Preliminary Economic Assessment Study for Kipawa Project

NI 43-101 REPORT

Preliminary Economic AssessmentStudy for Kipawa Project

Roches Ref.: 061623.001-200

Submitted toMatamec Explorations inc.

Prepared by

Guy Saucier, Eng.Andr Roy, Eng.

Pierre Casgrain, Eng.Philippe Ct, Eng.

Yves ThomassinMichel Bilodeau, Eng.

Roche Ltd, Consulting-Group

Yann Cannus, Eng.SGS Canada Inc.

Alfred Hayden, P.Eng.EHA Engineering Ltd.

Effective Date: January 30, 2012Issue Date: March 14, 2012

NI 43-101 Report

Preliminary Economic Assessment Study for Kipawa Project

Roche's Ref.: 061623.001-200

Submitted to

Matamec Explorations inc.

Prepared by:

Guy Saucier, Eng. Andr Roy, Eng.

Pierre Casgrain, Eng. Philippe Ct, Eng.

Yves Thomassin Michel Bilodeau, Eng.

Roche Ltd, Consulting-Group

Yann Cannus, Eng. SGS Canada Inc.

Alfred Hayden, P.Eng.

EHA Engineering Ltd.

Effective Date: January 30, 2012

Issue Date: March 14, 2012

Matamec Explorations Inc. Preliminary Economic Assessment for Kipawa Project Rep_Matamec-Fin-PEA-000-20120312-SEDAR.doc Report March 2012

Date and Signature

This Report entitled"Preliminary Economic Assessment Study for Kipawa Project, issue date March 14, 2012 was

prepared and signed by the following authors:

Signed and Sealed

Guy Saucier, Eng. March 14, 2012 Montral, Qubec OIQ # 37711

Signed and Sealed

Andr Roy, Eng. March 14, 2012 Montral, Qubec OIQ # 37775

Signed and Sealed

Pierre Casgrain, Eng. March 14, 2012 Montral, Qubec OIQ # 101321

Signed and Sealed

Philippe Ct, Eng. March 14, 2012 Qubec, Qubec OIQ # 128326

Signed and Sealed

Yves Thomassin March 14, 2012 Qubec, Qubec

Signed and Sealed

Michel Bilodeau, Eng. March 14, 2012 Montral, Qubec OIQ # 23799

Signed and Sealed

Yann Camus, Eng. March 14, 2012 Blainville, Qubec OIQ # 125443

Signed and Sealed

Alfred S. Hayden, P. Eng. March 14, 2012 Toronto, Ontario PEO # 18898015

Matamec Explorations Inc. Preliminary Economic Assessment for Kipawa Project Rep_Matamec-Fin-PEA-000-20120312-SEDAR.doc i Report March 2012

CERTIFICATE OF AUTHOR

Guy Saucier, Eng. Roche Ltd., Consulting Group 630, Ren-Levesque West, Suite 1500 Montral, QC, Canada, H3B 1S6 Phone : 514 393 9110 Fax : 514 393 1511

To Accompany the Report entitled Preliminary Economic Assessment Study for Kipawa Project for Matamec

Exploration Inc. dated March 14, 2012.

I, Guy Saucier, do hereby certify that:

1. I am Vice President, Mining and Mineral Processing and carried out this assignment as author/reviewer of Roche Ltd, Consulting-Group, Suite 1500, 630, Ren-Lvesque West, Montral, QC, Canada, H3B 1S6.

2. I am a graduate of cole Polytechnique, University of Montral, located in Montral with a B. Ing in Geological Engineering in 1983;

3. I am a Senior Geological Engineer, Member of the Ordre des Ingnieurs du Qubec (#37711), and a member of the Canadian Institute of Mining, Metallurgy and Petroleum (CIM), PDAC and SME;

4. I have worked as a geological engineer in the mineral industry for 28 years;

5. I have read the definition of "qualified person" set out in National Instrument 43-101 (NI 43-101) and certify that by reason of my education, affiliation with a professional association (as defined by NI 43-101) and past relevant work experience, I fulfill the requirements to be a "qualified person" for the purposes of NI 43-101;

6. I have supervised the development of the technical content in the following sections (1,2,3,15,18,19,20, 21,24,25,26,27);

7. I have not visited the site;

8. I have had no prior involvement with the properties that are the subject of this Technical Report.

9. I am an independent of the issuer as defined in section 1.5 of NI 43-101.

10. 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.

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

12. I consent of the filing of the Technical Report with any Canadian stock exchange and consent other securities regulatory authority and any publication by them for regulatory purposes of the technical report.

Montreal, March 14, 2012

"Guy Saucier"

Guy Saucier, Eng. OIQ # 37711

Matamec Explorations Inc. Preliminary Economic Assessment for Kipawa Project Rep_Matamec-Fin-PEA-000-20120312-SEDAR.doc ii Report March 2012


Andr Roy, Eng. Roche Ltd. Consulting Group 630, Ren-Lvesque West, Suite 1500 Montral, QC, Canada, H3B 1S6 Phone : 514 393 9110, ext. 512 Fax : 514 393 1511



I, Andr Roy, do hereby certify that:

1. I am the Principal of AR Tech Development, 3845 Victoria, Lachine, QC, Canada, H8T 1J9 and carried out this assignment as a Consultant of Roche Ltd, Consulting-Group, Suite 1500, 630, Ren-Lvesque West, Montral, QC, Canada, H3B 1S6.

2. I am a graduate of cole Polytechnique, University of Montral, located in Montral with a B. Ing. in Geological Engineering in 1983.

3. I am a Senior Geological Engineer, Member of the Ordre des Ingnieurs du Qubec (#37775);



6. I am responsible for the following sections (1,2,3,15,18,19, 21,24,25,26,27);

7. I have visited the site on Oct 31 and Nov 1, 2010;







"Andr Roy"

Andr Roy, Eng. OIQ # 37775

Matamec Explorations Inc. Preliminary Economic Assessment for Kipawa Project Rep_Matamec-Fin-PEA-000-20120312-SEDAR.doc iii Report March 2012


Pierre Casgrain, Eng. Roche Ltd., Consulting Group 630, Ren-Levesque West, Suite 1500 Montral, QC, Canada, H3B 1S6 Phone : 514 393 9110 Fax : 514 393 1511

To Accompany the Report entitled Preliminary Economic Assessment Study for Kipawa Project for Matamec Exploration Inc. dated March 14, 2012.

I, Pierre Casgrain, do hereby certify that:

1. I am Senior Mining Engineer and carried out this assignment as author/reviewer of Roche Ltd, Consulting Group, Suite 1500, 630, Ren-Lvesque West, Montral, QC, Canada, H3B 1S6.

2. I am a graduate of Laval University, located in Qubec City with a B. Ing in Mining Engineering in 1983;

3. I am a Senior Mining Engineer, Member of the Ordre des Ingnieurs du Qubec (# 101321), and a member of the Canadian Institute of Mining, Metallurgy and Petroleum (CIM);



6. I am responsible for section 16 of this technical report;

7. I have visited the site on June 13 and 14, 2011;







"Pierre Casgrain"

Pierre Casgrain, Eng.

OIQ # 101321

Matamec Explorations Inc. Preliminary Economic Assessment for Kipawa Project Rep_Matamec-Fin-PEA-000-20120312-SEDAR.doc iv Report March 2012


Philippe Ct, Eng. Roche Ltd., Consulting Group 1389, Galile Avenue, Suite 220 Qubec, QC, Canada, G1P 4G4 Phone : 418 682 8220 Fax : 418 654 9699


I, Philippe Ct, do hereby certify that:

1 I am a Metallurgical Engineer and carried out this assignment as author of Roche Ltd, Consulting Group, Suite 220, 1389, Galile Avenue, Qubec, QC, Canada, G1P 4G4.

2 I am a graduate of Laval University, located in Qubec with a B.Eng. in Materials and Metallurgical Engineering in 2002;

3 I am a Metallurgical Engineer, Member of the Ordre des Ingnieurs du Qubec (#128326);

4 I have worked as a metallurgical engineer in the mineral industry for 10 years;

5 I have read the definition of "qualified person" set out in National Instrument 43-101 (NI 43-101) and certify that by reason of my education, affiliation with a professional association (as defined by NI 43-101) and past relevant work experience, I fulfill the requirements to be a "qualified person" for the purposes of NI 43-101;

6 I have participated in the development of section 17;

7 I did not visit the site;

8 I have had no prior involvement with the properties that are the subject of this Technical Report.

9 I am an independent of the issuer as defined in section 1.5 of NI 43-101.

10 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.

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

12 I consent of the filing of the Technical Report with any Canadian stock exchange and consent other securities regulatory authority and any publication by them for regulatory purposes of the technical report.

Qubec, March 14, 2012

" Philippe Ct "

Philippe Ct, Eng.

OIQ # 128326

Matamec Explorations Inc. Preliminary Economic Assessment for Kipawa Project Rep_Matamec-Fin-PEA-000-20120312-SEDAR.doc v Report March 2012


Yves Thomassin, Forest Engineer, M.Sc.A. Roche Ltd., Consulting Group 3567 Neilson Qubec (Canada) G1W 4Z9 Phone : 418 654 9696 Fax : 418 654 9699


I, Yves Thomassin, do hereby certify that:

1 I am currently employed as Director Mining Projects Environment Division of Roche Ltd, Consulting Group, 3567 Neilson, Qubec (Canada), G1W 4Z9 ;

2 I graduate from Laval University in 1981, in Forest Engineering and obtain a Master Degree in Forest Management in 1984;

3 I am a specialist in mining environment since 20 years;

4 I have read the definition of "qualified person" set out in National Instrument 43-101 (NI 43-101) and certify that by reason of my education, and past relevant work experience, I fulfill the requirements to be a "qualified person" for the purposes of NI 43-101;

5 I have participated in the development of section 20 of this technical report;

6 I have not visited the site;

7 I have had no prior involvement with the properties that are the subject of this Technical Report.

8 I am an independent of the issuer as defined in section 1.5 of NI 43-101.

9 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.

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

11 I consent of the filing of the Technical Report with any Canadian stock exchange and consent other securities regulatory authority and any publication by them for regulatory purposes of the technical report.

Montreal, 14th

March 2012

" Yves Thomassin "

Yves Thomassin Environmental Mining Specialist

Matamec Explorations Inc. Preliminary Economic Assessment for Kipawa Project Rep_Matamec-Fin-PEA-000-20120312-SEDAR.doc vi Report March 2012


Michel L. Bilodeau, Eng., M.Sc. (App.), Ph.D. Independent Consultant 22 Labrador Street Kirkland, QC, H9J 3W8 Telephone: 514-426-4210 Email: [email protected]


I, Michel L. Bilodeau, Eng., do hereby certify that:

1. I am a retired (June 2009) Associate Professor from the Department of Mining and Materials Engineering of McGill University, 3450 University St., Montral, QC, Canada H3A 2A7, and still teach on a contract basis the mineral economics course of the mining engineering program;

2. I am a graduate of cole Polytechnique de Montral with a B.Eng. in Geological Engineering (1970), and of McGill University with a M.Sc. (App.) in mineral exploration (1972) and a Ph.D. in mineral economics (1975);

3. I am a member in good standing of the Ordre des ingnieurs du Qubec (#23799);

4. I have taught continuously in the areas of engineering economy, mineral economics and mining project feasibility studies in the mining engineering program dispensed by McGill University since my graduation from university, and have carried out in the capacity of independent consultant several assignments related to the economic/financial analysis of mining projects;


6. I am responsible for section 22 of this technical report;







Montral, March 14, 2012

" Michel L. Bilodeau "

Michel L. Bilodeau, Eng. Economic/Financial Analyst Consultant for Roche Ltd, Consulting Group OIQ #23799

mailto:[email protected]

Matamec Explorations Inc. Preliminary Economic Assessment for Kipawa Project Rep_Matamec-Fin-PEA-000-20120312-SEDAR.doc vii Report March 2012




I, Yann Camus, Eng., do hereby certify that:

1. I am project engineer with SGS Canada Inc. - Geostat with an office at 10 Blvd Seigneurie East, Suite 203, Blainville, Quebec, Canada, J7C 3V5;

2. I am a graduate from cole Polytechnique de Montral in 2000;

3. I am a registered member of the Ordre des Ingnieurs du Quebec (#125443);

4. I have worked as a geological engineer continuously since my graduation from university;

5. I have read the definition of Qualified Person set out in the National Instrument 43 101 and certify that by reason of my education, affiliation with a professional association and past relevant work experience, I fulfil the requirements to be an independent qualified person for the purposes of NI 43-101;

6. I am responsible for sections 4 to 12 inclusively plus 14 and 23 of this technical report;

7. I have visited the Property on November 10 and 11, 2008 for the verification of drill holes locations and inspection of the area;

8. I have no personal knowledge as of the date of this certificate of any material fact or change, which is not reflected in this report;

9. I have been involved in 2007 on work related to the mineral property. I conducted relative density measurements of core samples sampled to the project. I have not visited the project site during that occasion. I participated in the preparation of a Resource Report for the project in 2010;

10. Neither I, nor any affiliated entity of mine, is at present, under an agreement, arrangement or understanding or expects to become, an insider, associate, affiliated entity or employee of Matamec Exploration Inc. or any associated or affiliated entities;

11. Neither I, nor any affiliated entity of mine, own, directly or indirectly, nor expect to receive, any interest in the properties or securities of Matamec Exploration Inc., or any associated or affiliated companies;

12. Neither I, nor any affiliated entity of mine, have earned the majority of our income during the preceding three years from Matamec Exploration Inc., or any associated or affiliated companies

13. I have read NI 43-101 and Form 43-101F1 and have prepared the technical report in compliance with NI 43-101 and Form 43-101F1; and have prepared the report in conformity with generally accepted Canadian mining industry practice, and as of the date of the 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.

Signed at Blainville, Quebec this 14th

day of March 2012

Yann Camus

Yann Camus, Eng. Project Engineer SGS Canada Inc. Geostat Blainville (Qubec) OIQ #125443

Matamec Explorations Inc. Preliminary Economic Assessment for Kipawa Project Rep_Matamec-Fin-PEA-000-20120312-SEDAR.doc viii Report March 2012

CERTIFICATE OF AUTHOR Alfred S. Hayden, P. Eng. President EHA Engineering Ltd PO BOX 2711 Postal Station 'B' Richmond Hill, Ontario L4E 1A7



I, Alfred S. Hayden, do hereby certify that:

1. I am President of EHA Engineering Ltd., PO Box 2711, Postal Station B, Richmond Hill ON, L4E 1A7 Canada.

2. I graduated from the University of British Columbia, Vancouver, BC in 1967 with a Bachelor of Applied Science in Metallurgical Engineering.

3. I am a member of the Canadian Institute of Mining, Metallurgy and Petroleum and a Professional Engineer and Designated Consulting Engineer registered with Professional Engineers Ontario (PEO # 18898015).

4. I have worked as a metallurgical engineer in the mineral industry for 46 years;


6. I am responsible for sections 13 and 17 of this technical report;








"Alfred S. Hayden"

Alfred S. Hayden, P. Eng.

PEO # 18898015

Matamec Explorations Inc. Preliminary Economic Assessment for Kipawa Project Rep_Matamec-Fin-PEA-000-20120312-SEDAR.doc Report March 2012

Table of Contents

1.0 EXECUTIVE SUMMARY ........................................................................................................................ 1

1.1 Site Location ................................................................................................................................................................ 1

1.2 Geological Setting, Mineralisation, and Mineral Resource ......................................................................................... 2

1.3 Mining Method............................................................................................................................................................ 3

1.4 Recovery Methods ...................................................................................................................................................... 3

1.5 Tailings Management Facility ...................................................................................................................................... 3

1.6 Project Infrastructure .................................................................................................................................................. 4

1.7 Environmental Considerations .................................................................................................................................... 4

1.8 Capital Cost Estimates ................................................................................................................................................. 5

1.9 Operating Cost Estimate .............................................................................................................................................. 6

1.10 Economic Analysis ....................................................................................................................................................... 7

1.11 Financial Analysis ......................................................................................................................................................... 7

2.0 INTRODUCTION AND TERMS OF REFERENCE ........................................................................................ 9

2.1 General ........................................................................................................................................................................ 9

2.2 Terms of Reference ..................................................................................................................................................... 9

2.3 Units and Currency .................................................................................................................................................... 10

2.4 Disclaimer .................................................................................................................................................................. 11

3.0 RELIANCE ON OTHER EXPERTS ........................................................................................................... 12

4.0 PROPERTY DESCRIPTION AND LOCATION .......................................................................................... 14

4.1 Location ..................................................................................................................................................................... 14

4.2 Property Description, Ownership and Agreements ................................................................................................... 15

4.3 Royalties Obligations ................................................................................................................................................. 15

4.4 Environmental Liabilities ........................................................................................................................................... 16

5.0 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY ..................... 17

5.1 Accessibility ............................................................................................................................................................... 17

5.2 Physiography ............................................................................................................................................................. 17

5.3 Climate ...................................................................................................................................................................... 17

5.4 Local Resources and Infrastructure ........................................................................................................................... 17

6.0 HISTORY ............................................................................................................................................ 18

6.1 Exploration Work Pertaining to Period I (1956 to 1984) ........................................................................................... 18

6.2 Exploration Work Pertaining to Period II (1985 to 1991) .......................................................................................... 20

6.3 Exploration Work Pertaining to Period III (1992 to Present) ..................................................................................... 21

7.0 GEOLOGICAL SETTING AND MINERALISATION ................................................................................... 23

7.1 Regional Geology ....................................................................................................................................................... 23

7.2 Kipawa Deposit .......................................................................................................................................................... 24

8.0 DEPOSIT TYPES .................................................................................................................................. 36

9.0 EXPLORATION ................................................................................................................................... 39

10.0 DRILLING ........................................................................................................................................... 40

Matamec Explorations Inc. Preliminary Economic Assessment for Kipawa Project Rep_Matamec-Fin-PEA-000-20120312-SEDAR.doc ii Report March 2012

11.0 SAMPLE PREPARATION, ANALYSIS AND SECURITY ............................................................................. 42

11.1 Sample Preparation and Security .............................................................................................................................. 42

11.2 Sample Analyses ........................................................................................................................................................ 42

11.3 Quality Assurance and Quality Control Procedure .................................................................................................... 42

11.4 Specific Gravity .......................................................................................................................................................... 57

11.5 Conclusion ................................................................................................................................................................. 58

12.0 DATA VERIFICATION .......................................................................................................................... 59

13.0 MINERAL PROCESSING AND METALLURGICAL TESTING ..................................................................... 63

13.1 Metallurgical Testwork Summary .............................................................................................................................. 63

13.2 Process Selection ....................................................................................................................................................... 66

13.3 Future Metallurgical Testwork .................................................................................................................................. 66

14.0 MINERAL RESOURCE ESTIMATES ....................................................................................................... 67

14.1 Introduction .............................................................................................................................................................. 67

14.2 Exploratory Data Analysis .......................................................................................................................................... 67

14.3 Geological Interpretation .......................................................................................................................................... 69

14.4 Resource Block Modeling .......................................................................................................................................... 72

14.5 Grade Interpolation Methodology ............................................................................................................................ 72

14.6 Mineral Resource Classification ................................................................................................................................ 73

14.7 Mineral Resource Estimation .................................................................................................................................... 74

15.0 MINERAL RESERVES ESTIMATES ........................................................................................................ 77

16.0 MINING METHODS ............................................................................................................................ 78

16.1 General Considerations ............................................................................................................................................. 78

16.2 Pit Optimization ......................................................................................................................................................... 80

16.3 Pit Design ................................................................................................................................................................... 83

16.4 In-Pit Mineral Resource Estimate .............................................................................................................................. 87

16.5 Mining Equipment ..................................................................................................................................................... 88

16.6 Mine Development Sequence and Mine Planning .................................................................................................... 92

17.0 RECOVERY METHODS ........................................................................................................................ 97

17.1 Process Plant Design Criteria ..................................................................................................................................... 97

17.2 Flowsheets and Process Description ......................................................................................................................... 98

17.3 Mass Balances ......................................................................................................................................................... 100

17.4 Process Equipment .................................................................................................................................................. 100

17.5 Power Requirements ............................................................................................................................................... 100

17.6 Crushing and Processing Plant Layout ..................................................................................................................... 101

17.7 Tailings and Water Management ............................................................................................................................ 101

18.0 PROJECT INFRASTRUCTURE ............................................................................................................. 103

18.1 Power Generation Kipawa Site ............................................................................................................................. 103

18.2 Fuelling Storage Kipawa Site................................................................................................................................. 103

18.3 Process Water ......................................................................................................................................................... 103

18.4 Settling Pond ........................................................................................................................................................... 103

18.5 Access Road ............................................................................................................................................................. 103

18.6 Telecommunications ............................................................................................................................................... 104

Matamec Explorations Inc. Preliminary Economic Assessment for Kipawa Project Rep_Matamec-Fin-PEA-000-20120312-SEDAR.doc iii Report March 2012

18.7 Mine Office Complex ............................................................................................................................................... 104

18.8 Maintenance Shop .................................................................................................................................................. 104

18.9 Explosive Storage .................................................................................................................................................... 104

19.0 MARKET STUDIES AND CONTRACTS ................................................................................................. 105

19.1 Market Studies ........................................................................................................................................................ 105

19.2 Prices ....................................................................................................................................................................... 114

20.0 ENVIRONMENT STUDIES, PERMITTING AND SOCIAL OR COMMUNITY IMPACT ................................ 117

20.1 Environmental Baseline Study (EBS) ........................................................................................................................ 117

20.2 Ore, Waste and Tailings Characterization ............................................................................................................... 117

20.3 Provincial Government (Qubec) ............................................................................................................................ 119

20.4 Federal Government ............................................................................................................................................... 122

20.5 Social Impact ........................................................................................................................................................... 123

20.6 Community Impact .................................................................................................................................................. 124

21.0 CAPITAL AND OPERATING COSTS ESTIMATE .................................................................................... 126

21.1 Capital Cost Estimate (CAPEX) ................................................................................................................................. 126

21.2 Operating Cost Estimate (OPEX) .............................................................................................................................. 135

22.0 ECONOMIC ANALYSIS ...................................................................................................................... 141

22.1 General .................................................................................................................................................................... 141

22.2 Assumptions ............................................................................................................................................................ 141

22.3 Financial Model and Results .................................................................................................................................... 142

22.4 Sensitivity Analysis .................................................................................................................................................. 143

23.0 ADJACENT PROPERTIES ................................................................................................................... 145

24.0 OTHER RELEVANT DATA AND INFORMATION .................................................................................. 147

25.0 INTERPRETATION AND CONCLUSIONS ............................................................................................. 148

26.0 RECOMMENDATIONS ...................................................................................................................... 149

26.1 Introduction ............................................................................................................................................................ 149

26.2 Future Works ........................................................................................................................................................... 152

27.0 REFERENCES .................................................................................................................................... 159

Matamec Explorations Inc. Preliminary Economic Assessment for Kipawa Project Rep_Matamec-Fin-PEA-000-20120312-SEDAR.doc iv Report March 2012

LIST OF FIGURES

Figure 4.1 - Location Map (modified from Google Map) ................................................................................................................ 14

Figure 4.2 Map of the Zeus Property including the Kipawa Deposit ............................................................................................ 16

Figure 7.1 - Stratigraphic Column at Kipawa ................................................................................................................................... 23

Figure 7.2 Schematic Section of Lithologies ................................................................................................................................. 26

Figure 7.3 - Kipawa Eudialyte .......................................................................................................................................................... 30

Figure 7.4 - Kipawa Mosandrite ...................................................................................................................................................... 31

Figure 7.5 - Kipawa Britholite.......................................................................................................................................................... 32

Figure 7.6 - Chondrite normalized plot of REE-bearing minerals and historic bulk samples .......................................................... 33

Figure 7.7 - Kipawa Vlasovite and Gittinsite .................................................................................................................................. 34

Figure 8.1 Schematic Section of Lithologies ................................................................................................................................. 38

Figure 10.1 - Location of Matamec and Unocal Drill Holes at the Kipawa deposit ......................................................................... 40

Figure 11.1 - Analytical Results Grouped by Standard Type ........................................................................................................... 43

Figure 11.2 - Standard BRAM308 Analytical Results for Y, Zr, Dy and Nd ....................................................................................... 45

Figure 11.3 - Standard BRAM310 Analytical Results for Y, Dy and Nd ............................................................................................ 47



Figure 11.6 - Standard Sy-4 Analytical Results for Y, Zr, Dy and Nd ................................................................................................ 50

Figure 11.7 - Blanks Analytical Results for Y, Zr, Dy and Nd ............................................................................................................ 52

Figure 11.8 - Comparison between ALS Original Results and ALS Duplicate Results for Dy, Nd, Y and Zr ...................................... 55

Figure 11.9 - Comparison between ALS original results and ACTLABS duplicate results for Dy, Nd, Y and Zr ................................ 57

Figure 12.1 - Comparison between Matamec (ALS) and SGS Sampling and Analytical Procedures ............................................... 59

Figure 12.2 - Diagram Showing Correlation for Y, Zr and Dy Analytical Results between Matamec (ALS) and SGS Geostat ......... 60

Figure 12.3 - Sample to Sample Comparison between SGS and ALS for Y and Zr ........................................................................... 61

Figure 13.1 - Summary of Dry Magnetic Separation Results........................................................................................................... 64

Figure 13.2 - Wet Magnetic Separation, -60+200 Fraction ............................................................................................................. 64

Figure 13.3 - Wet Magnetic Separation, -14+60 Fraction ............................................................................................................... 65

Figure 13.4 - Rare Earth Extraction vs. Acid Addition ..................................................................................................................... 65

Figure 14.1 - Correlation between Y and REE Groups Showing the Regression Lines and Equations ............................................. 68

Figure 14.2 - Typical Geological Section for Syenite Modelling ...................................................................................................... 70

Figure 14.3 - 3D View of Syenite Body Meshed Envelope .............................................................................................................. 70

Figure 14.4 - Typical Geological Section with the 3 REE Enriched Zones Modelled ........................................................................ 71

Figure 14.5 - 3D View of the Three REE Enriched Zone Envelopes ................................................................................................. 71

Figure 14.6 - REE Enriched Zone Block Models ............................................................................................................................... 72

Figure 14.7 - REE Enriched Zone Block Model with the Same Indicated Resources Envelope ........................................................ 73

Figure 16.1 - Diagram Flow Illustrating the Mining Evaluation Process .......................................................................................... 79

Figure 16.2- Pit Selection with Whittle

......................................................................................................................................... 83

Figure 16.3 - Pit Design Parameters (Cross-Section of Pit Wall) ..................................................................................................... 84

Figure 16.4 - Ultimate Pit Design Plan View .................................................................................................................................... 85

Figure 16.5 - Waste Dump Parameters (Cross Section) .................................................................................................................. 86

Figure 16.6 - Haulage Road Dimensions ......................................................................................................................................... 86

Figure 16.7 - Blasting Pattern.......................................................................................................................................................... 90

Figure 16.8 - Production Schedule .................................................................................................................................................. 94

Matamec Explorations Inc. Preliminary Economic Assessment for Kipawa Project Rep_Matamec-Fin-PEA-000-20120312-SEDAR.doc v Report March 2012

Figure 16.9 - TREO Delivery Schedule ............................................................................................................................................. 95

Figure 16.10 - Rare Earth Oxides Relative Production .................................................................................................................... 96

Figure 17.1 Block Diagram of the Kipawa Process Flowsheet ....................................................................................................... 98

Figure 17.2 Block Diagram of the Hydrometallurgical Process Flowsheet ................................................................................... 99

Figure 19.1 - Growth in Global Consumption of Rare Earth 2000-2010 F ..................................................................................... 105

Figure 19.2 - Global Production of Rare Earth Oxides .................................................................................................................. 106

Figure 19.3 - World Division of Rare Earth Consumption by Major End Use, Selected Years, 1996-2010F .................................. 106

Figure 22.1 - Before-Tax NPV: Sensitivity to Capital Expenditure, Operating Cost and Price ....................................................... 144

Figure 22.2 - Before-Tax IRR: Sensitivity to Capital Expenditure, Operating Cost and Price ......................................................... 144

Matamec Explorations Inc. Preliminary Economic Assessment for Kipawa Project Rep_Matamec-Fin-PEA-000-20120312-SEDAR.doc vi Report March 2012

LIST OF TABLES

Table 1.1 Resource at Base Case Cut-Off Grade of 0.2 %TREO ...................................................................................................... 2

Table 1.2 Capital Cost Estimates Summary ..................................................................................................................................... 5

Table 1.3 - Operating Costs Summary (Per Tonne Ore Milled) ......................................................................................................... 6

Table 1.4 REO Prices ...................................................................................................................................................................... 7

Table 1.5 - Project Evaluation Summary ........................................................................................................................................... 8

Table 2.1 - Frequently Used Acronyms and Abbreviations ............................................................................................................. 10

Table 3.1 - Persons Who Prepared or Contributed to this Technical Report .................................................................................. 12

Table 6.1 - Summary of Drilling Programs on the Zeus Property .................................................................................................... 21

Table 7.1 - Grain Size Decriptions ................................................................................................................................................... 25

Table 10.1 - Summary of Drilling on Zeus Property ........................................................................................................................ 41

Table 11.1 - Expected Values and Performance Gates for the Different Standards used for the Current Project ......................... 44

Table 11.2 - Summary of Analytical Results for Y, Zr, Dy and Nd on Different Standards ............................................................... 44

Table 11.3 - Summary of Duplicate Results from ALS Pulp Rejects ................................................................................................. 54

Table 11.4 - Summary of Duplicate Results from ALS and ACTLABS ............................................................................................... 56

Table 11.5 - Statistics on specific gravity values ............................................................................................................................. 58

Table 12.1 - Summary Statistics of Analytical Results for Independent Check Samples ................................................................. 62

Table 14.1 - Summary of Database Entries ..................................................................................................................................... 67

Table 14.2 - Correlation Equations between Y and REE .................................................................................................................. 69

Table 14.3 - Formulas for the Conversion from Metal Concentrates to Oxides Concentrate ......................................................... 73

Table 14.4 - Global Resource Estimates of REE Enriched Zones at Different Cut-Off including the base case at 0.2% TREO ......... 75

Table 14.5 - Global Resource Estimates of REE Enriched Zones at Different Cut-Off ..................................................................... 76

Table 16.1 - Lerchs-Grossman Optimization Parameters................................................................................................................ 81

Table 16.2 - Commodity Price Used with Whittle ........................................................................................................................ 82

Table 16.3- In-Pit Resources inside the Pit Design, with 5% Dilution .............................................................................................. 87

Table 16.4 - Comparison between In-pit Mineral Resource and the Whittle Shell # 27 ................................................................. 88

Table 16.5 - Drilling and Blasting Parameters ................................................................................................................................. 89

Table 16.6 - Mining Equipment Requirement ................................................................................................................................. 90

Table 16.7 - Life of Mine Planning and Scheduling ......................................................................................................................... 93

Table 17.1 - Condensed Process Design Criteria Mine Site ............................................................................................................. 97

Table 17.2 Condensed Process Design Criteria, Hydromet Site ...................................................................................................... 97

Table 17.3 - Process Facilities Power Demand .............................................................................................................................. 101

Table 19.1 - Global Rare Earths Supply and Demand 2005-2015 (REO +/- 20%) .......................................................................... 107

Table 19.2 - Global Rare Earths Supply and Demand 2005-2015 (REO +/-20%) ........................................................................... 108

Table 19.3 - Rare Earth Mining Quotas for each Chinese Province and Municipality 2011 .......................................................... 108

Table 19.4 - Rare Earth Elements: World production and Reserves - 2010 .................................................................................. 109

Table 19.5 - Rare Earth Elements: China Reserves - 2010............................................................................................................. 110

Table 19.6 - Some Key Drivers of Rare Earths Demand ................................................................................................................ 110

Table 19.7 - Rare Earth Element Uses and Sources ...................................................................................................................... 110

Table 19.8 - Rare Earth Demand by Application ........................................................................................................................... 111

Table 19.9 - Global Rare Earths Demand in 2010 (REO +/- 15%) .................................................................................................. 112

Table 19.10 - Forecast Global Demand and Supply for Individual Rare Earths in 2015 (+/- 20%) ................................................ 113

Table 19.11 - Rare Earth Production by Element and for Future Mine 2012-2014 Matamec Kipawa as a New Producer ..... 114

Matamec Explorations Inc. Preliminary Economic Assessment for Kipawa Project Rep_Matamec-Fin-PEA-000-20120312-SEDAR.doc vii Report March 2012

Table 19.12 - Forecasted Prices .................................................................................................................................................... 115

Table 19.13 - Forecasted Prices After Refining ............................................................................................................................. 115

Table 19.14 - Forecasted Prices of Kipawa TREO Concentrate ..................................................................................................... 116

Table 21.1 Capital Cost Estimate Summary ............................................................................................................................... 126

Table 21.2 - Mine Equipment Capital Cost Summary ................................................................................................................... 130

Table 21.3 - Concentrator Capital Cost Summary ......................................................................................................................... 132

Table 21.4 - Hydrometallurgical Plant Capital Cost Summary....................................................................................................... 133

Table 21.5 - Operating Cost Summary .......................................................................................................................................... 136

Table 21.6 Manpower Costs ...................................................................................................................................................... 137

Table 21.7 - Mining Operating Cost Summary .............................................................................................................................. 138

Table 21.8 - Energy Cost Summary ............................................................................................................................................... 139

Table 22.1 - Economic Assumptions ............................................................................................................................................. 141

Table 22.2 - Technical Assumptions .............................................................................................................................................. 142

Table 22.3 - Project Evaluation Summary ..................................................................................................................................... 143

LIST OF APPENDICES

Appendix 1 - Pictures from Site Visit

Appendix 2 - List of Claims

Appendix 3 - Kipawa General Site Layout

Appendix 4 - Mine Plan

Appendix 5 - Kipawa Plant Site Layout

Appendix 6 - Kipawa Plant Layout

Appendix 7 - Tmiscaming Hydromet Plant Site Layout

Appendix 8 - Tmiscaming Hydromet Plant Layout

Appendix 9 - CAPEX

Appendix 10 - OPEX

Appendix 11 - Kipawa Project Financial Analysis

Appendix 12 - Table of Recommendations and Future Works

Matamec Explorations Inc. Preliminary Economic Assessment for Kipawa Project Rep_Matamec-Fin-PEA-000-20120312-SEDAR.doc 1 Report March 2012

1.0 EXECUTIVE SUMMARY

Matamec Explorations Inc. (Matamec) is a Canadian registered resource company, based in Montreal, Canada and

publicly listed on the TSX Venture Exchange. Matamec is a junior mining exploration company whose main focus is

in developing the Kipawa heavy rare earths deposit and exploring more than 35 km of strike length in the Kipawa

Alkalic Complex for rare earths-yttrium-zirconium-niobium-tantalum mineralization on its Zeus property.

The following is a Preliminary Economic Assessment (PEA) report on the Kipawa deposit located on the Zeus

Property where Matamec holds a 100% interest in the Zeus property (the Property). The property is located in

South Western Qubec. approximately 640 km from Montreal, 475 km from Toronto, 440 km from Ottawa and 62

km from the town of Tmiscaming.

Matamec has retained Roche Ltd, Consulting Group (Roche) to complete a National Instrument 43-101 (NI 43-101)

Compliant PEA Report on the Kipawa deposit. Roche has been involved with the Kipawa deposit since September

2010. As part of the PEA a resource calculation update was performed by SGS Canada Inc.-Geostat (SGS Geostat).

The following PEA report conforms to the standards set out in NI 43-101, Standards and Disclosure for Mineral

Projects and is in compliance with Form 43-101F1.

The Qualified Persons responsible for this report are: Guy Saucier Senior Geological Engineer with Roche, Andr

Roy, Senior Geological Engineer with Roche and Project Manager, Al Hayden Senior Metallurgist with EHA

Engineering, Philippe Ct, Process Engineer, Pierre Casgrain, Senior Mining Engineer, Yves Thomassin, Senior

Environmental Specialist, and Michel Biliodeau, Financial Analysis with Roche and Yann Camus, Senior Geological

Engineer with SGS Geostat assisted in the preparation of this report.

The site was visited by Mr. Roy on Oct 31 and Nov 1, 2010 and was accompanied by Mr. Frederic Fleury and Mr.

Andr Gauthier , Mr. Casgrain on June 13 and 14, 2011 and was accompanied by Mr. Robert Crpeau. Mr. Camus

visited the Property on November 10 and 11, 2008 for the verification of drill holes locations and inspection of the

area. Mr. Camus was assisted by Mr. Jean-Philippe Paiement M.Sc. who visited the Property on February 2, 2011

and the core shack in Val-dOr on April 1, 2011. Mr. Frdric Fleury, Mr. Gauthier and Mr. Crpeau (Independent

Consultant) were employed by Matamec.

The site visit was conducted for Mr. Roy and Mr. Casgrain to evaluate the area for mining development and

infrastructure and for Mr. Camus to review the core logging and sampling procedures, the facilities and the core

storage areas and Mr. Paiement audited the exploration methodology, sampling procedures, quality control

procedures and conducted an independent check sampling of mineralized drill core intervals selected from recent

drill holes.

1.1 Site Location

The Kipawa deposit is located on the Zeus Property. The 17,678 hectares property is located in the Tmiscamingue

region of Qubec, 160 kilometres south of Rouyn-Noranda and 50 kilometres east of the town of Tmiscamingue.

All 415 claims are 100% owned by Matamec and are in good standing. Resources are subject to NSR royalties for a

total of 1.25% that can be bought back for $ 310,000 CAD.


1.2 Geological Setting, Mineralisation, and Mineral Resource

The Zeus property is located in the Grenville geological province. The Kipawa deposit is wholly contained within

the Kipawa Alkaline complex. At the site, the complex shows modest small-scale internal folding, but at the deposit

scale is an almost entirely undeformed, gently south-west dipping linear slab.

The resource was as three REE enriched horizons within the Syenite complex (eudialyte, mosandrite and

britholite). This model was used to estimate Rare Earth Elements (REE) resource.

A total of 123 drill holes totalling 9,648m were used (93 holes are from Matamec and 30 are from Unocal of

Canada). In addition, 13 trenches totalling 631m were used.

Composite were generated at 1.5m intervals for each separate zones totalling 2,949 composites for the enriched

REE zones (1,829 for the eudialyte, 666 for the mosandrite and 454 for the britholite).

Since three types of mineralization are considered in the resource estimates, the geological modelling of the

resource included three separate 3D models and meshed envelopes. A surface was created in order to model the

overburden-fresh rock contact.

The three envelopes created for the REE enriched zones were used to generate three block models for REE

enriched zone mineralization. The block size was set at 10 m x 10 m x 5 m for a total of 31,337 blocks and a volume

of 9,056,000 m3 (5,012,000 m

3 for Eudialyte, 1,880,000 m

3 for Mosandrite and 2,164,000 m

3 for Britholite). Each

block has a fixed density of 2.86 t/m3 and a value for Zr plus each individual REE element plus U and Th (total of 18

variables for each block). The meshed envelopes were made to be higher than the overburden / fresh rock contact;

the block models were cut by the surface of the overburden by having each block attributed a percentage.

The setting for the interpolations of the REE enriched zone resource block model was based on the inverse

distance squared. A maximum of 12 samples per block, a minimum of one sample per block and a limit of four

samples per drill hole were used in the interpolation method. All 31,337 blocks were estimated with values ranging

from 6 to 4,692 ppm of Y.

The resource classification is based on the grid of drilling. Drilling every 20 to 25 meters is considered indicated. No

indicated resource comes solely from Unocal drill holes.

Each 18 variables (REE, Y, Zr, U and Th) were transformed from element value in ppm to oxide percent. Single

element ppm is multiplied by the oxide conversion factor and divided by 10,000 to get the oxide value in percent.

The base case cut-off grade was selected to be at 0.2 %TREO and is presented in the table below (Table 1.1). This

grade is chosen to present the resource since it corresponds best to the break even for the economical evaluation.

Table 1.1 Resource at Base Case Cut-Off Grade of 0.2 %TREO

Zone Classification Tonnage Volume ZrO2 Y2O3 LREO* HREO* TREO* La2O3 Ce2O3 Pr2O3 Nd2O3 Sm2O3 Eu2O3 Gd2O3 Tb2O3 Dy2O3 Ho2O3 Er2O3 Tm2O3 Yb2O3 Lu2O3 UO2 ThO2

t m3

% % % % % % % % % % % % % % % % % % % % %

Eudialyte 10,681,000 3,734,000 0.855 0.106 0.305 0.065 0.476 0.070 0.140 0.017 0.064 0.014 0.0019 0.014 0.0026 0.017 0.0038 0.012 0.0018 0.011 0.0014 0.0028 0.028

Mosandrite 4,231,000 1,479,000 1.031 0.085 0.249 0.054 0.388 0.055 0.116 0.014 0.053 0.012 0.0015 0.011 0.0021 0.014 0.0031 0.010 0.0015 0.010 0.0014 0.0032 0.023

Britholite 3,809,000 1,332,000 0.934 0.069 0.190 0.042 0.301 0.042 0.088 0.011 0.040 0.009 0.0011 0.009 0.0016 0.011 0.0024 0.008 0.0012 0.008 0.0012 0.0028 0.022

TOTAL Indicated 18,720,000 6,545,000 0.911 0.094 0.269 0.058 0.420 0.061 0.124 0.015 0.056 0.012 0.0016 0.012 0.0023 0.015 0.0033 0.010 0.0016 0.010 0.0013 0.0029 0.025

tonnes 170,493 17,561 50,300 10,844 78,706 11,424 23,177 2,817 10,546 2,335 302 2,316 433 2,826 624 1,951 300 1,840 252 540 4,739

Eudialyte 3,656,000 1,278,000 0.758 0.073 0.226 0.047 0.346 0.054 0.103 0.012 0.047 0.010 0.0013 0.010 0.0019 0.012 0.0027 0.008 0.0013 0.008 0.0011 0.0017 0.019

Mosandrite 1,147,000 401,000 1.094 0.113 0.326 0.072 0.511 0.069 0.153 0.019 0.070 0.016 0.0020 0.015 0.0029 0.019 0.0041 0.013 0.0020 0.012 0.0016 0.0037 0.028

Britholite 2,372,000 829,000 0.911 0.066 0.202 0.042 0.311 0.045 0.094 0.012 0.043 0.009 0.0011 0.009 0.0016 0.011 0.0023 0.008 0.0012 0.008 0.0011 0.0025 0.018

TOTAL Inferred 7,175,000 2,509,000 0.862 0.077 0.234 0.049 0.361 0.053 0.108 0.013 0.049 0.011 0.0014 0.011 0.0020 0.013 0.0028 0.009 0.0014 0.008 0.0012 0.0023 0.020tonnes 61,876 5,553 16,815 3,527 25,895 3,825 7,752 945 3,522 770 98 757 141 911 201 633 97 606 84 163 1,460

Resource with no cut-off * LREO: Light Rare Earth Oxides = La2O3 to Sm2O3 HREO: Heavy Rare Earth Oxides = Eu2O3 to Lu2O3 TREO: Total Rare Earth Oxides = LREO + HREO + Y2O3

Effective date: 1 june 2011


t m3

% % % % % % % % % % % % % % % % % % % % %

Eudialyte 10,342,000 3,616,000 0.860 0.108 0.311 0.066 0.486 0.072 0.143 0.017 0.065 0.014 0.0019 0.014 0.0027 0.018 0.0038 0.012 0.0018 0.011 0.0014 0.0028 0.028

Mosandrite 3,941,000 1,378,000 1.034 0.088 0.260 0.056 0.404 0.057 0.120 0.015 0.055 0.012 0.0015 0.012 0.0022 0.014 0.0032 0.010 0.0016 0.010 0.0014 0.0033 0.024

Britholite 3,361,000 1,175,000 0.914 0.073 0.200 0.044 0.318 0.045 0.093 0.011 0.042 0.009 0.0011 0.009 0.0017 0.011 0.0025 0.008 0.0013 0.008 0.0012 0.0029 0.023

TOTAL Indicated 17,645,000 6,169,000 0.909 0.097 0.278 0.060 0.435 0.063 0.128 0.016 0.058 0.013 0.0017 0.013 0.0024 0.016 0.0034 0.011 0.0017 0.010 0.0014 0.0029 0.026

tonnes 160,414 17,132 49,120 10,567 76,820 11,163 22,639 2,749 10,290 2,279 295 2,262 423 2,759 608 1,902 292 1,783 243 519 4,598

Eudialyte 3,460,000 1,210,000 0.771 0.076 0.233 0.048 0.356 0.056 0.106 0.013 0.048 0.011 0.0014 0.010 0.0019 0.013 0.0028 0.009 0.0013 0.008 0.0011 0.0018 0.020

Mosandrite 1,120,000 391,000 1.100 0.115 0.331 0.073 0.519 0.070 0.155 0.019 0.071 0.016 0.0020 0.016 0.0029 0.019 0.0042 0.013 0.0020 0.012 0.0017 0.0037 0.029

Britholite 2,226,000 778,000 0.896 0.068 0.208 0.043 0.319 0.046 0.097 0.012 0.044 0.009 0.0012 0.009 0.0017 0.011 0.0024 0.008 0.0012 0.008 0.0011 0.0025 0.019


Resource with TREO* > 0.20% * LREO: Light Rare Earth Oxides = La2O3 to Sm2O3 HREO: Heavy Rare Earth Oxides = Eu2O3 to Lu2O3 TREO: Total Rare Earth Oxides = LREO + HREO + Y2O3



t m3

% % % % % % % % % % % % % % % % % % % % %

Eudialyte 8,576,000 2,999,000 0.888 0.120 0.340 0.073 0.533 0.078 0.156 0.019 0.071 0.016 0.0021 0.016 0.0030 0.019 0.0042 0.013 0.0020 0.012 0.0015 0.0031 0.030

Mosandrite 2,541,000 889,000 1.021 0.104 0.317 0.066 0.488 0.070 0.148 0.018 0.067 0.015 0.0018 0.014 0.0027 0.017 0.0038 0.012 0.0018 0.011 0.0016 0.0034 0.027

Britholite 1,355,000 474,000 0.868 0.100 0.264 0.060 0.424 0.059 0.123 0.015 0.055 0.012 0.0016 0.012 0.0023 0.015 0.0035 0.011 0.0017 0.010 0.0014 0.0032 0.027

TOTAL Indicated 12,472,000 4,361,000 0.913 0.114 0.327 0.070 0.512 0.074 0.151 0.018 0.068 0.015 0.0020 0.015 0.0028 0.018 0.0041 0.013 0.0019 0.012 0.0015 0.0032 0.029

tonnes 113,819 14,279 40,835 8,743 63,856 9,287 18,837 2,279 8,534 1,898 247 1,889 354 2,305 507 1,577 239 1,434 191 395 3,676

Eudialyte 2,098,000 734,000 0.831 0.091 0.275 0.057 0.423 0.066 0.125 0.015 0.056 0.012 0.0016 0.012 0.0023 0.015 0.0033 0.010 0.0016 0.009 0.0013 0.0021 0.024

Mosandrite 976,000 341,000 1.100 0.123 0.356 0.078 0.558 0.075 0.166 0.020 0.077 0.017 0.0022 0.017 0.0032 0.020 0.0045 0.014 0.0022 0.013 0.0017 0.0039 0.032

Britholite 768,000 268,000 0.893 0.099 0.294 0.062 0.455 0.064 0.139 0.017 0.062 0.013 0.0017 0.013 0.0025 0.016 0.0035 0.011 0.0017 0.011 0.0014 0.0029 0.025


Resource with TREO* > 0.30% * LREO: Light Rare Earth Oxides = La2O3 to Sm2O3 HREO: Heavy Rare Earth Oxides = Eu2O3 to Lu2O3 TREO: Total Rare Earth Oxides = LREO + HREO + Y2O3



1.3 Mining Method

The open pit was designed using a two-stage approach. The first stage identified an optimum pit shell using the

Lerchs-Grossman pit optimization method using Whittle software. In the second stage, phase mining and

production schedules were developed, equipment selections were performed and the capital and operating costs

were estimated.

For this Project, Roche determined that the mining operation will use a conventional (truck and shovel) open pit

mining method. The mine will provide mill feed of ore at a rate of 1,500,000 t/y (4,110 t/d) starting from the

beginning of the second year of the mine life.

The selected base case pit contains 19.0 Mt of mineable resource (ore) with an average grade 0.428% TREO. The

overall stripping ratio is 1.53:1 (waste:ore). The whole mine life is about 13 years, and Roche conducted a yearly

planning for the entire mine life.

The mine development for the ore and the waste will progress using 10m high benches.

It is proposed that the operation will be carried out with an equipment fleet comprising of two down the hole

(DTH) drill rigs for mineable resource and waste, a 5.6 m (bucket capacity) hydraulic face shovel with a fleet of

four 50-tonne haul trucks. These will be supplemented with support equipment of a loader, a grader, two dozers, a

small excavator, etc.

1.4 Recovery Methods

Roche has based the current study on a beneficiation, leach and solvent extraction process to produce a single

TREO concentrate.

The metallic concentrate at Kipawa is basically a REE silicate mix. The main concentrate mineral are eudialyte,

mosandrite and britholite. It may be possible for the single TREO concentrate to be converted to individual rare

earth oxides, and Matamec is currently undertaking metallurgical test work with SGS Lakefield to make this

determination.

Testing by SGS Lakefield has shown that leaching of the silicates requires the use of sulphuric acid. The results of

the test of magnetic separation and solvent extraction show indication that recovery will be in the order of 81%.

Optimization of these base-case test results is currently being investigated in an attempt to reduce input costs in

the metallurgical processing of the Kipawa mineralization.

Roche considers the soft granular ore will require the use of a SAG Mill followed by a rod mill. Capital and

operating costs are based on the actual flowsheets, including magnetic separation, acid leach and a single TREO

product from solvent extraction.

1.5 Tailings Management Facility

The Kipawa project includes the development of a tailings management facility (TMF) at the Kipawa site located

approximately 4 km north of the mine site for the tailings from the concentrator and a another tailings site for the

Hydromet plant will be located in the area of Tmiscaming.

Dams capable of containing 11.7 M m3 of tailings for the Kipawa Concentrator TMF and 17.9 M m

3 of tailings for

the Tmiscaming Hydromet TMF are considered in the PEA.


Radioactivity analysis performed on tailings samples from the pilot plant of the mineralurgical process showed

value smaller than the factor (1) presented in Directive 019 for classification of radioactive waste.

Comprehensive characterization programme should be carried out when new representative samples of

minerallurgical tailings to be produced at Kipawa will be available. Results of this characterization will allow the

comparison with Ministre du Dveloppement Durable, Environnement et les Parcs (MDDEP) requirements for the

protection of groundwater at Kipawa site.

No characterization of the metallurgical process has been carried out. Comprehensive characterization programme

should be carried out when new representative samples of metallurgical tailings to be produced at Temiscaming

will be available. Results of this characterization will allow the comparison with MDDEP requirements for the

protection of groundwater at Temiscaming site.

Most of the water sent to the Kipawa tailings will be recycled in the process. However, since the precipitation

exceeds the evaporation, there will be an effluent in the environment especially at snowmelt period from the

Kipawa Concentrator TMF and the Tmiscaming Hydromet TMF.

Geotechnical designs of both tailings sites presented herein are conceptual and include use of local mineral soil for

the earth embankments. Local topographic conditions in the proposed TMF area are planned to contain the wet

tailings by earthen dams. The local topography of the selected site determines that a dam will be required for TMF.

The dam design section assumes the use of local materials and a competent foundation. No assessment was done

to evaluate if it has a potential for acid generation. No watertight barrier is planned for the Kipawa concentrator

tailings. A watertight barrier is planned for the Hydromet tailings.

1.6 Project Infrastructure

The infrastructure is limited to the typical mining infrastructure and production of electricity at the Kipawa sites

since no power lines reaches the site. The site is already connected to the road network which will need to be

improved. The Hydromet site will be located short distance from the road to connect to the railroad network for

shipment of the concentrate to a Pacific coast port in transit to an Asian REO refinery. The project proposes

operating the beneficiation, in a concentrator plant on the Kipawa site and a leach and solvent extraction

hydrometallurgical process in the Tmiscaming area.

1.7 Environmental Considerations

1.7.1 ENVIRONMENTAL SETTING

The project involves two sites of activity. A mining site including an open-pit, waste dump, mill and tailings is

proposed at Kipawa. The hydrometallurgical plant will be located in Temiscaming.

Preliminary environmental baseline studies (EBS) has been conducted in the area of the Kipawa site before the

selection of the waste dump and tailings has been done. No EBS has been carried out for the Temiscaming site.

Baseline environmental studies typically are conducted over a minimum of 12 continuous months to provide

coverage of all four seasons.

1.7.2 ENVIRONMENTAL ASSESSMENT AND PERMITTING

The production capacity and processing capacity estimated for the Matamec installations in Kipawa are lower than

7,000 t/day and more specifically 4 110 t/day. The expected production capacity for the Matamec installations in

Temiscaming is lower than 20 000 t/year. Therefore, the environmental impact assessment and review procedure


will not apply to the Matamec project and application for certificate of authorization in accordance with Section 22

of the QEA will be sufficient.

Federal regulatory processes are determined after a project description is submitted to the federal authorities

such as Environment Canada, Health Canada, Fisheries and Oceans Canada, and Transport Canada. The proposed

mine, with a planned production rate of 4,110 t/day, would undergo a comprehensive study in the event that a

federal approval is required.

1.7.3 COMMUNITY AND ABORIGINAL ENGAGEMENT

The purpose of this program is to ensure that all potentially affected persons, businesses, and communities have a

full understanding of the project. In addition to a continuing public engagement program, it may be necessary to

negotiate an impact/benefit agreement (IBA) with potentially affected stakeholder groups.

1.8 Capital Cost Estimates

The total capital costs presented in the study are $315,763,000 CAD and are separated into direct capital costs,

indirect capital costs and contingency. The direct costs breakdown, the Indirect cost and contingency is shown

below (Table 1.2).

Table 1.2 Capital Cost Estimates Summary

COST ITEMS Initial Cost

(CAD)

Mine Site

Mining 13,400,000

Open Pit & Auxiliary Services 7,617,000

Mine Site Tailings & Water Management 10,269,000

Concentrator 62,292,000

Mine Site Infrastructure 7,200,000

Hydromet Site

Hydromet Site Tailings & Water Management 15,004,000

Hydrometallurgical Facility 67,472,000

Hydromet Site Infrastructure 3,523,000

Other Infrastructure

Auxiliary Buildings - Non Process 10,730,000

Electricity, Automation & Communication Included

Total Direct Costs 197,507,000

Total Indirect Costs 55,103,000

Contingency (25%) 63,153,000

Total Costs ($CAD): 315,763,000


1.9 Operating Cost Estimate

The total yearly operating cost is $89,210,000 CAD which equates to $59.47 CAD per tonne milled in the

concentrator and $16.97 CAD per kg of TREO concentrate. The breakdown of operating costs is shown below

(Table 1.3).

Table 1.3 - Operating Costs Summary (Per Tonne Ore Milled) Y1Ramp-up

Y13

Exhaustion of ore

COST ITEMSANNUAL COST

($/y)

ANNUAL COST

PER TONNE

MINED

($/t)

ANNUAL COST

PER TONNE

MILLED

CONCENTRATOR

($/t)

ANNUAL COST

PER TONNE OF

CONCENTRATE

($/t)

ANNUAL COST

PER kg OF

TREO

($/kg)

ANNUAL COST

(lower due to

ramp up)

($/y)

ANNUAL COST

(lower due to

exhaustion of ore)

($/y)

GENERAL & ADMINISTRATION treo 4229 tonnes treo 3882 tonnes

3,672,000$ 1.03 2.4 6.99 0.698 3,672,000$ 3,304,800$

2,971,000$ 0.84 2.0 5.66 0.565 2,971,000$ 2,673,900$

1,343,000$ 0.38 0.9 2.56 0.255 1,343,000$ 1,208,700$

450,000$ 0.13 0.3 0.86 0.086 450,000$ 405,000$

405,000$ 0.11 0.3 0.77 0.077 405,000$ 364,500$

TOTAL G&A 8,841,000$ 2.49 5.9 16.84 1.682 8,841,000$ 7,956,900$

MINING (Including Mine Manpower)

TOTAL MINING (Incl Mine Manpower) 16,619,000$ 4.67 11.079 31.66 3.161 16,479,848$ 16,319,724$

PROCESS

10,571,000$ 2.97 7.0 20.14 2.011 10,571,000$ 9,513,900$

9,781,000$ 2.75 6.5 18.63 1.861 9,781,000$ 8,802,900$

FRESH WATER 98,000$ 0.03 0.1 0.19 0.019 98,000$ 88,200$

REAGENTS 29,207,000$ 8.21 19.5 55.63 5.556 21,905,250$ 26,286,300$

CONSUMMABLES 4,741,000$ 1.33 3.2 9.03 0.902 3,555,750$ 4,266,900$

OTHER PROCESSING 3,952,000$ 1.11 2.6 7.53 0.752 2,964,000$ 3,556,800$

TOTAL PROCESS 58,350,000$ 16.40 38.9 111.14 11.099 48,875,000$ 52,515,000$

TAILINGS

TOTAL TAILINGS 240,000$ 0.07 0.2 0.46 0.046 240,000$ 216,000$

TRANSPORTATION

4,200,000$ 1.18 2.8 8.00 0.799 3,150,000$ 3,780,000$

TREO MIX TRANSPORT TO ASIA 960,000$ 0.27 0.6 1.83 0.183

Preliminary Economic Assessment Study for Kipawa Project

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Transcript of Preliminary Economic Assessment Study for Kipawa Project