist is the marking and logging of the core.

For diamond drill holes, the following data must be captured: 

The length of the core run, in metres and millimetres, as defined by the driller’s core blocks;

The length drilled, measured length of core recovered (in metres and centimetres) and a calculation of the per cent core recovered;

A graphic lithological section;

Lithological features such as the degree of weathering, colour, grain size, field rock name (often in capitals or underlined);

Proportions of rock minerals;

The attitude of bedding or foliation (the angle between the planar structure and the long axis is generally stated, often termed );

Attitude and spacing of other structures such as joints and sheared zones. It is also important to make note of the width of the sheared zones;

The interval in which ore minerals are present is to be listed separately, with ore mineral species in capitals or underlined. Notes should also be colleted on the orientation of ore minerals, the gangue minerals present, grain size and a visual estimate of the percentage of metal.

Diamond core should be logged using the coding system provided by Micromine. It is good practice to use summary logs for modelling purposes and to keep the detailed logs for 76


reference if required. Diamond core should be geotechnically logged, photographed and the recovery should be determined while the core is still wet and sitting in the tube. If this is not possible, all man-made breaks should be clearly marked with an X when the core is being placed in the core tray. Core boxes should be transported to the base on a daily basis and stored under cover. All cores should be logged within two days of completion of the hole. Due to high humidity and rainfall, core left exposed will be weathered very quickly. All observations are to be transferred to the database at least on a weekly basis. The order of the logging procedure is described below: 

Lay the complete core out in the core boxes;

Join and align the core prior to marking off a centre line for cutting with a diamond saw (which will occur later). Joining and aligning the core will also ensure that all length measurements are accurate;

Identify and record the major lithological changes;

Record the major structural features such as faults, veins and joints;

Log in the sequence prescribed in the log sheet, ensuring that all the sections in the sheet are addressed.

37.6 RC Drilling The logging of RC drill cuttings is more difficult and the information acquired is less detailed relative to diamond core. The following information should be captured during the logging of RC chips: 

The weight of each sample should be measured in order to determine recoveries. Coupled with the theoretical mass that should be recovered according to the diameter of the hole, the sample weight can be used to calculate the per cent recovery;

The depth of the water table should be noted to assist with subsequent hydrological studies;

RC rod changes should also be noted in the logs, as well as the depths at which the hole was stopped for any reason;

The penetration rate should be noted to provide a relative measure of rock hardness.

RC drill samples will be collected by the drill crew at 1m intervals into a 20kg numbered bag and delivered to the sample preparation area at the camp. Field geologists should regularly observe the sampling to ensure that samples are taken according to the specifications in the drill contract. RC drilling should be carried out by experienced drillers using the appropriate equipment. This equipment would include compressors with sufficient air capacity for the depths and material drilled. Air capacity can be easily boosted by using auxiliary compressors that are capable of providing sufficient air to prevent water inflow below the water table. A downhole face sampling hammer should be used as well as stabilisers to prevent deflection of the hole near the collar. In addition, the hole should be sealed to prevent air and dust loss at the collar. It is good practice to implement the use of 'blow-backs' at the end of each sample run whereby the bit is pulled back from the bottom of the hole and the hole is cleaned out for a few seconds with air. RC sampling should always be carried out with care so that the results can be successfully matched with any diamond twin holes. This assists in allaying any concerns regarding RC drilling as a resource definition tool. There is much debate regarding the sampling of wet RC holes. If the sample cannot be kept dry by the air pressure used, then the samples should not be collected at all. 77


RC samples should be collected through a properly designed and fitted cyclone that minimises dust loss. After collection and weighing of the entire sample, a riffle splitter should be used to split the sample down to a manageable size for assaying; approximately 4kg. Spear sampling is acceptable if it is carried out properly and with due care in terms of sample homogenisation. Sample residues should be clearly marked and stored securely under cover. shows the proposed RC sampling procedure. The samples are to be numbered in sequence from the top to the total depth with the numbering correlating to the drill depth. RC Cyclone Output (1 metre = 15 â&#x20AC;&#x201C; 25 kg)

25mm Split

Chip Tray (for a visual record)

Logging

15mm Split Residue bagged and stored at field camp Oxide material >7 kg Sulphide material > 15 kg

15mm Split

Sample for Laboratory (1.5 â&#x20AC;&#x201C; 4 kg)

Duplicate (back-up) 1.5 â&#x20AC;&#x201C; 4 kg

Fractional samples taken (optional)

(bagged and stored undercover at field camp)

Figure 37-1: RC sampling procedure.

37.7 Drill hole and Sample Numbering It is recommended that a consistent numbering system be developed that adequately identifies the project, sampling method (surface grab, trench, drill core or RC) followed by a number in 78


sequence. This must be recorded together with date sampled and the coordinates, including the collar elevation.

79


Terrafirma NI-43-101