Hellyer Tailings Retreatment Project, Tasmania · processing facility at Hellyer, adjacent to the...

Competent Persons Report

Hellyer Tailings Retreatment Project, Tasmania

CSA Global Report N R301.2017 20 November 2017

www.csaglobal.com

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NQ MINERALS PLC HELLYER TAILINGS RETREATMENT PROJECT, TASMANIA

CSA-Report N: R301.2017

Report prepared for

Client Name NQ Minerals Plc

Project Name/Job Code NQMCPR01

Contact Name Mike Barden

Contact Title Chief Development Officer

Office Address Finsgate, 5-7 Cranwood St, London, UK

Report issued by

CSA Global Office

CSA Global Pty Ltd

Level 2, 201 Leichhardt Street

Spring Hill QLD 4000

AUSTRALIA

PO Box 1077

Spring Hill QLD 4004

AUSTRALIA

T +61 7 3106 1200

F +61 7 3106 1201

E [email protected]

Division Corporate

Report information

File name R301.2017 NQMCPR01 CPR - NQ Minerals Hellyer Tailings Retreatment Project FINAL_v2

Last edited 31-Dec-17 5:35:00 AM

Report Status Final

Author and Reviewer Signatures

Coordinating Author

David Williams

BSc (Hons), MAusIMM Signature:

Coordinating Author

Peter Cranfield

BSc (Hons) ARSM, MIMMM, C.Eng

Signature:

Peer Reviewer Galen White

BSc (Hons), FAusIMM, FGS Signature:

CSA Global Authorisation

Galen White

BSc (Hons), FAusIMM, FGS Signature:

Copyright 2017

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Disclaimers

Purpose of this document

This Report was prepared exclusively for NQ Minerals Plc (the Client) by CSA Global Pty Ltd (CSA Global). The quality of information, conclusions, and estimates contained in this Report are consistent with the level of the work carried out by CSA Global to date on the assignment, in accordance with the assignment specification agreed between CSA Global and the Client.

Notice to third parties

CSA Global has prepared this Report having regard to the particular needs and interests of our client, and in accordance with their instructions. This Report is not designed for any other persons particular needs or interests. Third party needs and interests may be distinctly different to the NQ Minerals Plcs needs and interests, and the Report may not be sufficient nor fit or appropriate for the purpose of the third party.

CSA Global expressly disclaims any representation or warranty to third parties regarding this Report or the conclusions or opinions set out in this Report (including without limitation any representation or warranty regarding the standard of care used in preparing this Report, or that any forward-looking statements, forecasts, opinions or projections contained in the Report will be achieved, will prove to be correct or are based on reasonable assumptions). If a third party chooses to use or rely on all or part of this Report, then any loss or damage the third party may suffer in so doing is at the third partys sole and exclusive risk.

CSA Global has created this Report using data and information provided by or on behalf of the Client [and the NQ Minerals Plc agents and contractors]. Unless specifically stated otherwise, CSA Global has not independently verified that all data and information is reliable or accurate. CSA Global accepts no liability for the accuracy or completeness of that data and information, even if that data and information has been incorporated into or relied upon in creating this Report.

Results are estimates and subject to change

The interpretations and conclusions reached in this Report are based on current scientific understanding and the best evidence available to the authors at the time of writing. It is the nature of all scientific conclusions that they are founded on an assessment of probabilities and, however high these probabilities might be, they make no claim for absolute certainty.

The ability of any person to achieve forward-looking production and economic targets is dependent on numerous factors that are beyond CSA Globals control and that CSA Global cannot anticipate. These factors include, but are not limited to, site-specific mining and geological conditions, management and personnel capabilities, availability of funding to properly operate and capitalise the operation, variations in cost elements and market conditions, developing and operating the mine in an efficient manner, unforeseen changes in legislation and new industry developments. Any of these factors may substantially alter the performance of any mining operation.

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1 Executive Summary

CSA Global Pty Ltd (CSA Global) was engaged by NQ Mineral Plc (NQM) to compile a Competent Persons

Report (CPR) setting out, in addition to background information, the Mineral Resource estimate and Ore

Reserve estimate relating to the Hellyer Tailings Retreatment Project (Hellyer or Hellyer Project), located

in Tasmania, Australia.

1.1 Tenure

NQM holds a consolidated granted mining leases CML103M/1987 over the area including the tailings dam

and the processing plant. This lease covers all the areas required for the proposed tailings reclaim

operations. The mining lease is held by Hellyer Gold Mines Pty Limited, a wholly owned subsidiary of NQM.

The lease was granted on 24 February 1988 and was renewed and extended in June 2009 until 30 June

2020. The lease can then be further extended, for as long as the mine is operated, as advised by Mineral

Resources Tasmania. The annual permit has been paid in full until 15 February 2018.

1.2 Project Location, Access and Climate

The Hellyer Mine is located in north-western Tasmania 80 km south of Burnie, just off the main highway

between Burnie and Queenstown and four hours drive northwest of the capital, Hobart. The area

surrounding the project is mainly forest reserve with farmland. There has been extensive historical mining

activity in the area. The licence area has a polymetallic (Cu-Pb-Zn-Au-Ag) deposit and associated ore

processing facility at Hellyer, adjacent to the tailings dam.

This part of Tasmania lies in a high rainfall area with annual average precipitation of 2,180 mm (Bureau of

Meteorology Waratah) falling all year although higher falls and snowfall occur over winter months.

1.3 Geology and Nature of the Deposit

The Hellyer deposit is a volcanic hosted polymetallic massive sulphide deposit located within the Mount

Read volcanic arc of western Tasmania. This region also hosts similar deposits such as Hercules, Que River,

Roseberry and Mount Lyell. Mineralisation is sulphide hosted and comprised predominantly of pyrite,

with lesser sphalerite, galena and arsenopyrite. The pyrite must be carefully managed when exposed to

air to prevent its potential for oxidation and consequent and potential acid mine drainage issues. The

economic metals mined at Hellyer were lead, zinc, copper, gold and silver. The Hellyer deposit was mined

by underground methods during the period 1989 to 2000. The Fossey deposit extends down plunge from

the Hellyer deposit and was mined by Bass Metals Pty Ltd (Bass Metals) between 2010 and 2012.

Tailings from the mill were deposited in a depression approximately 1 km to the west of the Hellyer mill.

The tails were simultaneously inundated with water to prevent oxidation of the sulphide species present

in the tails. The tails were partially dredged by Polymetals Group (Polymetals) and retreated between

2006 and 2008, with the reprocessed tails deposited in the Shale Pit and Western Arm. Tails from

processed Fossey deposit ore were also discharged into the Western Arm.

1.4 Mineral Resource Estimate

The Mineral Resource estimate for the Hellyer Tailings Storage Facility (TSF) is presented in Table 1. The

Mineral Resource estimate is reported in accordance with the JORC Code1. Table 2 presents the metal

totals, as calculated from Table 1 (only gross totals are presented).

1 Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. The JORC Code, 2012 Edition. Prepared by: The Joint Ore Reserves Committee of The Australasian Institute of Mining and Metallurgy, Australian Institute of Geoscientists and Minerals Council of Australia (JORC).

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CSA Global considers that data collection techniques are consistent with industry good practice and

suitable for use in the preparation of a Mineral Resource estimate. Vibracore drill samples were used to

interpolate grades into blocks using ordinary kriging. Several methods were used to validate the block

model, including visual review and a comparison of sampling and block model grades. A three-dimensional

block model representing the mineralisation was created using Datamine software.

The Mineral Resource is considered to have reasonable prospects for eventual economic extraction (a

required condition under JORC) due to the volume and grade of mineralisation, the tailings are readily

amenable for extraction by dredging, and the project has access to critical infrastructure, including a

processing plant. The potential economic viability has also been assessed with respect to the preparation

of Ore Reserves and economic analysis (see Sections 10 and 11 of this report).

Table 1: Hellyer Tailings Storage Facility, Mineral Resource estimate

JORC classification

Gross Net attributable

Operator Tonnage (Mt)

Zn %

Pb %

Ag g/t

Au g/t

Cu %

Tonnage (Mt)

Zn %

Pb %

Ag g/t

Au g/t

Cu %

Measured 2.05 3.31 3.35 94 2.63 0.2 2.05 3.31 3.35 94 2.63 0.2

NQM Indicated 5.99 2.29 2.95 93 2.55 0.18 5.99 2.29 2.95 93 2.55 0.18

Inferred 1.21 1.00 2.60 86 2.57 0.19 1.21 1.00 2.60 86 2.57 0.19

Total 9.25 2.35 2.99 92 2.57 0.19 9.25 2.35 2.99 92 2.57 0.19

Note: No lower cut-off reporting grade has been applied. Differences may occur due to rounding. (Datamine model: hel717md.dm).

Table 2: Hellyer Tailings Storage Facility, Mineral Resource estimate metal tonnes and ounces, gross total only, all attributable to NQM

JORC classification Gross

Tonnage Zn (t) Pb (t) Ag (oz) Au (oz) Cu (t)

Measured 2,050,000 67,900 68,700 6,195,400 173,300 4,100

Indicated 5,990,000 137,200 176,700 17,910,200 491,100 10,800

Inferred 1,210,000 12,100 31,500 3,345,600 100,000 2,300

Total 9,250,000 217,400 276,600 27,360,300 764,300 17,600

Note: Metal tonnages and ounces rounded from calculated values.

1.5 Previous Mining Studies

During the period 2006 to 2008, Polymetals successfully dredged and processed approximately 2 million

tonnes (Mt) of tailings at Hellyer, targeting the Zn value through the sale of a bulk Zn/Pb concentrate.

Operations ceased in September 2008.

In 2010, CSA Global prepared a Resource Report for the Hellyer tailings as part of a Resource Estimate and

Mining Study (CSA Global, 2010). This report was used by Como Engineers Pty Ltd (Como) as a part of a

broader project evaluation for the then owners of Hellyer, Bass Metals.

In 2013, Ivy Resources Pty Ltd (Ivy Resources) acquired Hellyer and in November 2013 completed a

Feasibility Study of the Hellyer Tailings Retreatment Project, which presented results including marketing

studies, geology, Mineral Resource estimation, mining, mineral processing, infrastructure, permitting, and

financial analysis (Ivy Resources, 2013). The mining technology considered in the study was dredging.

As part of the Ivy Resources Feasibility Study, Como completed a Definitive Feasibility Study (DFS) on

the project with a specific scope related to direct cyanide leach and leaching of the Albion process product

(Como, 2013). This was updated in 2015 to include costs for various feed rates to the cyanide leach circuit

and subsequent processes (Como, 2016).

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In 2016, Ausenco produced a report on the tailings treatment restart cost estimate following a request by

NQM based on a refined processing flowsheet for sequential flotation of the tailings (Ausenco, 2016).

NQM also requested Pitt & Sherry to prepare a report in November 2016 to assess the status of

metallurgical testwork in connection with the sequential flotation of the Hellyer tailings (Pitt & Sherry,

2016).

A relevant study was also conducted by Commodity and Mining Insight Ltd (CM Insight, 2016) that

included preliminary economic modelling of the potential reprocessing of the Hellyer tailings.

1.6 Current Mining Study

In 2017, AusGEMCO Pty Ltd (AusGEMCO) were engaged by NQM to complete an Ore Reserve estimate

over the Hellyer Tailings Project. This study is documented in a report titled Hellyer Tailings Retreatment

Project Tasmania, Ore Reserve Estimate dated September 2017. This report, along with supporting data

and information compiled during the study was made available to CSA Global for review and CSA Global

completed a gap analysis and peer review of this study prior to inclusion of the study contents in this

report as current material information.

A summary of this study is presented in the body of this CPR, referenced as appropriate and augmented

by CSA Global independent comment as appropriate.

1.6.1 Mine Design and Planning

The mine design for the Hellyer Tailings Retreatment Project has been developed by AusGEMCO by

modelling the profit from the exploitation of each block of the Mineral Resource block model (CSA Global,

2017) and by assessment of the Net Smelter Return from selling concentrates as final products of the mine

production. For the purpose of this study three types of concentrate are planned as final products: lead

concentrate, zinc concentrate and pyrite/gold/silver concentrate.

The Block Profit Modelling is organised for each impoundment area comprising the Hellyer TSF. The

economic inputs and mining and processing assumptions are based on those used in the financial model

described in Section 10. Two criteria are used in the block modelling: Block Unit Profit per dry metric tonne

of in-situ tailings (US$/dmt) of a block and Block Profit (US$) per block of the geological model.

The results obtained for the Main Dam consider the tails topography to the terrain bottom after the

dredging operations that were conducted by Polymetals during the period November 2006 to August

2008. A further variant covers the full Mineral Resource including the reprocessed tailings deposited in

the Shale Pit as a result of this previous dredging.

The average Block Unit Profit estimate is US$51.84/dmt of tails and the standard deviation is US$5.25/dmt.

The results of the Block Profit (US$) vary within a range from US$100,000 up to US$1,400,000 per block

of the geological model. The (X, Y) size of a block is 25 m x 25 m while block height is variable. The entire

area of Main Dam is characterised with positive estimates for both the economic criteria used.

For the purposes of mining, the sequencing of panels is based on the analysis of the Block Unit Profit

model of the dam.

Dredging is the major mining method for the extraction of Hellyer tailings. Hydraulic mining with slurry

pumps mounted on a platform and water cannon wash are the other mining methods to be used.

Production scheduling of Hellyer Tailings Dam is organised using the dredging assumptions as follows:

dredging rate = 3,234 dmt/day or 154 dmt/hour (21 hours per day); resources time of dredging = 355 days

per year (10 days for planned maintenance); number of shifts = two shifts per day (each shift = 12 hours);

and working days per week = seven days/week. These assumptions are based on analysis of the dredge

performance during the 2006 to 2008 dredging period.

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1.6.2 Environmental, Law Compliance and Permits

Caloundra Environmental Pty Ltd and Hellyer Gold Mine Pty Ltd (HGM) have conducted preliminary

assessments to identify key environmental aspects associated with the proposed development.

Emission limits have been set by the Environmental Protection Authority (EPA) to manage the point source

pollution (the TSF outflow), and the environmental authority for the tailings reprocessing operation, PCE

7386, sets emission limits from the Main Dam in its condition EF2.

Historically, zinc has been the most difficult limit to meet at the TSF outfall. Since the Aberfoyle Resources

Ltd operation ceased production in June 2000 and closed in 2003, sulphidic tailings have been left

exposed in the upper reaches of the eastern arm of the Main Dam and in Mill Creek. The acidity generated

from these sulphides caused ongoing issues with pH in the Main Dam. The pH in the Main Dam is

important due to the relationship between a pH above 8.0 and total zinc concentrations at the TSF outfall.

HGMs improved management protocols, such as adding a lime slurry directly into the eastern arm

spillway before it overflows into the main TSF, have been responsible for most of the improvements seen

since 2016.

Environmental licence conditions for the site since 2006 have required a minimum pH of 8.0 and a

maximum Total Zn of 0.8 mg/L at the TSF outfall. A review of long-term water quality records indicates

that with good management procedures and the remediation proposed by HGM, this should be readily

achievable going forward.

HGM holds the consolidated mining lease, CML 103M/87 and the environmental licences PCE 7386

(tailings mining and reprocessing) and PCE 7759 (Fossey underground mine). HGM plans to reprocess

tailings under PCE 7386.

The mining lease encompasses the area at Hellyer where the tailings impoundment and the processing

plant are situated. The original lease (CML 103M/1987) was granted on 24 February 1988. It was renewed

and extended in June 2009. It is currently valid until 20 June 2020. An application for an extension of the

lease can only be made no more than three months before and one month after the lease ceases to be

effective.

In October 2017, following submission by HGM, the EPA of Tasmania approved the Environmental

Management Plan (EMP) for implementation of the Hellyer Project, which was prepared and submitted

by Caloundra Environmental Pty Ltd in accordance with the Condition G7 of Permit Conditions

Environmental (PCE) No. 7386.

1.6.3 Mineral Processing

A processing plant exists at Hellyer with all the relevant equipment required to reprocess tailings. The

plant was used previously to produce a range of concentrates from mined ore and a bulk concentrate

from previous tailings reprocessing.

The plant is a relatively modern base metals processing facility that was commissioned in early 1989 and

designed to treat the complex Hellyer fine grained copper-silver-lead-zinc orebody. Its initial capacity was

for 1.0 million tonnes per annum (Mt/a) with a circuit consisting of a semi-autogenous grind (SAG) mill,

ball mill and sequential copper, lead, zinc and bulk flotation circuits. The plant was expanded to 1.25 Mt/a

in early 1990 with the addition of pebble crushing, DSM screens in the SAG mill circuit and extra lead and

bulk circuit flotation capacity.

Early processing performance was typified by low metal recoveries to concentrates, but these improved

during subsequent operation.

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This plant is in reasonable condition and currently under a maintenance program that includes some

activities focused on preparation for the proposed retreatment project. However further refurbishment

will be required before it can be brought back into production.

The processing plant is expected to operate at an average tailings feed rate of 154 dmt/hour with

availability of 92%. This performance was achieved during the previous dredging operations (2006 to

2008). The plant is already equipped with a high degree of instrumentation, automation and process

control equipment enabled by online, real-time measurement and recording.

The metallurgical processing characteristics of the Hellyer ore have been extensively tested and are well

known. Recent tests have been conducted by ALS Laboratories (ALS) in Burnie and reviewed by Pitt &

Sherry Group (2016) with the objective of defining a new flowsheet for the reprocessing of Hellyer tailings

and optimising metal recoveries.

Based on the analysis of these test results, understanding of the potential reprocessing characteristics has

been improved and a number of options to optimise the process identified.

Arsenic (As) is the only significant deleterious element in the proposed concentrate production. NQM

advised that it will target As grades below 1% in the planned concentrate products and/or use the blending

capabilities of marketing agents to enable product saleability.

Table 3 below summarises the assumptions about concentration production in the current study.

Table 3: Planned parameters of concentrate production

Parameter Unit Lead concentrate Zinc concentrate Au/Ag/pyrite concentrate

Pb grade % 37 5

Pb recovery % 47

Zn grade % 6 45

Zn recovery % 38

Au grade g/t 6.9 2 2.77

Ag grade g/t 850 160 64

Concentrate mass recovery % 51

The residuals from tailings retreatment in the Hellyer plant need additional storage capacity due to the

specific characteristics of the residuals and the proposed use of dredging for mining. The Hellyer residue

will be stored underwater to prevent potential oxidisation and acid formation.

The total quantity of residue that will be released from the processing plant after the treatment of the

tailings (9.7 Mt) is 4.2 Mt.

A new TSF (TSF2) will be built and ready for storage of the residue by April 2019 (Longey, 2017). The

embankment is proposed to be located approximately 550 m downstream of the Hellyer Main Dam,

located approximately 2 km northwest of the Mill Site. The initial phase will hold 3.0 Mt, with a planned

lift, scheduled for 2024, that will provide storage for the remaining 1.2 Mt. The new TSF2 footprint is

shown in Figure 1.

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Figure 1: New TSF2 downstream of Main Dam (after Longey, 2017)

For the period from April 2018 until March 2019, a quantity of 0.49 Mt residue will need to be temporarily

stored in accordance with the planned schedule detailed in Section 9. The Finger Pond will be used for

this purpose and to enable this the tailings that are currently located in the Finger Pond will be transferred

to the Main Dam during the pre-production period. The quantity of 0.49 Mt residue temporarily stored in

the Finger Pond will be transferred to TSF2 by using slurry pumps prior to lowering the water level in the

Main Dam and Finger Pond as described in the mining plan.

The transport of the residue from the processing plant to the storage dams will be done with a slurry

pump. Deposition of residuals into the storage areas will be sub-aqueous. This approach will minimise any

risks associated due to contact with oxygen in the air and potential oxidation.

1.6.4 Economic Evaluation

All capital cost estimates for the project were supplied to AusGEMCO by NQM. The total estimate is

US$31,253,570. All costs are projected over the LOM period of 114 months (March 2017 until September

2026 for the purposes of evaluation). Most of the capex is allocated over the first two years of the project

commencement. The highest component of the capital expenditure is the cost for building a new TSF

(US$16,136,364).

NQM supplied the operating costs for the Hellyer Tailings Project. Table 4 below reflects a summary of

some operating costs per unit product and run of mine (ROM) tailings.

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Table 4: Hellyer Tailings Project operating expenditure

Cost Unit Value

Dredging A$/dmt 2.84

Hydraulic mining A$/dmt 2.84

Processing A$/dmt 18.5

Logistics EXW to FOB A$/wmt 18.55

Logistics FOB to CIF A$/wmt 25

Sales and marketing A$/month 20,000

Shutdown maintenance A$/month 400,000

General and administration A$/LOM 12,234,527

Royalty Percent net revenue 5

Mine closure/rehabilitation A$ 2,000,000

Two variants of the economic evaluation of Hellyer Tailings Retreatment Project have been assessed.

The first variant reflects a discounted cash flow (DCF) model based on the Ore Reserve estimate of the

Hellyer Project. The basic metrics of the analysis are presented in Table 5 below. The NPV is positive

(US$113.2 million) for the case that incorporates the acquisition cost of the Project. The Discounted Cash

Flow Internal Rate of Return (DCFIRR) is 91% which is higher than the project discount rate of 10%. The

NPV calculated without the acquisition cost is US$128.5 million and the DCFIRR is 197%. This gives grounds

to accept the Hellyer Tailings Retreatment Project as economically effective, which is a precondition for

reporting its Ore Reserve in accordance with the JORC Code (2012).

Table 5: Summary of the DCF model results based on Ore Reserve estimate

Parameters Unit Value

Net revenue US$M 628

Operating expenses US$M 343

Cash flows before tax US$M 285

Cash flows after tax and acquisition US$M 183

With Acquisition Cost

NPV US$M 113.2

DCFIRR % 90.94

DCFPBP months 28

Without Acquisition Cost

NPV US$M 128.4

DCFIRR % 197.42

The second variant is an option of the evaluation of the Hellyer Project with the inclusion of the Inferred

Mineral Resource of Shale Pit which could be extracted at the end of the life of mine (LOM). This

assessment is a requirement of the 2012 JORC Code, Table 1 Modifying Factors or Assumptions about

the manner in which the Inferred Mineral Resources are utilised and the sensitivity of the outcome of

their inclusion. The resource of Shale Pit is 1.2 Mt and the total quantity of tailings included in the DCF

model for this variant is 9.7 Mt.

The basic metrics of the DCF model are summarised in Table 6. The NPV is positive (US$124.7 million) for

the case that incorporates the acquisition cost of the Project. The DCFIRR is 91% which is higher than the

project discount rate of 10%. This give grounds to accept the Hellyer Tailing Project as economically

effective. The Discounted Cash Flow Payback Period (DCFPBP) is 28 months. The NPV calculated without

the acquisition cost is US$139.9 million and the DCFIRR is 197%.

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Table 6: Summary of the DCF model results with inclusion of the Shale Pit resource

Parameters Unit Value

Net revenue US$M 708

Operating expenses US$M 388

Cash flows before tax US$M 320

Cash flows after tax and acquisition US$M 209

With Acquisition Cost

NPV US$M 124.7

DCFIRR % 91.26

DCFPBP months 28

Without Acquisition Cost

NPV US$M 139.9

DCFIRR % 197.46

1.7 Ore Reserve Estimate

The Hellyer TSF Ore Reserve estimate is reported in Table 7 and was compiled for NQM as a part of the

mine planning study undertaken by AusGEMCO. This study followed a process of detailed mine

optimisation using AusGEMCOs original method that incorporated Geological Block Profit Modelling,

mine design, sequencing, production scheduling economic evaluation and mine project risk assessment.

The resulting Ore Reserve estimate was prepared using the Guidelines of the Australasian Code for

Reporting of Ore Reserves (JORC Code, 2012).

The Ore Reserve estimate relates specifically to the conversion of Measured and Indicated Mineral

Resources of the Hellyer TSF Project and includes consideration of the modifying factors documented in

Appendix 1 JORC Code Table 1.

No cut-off grade(s) has been used in the reserve estimation due to the specific nature of mining the tailings

by dredging. Details on the implementation of other modifying factors are presented in Section 3 of the

AusGEMCO technical report (AusGEMCO, 2017), and are summarised in Section 7 of this report.

All material classified as Measured Mineral Resources in the Hellyer TSF has translated into Proved Ore

Reserves while all material classified as Indicated Mineral Resources has translated to Probable Ore

Reserves. The reserve conversion is based on the CSA Global Mineral Resource estimate updated 24

August 2017 (CSA Global, 2017).

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Table 7: Hellyer TSF Ore Reserve estimate* (6 September 2017)

Ore Reserves

Gross Operator

Tonnage (Mt)

Grade Contained metal

NQM

Zn % Pb % Ag g/t Au g/t Cu % Zn (t) (00)

Pb (t) (00)

Ag (oz) (000)

Au (oz) (000)

Cu (t) (00)

Proved 2.05 3.31 3.35 94 2.63 0.21 679 687 6,212 173 43

Probable 5.99 2.29 2.95 93 2.55 0.18 1,372 1,767 17,941 491 108

Total 8.04 2.55 3.05 93 2.57 0.19 2,050 2,454 24,153 664 151

Net attributable

Tonnage (Mt)


Zn % Pb % Ag g/t Au g/t Cu %

Zn (t) (00)

Pb (t) (00)

Ag (oz) (000)

Au (oz) (000)

Cu (t) (00)

Proved 2.05 3.31 3.35 94 2.63 0.21 679 687 6,212 173 43

Probable 5.99 2.29 2.95 93 2.55 0.18 1,372 1,767 17,941 491 108

Total 8.04 2.55 3.05 93 2.57 0.19 2,050 2,454 24,153 664 151

* Mt tonnes and Zn, Ag, Au and Cu grades are rounded to two decimal places, Ag to the nearest whole number. Contained metal tonnes are reported to nearest hundred, and ounces to nearest thousand tonnes.

Table 8: Hellyer TSF non-JORC Reserve deposited material (6 September 2017)

Non-JORC Reserves

Gross Operator

Tonnage (Mt)


NQM

Zn % Pb % Ag g/t Au g/t Cu % Zn (t) (00)

Pb (t) (00)

Ag (oz) (000)

Au (oz) (000)

Cu (t) (00)

Fossey 0.45 1.84 1.37 35 1.80 0.03 83 62 512 26 1

Shale Pit 1.21 1.00 2.60 86 2.57 0.19 121 315 3,346 100 23

Total 1.66 1.23 2.27 72 2.36 0.15 204 376 3,857 126 24

* Mt and Zn, Ag, Au and Cu grades are rounded to two decimal places, Ag to the nearest whole number. Contained metal tonnes are reported to nearest hundred, and ounces to nearest thousand tonnes.

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Table 8 above shows the estimates of additional deposited tailings material at Hellyer. This is not classified

as a JORC Code Ore Reserve category. The Fossey tailings were deposited on top of the existing tailings in

the Western Arm Dam after preparation of the 2010 CSA Global Mineral Resource estimate. At present,

the Fossey tailings are unclassified while the tailings beneath them are classified as a Probable Reserve.

However, the extraction of the Probable Reserve of the Western Arm Dam is possible only after the

extraction of Fossey tailings which lie above them. For this reason, the Fossey tailings have been taken

into account in the mine plan and financial model of Hellyer Project.

Additional deposited tailings materials are located in the Shale Pit. The recent update of the Hellyer

Resource model in 2017 has classified these tailings as an Inferred Mineral Resource, which is insufficient

for their translation into a JORC Ore Reserve category. These tailings have an economic potential and have

been analysed in the aforementioned variant to mine plan and financial model for the Hellyer Project.

1.8 Risk Assessment

Ore Reserve Risk has been assessed by using the Monte Carlo method to generate randomly distributed

sample estimates for geological parameters such as in-situ Pb grade, Zn grade, Au grade, Ag grade and

tailings density. This risk evaluation used a similar cash flow model to that developed for the economic

evaluation of the Hellyer Tailings Retreatment Project in Section 10 of the Report. However, because this

risk model applied a simplified assumption to the timing of tax payments it resulted in a slightly different

deterministic Project NPV (US$118.9 million) from the Project NPVs referenced above.

For the purpose of Ore Reserve Risk, all other inputs to the cash flow model are assumed to be constant.

Two variants were used for the assessment of the standard deviations of the geological variables:

Variant 1 used the monthly estimates of the grades in the production schedule to determine the

standard deviation.

Variant 2 assessed standard deviations by using the results of CSA Global variogram modelling of the

Hellyer Mineral Resource (CSA Global, 2010), which captures the short-range variability.

Estimates of variation of tailings density were obtained using a standard deviation of 10% around the

assumed constant tailings density (1.93 t/m3) as applied in the Geological Block Model.

Two criteria are used for assessing the Ore Reserve Risk:

Risk that the stochastic NPV is less than the deterministic NPV.

Risk that the stochastic NPV is less than zero.

1.8.1 Variant 1

The estimates of the Ore Reserve Risk are presented in Table 9. The criteria using the stochastic project

NPV (US$122.5 million) relative to the deterministic Project NPV (US$118.9 million) as a critical level of the

Ore Reserve risk shows a risk estimate of 32%, which means that the stochastic NPV is higher than the

deterministic NPV for 68% of estimates. In other words, this also means that the deterministic NPV, using

only average estimates of the tonnage and grades of Ore Reserves, is an underestimate. The results using

the second criterion of the risk analysis (Table 9) indicate a zero Ore Reserve Risk because the stochastic

Project NPV (US$122.5 million) is much higher than zero.

These results give ground to conclude that the current estimates of the variability of the tailings grades

and density will not have a significant negative impact on the successful and profitable exploitation of

Hellyer tailings.

XIII



Table 9: Ore Reserve Risk estimates Variant 1

NPV mean (US$) NPV Std Dev (US$) Critical level (US$) Probability (%) Risk (%)

122,494,493 7,724,451 118,901,024 67.91 32.09

122,084,493 7,724,451 0 100 0

1.8.2 Variant 2

The estimates of the Ore Reserve Risk using Variant 2 are summarised in Table 10.

The risk that the stochastic Project NPV (US$120.9 million) is less than the deterministic NPV

(US$118,901,024) is 35.24%, while the risk that the stochastic Project NPV is less than zero is 0%. These

estimates confirm the validity of the conclusions made for Variant 1 that:

The stochastic NPV is higher than the deterministic NPV, which indicates an underestimation of the

deterministic NPV.

The stochastic NPV is significantly higher than zero.

The estimates of ore grades and density will not have a significant negative impact on the profitable

exploitation of Hellyer tailings.

Table 10: Ore Reserve Risk estimates Variant 2

NPV mean (US$) NPV Std Dev (US$) Critical level (US$) Probability (%) Risk (%)

120,940,367 5,381,536 118,901,024 64.76 35.24

120,940,367 5,381,536 0 100 0

The Mining Project Risk assessment followed the methodology described in the references (Halatchev et

al., 2005; Halatchev, 2007; Davis et al., 2007). This methodology deals with the concept of the

development of a stochastic DCF model over LOM and treatment of all parameters of the mining project

as random quantities or functions depending on available input data.

The criterion for defining the Mining Project Risk are the DCFs of the mining project assessed with the

discounted cash flow model. This criterion is based on the risk of not achieving positive discounted cash

flows at each time step of the DCF analysis, which is a logical requirement of mining business. Such a

formulation of the Mining Project Risk model means that a strategy for achieving positive DCFs over the

LOM is set by the mining company.

To assess the Mining Project Risk, 300 Monte Carlo simulations were run, and their analysis indicates a

negative cash flow for the first period till the 14th month. After that period all cash flows are positive except

for the 23rd and 83rd months, which are affected by the increase of capex and mine closure bond costs

(23rd) and the increase in mining costs because of using water cannon washing technology and additional

capex (83rd).

The payback period of the stochastic cash flows profile is 28 months. As noted above, it is important to

note that the cash flows are assessed with income tax paid every month of the year.

The results of the Mining Project Risk assessment indicate that the risk is 100% for the period until the 14th

month. This is to be expected because the planned cash flows are negative for that period. After that

period the risk varies within the range from 0 to 10%. There are three short periods of higher risk after

the 14th month, the first two are due to the negative cash flow months mentioned above, and the third

during shutdown of the mining operations and mine closure.

Generally, the predicted profile of the Mining Project Risk is attractive for investment and useful for the

decision-making process. It can also help the management of NQM in shaping a strategy about the

mitigation of Mining Project Risk and achieving sustainable exploitation of the Hellyer tailings.

XIV



Contents

Report prepared for ............................................................................................................................................ I

Report issued by ................................................................................................................................................. I

Report information ............................................................................................................................................. I

Author and Reviewer Signatures ........................................................................................................................ I

DISCLAIMERS ......................................................................................................................................................... II

Purpose of this document ................................................................................................................................. II

Notice to third parties ....................................................................................................................................... II

Results are estimates and subject to change .................................................................................................... II

1 EXECUTIVE SUMMARY ............................................................................................................................... III

1.1 Tenure ................................................................................................................................................ III

1.2 Project Location, Access and Climate ................................................................................................. III

1.3 Geology and Nature of the Deposit .................................................................................................... III

1.4 Mineral Resource Estimate................................................................................................................. III

1.5 Previous Mining Studies ..................................................................................................................... IV

1.6 Current Mining Study .......................................................................................................................... V 1.6.1 Mine Design and Planning .......................................................................................................... V 1.6.2 Environmental, Law Compliance and Permits ........................................................................... VI 1.6.3 Mineral Processing .................................................................................................................... VI 1.6.4 Economic Evaluation ............................................................................................................... VIII

1.7 Ore Reserve Estimate .......................................................................................................................... X

1.8 Risk Assessment ................................................................................................................................ XII 1.8.1 Variant 1 ................................................................................................................................... XII 1.8.2 Variant 2 .................................................................................................................................. XIII

2 INTRODUCTION ........................................................................................................................................... 1

2.1 Context, Scope and Terms of Reference ............................................................................................. 1

2.2 Compliance with the JORC Code ......................................................................................................... 1

2.3 Principal Sources of Information ......................................................................................................... 1

2.4 Authors of the Report Qualifications, Experience and Competence ................................................ 2

2.5 Independence ...................................................................................................................................... 3

2.6 Declarations ......................................................................................................................................... 3

2.7 Results are Estimates and Subject to Change...................................................................................... 3

2.8 About this Report ................................................................................................................................ 4

2.9 Competent Person Statement ............................................................................................................. 4

3 PROPERTY DESCRIPTION AND TENURE........................................................................................................ 5

3.1 Property Location and Climate ............................................................................................................ 5

3.2 Property Description ........................................................................................................................... 6

3.3 Tenure ................................................................................................................................................. 7

4 GEOLOGY AND PROJECT HISTORY ............................................................................................................... 8

4.1 Geology ................................................................................................................................................ 8

XV



4.2 Project History ..................................................................................................................................... 8 4.2.1 Hellyer Base Metals Mine ........................................................................................................... 8 4.2.2 Metallurgical Accounting ............................................................................................................ 8 4.2.3 Retreatment of Tails ................................................................................................................... 8 4.2.4 Fossey Base Metals Mine ........................................................................................................... 9

5 MINERAL RESOURCE ESTIMATE ................................................................................................................. 11

5.1 Exploration History ............................................................................................................................ 11

5.2 Mineral Resource Estimate................................................................................................................ 12

6 PREVIOUS MINING STUDIES ...................................................................................................................... 15

7 CURRENT MINING STUDY .......................................................................................................................... 17

7.1 Mine Design and Planning ................................................................................................................. 17 7.1.1 Mine Design based on Block Profit Modelling .......................................................................... 17 7.1.2 Production Scheduling.............................................................................................................. 22

8 ENVIRONMENTAL, LAW COMPLIANCE AND APPROVED PERMITS ............................................................. 27

8.1 Key Environmental Aspects and their Management ......................................................................... 27

8.2 Relevant Legislation, Regulations, Codes and Polices ....................................................................... 30

8.3 Environmental Licences and Permits................................................................................................. 31

8.4 Environmental Permitting History ..................................................................................................... 32

9 MINERAL PROCESSING .............................................................................................................................. 33

9.1 Prior Processing Plant Preparation .................................................................................................... 33

9.2 Current Plant Configuration .............................................................................................................. 34

9.3 Planned Plant Operation ................................................................................................................... 35

9.4 Planned Concentrate Production ...................................................................................................... 37

9.5 Tailings Residue Storage .................................................................................................................... 42

10 ECONOMIC EVALUATION .......................................................................................................................... 46

10.1 Capital Cost Estimates ....................................................................................................................... 46

10.2 Operating Cost Estimates .................................................................................................................. 47

10.3 Financial Model Assumptions ............................................................................................................ 47

10.4 Discounted Cash Flow Model ............................................................................................................ 48 10.4.1 Discounted Cash Flow Model based on the Ore Reserves Estimate ........................................ 48 10.4.2 Discounted Cash Flow Model with Inclusion of Shale Pit Inferred Mineral Resource .............. 48

11 ORE RESERVE ESTIMATE ............................................................................................................................ 53

12 RISK ASSESSMENT ..................................................................................................................................... 57

12.1 Ore Reserve Risk Assessment ............................................................................................................ 57

12.2 Mining Project Risk Assessment ........................................................................................................ 59

13 CONCLUSIONS ........................................................................................................................................... 64

14 REFERENCES .............................................................................................................................................. 66

15 GLOSSARY ................................................................................................................................................. 67

XVI



16 ABBREVIATIONS AND UNITS OF MEASUREMENT ...................................................................................... 69

Figures Figure 1: New TSF2 downstream of Main Dam (after Longey, 2017) ...................................................................... VIII Figure 2: Project location ............................................................................................................................................ 5 Figure 3: Site layout .................................................................................................................................................... 6 Figure 4: Collar plan for Hellyer TSF .......................................................................................................................... 11 Figure 5: Zn % grade variation with depth, by year of drilling .................................................................................. 12 Figure 6: Block Unit Profit spatial distribution of Main Dam .................................................................................... 18 Figure 7: Block Profit spatial distribution of Main Dam ............................................................................................ 18 Figure 8: Block Profit spatial distribution of Finger Pond Dam ................................................................................. 19 Figure 9: Block Profit spatial distribution of Western Arm Dam ............................................................................... 19 Figure 10: Block Profit spatial distribution of Shale Pit ............................................................................................... 20 Figure 11: Mine sequence of Main Dam for benches B1 and B2 ................................................................................ 22 Figure 12: Monthly tails production schedule ............................................................................................................ 23 Figure 13: Monthly Zn head grade distribution .......................................................................................................... 24 Figure 14: Monthly Pb head grade distribution .......................................................................................................... 24 Figure 15: Monthly Au head grade distribution .......................................................................................................... 25 Figure 16: Monthly Ag head grade distribution .......................................................................................................... 25 Figure 17: TSF outflow pH versus total zinc (operations compared with closure) ................................................... 28 Figure 18: Emission improvement since 2016 ............................................................................................................ 29 Figure 19: TSF discharge pH and Total Zn since January 2016 .................................................................................... 29 Figure 20: TSF discharge pH versus Total Zn ............................................................................................................... 30 Figure 21: Hellyer mining lease ................................................................................................................................... 32 Figure 22: Hellyer Tailings lead and zinc grades by year ............................................................................................. 33 Figure 23: Inside view of the processing plant ............................................................................................................ 35 Figure 24: Flowsheet of the Hellyer processing plant ................................................................................................. 36 Figure 25: Tailings storage tanks behind the mill ........................................................................................................ 37 Figure 26: Schematic view of the proposed flotation technology .............................................................................. 38 Figure 27: Schedule of zinc production in concentrate............................................................................................... 40 Figure 28: Schedule of lead production in concentrate .............................................................................................. 40 Figure 29: Schedule of gold production in concentrate .............................................................................................. 41 Figure 30: Schedule of silver production in concentrate ............................................................................................ 41 Figure 31: Schedule of monthly tailings residues over LOM ....................................................................................... 43 Figure 32: New TSF2 downstream of Main Dam ........................................................................................................ 45 Figure 33: Histogram of NPV estimates Variant 1 .................................................................................................... 58 Figure 34: Histogram of NPV estimates Variant 2 .................................................................................................... 59 Figure 35: Stochastic DCFs profile ............................................................................................................................... 61 Figure 36: Mining Project Risk profile over LOM ........................................................................................................ 61

Tables Table 1: Hellyer Tailings Storage Facility, Mineral Resource estimate ..................................................................... IV Table 2: Hellyer Tailings Storage Facility, Mineral Resource estimate metal tonnes and ounces, gross total

only, all attributable to NQM ...................................................................................................................... IV Table 3: Planned parameters of concentrate production........................................................................................ VII Table 4: Hellyer Tailings Project operating expenditure ........................................................................................... IX Table 5: Summary of the DCF model results based on Ore Reserve estimate ......................................................... IX Table 6: Summary of the DCF model results with inclusion of the Shale Pit resource .............................................. X Table 7: Hellyer TSF Ore Reserve estimate* (6 September 2017) ............................................................................ XI Table 8: Hellyer TSF non-JORC Reserve deposited material (6 September 2017) .................................................... XI

XVII



Table 9: Ore Reserve Risk estimates Variant 1 .................................................................................................... XIII Table 10: Ore Reserve Risk estimates Variant 2 .................................................................................................... XIII Table 11: Summary table of assets .............................................................................................................................. 7 Table 12: Metallurgical accounting, Hellyer .............................................................................................................. 10 Table 13: Hellyer Tailings Storage Facility, Mineral Resource estimate .................................................................... 14 Table 14: Hellyer Tailings Storage Facility, Mineral Resource estimate metal tonnes and ounces (gross total

only, all attributable to NQM) .................................................................................................................... 14 Table 15: Parameters of mine design of all dams ...................................................................................................... 21 Table 16: TSF discharge emission limits ..................................................................................................................... 27 Table 17: Planned parameters of concentrate production........................................................................................ 39 Table 18: Schedule of residues storage ..................................................................................................................... 43 Table 19: Residue storage capacities ......................................................................................................................... 44 Table 20: Hellyer Tailings Project capital expenditure ............................................................................................ 46 Table 21: Hellyer Tailings Project operating expenditure ....................................................................................... 47 Table 22: Forecasting of Zn, Pb, Au and Ag prices ..................................................................................................... 48 Table 23: Summary of the DCF model results for Ore Reserve estimate .................................................................. 50 Table 24: Summary of the DCF model results including Shale Pit Inferred Mineral Resource .................................. 50 Table 25: DCF model of Hellyer Project based on Ore Reserve estimate .................................................................. 51 Table 26: DCF model of Hellyer Project with inclusion of Inferred Mineral Resource............................................... 52 Table 27: Hellyer TSF Ore Reserve estimate* (6 September 2017) ........................................................................... 54 Table 28: Hellyer Non-JORC Reserves (31 August 2017) of Fossey tails in the Western Arm and Shale Pit tails ...... 54 Table 29: Hellyer Ore Reserve Datamine files ........................................................................................................... 55 Table 30: Hellyer Ore Reserve Grid Datamine files .................................................................................................... 55 Table 31: Statistical input parameters of Ore Reserve Risk assessment ................................................................... 58 Table 32: Input parameters of variogram modelling ................................................................................................. 58 Table 33: Ore Reserve Risk estimates Variant 1 ..................................................................................................... 59 Table 34: Ore Reserve Risk estimates Variant 2 ..................................................................................................... 59 Table 35: Results of Mining Project Risk assessment ................................................................................................ 62

Appendices Appendix 1: JORC Code (2012 Edition) Table 1

1



2 Introduction

2.1 Context, Scope and Terms of Reference

CSA Global Pty Ltd (CSA Global) was engaged by NQ Mineral Plc (NQM) to compile a Competent Persons

Report (CPR) setting out, in addition to required background information, the Mineral Resource estimate

and Ore Reserve estimate relating to the Hellyer Tailings Retreatment Project (Hellyer or Hellyer Project),

located in Tasmania, Australia.

This report was prepared exclusively for NQM by CSA Global. The quality of information, conclusions and

estimates contained in this report are consistent with the level of the work carried out by CSA Global to

date on the assignment, in accordance with the assignment specification agreed between CSA Global and

NQM.

In preparing this report, CSA Global has:

1. Adhered to the JORC Code2.

2. Relied on the accuracy and completeness of the data provided to it by NQM, and that NQM made

CSA Global aware of all material information in relation to the project asset.

3. Relied on the accuracy and completeness of the data, information and reporting provided to it by

AusGEMCO Pty Ltd (AusGEMCO) where this relates to the Ore Reserve Study, having completed

appropriate gap analysis and peer review of this work prior to inclusion of this study in this report.

4. Relied on NQMs representation that it will hold adequate security of tenure for assessment of the

project to proceed.

5. Has independently verified the data used to prepare this report and concludes that the data provide

reasonable grounds for CSA Globals conclusions reached in this report.

6. Required that NQM provide an indemnity to the effect that NQM would compensate CSA Global in

respect of preparing the report against any and all losses, claims, damages and liabilities to which

CSA Global or its Associates may become subject under any applicable law or otherwise arising from

the preparation of the report to the extent that such loss, claim, damage or liability is a direct result

of NQM or any of its directors or officers knowingly providing CSA Global with any false or misleading

information, or NQ Minerals, or its directors or officers knowingly withholding material information.

7. Required an indemnity that NQM would compensate CSA Global for any liability relating to any

consequential extension of workload through queries, questions or public hearings arising from the

reports.

2.2 Compliance with the JORC Code

This report has been prepared in accordance with the JORC Code (2012 Edition), which is binding upon

Members of the Australian Institute of Geoscientists (AIG) and the Australasian Institute of Mining and

Metallurgy (AusIMM) for the reporting of Mineral Resources and Ore Reserves.

2.3 Principal Sources of Information

CSA Global has based its review based on information made available to the authors by NQM, along with

technical reports prepared by consultants, previous tenement holders and other relevant published and

unpublished data.

2 Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. The JORC Code, 2012 Edition. Prepared by: The Joint Ore Reserves Committee of The Australasian Institute of Mining and Metallurgy, Australian Institute of Geoscientists and Minerals Council of Australia (JORC).

2



CSA Global has relied upon discussions with NQMs management, as well as previous company and

consultants reports for information contained within this assessment.

CSA Global visited the Project on 17 July 2017, reviewing the project setting, infrastructure and discussing

the Projects history with the Resident Manager, Mr Bob Quilliam.

This report has been based upon information available up to and including 7 September 2017.

CSA Global has endeavoured, by making all reasonable enquiries, to confirm the authenticity, accuracy,

and completeness of the technical data upon which this report is based. Unless otherwise stated,

information and data contained in this technical report or used in its preparation has been provided by

NQM in the form of documentation, and from data obtained and observations made during the site visits.

NQM was provided a final draft of this report and requested to identify any material errors or omissions

prior to its lodgement.

Descriptions of the mineral tenure; tenure agreements, encumbrances and environmental liabilities were

provided to CSA Global by NQM. NQM has warranted to CSA Global that the information provided for

preparation of this report correctly represents all material information relevant to the mineral assets. Full

details on the tenement is provided in Section 3.

2.4 Authors of the Report Qualifications, Experience and Competence

CSA Global is a privately owned, mining industry consulting company headquartered in Perth, Western

Australia, with regional offices throughout the world. CSA Global provides geological, resource, mining,

management and corporate consulting services to the international resources sector and has done so for

more than 30 years.

This report has been prepared by a team of consultants sourced from CSA Globals Perth and Horsham

(UK) offices. The individuals who have provided input to the report have extensive experience in the

mining industry and are members in good standing of appropriate professional institutions. The

Consultants preparing this report are specialists in the fields of geology, exploration and Mineral Resource

estimation, in particular relating to tailings dam deposits.

The following individuals, by virtue of their education, experience and professional association, are

considered Competent Persons, as defined in the JORC Code (2012), for this report. The Competent

Persons individual areas of responsibility are presented below:

Coordinating author David Williams (Principal Resource Geologist) is responsible for Sections 1.1 to

1.4 and 2 to 5 of the report.

Contributing author Peter Cranfield (Associate Principal Mining Engineer) is responsible for Sections

1.5 to 1.8 and 6 to 12 of the report.

Peer reviewer Mr Galen White (Director Europe and Africa) has peer reviewed all sections of this

report.

David Williams, CSA Global Principal Resource Geologist, is a resource geologist with 25 years experience

in Mineral Resource estimation and mine geology. He has worked on a variety of commodities including

gold, iron ore, uranium, nickel laterite, graphite and base metals in Australia, Indonesia and Namibia.

David is a Competent Person for JORC reporting of Mineral Resources and is also a Qualified Person for

Canadian NI 43-101 reporting for gold and base metals. David is able to provide advice on due diligence

studies, JORC and NI 43-101 reporting and Independent Geologist Reports.

Peter Cranfield, Associate Principal Mining Engineer is an engineer with over 40 years experience in the

mining industry throughout South-East Asia and Australia, specialising in alluvial mining and tailings

projects. He has 10 years experience operating and managing narrow vein underground mines and 30

3



years experience in alluvial and tailings mining and processing, covering exploration, development and

production for tin, wolfram, gold, mineral sands and diamonds. Alluvial resource evaluation, feasibility

studies, planning and development of new mines. Exploration and evaluation through drilling, bulk

sampling, and pilot plants to generate sufficient data for mine planning.

Galen White, CSA Global (UK) Director and Principal Geologist, is a geologist with over 20 years

experience in the mining industry, with the last 12 years spent in consulting. He has experience in mineral

exploration, Mineral Resource estimation and mine geology in a variety of geological settings and in

relation to a variety of mineral commodities including gold, silver, base metals, uranium and iron ore

across Europe, Africa, Australia, Asia and the Americas. He has completed project reviews, Mineral

Resource estimates and audits, due diligence reviews, project management and formal stock exchange

reporting. He is a Competent Person as defined in the JORC Code (2012) and a Qualified Person in relation

to CIM compliance and NI 43-101 Technical Reporting.

2.5 Independence

Neither CSA Global, nor the authors of this report, has or has had previously, any material interest in

NQM, or the mineral properties in which NQM has an interest. CSA Globals relationship with NQM is

solely one of professional association between client and independent consultant.

CSA Global is an independent geological consultancy. Fees are being charged to NQM at a commercial

rate for the preparation of this report, the payment of which is not contingent upon the conclusions of

the report.

No member or employee of CSA Global is, or is intended to be, a director, officer or other direct employee

of NQM. No member or employee of CSA Global has, or has had, any shareholding in NQM.

CSA Global has completed technical work previously for Bass Metals Pty Ltd (Bass Metals), the previous

owners of the Project, and as such disclosure is required including declaration of any previous reports that

the Practitioner has prepared relating to the Mineral Assets being assessed. To meet this requirement,

the reader is advised that CSA Global completed the following work for Bass Metals:

CSA Global prepared the Mineral Resource estimate for the Hellyer Tailings Retreatment Project in

2010.

CSA Global prepared a Mining Study for the Project in 2010.

This report was not influenced by NQM, and reflects CSA Globals objective critical analysis and

professional judgement.

2.6 Declarations

This report has been prepared by CSA Global at the request of, and for the sole benefit of NQM. Its

purpose is to provide a technical assessment of the Hellyer Tailings Retreatment Project. It is not intended

to serve any purpose beyond that stated and should not be relied upon for any other purpose.

The statements and opinions contained in this report are given in good faith and in the belief that they

are not false or misleading. The conclusions are based on the reference date of 31 July 2017 and could

alter over time depending on exploration results, mineral prices and other relevant market factors.

2.7 Results are Estimates and Subject to Change

The interpretations and conclusions reached in this report are based on current scientific understanding

and the best evidence available to the authors at the time of writing. It is the nature of all scientific

conclusions that they are founded on an assessment of probabilities and, however high these probabilities

might be, they make no claim for absolute certainty.

4



The ability to achieve forward-looking production and economic targets is dependent on numerous

factors that are beyond CSA Globals control and that CSA Global cannot anticipate. These factors include,

but are not limited, to changes to site-specific mining and geological conditions, management and

personnel capabilities, availability of funding to properly operate and capitalise the operation, variations

in cost elements and market conditions, developing and operating the mine in an efficient manner,

unforeseen changes in legislation and new industry developments. Any of these factors may substantially

alter the performance of any mining operation.

2.8 About this Report

This report discusses the Mineral Resource estimate of the tailings material impounded in the Hellyer

Tailings Retreatment Project. The geology and mineralisation are discussed, as well as the drilling activities

completed which support the Mineral Resource estimate. The Project has been part of the Hellyer and

Fossey polymetallic underground mine, which operated from 1989 to 2000 and 2010 to 2102 respectively.

Management of the tailings facility has continued to the present day. No discussion is provided concerning

the Hellyer or Fossey underground orebodies, apart from a discussion on the grades of ore feed into the

Hellyer mill, and tailings subsequently discharged.

2.9 Competent Person Statement

The information that relates to Mineral Resources is based on information compiled by Mr David Williams,

a Competent Person, who is a Member of the Australasian Institute of Mining and Metallurgy. Mr Williams

is employed by CSA Global Pty Ltd, an independent consulting company. Mr Williams has sufficient

experience, which is relevant to the style of mineralisation and type of deposit under consideration, and

to the activity he is undertaking, to qualify as a Competent Person as defined in the 2012 Edition of the

Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves.

Mr Williams consents to the inclusion of the matters relating to Mineral Resources, based on his

information in the form and context in which it appears.

The information that relates to Ore Reserves is based on information received and reviewed by Mr Peter

Cranfield, a Competent Person, who is a Member of the Institute of Materials, Minerals and Mining.

Mr Cranfield is an Associate of CSA Global Pty Ltd, an independent consulting company. Mr Cranfield has

sufficient experience, which is relevant to the style of mineralisation and type of deposit under

consideration, and to the activity he is undertaking, to qualify as a Competent Person as defined in the

2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore

Reserves. Mr Cranfield consents to the inclusion of the matters relating to Ore Reserves, based on his

information in the form and context in which it appears.

5



3 Property Description and Tenure

3.1 Property Location and Climate

Hellyer is located in north-western Tasmania 80 km south of Burnie, just off the main highway between

Burnie and Queenstown and four hours drive northwest of the capital, Hobart. The area surrounding the

project is mainly forest reserve with farmland. There has been extensive historical and recent mining

activity in the area, including the Hellyer base metals mine located adjacent to the Hellyer. The project

location is presented in Figure 2.

This part of Tasmania lies in a high rainfall area with annual average precipitation of 2,180 mm (Bureau of

Meteorology, Waratah) falling all year although higher falls, and snowfall, occur over winter months.

Average daytime temperatures range from 7C (winter) to 18C (summer).

Figure 2: Project location

6



3.2 Property Description

The property under study is a tailings dam with a capacity of approximately 10 Mt at an in-situ density of

approximately 1.9 t/m3. The tailings are the waste product from the Hellyer mill and comprise fine sands

containing significant values of zinc, lead, copper, gold and silver, a portion of which can possibly be

recovered by further milling and retreatment by flotation and other means.

The depth of the tailings varies from 1 m below water level to approximately 20 m below water level at

the deepest point beside the dam wall. There is an environmental constraint to maintain a minimum water

cover of 1 m over the surface of the tailings. The tailings contain sulphides susceptible to oxidation and

the formation of acids if exposed to the atmosphere. This imposes a constraint on the mining method,

resulting in the choice of a dredge as the most suitable means of mining. A Seabird III 300 kW Electric

Drive Cutter Suction Dredge is currently moored on the tails dam and has been used in the past to mine

approximately 2 Mt of the tails material for retreatment in the Hellyer mill. Figure 3 presents a map

showing the site layout.

Figure 3: Site layout

7



3.3 Tenure

NQM holds a consolidated granted mining leases CML103M/1987 over the area including the tailings dam

and the processing plant. This lease covers all the areas required for the proposed tailings reclaim

operations. The mining lease is held by Hellyer Gold Mines Pty Ltd (HGM), a wholly owned subsidiary of

NQM. The lease was granted on 24 February 1988 and was renewed and extended in June 2009 until

30 June 2020. The lease can then be further extended, for as long as the mine is operated, as advised by

Mineral Resources Tasmania. The annual permit has been paid in full until 15 February 2018.

Tenure details are presented in Table 11, and the tenement outline is shown in Figure 2 and Figure 3.

In relation to further extension of the lease beyond June 2020, NQM has been in direct communication

with the Inspection Team at Mineral Resources Tasmania. The Inspection Team undertakes mining lease

renewal assessments whose manager reports directly to the Director of Mines (Tasmania), who then

makes recommendations to the Minister for Mines. NQM was provided with the following email advice

on 30 August 2016 from the Manager, Inspection Team, as follows:

Under Section 97(2) of the MRDA, the Minister must grant the application if satisfied that:

o The lessee has submitted a mining plan for the renewal period;

o The lessee has complied with the conditions of the lease and provisions of this Act;

o A failure to comply with any conditions of a lease was exempted under section 86; and

o The lessee has provided a security deposit.

The legislation is worded in favour of ongoing security of tenure as long as a lessee provides the

information, security deposit and has demonstrated compliance.

The proposed Hellyer Project requires government approvals to operate and, as such, a permit currently

exists for the reprocessing of tailings (2 Mt/a) at Hellyer (PCE No. 7386). In October 2017, following a

request by HGM the Environmental Protection Authority (EPA) of Tasmania approved the 2017

Environmental Management Plan (EMP) for implementation of the Hellyer Project, in accordance with the

Condition G7 of Permit Conditions Environmental (PCE) No. 7386, as contained in Permit No. DA

138/2006. As a result, all permits and approvals required for the tailings reclaim and retreatment

operation are either in place or can be obtained by NQM within the necessary timeframe.

Table 11: Summary table of assets

Asset Holder Interest

(%) Status

Lease expiry date

Lease area

Comments

Australia, Hellyer Gold Mine

Hellyer Gold Mines Pty Ltd

100 Production 30 June

2020 16.95 km2

Final permitting for retreatment complete.

8



4 Geology and Project History

4.1 Geology

The Hellyer deposit is a volcanic hosted polymetallic massive sulphide deposit located within the Mount

Read volcanic arc of western Tasmania. This region also hosts similar deposits such as Hercules, Que River,

Roseberry and Mount Lyell. Mineralisation is sulphide hosted and comprised predominantly of pyrite,

with lesser sphalerite, galena and arsenopyrite. The pyrite must be carefully managed when exposed to

air to prevent its oxidation and potential to form acid mine drainage issues. The economic metals mined

at Hellyer were lead, zinc, copper, gold and silver. The Hellyer deposit was mined by underground

methods during the period 1989 to 2000. The Fossey deposit extends down plunge from the Hellyer

deposit and was mined by Bass Metals between 2010 and 2012.

Tailings from the mill were deposited in a depression approximately 1 km to the west of the Hellyer mill.

The tails were inundated with water to prevent oxidation of the sulphide species present in the tails. The

tails are typically stratified, having been deposited from discharge pipes set around the dam. The

sedimentary stratification is also reflected in a mild gradient in grades of Zn and Pb, with grades typically

higher in the deeper parts of the tails and decreasing as the depth of the tails sediments shallow. The tails

sediments are unconsolidated.

4.2 Project History

4.2.1 Hellyer Base Metals Mine

The Hellyer base metals mine was operated by Aberfoyle Resources Ltd (Aberfoyle), then Western Metals

Ltd (Western Metals) between 1989 and 2000. Tails were deposited in a storage facility constructed to

the west of the mine site, making use of a broad valley. The dam wall is of earth construction.

4.2.2 Metallurgical Accounting

Aberfoyle and Western Metals produced a metallurgical account of the materials that were treated

through their operation during the life of the operation. Table 12 presents the inventory of tails deposited

in the tailings dam between 1989 and 2000. Table 12 shows the tails deposited in the earlier years

contained higher grades of Cu, Zn, Pb, Ag and Au than in later years. These higher-grade tails are located

in the deeper parts of the tailings dam, as discussed in Section 5.2.

4.2.3 Retreatment of Tails

The tailings dam was partially dredged between November 2006 and August 2008, for a total of 2.026 Mt

of tails. These tails were treated at the Hellyer mill. The tails were sourced from the following areas of the

tails dam, which are depicted in Figure 3:

Western Arm

Eastern Arm

Main Dam.

The retreated tails were redeposited into the following locations:

Shale Pit (1.31 Mt)

Western Arm Dam (0.605 Mt).

No tails were deposited into the Eastern Arm (Mill Creek) because it was set aside as an environmental

remediation dam to submerge legacy beached tails mainly emanating from operations during the 1990s

(Bolger, 2007).

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4.2.4 Fossey Base Metals Mine

Bass Metals mined the Fossey underground deposit between 2010 and 2012. The tails were discharged

into the Western Arm of the tailings dam. Table 12 presents the inventory of tails deposited in the tailings

dam, from ore sourced from Fossey, between 2010 and 2012. No mining production statistics for mill ore

feed were provided to CSA Global.

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Table 12: Metallurgical accounting, Hellyer

Year Mill Ore Feed Tails

Tonnes % Cu % Zn % Pb g/t Ag g/t Au Tonnes % Cu % Zn % Pb g/t Ag g/t Au

1989 582,022 0.38 13.05 7.08 150.00 2.67 440,503 0.24 5.90 3.66 92.18 2.89

1990 995,087 0.36 13.12 7.24 166.00 2.63 744,267 0.21 5.18 4.18 105.62 2.33

1991 1,248,881 0.37 13.78 7.39 178.00 2.77 878,240 0.16 3.39 3.83 101.70 3.13

1992 1,355,658 0.32 12.55 7.08 170.00 2.80 1,001,451 0.19 3.16 3.93 119.69 3.13

1993 779,256 0.31 12.33 6.70 157.00 2.41 576,366 0.15 3.23 3.50 99.56 2.71

1994 1,305,946 0.32 13.07 6.55 165.00 2.43 942,371 0.16 2.97 3.67 102.76 2.76

1995 1,322,518 0.36 13.14 6.38 155.00 2.30 945,779 0.16 2.45 3.48 94.07 2.69

1996 1,335,749 0.29 12.57 5.66 148.00 2.23 978,643 0.12 2.54 2.86 85.56 2.54

1997 1,392,528 0.32 11.94 6.01 155.00 2.47 1,017,928 0.15 2.17 2.57 85.68 2.80

1998 1,436,210 0.29 10.60 4.91 130.00 2.03 1,105,009 0.14 2.08 2.01 71.00 2.23

1999 1,491,888 0.32 10.46 5.14 114.00 1.96 1,150,603 0.16 1.99 2.06 66.92 2.17

2000 1,368,980 0.27 8.63 4.57 106.00 1.89 1,101,027 0.13 1.48 1.71 58.39 1.98

Total 14,615,210 0.32 11.97 6.11 148.03 2.35 10,882,187 0.16 2.80 3.00 88.42 2.58

2010-2012 447,798 0.03 1.84 1.37 35.38 1.80

Hellyer Tailings Retreatment Project, Tasmania · processing facility at Hellyer, adjacent to the...

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