M

November 2012
SEGA Gold Project PEA NI 43-101 Report
Page I
TABLE OF CONTENTS
SECTION 1.
1.1 1.2
EXECUTIVE SUMMARY .............................................................. 1-1
Introduction ............................................................................................................................ 1-1 Property Description and Location ...................................................................................... 1-2 Title ................................................................................................................................... 1-2 Accessibility, Climate, Local Resources, Physiography and Infrastructure ..................... 1-3
1.2.1 1.2.2 1.3 1.4
Resources ............................................................................................................................... 1-3 Mining ...................................................................................................................................... 1-6 Sega Mineral Inventory .................................................................................................... 1-9 Mining Operations ............................................................................................................ 1-9 Capital and Operating Cost .............................................................................................. 1-9
1.4.1 1.4.2 1.4.3 1.5
Metallurgy ............................................................................................................................... 1-9 Metallurgical Testing ........................................................................................................ 1-9 Mineral Processing ......................................................................................................... 1-12
1.5.1 1.5.2 1.6 1.7 1.8
Process Plant Description................................................................................................... 1-12 Infrastructure and Other Site Services .............................................................................. 1-15 Implementation ..................................................................................................................... 1-15 Crusher Installation ........................................................................................................ 1-15 Haul Road and Other Sega Mining Infrastructure .......................................................... 1-16 ESIA ............................................................................................................................... 1-16 Overall Project Execution Schedule ............................................................................... 1-16
1.8.1 1.8.2 1.8.3 1.8.4 1.9
Environmental ...................................................................................................................... 1-18 ESIA Report ................................................................................................................... 1-18 ESIA Baseline and Specialist Studies ............................................................................ 1-18 Resettlement Action Plan ............................................................................................... 1-19 Closure Financial Provision ............................................................................................ 1-21 Environmental Conclusion ............................................................................................. 1-21
1.9.1 1.9.2 1.9.3 1.9.4 1.9.5 1.10
Capital and Operating Costs ............................................................................................... 1-22 Capital Expenditure ........................................................................................................ 1-22 Operating Expenditure ................................................................................................... 1-23
1.10.1 1.10.2 1.11
Economics and Financial Analysis .................................................................................... 1-26 Assumptions ................................................................................................................... 1-26

SEGA Gold Project PEA NI 43-101 Report Page I
1.11.1
November 2012
1.11.2 1.11.3 1.12
Summary of Financial Analysis ...................................................................................... 1-27 Sensitivity Analysis ......................................................................................................... 1-30
Interpretation and Conclusion ............................................................................................ 1-31 Interpretation .................................................................................................................. 1-31 Conclusion ...................................................................................................................... 1-32
1.12.1 1.12.2 1.13
Recommendations ............................................................................................................... 1-32
SECTION 2.
2.1 2.2
INTRODUCTION AND SCOPE OF SERVICES ........................... 2-1
Purpose of Report .................................................................................................................. 2-1 Scope of Services .................................................................................................................. 2-2 Orezone Gold Corporation ............................................................................................... 2-2 SRK Scope of Services .................................................................................................... 2-2 Digby Wells Environmental Scope of Services ................................................................ 2-4 SENETs Scope of Services ............................................................................................. 2-7 AMARAs Scope of Services ............................................................................................ 2-7
2.2.1 2.2.2 2.2.3 2.2.4 2.2.5 2.3 2.4 2.5 2.6
Cautionary Notes ................................................................................................................... 2-8 Qualifications.......................................................................................................................... 2-9 Inspections of the Property................................................................................................... 2-9 Reliance on Other Experts .................................................................................................. 2-10
SECTION 3.
3.1 3.2 3.3
PROPERTY DESCRIPTION & LOCATION .................................. 3-1
Property Description .............................................................................................................. 3-1 Title .......................................................................................................................................... 3-4 Environmental Considerations ............................................................................................. 3-5
SECTION 4. ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, PHYSIOGRAPHY AND INFRASTRUCTURE ......................................................... 4-1
4.1 4.2 4.3 4.4 Accessibility ........................................................................................................................... 4-1 Climate .................................................................................................................................... 4-1 Local Resources and Infrastructure .................................................................................... 4-1 Physiography and Vegetation............................................................................................... 4-2
SECTION 5.
November 2012
EXPLORATION HISTORY ........................................................... 5-1

SEGA Gold Project PEA NI 43-101 Report Page II
5.1 5.2
Introduction ............................................................................................................................ 5-1 Exploration Activities ............................................................................................................ 5-1
SECTION 6.
6.1 6.2 6.3
GEOLOGICAL SETTING ............................................................. 6-1
Regional Geology ................................................................................................................... 6-1 Property Geology ................................................................................................................... 6-1 Petrography and Petrochemistry ......................................................................................... 6-3 Metasediments ................................................................................................................. 6-4 Metavolcanites ................................................................................................................. 6-4 Intrusives .......................................................................................................................... 6-5 Metasomatism and Mineralisation .................................................................................... 6-6 Petrochemistry ................................................................................................................. 6-6
6.3.1 6.3.2 6.3.3 6.3.4 6.3.5 6.4
Structural Geology ................................................................................................................. 6-6
SECTION 7.
7.1 7.2
DEPOSIT TYPES.......................................................................... 7-1
Introduction ............................................................................................................................ 7-1 Deposit Types ......................................................................................................................... 7-1
SECTION 8.
8.1 8.2 8.3 8.4
MINERALISATION ....................................................................... 8-1
Introduction ............................................................................................................................ 8-1 Bakou-RZ Deposits ................................................................................................................ 8-1 Gambo Deposits ..................................................................................................................... 8-2 Tiba Deposits .......................................................................................................................... 8-2 Tiba 1 Deposit .................................................................................................................. 8-3 Tiba 1E Deposit ................................................................................................................ 8-3 Tiba 3SE Deposit ............................................................................................................. 8-3 Tiba 3 Deposit .................................................................................................................. 8-3 Tiba 2 Deposit .................................................................................................................. 8-4
8.4.1 8.4.2 8.4.3 8.4.4 8.4.5 8.5
Other Prospects ..................................................................................................................... 8-4
SECTION 9.
9.1 9.2
TIBA PERMIT 2007 2009 EXPLORATION PROGRAMS ......... 9-1
Introduction ............................................................................................................................ 9-1 Exploration Programs ............................................................................................................ 9-1

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November 2012
SECTION 10.
10.1 10.2 10.3 10.4
DRILLING PROCEDURES ......................................................... 10-1
Introduction .......................................................................................................................... 10-1 Hole Planning, Site Preparation and Set-up ...................................................................... 10-3 Orientation Survey ............................................................................................................... 10-3 Hole Logging procedure ...................................................................................................... 10-4 Core Logging .................................................................................................................. 10-4 RC Chips Logging .......................................................................................................... 10-5
10.4.1 10.4.2
SECTION 11.
11.1 11.2 11.3
SAMPLING METHOD & APPROACH........................................ 11-1
Introduction .......................................................................................................................... 11-1 Reverse Circulation Drilling ................................................................................................ 11-1 Diamond Drilling .................................................................................................................. 11-1
SECTION 12.
12.1 12.2 12.3 12.4 12.5
SAMPLE PREPARATION, ANALYSES & SECURITY .............. 12-1
Introduction .......................................................................................................................... 12-1 Sample Preparation ............................................................................................................. 12-1 Sample Analysis ................................................................................................................... 12-2 Sample Security ................................................................................................................... 12-2 Monitoring of the Preparation and Analytical Services ................................................... 12-2
SECTION 13.
13.1 13.2 13.3
DATA VERIFICATION ................................................................ 13-1
Introduction .......................................................................................................................... 13-1 Database Validation ............................................................................................................. 13-1 Quality Control of the Laboratories ................................................................................... 13-2 Introduction ..................................................................................................................... 13-2 Blanks ............................................................................................................................. 13-4 Standards ....................................................................................................................... 13-9 Duplicates ..................................................................................................................... 13-18
13.3.1 13.3.2 13.3.3 13.3.4 13.4 13.5 13.6
Umpire assays .................................................................................................................... 13-24 Internal Laboratory Quality Control ................................................................................. 13-25 Independent Check Sampling ........................................................................................... 13-25
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November 2012
SECTION 14.
14.1 14.2
ADJACENT PROPERTIES ........................................................ 14-1
Introduction .......................................................................................................................... 14-1 Amara Mining plc ................................................................................................................. 14-1 Kalsaka Gold Mine ......................................................................................................... 14-1 Yako ............................................................................................................................... 14-1
14.2.1 14.2.2 14.3
Riverstone Resources Inc. .................................................................................................. 14-1 Karma Project................................................................................................................. 14-1
14.3.1 14.4
Pinsapo Group...................................................................................................................... 14-2 Peleguetenga, Tibou and Sassa .................................................................................... 14-2
14.4.1 14.5
High River Gold .................................................................................................................... 14-2 Bissa Hill ......................................................................................................................... 14-2
14.5.1 14.6
Goldrush Resources ............................................................................................................ 14-3 Ronguen ......................................................................................................................... 14-3
14.6.1
SECTION 15.
15.1 15.2
MINERAL PROCESSING & METALLURGICAL TESTING ....... 15-1
Introduction .......................................................................................................................... 15-1 Review of Scoping Study Metallurgical Testwork ............................................................ 15-1 Queens University Test Program ................................................................................... 15-1 Heap Leach Column Test Work ..................................................................................... 15-2 Bottle-Roll Test Program ................................................................................................ 15-3
15.2.1 15.2.2 15.2.3 15.3
Review of Further Metallurgical Testwork (2010) ............................................................. 15-5 Sample preparation ........................................................................................................ 15-5 Head Analyses ............................................................................................................... 15-6 Comminution Testwork .................................................................................................. 15-7 Direct Cyanidation Bottle Roll Cyanidation Testwork.................................................. 15-7 Gravity Concentration Testwork ..................................................................................... 15-8 Sulphide Flotation......................................................................................................... 15-10 Agglomerate Strength and Stability Testwork .............................................................. 15-10 Column Leach Test Results ......................................................................................... 15-12 Head Screening Analysis ............................................................................................. 15-12 Physical Ore Characteristic ...................................................................................... 15-14 Moisture Requirements for Composites ................................................................... 15-14 Geotechnical (Load/Permeability) Testing ............................................................... 15-15
15.3.1 15.3.2 15.3.3 15.3.4 15.3.5 15.3.6 15.3.7 15.3.8 15.3.9 15.3.10 15.3.11 15.3.12
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15.3.13 15.3.14 15.3.15 15.4
Fixed Wall Hydraulic Conductivity ............................................................................ 15-15 Further Column Leach Tests .................................................................................... 15-15 Heap Leach Testwork .............................................................................................. 15-16
Metallurgical testwork Conclusions ................................................................................. 15-18
SECTION 16.
16.1 16.2
MINERAL RESOURCE AND MINERAL RESERVE ESTIMATE 16-1
Introduction .......................................................................................................................... 16-1 Drill Holes Database ............................................................................................................ 16-1 Database Construction ................................................................................................... 16-1 Database Validation ....................................................................................................... 16-2 Collar Location ............................................................................................................... 16-3 Density Determinations .................................................................................................. 16-3 Assays Statistics and Upper Cut-Off .............................................................................. 16-5 Assays compositing...................................................................................................... 16-15 Variogram Analysis ...................................................................................................... 16-17
16.2.1 16.2.2 16.2.3 16.2.4 16.2.5 16.2.6 16.2.7 16.3
Geological Interpretation ................................................................................................... 16-22 Introduction ................................................................................................................... 16-22 Mineralised Envelope Definition ................................................................................... 16-23 Surface Topography ..................................................................................................... 16-23 Weathering Profile ........................................................................................................ 16-23
16.3.1 16.3.2 16.3.3 16.3.4 16.4
Block modeling................................................................................................................... 16-23 Model Definition............................................................................................................ 16-23 Density ......................................................................................................................... 16-25 Mineralised Envelopes ................................................................................................. 16-25 Grade Interpolation....................................................................................................... 16-25
16.4.1 16.4.2 16.4.3 16.4.4 16.5 16.6 16.7
Mineral Resource Classification ....................................................................................... 16-27 Previous Mineral Resource Estimate ............................................................................... 16-33 Conclusions ........................................................................................................................ 16-33
SECTION 17.
17.1
MINE STUDY .............................................................................. 17-1
Preliminary Economic Assessment ................................................................................... 17-1 Mineral Reserve Estimate .............................................................................................. 17-1
17.1.1 17.2
Geotechnical Investigation and Slope Stability Analysis ................................................ 17-1
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Page VI
17.3
Open Pit Optimisation ......................................................................................................... 17-2 Introduction ..................................................................................................................... 17-2 Resource Block Models ................................................................................................. 17-2 Geotechnical .................................................................................................................. 17-2 Cost Inputs ..................................................................................................................... 17-3 Mining Costs ................................................................................................................... 17-3 Processing and General Administration Cost ................................................................ 17-3 Mining Factors ................................................................................................................ 17-3 Gold Price and Royalties ................................................................................................ 17-3 Cut-off Grade Calculations ............................................................................................. 17-3 Whittle Results ........................................................................................................... 17-5 Practical Pit Design .................................................................................................... 17-5 Mine Production Schedule ....................................................................................... 17-10 Sega Mineral Inventory ............................................................................................ 17-12
17.3.1 17.3.2 17.3.3 17.3.4 17.3.5 17.3.6 17.3.7 17.3.8 17.3.9 17.3.10 17.3.11 17.3.12 17.3.13 17.4
Mining Operations .............................................................................................................. 17-12 Introduction ................................................................................................................... 17-12 Mining Equipment Requirements ................................................................................. 17-13 Mine Work Schedule .................................................................................................... 17-13 Open Pit Dewatering .................................................................................................... 17-14
17.4.1 17.4.2 17.4.3 17.4.4 17.5 17.6
Further Work Required ...................................................................................................... 17-15 Interpretation and Conclusions ........................................................................................ 17-16
SECTION 18.
18.1
PROCESS PLANT...................................................................... 18-1
Process Plant Design Criteria ............................................................................................. 18-1 General Process Plant Criteria ....................................................................................... 18-1
18.1.1 18.2
Process Plant Description................................................................................................... 18-2 Sega Process Plant Description ..................................................................................... 18-2 Kalsaka Process Plant Description ................................................................................ 18-5
18.2.1 18.2.2
SECTION 19.
19.1 19.2 19.3
INFRASTRUCTURE AND OTHER SITE SERVICES ................. 19-1
Logistics................................................................................................................................ 19-1 Existing Infrastructure ......................................................................................................... 19-1 Proposed New Mine Infrastructure .................................................................................... 19-2
November 2012
Page VII
SECTION 20.
20.1 20.2 20.3 20.4 20.5
IMPLEMENTATION .................................................................... 20-1
Introduction .......................................................................................................................... 20-1 Crusher Installation Milestones .......................................................................................... 20-1 Long Lead Items ................................................................................................................... 20-1 EPCM Consultant ................................................................................................................. 20-1 Haul Road and Other Mining Infrastructure ...................................................................... 20-2 Introduction ..................................................................................................................... 20-2 Scope of Works .............................................................................................................. 20-2
20.5.1 20.5.2 20.6 20.7 20.8 20.9
Project Duration ................................................................................................................... 20-5 Other SEGA Mining Infrastructure ..................................................................................... 20-5 ESIA ....................................................................................................................................... 20-5 Overall Project Execution Schedule .................................................................................. 20-7
SECTION 21.
21.1 21.2 21.3
ENVIRONMENTAL AND SOCIAL STUDY ................................ 21-1
Introduction .......................................................................................................................... 21-1 Objectives of the ESIA Report ............................................................................................ 21-3 Regulatory and Administrative Framework ....................................................................... 21-3 Burkinabe Policy and Legislation ................................................................................... 21-3
21.3.1 21.4
International Guidelines ...................................................................................................... 21-4 International Finance Corporation 2012 ...................................................................... 21-4 Project Categorisation .................................................................................................... 21-4 Land Acquisition and Involuntary Resettlement ............................................................. 21-5 Biodiversity Management ............................................................................................... 21-5 Closure Requirements ................................................................................................... 21-5
21.4.1 21.4.2 21.4.3 21.4.4 21.4.5 21.5
Stakeholder Engagement Process ..................................................................................... 21-5 Introduction ..................................................................................................................... 21-5 Objectives of the SEP .................................................................................................... 21-8 Communication with the Authorities ............................................................................... 21-9 Announcing the Proposed Projects ................................................................................ 21-9
21.5.1 21.5.2 21.5.3 21.5.4 21.6 21.7
ESIA Report .......................................................................................................................... 21-9 Environmental Authorisation .............................................................................................. 21-9
November 2012
Page VIII
21.8 21.9
ESIA Baseline and Specialist Studies ................................................................................ 21-9 Impact Assessment ........................................................................................................... 21-10 Construction Phase Impact .......................................................................................... 21-10 Job Creation ................................................................................................................. 21-10 Multiplier Effects on Economy ...................................................................................... 21-11 Physical and Economic Displacement ......................................................................... 21-12 Resettlement Action Plan .............................................................................................. 21-14 Purpose .................................................................................................................... 21-14 Approach for Calculating Resettlement Costs ......................................................... 21-15 Resettlement Options ............................................................................................... 21-15 Provisional Cost Estimates ...................................................................................... 21-16
21.9.1 21.9.2 21.9.3 21.9.4 21.10
21.10.1 21.10.2 21.10.3 21.10.4 21.11 21.12
Monitoring Plans ............................................................................................................ 21-16 Closure Framework ........................................................................................................ 21-17 Mine Closure ............................................................................................................ 21-17 Objectives for Mine Closure ..................................................................................... 21-17 Activities for Mine Closure ........................................................................................ 21-17 Financial Provision ................................................................................................... 21-18
21.12.1 21.12.2 21.12.3 21.12.4 21.13
Conclusion ...................................................................................................................... 21-18
SECTION 22.
22.1 22.2 22.3 22.4 22.5 22.6 22.7 22.8
OPERATING COSTS AND CAPITAL COSTS ........................... 22-1
Introduction .......................................................................................................................... 22-1 Scope of the Estimate .......................................................................................................... 22-1 Responsibilities .................................................................................................................... 22-1 Exclusions ............................................................................................................................ 22-1 Escalation ............................................................................................................................. 22-2 Exchange Rates ................................................................................................................... 22-3 Taxes and Duties .................................................................................................................. 22-3 Capital Cost Estimate .......................................................................................................... 22-9 Validity of Estimate ......................................................................................................... 22-9 Overall Capital Cost Summary ..................................................................................... 22-10 Crusher Installation Costs ............................................................................................ 22-11 Mining Capital Cost Summary...................................................................................... 22-12
22.8.1 22.8.2 22.8.3 22.8.4
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Page IX
22.8.5 22.8.6 22.8.7 22.9
Infrastructure Costs ...................................................................................................... 22-13 Other Project Related Costs ........................................................................................ 22-14 Contingency ................................................................................................................. 22-15
Operating Cost Estimate ................................................................................................... 22-15 Summary of Operating Costs ....................................................................................... 22-15 G&A Costs .................................................................................................................... 22-16 Processing Costs ......................................................................................................... 22-19 Additional Crushing Costs ............................................................................................ 22-20 Mining Technical Services ........................................................................................... 22-21 ROM Rehandle............................................................................................................. 22-21 Mining Costs ................................................................................................................. 22-21
22.9.1 22.9.2 22.9.3 22.9.4 22.9.5 22.9.6 22.9.7
SECTION 23.
23.1 23.2 23.3 23.4 23.5 23.6 23.7 23.8
ECONOMIC MODEL AND FINANCIAL ANALYSIS .................. 23-1
Introduction .......................................................................................................................... 23-1 Evaluation Method ............................................................................................................... 23-1 Production Schedule ........................................................................................................... 23-1 Assumptions......................................................................................................................... 23-3 Summary of Financial Analysis .......................................................................................... 23-4 Project Life Cash Flow ......................................................................................................... 23-5 Sensitivity Analysis ............................................................................................................. 23-7 Discussion ............................................................................................................................ 23-8
SECTION 24.
24.1 24.2
INTERPRETATION & CONCLUSION ........................................ 24-1
Interpretation ........................................................................................................................ 24-1 Conclusion ............................................................................................................................ 24-2
SECTION 25.
25.1 25.2 25.3 25.4 25.5
RECOMMENDATIONS............................................................... 25-1
Introduction .......................................................................................................................... 25-1 Resources ............................................................................................................................. 25-1 Mining .................................................................................................................................... 25-1 Processing ............................................................................................................................ 25-2 Water and Power Management ........................................................................................... 25-2
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November 2012
25.6 25.7 25.8
Infrastructure ........................................................................................................................ 25-3 ESIA and RAP Related Issues............................................................................................. 25-3 Capex-Opex and Schedule Verification ............................................................................. 25-4
SECTION 26. SECTION 27. SECTION 28.
REFERENCES ........................................................................... 26-1 DATE AND SIGNATURE PAGE ................................................ 27-1 CERTIFICATES OF QUALIFIED PERSONS ............................. 28-1
November 2012
Page XI
List of Tables
Table 1.1: Table 1.2: Table 1.3: Table 1.4: Table 1.5: Table 1.6: Table 1.7: Table 1.8: Table 1.9: Table 1.10: Table 1.11: Table 1.12: Table 1.13: Table 1.14: Table 1.15: Table 1.16: Table 1.17: Table 1.18: Table 1.19: Table 1.20: Table 1.21: Table 1.22: Table 1.23: Table 1.24: Table 1.25: Table 1.26: Table 1.27: Table 1.28: Table 2.1: Table 2.2: Table 3.1: Table 5.1: Table 9.1: Table 10.1: Table 10.2: Table 13.1: Table 13.2:
November 2012
Tiba Permit Coordinates............................................................................................................. 1-2 Total Indicated Mineral Resources above a Lower Cut-off of 0.5g/t ........................................... 1-4 Total Inferred Mineral Resources above a Lower Cut-off of 0.5g/t ............................................. 1-5 Comparative Summary of the Current and Previous Minerals Resource Estimates for the Sega Project ........................................................................................................................................ 1-6 Whittle Parameters for the Open Pit Optimisation ...................................................................... 1-6 Whittle Optimisation Results ...................................................................................................... 1-7 LOM Production Schedule ...................................................................................................... 1-8 Summary of Sega Mineral Inventory .......................................................................................... 1-9 Ai and BBWi Testwork Results ................................................................................................. 1-10 Summary of Direct Cyanidation Testwork Results ................................................................... 1-11 Column Leach Test Results ..................................................................................................... 1-11 General Process Plant Criteria ................................................................................................. 1-12 Requirements for Closure ........................................................................................................ 1-21 Exchange Rates ....................................................................................................................... 1-22 Overall Capital Cost Estimate Summary .................................................................................. 1-23 Summary of the Operating Costs ............................................................................................. 1-24 Summary of G&A Costs ........................................................................................................... 1-24 Summary of Processing Costs ................................................................................................. 1-25 Additional Crushing Costs ........................................................................................................ 1-25 Summary of the Mining Costs .................................................................................................. 1-26 Breakdown of Ore and Waste Mining Costs............................................................................. 1-26 Financial Evaluation - Assumptions.......................................................................................... 1-27 Summary of Financial Analysis Results ................................................................................... 1-27 Salient Features ....................................................................................................................... 1-28 Cash Flow Model Summary ..................................................................................................... 1-29 Gold Price Sensitivity ............................................................................................................... 1-30 Capex Sensitivity ...................................................................................................................... 1-30 Operating Costs Sensitivity ...................................................................................................... 1-30 Authors Qualifications................................................................................................................ 2-9 Other Experts ........................................................................................................................... 2-11 Tiba Permit Coordinates............................................................................................................. 3-2 Main Exploration Activities Completed on the Sgunega Permit .............................................. 5-2 Main Exploration Activities Completed on the Tiba Permit ......................................................... 9-2 Proportion of Core versus RC Drill Holes Used in the Resource Estimation ............................ 10-1 Proportion of Core and RC Holes Drilled by Orezone and Used in the Resource Estimation 10-2
Control Samples Inserted with the Field Samples .................................................................... 13-2 Control Samples Inserted into the Samples Selected for FA.................................................... 13-3
SEGA Gold Project PEA NI 43-101 Report Page XII
Table 13.3: Table 13.4: Table 13.5: Table 13.6: Table 13.7: Table 13.8: Table 13.9: Table 13.10: Table 13.11: Table 14.1: Table 15.1: Table 15.2: Table 15.3: Table 15.4: Table 15.5: Table 15.6: Table 15.7: Table 15.8: Table 15.9: Table 15.10: Table 15.11: Table 15.12: Table 15.13: Table 15.14: Table 15.15: Table 15.16: Table 15.17: Table 15.18: Table 15.19: Table 15.20: Table 15.21: Table 15.22: Table 16.1: Table 16.2: Table 16.3: Table 16.4: Table 16.5:
2007 Tiba RC Program Control Samples ................................................................................. 13-3 2008 Tiba RC Program Control Samples ................................................................................. 13-3 2007 Tiba DD Program Control Samples ................................................................................. 13-4 2008 Tiba DD Program Control Samples ................................................................................. 13-4 List of In-house Standard Materials Used by Orezone in 2007 ................................................ 13-9 List of 2007 IHS Batches with Acceptable Limits ................................................................... 13-11 List of Certified Standard Materials Used by Orezone for the Preparation on In-house Standards (IHS) ....................................................................................................................................... 13-11 List of 2008 IHS Batches with Acceptable Limits ................................................................... 13-11 Descriptive Statistics, Original Orezone Core Assays and Cluff Check Assays ..................... 13-28 Bissa Resource Estimate (WAI, 01 January 2012) .................................................................. 14-3 Testwork results from Queens University, April 2005 ............................................................... 15-2 Summary Results from Column Leach Tests ........................................................................... 15-3 Split 1 - Percentage of Cyanide Soluble Gold at 200mesh Grind ............................................. 15-3 Split 2 - Percentage of +10mesh Material in the "As Received" RC Samples .......................... 15-4 Split 3 - Percentage of Samples with Almost Essentially Complete Dissolution of Gold .......... 15-4 pH Tests Prior to Lime Addition ................................................................................................ 15-5 Gold Head Assay Results ........................................................................................................ 15-6 Ai and BBWi Testwork Results ................................................................................................. 15-7 Summary of Direct Cyanidation Testwork Results ................................................................... 15-8 Gravity Concentration Tests ..................................................................................................... 15-9 Gravity Tailings Cyanidation ..................................................................................................... 15-9 Bulk Sulphide Flotation Tests ................................................................................................. 15-10 Agglomerate Strength and Stability Testwork Results............................................................ 15-11 Column Leach Test Results ................................................................................................... 15-12 Assay by Size Table for PQ-FR, PQ-TR and TIBA1............................................................... 15-13 Assay by Size Table for RBG-1A, RBG1B and RBG-2 .......................................................... 15-13 Assay by Size Table for RBG-1A, RBG1B and RBG-2 .......................................................... 15-14 Further Column Leach Testwork ............................................................................................ 15-15 Sample ID and Head Assays ................................................................................................. 15-16 Summary of Column Leach Tests .......................................................................................... 15-17 Predicted Field Heap Cement Requirement testwork ............................................................ 15-17 Compacted Permeability Tests .............................................................................................. 15-18 List of Current Estimate Block Models...................................................................................... 16-1 Content of Drill Hole Database ................................................................................................. 16-2 Bulk Density Calculated and Used by Orezone in the Tonnage Calculations .......................... 16-4 Bulk Density Calculated and Used by Orezone in the Tonnage Calculations for the Tiba Deposits ................................................................................................................................................. 16-4 Bulk Density Calculated and Used by Orezone in the Tonnage Calculations for the Tiba Deposits ................................................................................................................................... 16-5
SEGA Gold Project PEA NI 43-101 Report Page XIII
November 2012
Table 16.6: Table 16.7: Table 16.8: Table 16.9: Table 16.10: Table 16.11: Table 16.12: Table 16.13: Table 16.14: Table 16.15: Table 16.16: Table 16.17: Table 16.18: Table 16.19: Table 16.20: Table 16.21: Table 16.22: Table 17.1: Table 17.2: Table 17.3: Table 17.4: Table 17.5: Table 17.6: Table 17.7: Table 17.8: Table 17.9: Table 17.10: Table 18.1: Table 18.2: Table 20.1: Table 20.2: Table 21.1: Table 21.2: Table 21.3:
Top Cut Applied to the Various Mineralised Zones Based on 500ppb Envelopes .................. 16-13 Top Cut Applied to the Various Mineralised Zones Based on 300ppb Envelopes .................. 16-14 Top Cut Applied to the Various Mineralised Zones Based on Other Envelopes..................... 16-15 Comparison of Assay Statistics for each RZ-Bakou-Gambo Area Mineralised Envelope at 0.0g/t and 0.5g/t Cut-Off ................................................................................................................... 16-16 Comparison of Assay Statistics for Each Tiba Area and Lateritic Mineralised Envelope at 0.0g/t and 0.5g/t Cut-Off ................................................................................................................... 16-17 Block Model Definition Details ................................................................................................ 16-24 Interpolation Parameters for Indicated Resources, RZ-Bakou-Gambo Deposits ................... 16-26 Interpolation Parameters for Indicated Resources, Tiba Deposits ......................................... 16-27 Total Indicated Mineral Resources above a Lower cut-off of 0.5g/t ........................................ 16-28 Total Inferred Mineral Resources above a Lower cut-off of 0.5g/t .......................................... 16-28 Indicated Mineral Resources above a Lower cut-off of 0.5g/t by Mineralised Zone for the RZBakou-Gambo Deposits ......................................................................................................... 16-29 Indicated Mineral Resources above a Lower cut-off of 0.5g/t by Mineralised Zone for the Tiba Deposits ................................................................................................................................. 16-30 Inferred Mineral Resources above a Lower cut-off of 0.5g/t by Mineralised Zone for the RZBakou-Gambo Deposits ......................................................................................................... 16-31 Inferred Mineral Resources above a Lower cut-off of 0.5g/t by Mineralised Zone for the Tiba Deposits ................................................................................................................................. 16-32 Total Indicated Mineral Resources above a Lower cut-off of 0.5g/t by Weathering Facies .... 16-32 Total Inferred Mineral Resources above a Lower cut-off of 0.5g/t by Weathering Facies ...... 16-33 Comparative Summary of the Current and Previous Minerals Resource Estimates for the Sega Project .................................................................................................................................... 16-34 Mineral Resource Classification (+0.5g/t) ................................................................................. 17-1 Whittle Parameters for the Open Pit Optimisation .................................................................... 17-3 Cut-Off grades for FGO and MGO ........................................................................................... 17-4 Whittle Optimisation Results .................................................................................................... 17-5 LOM Production Schedule .................................................................................................. 17-11 Summary of Sega Mineral Inventory ...................................................................................... 17-12 Mining Equipment Requirements ........................................................................................... 17-13 Scheduled Working Periods ................................................................................................... 17-13 Summary of Amara Labour .................................................................................................... 17-15 Summary of Mining Contractors Labour ................................................................................. 17-15 Process Design Criteria for the Sega Crushing Plant ............................................................... 18-1 General Process Plant Criteria ................................................................................................. 18-2 Manpower Schedule................................................................................................................. 20-4 Earthmoving Equipment List .................................................................................................... 20-5 Suggestions for Successful Execution of Sega Project Summary Table .................................. 21-1 Pre & Post Mitigation Ratings Job Creation ........................................................................ 21-11 Pre & Post Mitigation Ratings Multiplier Effects on Economy .............................................. 21-12
November 2012
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Table 21.4: Table 21.5: Table 21.6: Table 22.1: Table 22.2: Table 22.3: Table 22.4: Table 22.5: Table 22.6: Table 22.7: Table 22.8: Table 22.9: Table 22.10: Table 22.11: Table 22.12: Table 22.13: Table 22.14: Table 22.15: Table 22.16: Table 22.17: Table 22.18: Table 22.19: Table 23.1: Table 23.2: Table 23.3: Table 23.4: Table 23.5: Table 23.6: Table 23.7: Table 23.8:
Displacement Estimates ......................................................................................................... 21-13 Pre & Post Mitigation Ratings Physical and Economic Displacement ................................. 21-14 Requirements for Closure ...................................................................................................... 21-18 Exchange Rates ....................................................................................................................... 22-3 Performance Related Taxes ..................................................................................................... 22-4 Other Company Taxes ............................................................................................................. 22-5 Payroll Taxes ........................................................................................................................... 22-6 Withholding Taxes .................................................................................................................... 22-7 Customs Taxes and Duties ...................................................................................................... 22-7 Registration and Stamp Fees ................................................................................................... 22-8 Depreciation ............................................................................................................................. 22-9 Overall Capital Cost Estimate Summary ................................................................................ 22-11 Crusher Installation Capital Cost Estimate ............................................................................. 22-12 Mining Capital Cost Estimate ................................................................................................. 22-13 Infrastructure Capital Cost Estimate ....................................................................................... 22-14 Other Project Related Capital Cost Estimate ......................................................................... 22-15 Summary of the Operating Costs ........................................................................................... 22-16 Summary of G&A Costs ......................................................................................................... 22-17 Summary of Processing Costs ............................................................................................... 22-20 Additional Crushing Costs ...................................................................................................... 22-21 Summary of the Mining Costs ................................................................................................ 22-21 Breakdown of Ore and Waste Mining Costs........................................................................... 22-22 Production Schedule ................................................................................................................ 23-2 Financial Evaluation - Assumptions.......................................................................................... 23-3 Summary of Financial Analysis Results ................................................................................... 23-4 Salient Features ....................................................................................................................... 23-5 Cash Flow Model Summary ..................................................................................................... 23-6 Gold Price Sensitivity ............................................................................................................... 23-7 Capex Sensitivity ...................................................................................................................... 23-7 Operating Costs Sensitivity ...................................................................................................... 23-7
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List of Figures
Figure 1.1: Figure 1.2: Figure 1.3: Figure 1.4: Figure 3.1: Figure 3.2: Figure 3.3: Figure 6.1: Figure 13.1 : Figure 13.2: Figure 13.3: Figure 13.4: Figure 13.5: Figure 13.6: Figure 13.7: Figure 13.8: Figure 13.9: Figure 13.10: Figure 13.11: Figure 13.12: Figure 13.13: Figure 13.14: Figure 13.15: Figure 13.16: Figure 13.17: Figure 13.18: Sega Overall Flowsheet ........................................................................................................... 1-13 Kalsaka Overall Flowsheet ....................................................................................................... 1-14 Project Execution Schedule ..................................................................................................... 1-17 NPV Sensitivity at 10% Discount Rate ..................................................................................... 1-31 Sega Project Location, Burkina Faso ......................................................................................... 3-2 Sega Project Tenements ............................................................................................................ 3-3 Location of the Bakou, Gambo, RZ and Tiba Deposits (Tiba Permit) ......................................... 3-4 Geology of the Sega Property .................................................................................................... 6-3 Performance of Blind In-house Control Sample BLKORZ by Abilab-Ouagadougou, 2007 RC program (Pass rate = 97.1%) ................................................................................................... 13-5 Performance of Blind In-house Control Sample STD6 by Abilab-Ouagadougou, 2007 RC program (Pass rate = 96.6%) ................................................................................................... 13-6 Performance of Blind Certified Control Blank Sample BLKORZ by BIGS-Ouagadougou, 2008 RC Program (Pass rate = 98.2%) ................................................................................................... 13-6 Performance of Blind Certified Control Blank Sample BLK9 by Abilab-Bamako, 2007 DD Program (Pass rate = 100%) .................................................................................................... 13-7 Performance of Blind Certified Control Blank Sample BLK10 by Abilab-Bamako, 2007 DD Program (Pass rate = 95.8%) ................................................................................................... 13-7 Performance of Blind Certified Control Blank Sample BLK10 by ALS-Chemex-Vancouver, 2007 DD Program (Pass rate = 100%).............................................................................................. 13-8 Performance of Blind Certified Control Blank Sample BLK12 by SGS-Ouagadougou, 2008 DD Program (Pass rate = 95%) ...................................................................................................... 13-8 In-house Standard Coding ..................................................................................................... 13-10 Performance of Blind In-house Control Sample STD7 by Abilab-Ouagadougou, 2007 RC Program (Pass Rate = 100%) ................................................................................................ 13-12 Performance of Blind In-house Control Sample STD9 by Abilab-Ouagadougou, 2007 RC Program (Pass Rate = 100%) ................................................................................................ 13-13 Performance of Blind Certified Control Sample OxL51 by Abilab-Bamako, 2007 DD Program (Pass Rate = 80%) ................................................................................................................. 13-13 Performance of Blind Certified Control Sample SF23 by Abilab-Bamako, 2007 DD Program (Pass Rate = 59%) ................................................................................................................. 13-14 Performance of Blind Certified Control Sample SH24 by Abilab-Bamako, 2007 DD Program (Pass Rate = 76%) ................................................................................................................. 13-14 Performance of Blind Certified Control Sample OxJ47 by ALS-Chemex-Vancouver, 2007 DD Program (Pass Rate = 100%) ................................................................................................ 13-15 Performance of Blind Certified Control Sample SH24 by ALS-Chemex-Vancouver, 2007 DD Program (Pass Rate = 50%) .................................................................................................. 13-15 Performance of Blind In-house Control Sample AR38-220 by BIGS-Ouagadougou, 2008 RC Program (Pass Rate = 100%) ................................................................................................ 13-16 Performance of Blind In-house Control Sample AR36-205 by BIGS-Ouagadougou, 2008 RC Program (Pass Rate = 92%) .................................................................................................. 13-16 Performance of Blind In-house Control Sample AR36-210 by BIGS-Ouagadougou, 2008 RC Program (Pass Rate = 94%) .................................................................................................. 13-17
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Figure 13.19: Figure 13.20: Figure 13.21: Figure 13.22: Figure 13.23: Figure 13.24: Figure 13.25: Figure 13.26: Figure 13.27: Figure 13.28: Figure 13.29: Figure 13.30: Figure 13.31: Figure 13.32: Figure 13.33: Figure 13.34: Figure 13.35: Figure 13.36: Figure 16.1: Figure 16.2: Figure 16.3: Figure 16.4: Figure 16.5: Figure 16.6: Figure 16.7: Figure 16.8: Figure 16.9: Figure 16.10: Figure 16.11:
November 2012
Performance of Blind In-house Control Sample AA23-230 by BIGS-Ouagadougou, 2008 RC Program (Pass Rate = 86%) .................................................................................................. 13-17 Performance of Blind Field Duplicate Samples by ALS-Ouagadougou, 2007 RC Program (Pass Rate = 96%) ........................................................................................................................... 13-18 Performance of Blind Pulp Duplicate Samples by ALS-Ouagadougou, 2007 RC Program (Pass Rate 98%) .................................................................................................................... 13-19 Performance of Lab-Aware Pulp Duplicate Samples by ALS-Ouagadougou, 2007 RC Program ............................................................................................................................................... 13-19 Performance of Blind Crush Duplicate Samples by ALS-Bamako, 2007 DD Program (Pass Rate 95%) ....................................................................................................................................... 13-20 Performance of Blind Pulp Duplicate samples by ALS-Bamako, 2007 DD Program (Pass Rate 89%) ....................................................................................................................................... 13-20 Performance of Blind Crush Duplicate Samples by ALS-Vancouver, 2007 DD Program (Pass Rate 100%) ............................................................................................................................ 13-21 Performance of Blind Pulp Duplicate Samples by ALS-Vancouver, 2007 DD Program (Pass Rate 100%) ..................................................................................................................................... 13-21 Performance of Blind Field Duplicate Samples by BIGS-Ouagadougou, 2008 RC Program (Pass Rate = 100%) ......................................................................................................................... 13-22 Performance of Blind Pulp Duplicate Samples by BIGS-Ouagadougou, 2008 RC Program (Pass Rate = 99%) ........................................................................................................................... 13-22 Performance of Lab-aware Pulp Duplicate Samples by BIGS-Ouagadougou, 2008 RC Program ............................................................................................................................................... 13-23 Performance of blind Crush Duplicate Samples by SGS-Ouagadougou, 2008 DD Program (Pass Rate 100%) ............................................................................................................................ 13-23 Performance of Blind Pulp Duplicate Samples by SGS-Ouagadougou, 2008 DD Program (Pass Rate 100%) ............................................................................................................................ 13-24 Check Assays by SGS-Ouagadougou on Abilab-Bamako Core Sample Pulps ..................... 13-25 Cluff Gold plc Check Assays Performed on Orezone Sega Core Sample Pulps .................... 13-26 Cluff Gold plc Check Assays Performed on Orezone Sega RC Coarse Reject Samples by ALS Ouagadougou ........................................................................................................................ 13-27 Cluff Gold plc Check Assays Performed on Orezone Sega RC Coarse Reject Samples by Kalsaka Laboratory ................................................................................................................ 13-27 Cluff Gold plc Check Assays Performed on Orezone Sega Core Sample Pulps .................... 13-28 Bakou Deposit, BK1 Zone, Log Normal Histogram .................................................................. 16-6 Gambo 2 South, GS1 Zone, Log Normal Histogram ................................................................ 16-6 RZ Deposit, RZ1 Zone, Log Normal Histogram ........................................................................ 16-7 RZ East Log Normal Histogram............................................................................................. 16-7 Tiba 1E Deposit, T1E-6 Zone, Log Normal Histogram ............................................................. 16-8 Tiba 3SEE Log Normal Histogram ........................................................................................ 16-8 Bakou Normal Cumulative Frequency Plot ............................................................................ 16-9 Gambo 2 South Normal Cumulative Frequency Plot ............................................................. 16-9 RZ Normal Cumulative Frequency Plot ............................................................................... 16-10 RZ East Normal Cumulative Frequency Plot ....................................................................... 16-10 Tiba 1E Normal Cumulative Frequency Plot ....................................................................... 16-11
SEGA Gold Project PEA NI 43-101 Report Page XVII
Figure 16.12: Figure 16.13: Figure 16.14: Figure 16.15: Figure 16.16: Figure 16.17: Figure 16.18: Figure 16.19: Figure 16.20: Figure 17.1: Figure 17.2: Figure 18.1: Figure 18.2: Figure 18.3: Figure 18.4: Figure 20.1: Figure 20.2: Figure 20.3: Figure 21.1: Figure 21.2: Figure 21.3: Figure 23.1:
Tiba 3SEE Normal Cumulative Frequency Plot ................................................................... 16-11 Bakou Deposit BK1 Zone Variogram on Primary Axis (Az 60, Dip -70)............................... 16-18 Bakou Deposit BK1 Zone Variogram on Secondary Axis (Az 234, Dip -18.5) ..................... 16-18 Gambo 2S Deposit GS1 Zone Variogram on Primary Axis (Az 40, Dip -70) ....................... 16-19 Gambo 2S Deposit GS1 Zone Variogram on Secondary Axis (Az 310, Dip 0) .................... 16-19 RZ East Deposit RZ1 Zone Variogram on Primary Axis (Az 60, Dip -70) ............................ 16-20 RZ East Deposit RZ1 Zone Variogram on Secondary Axis (Az 83, Dip 18) ........................ 16-20 RZ East Deposit RZE1 Zone Variogram on Primary Axis (Az 45, Dip -70) ......................... 16-21 RZ East Deposit RZE1 Zone Variogram on Secondary Axis (Az 150, Dip 15) .................... 16-21 BK RZ Practical Pits ................................................................................................................. 17-8 Tiba Practical Pits..................................................................................................................... 17-9 Sega Primary and Secondary Crushing Plant PFD .................................................................. 18-3 Sega Crushing Plant Proposed Layout .................................................................................... 18-4 Kalsaka Mine Upgrade PFD ..................................................................................................... 18-6 Kalsaka Overall Site Plan ......................................................................................................... 18-7 Haul Road Cross Sections ....................................................................................................... 20-3 Steps to Resettlement Schedule .............................................................................................. 20-6 Project Execution Schedule ..................................................................................................... 20-7 Preliminary Mine Plan Overview .............................................................................................. 21-6 Preliminary Mine Plan Tiba Operations ................................................................................. 21-7 Preliminary Mine Plan - Gambo ............................................................................................... 21-8 NPV Sensitivity at 10% Discount Rate ..................................................................................... 23-8
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List of Appendices
Appendix 3-A: Appendix 12-A: Appendix 12-B: Appendix 13-A: Appendix 13-B: Appendix 13-C: Appendix 13-D: Appendix 15-A: Appendix 15-B: Appendix 15-C: Appendix 16-A: Appendix 16-B: Appendix 17-A: Appendix 17-B: Appendix 17-C: Appendix 17-D: Appendix 23-A: Arrt ministriel for the Tiba permit Sample preparation procedures - 2007 drilling program Sample preparation procedures - 2008 drilling program Laboratory Quality Control Laboratory Quality Control - FA List of Standard in-house materials List of Standard in-house materials McClelland Metallurgical Testing Report 2010 McClelland Further Column Leach Testing Report 2011 (Fresh ore type) Cluff Gold Metallurgical Testing Report Column Leach Test Work Report August 2012 Block Models and Plan Views for Bakau, RZ & Gambo CIM Definition & Standards on Mineral Resources and Mineral Reserves (2005) SRK Ghana Geotechnical Report Mining Contractor Rates Whittle Optimisation Results Mining Capital Cost Estimate Financial Model
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SECTION 1.
1.1 INTRODUCTION
EXECUTIVE SUMMARY
Amara Mining plc (Amara) formerly known as Cluff Gold plc has carried out a Preliminary Economic Assessment (PEA) of the Sega Project located in Burkina Faso, West Africa. Amara is a gold developer-producer with assets in West Africa. In February 2012, the Company entered into a conditional agreement with Orezone Gold Corporation (Orezone) for the acquisition of its Sega Project (Sega), located approximately 20km by road from Amaras Kalsaka project in Burkina Faso. In May 2012 this acquisition was completed. The purchase and development of the proposed Sega Project provided an opportunity to enhance Kalsakas production profile. Since Kalsakas ore reserve continues to be depleted, this would allow for the mining of Sega ore, which could then be hauled to Kalsakas existing heap leach processing facility. This synergistic initiative is expected to provide advantages for both Sega and Kalsaka by allowing development of mining at Sega with very limited infrastructural requirement but simultaneously allows Kalsakas life-of-mine to be lengthened through the continued use of its already substantial and existing mine infrastructure and processing facility. This report presents the findings of a PEA undertaken for the proposed development of the Sega Project, with a view that aims to maximise the positive aspects of the project and to minimise or manage any negative implications and risks. This study has been prepared following the guidelines of the Canadian Securities Administrators National Instrument 43-101 (NI 43-101). Amara retained the services and coordinated the work of various subcontractors and accepts ultimate responsible for the final PEA document, being assisted by SENET Engineering in its compilation. Amara prepared the process/metallurgy, infrastructure, and economics sections of the report; The resources have been based on a previous NI 43-101 resource update report filed in January 2010 by Orezone and for this report remains unchanged; SRK (SA) completed the mining sections of the document based on input supplied by Amara; SRK (Ghana) have performed geotechnical investigative work; The environmental section of the report has been based on input directly obtained from Digby Wells Environmental (Digby Wells) who are also performing a comprehensive environmental and social impact assessment (ESIA) in conjunction with Bureau detudes de Conseils et de Restauration des Mines (BECoReM), an environmental consultancy local to Burkina Faso; and SENET Pty Ltd (SENET) has provided valuable assistance in respect of their drawing office and survey services. They were also instrumental in compiling the report into a format suitable for filing with the Canadian Securities Administrators.
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Amara appointed the various consultants as mentioned above for the Sega Project which is envisaged to be a 1.6 million tonnes per annum (MTPA) open pit mine whose ore is intended to be treated at Amaras existing heap leach processing facility at Kalsaka. According to NI 43-101 guidelines, this PEA is considered preliminary in nature, as a portion of the process feed identified in the development plan is classified as inferred resources. Inferred resources are considered too speculative geologically to serve as an economic basis for project mineral reserves. Mineral resources that are not mineral reserves do not have demonstrated economic viability. There is no certainty that these inferred mineral resources will be converted to measured and indicated categories through further drilling, or into mineral reserves, once economic considerations are applied.
1.2
PROPERTY DESCRIPTION AND LOCATION
The Sega Project consists of the Tiba and Namasa permits. The planned Sega Project is wholly contained within the Tiba permit. The Tiba Permit is situated in the Yatenga Province, in the north-central part of Burkina Faso, some 120km to the north-northwest of Ouagadougou .The permit covers an area of 124km and is registered under an "Arrt ministriel" which defines the boundaries by the coordinates of the ten corners formed by E-W and N-S lines.
Table 1.1:
Tiba Permit Coordinates
APEX A B C D E
Easting 604 641 611 164 611 164 615 162 615 162
Northing 1 483 790 1 483 790 1 484 904 1 484 904 1 486 886
APEX F G H I J
Easting 617 629 617 629 612 680 612 680 604 641
Northing 1 486 886 1 476 982 1 476 982 1 474 124 1 474 124
1.2.1
Title
The Tiba Permit is 100% held by Cluff Gold Sega SARL, a wholly-owned subsidiary of Amara Mining plc (formerly Cluff Gold plc). In accordance with Burkinab law, the Government of Burkina Faso will be issued with a 10% free carried interest when a mining licence (Permis d'exploitation industrielle de grande mine) is granted (Loi No. 031-2003/AN Portant code minier au Burkina Faso). Repadre retained a 3% Net Smelter Royalty (NSR) on the Sgunga permit that expired in January 2007. Amara has the option to buy back two thirds of this royalty for USD 2 million. Repadre/IAMGOLD sold this royalty to Battle Mountain who in turn sold the royalty to Royal Gold. The Tiba permit is part of a land package of 313km2 including the contiguous Namasa permit granted to Orezone in 2006.
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1.2.2
Accessibility, Climate, Local Resources, Physiography and Infrastructure
The Tiba property is located in the north central part of Burkina Faso, West Africa, about 120km N-NW of Ouagadougou. The Sega Project area is accessible from Ouagadougou by paved National Highway N22 toward the north to Kongoussi (110km) and then via a well maintained lateritic gravel road (N15) 55km toward the northwest, to the village of Sgunga. The project is also accessible during the dry season by local roads through Kalsaka off Highway N2 at Yako. The climate of the region is tropical of Sudano-Sahelian type. A dry season extending from November to February alternates with a rainy season for the rest of the year, with maximum precipitations occurring during the month of August. The local populations depend on subsistence farming and cattle herding for their livelihood. The farmers tend fields with low levels of soil fertility, degraded by erosion and overgrazing. Gold mining is used to compensate for poor crops. Artisanal mine workings are scattered over the Sega Project area. Diesel generated electrical power is available in Ouahigouya. The region is not connected to the national railway system. The topography on the property consists of hills formed by outcrops and sub-crops and by lateritic cuirasse dominating by 80m the gently west sloping plateau the average elevation of which is about 300m above sea level. Outcropping conditions are fair. Vegetation consists of savannah shrubs and sparse trees, with a gradual increase in density toward the low grounds, and abundant shrubs along the rivers. Fauna within the permit area has all but disappeared, owing to the pressure from human presence, activities and hunting. Hares, porcupines, pythons, crocodiles, hyenas, bats and long-tail monkeys (patas) have been observed. Bird diversity is relatively poor.
1.3
RESOURCES
This PEA technical report issued by Amara takes into account only those resources as filed in a separate report by Orezone with SEDAR, being NI: 43-101 compliant and dated 10 January 2010. That technical report issued is entitled Technical Report on the Mineral Resource of the Sega Gold Project and covers a mineral resource update for the Sega Project that was owned by Orezone. All subsequent text in the Mineral Resource section is lifted from that Orezone report. This update is taking into account the 2007 and 2008 drilling programs completed on the project and excluded from the previous NI 43-101 technical report prepared by Met-Chem in February 2009. Orezone held the Tiba and Namasa exploration permits, commonly referred to as the Sega Project, located close to the Sgunega village, in the north-central part of Burkina Faso, West Africa. The Sega Project mineral resources are located on the Tiba permit.
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The 124km2 Tiba permit lies within the Birimian Gaoua-Yako-Ouahigouya belt. The region around the Sega Project is the target of activities by artisanal miners and mining exploration companies. The property is underlain by sedimentary sequences and mafic volcanic formations affected by multi-phase folding and metamorphism, intruded by mafic and felsic intrusives and affected by deep surface weathering. The Bakou, RZ, Gambo and Tiba mineral deposits consist of epigenetic lode and stockwork quartz-sulphides gold veinlets associated with shears zones preferentially developed along major sedimentary-volcanic contacts. Modern exploration work on the Sega property started in 1995 and since 2001 Orezone has identified significant gold mineralisation in several sectors of the permit, discovered the RZ, RZ East, RZ West, Gambo SW, MS and Tiba 2 deposits. Orezone delineated mineral resources in the Bakou, RZ, Gambo, and Tiba areas to an average depth of about 150 m, locally reaching 250m in the portions of the deposits showing good geological and grade continuity. The current mineral resource has been estimated on the basis of about 92,000m of RC drilling and 13,000m of core drilling on a 25m square pattern. This represents an increase of 15% and 48%, respectively, for the RC and core drilling compared to the previous minerals estimate. Orezone completed a mineral resource estimate for thirteen deposits in accordance with National Instrument 43-101. The resources for a cut-off at 0.5g/t Au for the Sega Project are summarized in Table 1.2 and Table 1.3.
Table 1.2:
Total Indicated Mineral Resources above a Lower Cut-off of 0.5g/t
Category
Model RZ RZE RZW BK GS
Tonnes 905,000 901,000 206,000 3,123,000 1,458,000 291,000 171,000 146,000 40,000 329,000 141,000 327,000 250,000 8,289,000
Grade (g/t) 3.12 1.28 1.50 1.43 1.60 1.71 1.27 1.27 2.69 2.17 1.74 0.87 2.72 1.69
Grams 2,823,000 1,151,000 310,000 4,466,000 2,327,000 499,000 217,000 185,000 107,000 713,000 244,000 284,000 681,000 14,009,000
Ounces 90,800 37,000 10,000 143,600 74,800 16,000 7,000 6,000 3,400 22,900 7,900 9,100 21,900 450,400
Indicated
GN GSW MS Tiba 1 Tiba 1E Tiba 2 Tiba 3 Tiba 3SE
Total Indicated
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Table 1.3:
Total Inferred Mineral Resources above a Lower Cut-off of 0.5g/t
Category
Model RZ RZE RZW BK GS
Tonnes 187,000 433,000 111,000 896,000 190,000 76,000 96,000 184,000 73,000 376,000 157,000 97,000 30,000 2,908,000
Grade 2.10 1.15 1.20 1.41 1.61 1.27 1.29 1.57 2.66 2.32 1.65 0.74 2.70 1.58
Grams 394,000 500,000 133,000 1,263,000 306,000 96,000 123,000 289,000 195,000 873,000 259,000 72,000 81,000 4,583,000
Ounces 12,700 16,100 4,300 40,600 9,800 3,100 4,000 9,300 6,300 28,100 8,300 2,300 2,600 147,300
Inferred
GN GSW MS Tiba 1 Tiba 1E Tiba 2 Tiba 3 Tiba 3SE
Total Inferred
Most of the drilling that had been added since the last mineral resource estimate was infill drilling. This and the various steps taken by Orezone to improve the geological models, i.e. re-logging of all RC and core holes, a more detailed level of geological description, especially to model separately the meta-sandstones and meta-argillites as well as the various generations of dykes, the modeling of the RC penetration rates, the increased number of density determinations, the cross-validation of the weathering logs with the specific density, bulk density and RC penetration rate databases, the petrographic and lithogeochemical studies, etc. all contribute to a more robust geological interpretation. In spite of the additional infill drilling, which essentially confirmed the previous model, the Indicated gold resource has little changed, mostly due to the fact that most of the mineralisation is hosted in metasediments that have a lower bulk density that the ones used for the previous mineral resource estimate. The short range step-out drilling added Inferred resources, mostly in the Fresh zone at Bakou and in the Oxide zone at the newly discovered Tiba 2 deposit.
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Table 1.4:
Comparative Summary of the Current and Previous Minerals Resource Estimates for the Sega Project Category Measured + Indicated Measured + Indicated Weathering All Zones All Zones Tonnes 7,150,000 8,289,000 1,139,000 16% 1,320,000 2,908,000 1,588,000 120% 4,368,000 4,890,000 522,000 Inferred Inferred Oxide + Transition Oxide + Transition 12% 526,000 1,171,000 645,000 123% g/t 1.94 1.69 -0.25 -13% 1.50 1.58 0.08 5% 1.89 1.64 -0.25 -13% 1.21 1.49 0.29 24% Oz 446,000 450,400 4,400 1% 64,000 147,300 83,300 130% 265,000 257,600 -7,400 -3% 21,100 56,300 35,200 167%
Year 2007 2009 2009 vs 2007 Change 2007 2009 2009 vs 2007 Change 2007 2009 2009 vs 2007 Change 2007 2009 2009 vs 2007 Change
Inferred Inferred
All Zones All Zones
Measured + Indicated Measured + Indicated
Oxide + Transition Oxide + Transition
1.4
MINING
Indicative production and scheduling was carried out in conjunction between SRK Consulting (South Africa) (Pty) Ltd. (SRK (SA)) and Amara. The study is based on the Mineral Resources published by Orezone in January 2010. There are three main deposit areas. These are the Bakou-RZ deposits, the Gambo deposits and the Tiba deposits. These main areas are in turn split into a number of separate deposits. It has been assumed that a conventional open pit shovel and truck method will be used over a period of 17 months, exclusive of any pre-stripping period. Based on the geotechnical slope parameters derived by SRK Ghana for the PEA, the overall slope angles used for the pit optimisation was 46 for both oxide and transitional material. Amara provided the metallurgical processing recovery factors and costs for ore, and the overall General and Administration (G&A) costs based on a throughput of 1.6Mtpa. A breakdown of the costs and parameters used in the Whittle optimisation runs are shown in the table below.
Table 1.5:
Whittle Parameters for the Open Pit Optimisation
Type Ore
Oxide Recovery - 87% Processing, Trans & Admin cost BK RZ - US$ 24.73 / t Processing, Trans & Admin cost Tiba US$ 26.67 / t Oxide - US$ 83.4/oz
Transition Recovery - 70% Processing, Trans & Admin cost BK RZ US$ 24.95 / t Processing, Trans & Admin cost Tiba US$ 26.89 / t Trans - US$ 83.4/oz
Royalty
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From previous experience it was decided that the mining dilution factor be set at 5% (at 0 g/t grade) and mining recovery at 95% based on the block size used in the mining model. An average gold price of US$1300/oz was selected by Amara which corresponds to other economic mining studies being undertaken elsewhere at this time. The results from the pit optimisation are shown as prepared by SRK. A total of thirteen pits have been designed.
Table 1.6:
RoM Optimum Pit Ore Tonnes grade g/t
Whittle Optimisation Results

RoM Oxide Ore Tonnes grade g/t 3.31 1.66 1.79 1.59 1.88 1.55 1.46 1.66 3.02 2.40 1.99 1.46 3.11 2.25 Transition Ore Tonnes 1,421 1,167 0 199,422 88,981 16,684 2,306 39,276 0 41,887 485 17 11,523 403,169 grade g/t 2.59 1.99 0.00 2.14 2.05 2.36 1.87 1.85 0.00 3.80 2.44 1.20 3.29 2.31 3,668,289 722,558 154,098 3,099,805 687,053 132,064 86,430 171,150 564,814 1,781,271 817,374 48,917 924,129 12,857,952 10.5 3.7 5.3 4.6 3.5 5.5 4.2 2.6 11.0 5.6 6.1 1.4 5.9 5.7 4,018,908 915,596 183,308 3,773,681 881,662 156,215 107,158 237,202 616,400 2,101,105 951,790 83,434 1,081,062 15,107,521 20,123,021 3,896,939 643,166 11,637,648 4,725,544 476,198 273,978 1,234,417 1,956,402 13,850,890 3,194,576 607,954 9,789,928 72,410,661 Waste Tonnes SR t:t Total Tonnes Cashflow Gold Rec oz 32,376 8,964 1,462 30,701 9,658 1,211 851 2,881 4,363 22,275 7,472 1,411 13,504 137,128 Operating Cost US$/oz 678.6 865.4 860.1 921.1 810.8 907.0 978.1 871.6 851.7 678.3 872.6 869.3 575.2 772.1
RZ RZE RZW BK GBS GBN GBSW MS Tiba1 Tiba1E Tiba2 Tiba3 Tiba3SE Total
350,619 193,038 29,210 673,876 194,609 24,151 20,728 66,052 51,586 319,834 134,416 34,517 156,933 2,249,569
3.30 1.66 1.79 1.75 1.96 2.11 1.51 1.77 3.02 2.59 1.99 1.46 3.12 2.26
349,198 191,871 29,210 474,454 105,628 7,467 18,422 26,777 51,586 277,947 133,931 34,501 145,410 1,846,402
Ore in the indicated and inferred categories is scheduled for processing. A summary of the mining schedule is shown in the table below.
November 2012
Page 1-7
Table 1.7:
LOM Production Schedule
RZ MAIN
RZ EAST
BAKOU
RZ WEST
Total RZ
Tiba 1E
Tiba 3SE
Tiba 1 & 2 & 3
Total Tiba Gambo North/South Gambo SouthWest/ MS SEGA TOTAL
Ore (kt) Grade (g/t) Waste (kt) Ore (kt) Grade (g/t) Waste (kt) Ore (kt) Grade (g/t) Waste (kt) Ore (kt) Grade (g/t) Waste (kt) Ore (kt) Grade (g/t) Waste (kt) Ore (kt) Grade (g/t) Waste (kt) Ore (kt) Grade (g/t) Waste (kt) Ore (kt) Grade (g/t) Waste (kt) Ore (kt) Grade (g/t) Waste (kt) Ore (kt) Grade (g/t) Waste (kt) Ore (kt) Grade (g/t) Waste (kt) Ore (kt) Grade (g/t) Waste (kt)
LoM 451.7 2.79 5 521 215.4 1.46 999.3 818.6 1.49 4 149.9 22.3 1.80 189.6 1 508.0 1.88 10 859.8 322.1 2.34 2 212.8 148.1 3.01 863.5 254.4 1.92 2 014.9 724.7 2.33 5 091.2 216.3 1.81 1 066.6 90.6 1.58 331.5 2 539.6 1.99 17 349.1
Month 1 2.2 1.70 334
Month 2 15.5 2.72 303
Month 3
285
Month 4 27.0 2.87 284
Month 5
Month 6
323
276
Month 7 27.0 2.54 408
Month 8 25.9 2.41 674
Month 9 24.2 2.26 518
Month 10 44.9 2.55 565
Month 11
0.7 1.43 26.3 2.9 1.63 360.8 17.1 2.14 112.3 11.0 2.67 259.3
2.9 1.76 39.7 18.4 2.56 342.8 38.0 2.11 245.7 37.5 2.50 196.9
9.2 1.93 90.7 9.2 1.93 375.3 27.6 2.50 296.8 35.9 2.86 281.5
5.6 1.84 221.3 9.4 1.72 32.9 42.1 2.48 537.9 37.6 2.53 281.6 32.1 3.31 82.8
28.0 1.49 36.6
320.7
58.8 1.34 248.1
324.0
76.2 1.40 548.2
73.4 1.39 551.7
223 37.0 1.20 377.7 79.4 1.36 546.4
Month 12 26.3 3.08 257 33.9 1.40 240.6 148.9 1.40 466.4
Month 13
99 33.1 1.47 80.8 132.3 1.37 538.6
Month 14 85.0 2.92 472 31.5 1.51 159.3 102.2 1.38 232.3
Month 15 82.1 2.90 265 51.5 1.54 104.2 56.8 1.69 89.1
Month 16 56.3 2.39 177 28.4 1.68 36.6 56.8 2.61 26.5
Month 17 35.2 3.82 59
28.0 2.35 371.6 8.2 1.41 272.1
75.5 2.30 442.6 25.7 1.77 254.7
63.6 2.70 578.3 33.5 1.63 223.1
69.8 2.89 364.4 72.4 1.75 201.0
39.2 2.10 1 004.5
119.6 2.23 1 040.1
106.3 2.30 1 176.7
184.2 2.35 1 103.3
28.0 1.49 359.9 41.4 2.42 472.0 23.4 3.58 40.6 29.3 1.20 38.6 94.0 2.33 551.2 62.7 2.00 113.1 8.6 1.27 71.6 193.3 2.05 1 095.8
596.7 77.2 2.35 551.9 8.2 3.64 2.5 9.7 1.52 7.4 95.1 2.38 561.8 13.8 2.08 2.6 7.6 1.57 18.6 116.5 2.29 1 179.7
85.8 1.72 655.8 52.7 2.20 197.8
25.9 2.41 998.2 25.0 2.47 51.8
100.4 1.61 1 065.9 5.5 2.58 2.8
118.4 1.83 1 116.4
116.3 1.31 1 147.0
209.2 1.61 964.3
165.4 1.39 718.5
218.7 2.00 863.8
190.3 2.17 458.1
141.6 2.33 239.8
35.2 3.82 58.8
11.0 1.72 280.6 63.7 2.12 478.4
14.1 1.73 139.3 39.1 2.21 191.1
15.7 1.72 65.1 21.2 1.94 67.9
30.3
15.1
45.4
30.3
15.1
45.4
33.5 1.70 306.2 33.5 1.70 306.2
20.8 1.85 162.5 20.8 1.85 162.5
47.4 2.00 553.5 47.4 2.00 553.5
54.4 2.10 285.6 54.4 2.10 285.6
18.6 3.42 85.5 18.6 3.42 85.5
149.5 1.89 1 134.2
65.0 2.29 1 189.2
121.7 1.67 1 133.8
118.4 1.83 1 146.6
116.3 1.31 1 162.1
6.6 1.51 55.2 215.8 1.61 1 064.8
15.1 1.57 80.0 214.0 1.45 1 104.7
14.0 1.66 27.5 253.6 1.97 1 053.8
4.1 1.29 39.4 241.8 2.12 1 051.0
23.7 1.73 36.5 219.6 2.21 562.0
10.9 1.60 2.7 64.7 3.33 146.9
November 2012
Page 1-8
1.4.1
Sega Mineral Inventory
The Mineral Inventory Statement is based on Indicated and Inferred Resources within the designed practical open pits. The table below shows the Mineral Inventory estimated to be contained in the Sega practical pit designs and the production schedule.
Table 1.8:
Summary of Sega Mineral Inventory
Deposit BK / RZ Tiba TOTAL
Tonnes kt 1,815 724 2,539
Grade (g/t Au) 1.86 2.33 1.99
Ounces koz 109 54 163
1.4.2
Mining Operations
Contractor-based mining is preferred by Amara. The mining operations are based upon the usage of hydraulic excavators and haul truck fleets engaged in conventional open pit mining techniques. Access roads will be developed as required for access into new areas. The main arterial roads where necessary will be constructed to a minimum 14m width, including berms and drainage areas. The total waste to be moved is about 17Mt, which approximates to 8Mm3 of dumping volume. Due to the nature of the proposed Sega Project, minimal infrastructure will be required at the Sega Project site, with the main activities being the open pit mining and primary crushing.
1.4.3
Capital and Operating Cost
The mining capital cost has been estimated to be US$2.25 million. From the contractors rates provided the total mining operating cost for ore and waste (excluding ore haulage from Sega to Kalsaka is US$2.59/t. The ore haulage cost has been estimated to be US$5.7/t ore processed.
1.5
METALLURGY
1.5.1
Metallurgical Testing
Though described in greater detail in a later section of this report some pertinent heap leach amenability tests results (consisting of bottle roll and column leach tests) are exhibited here as performed by McClelland Laboratories. Comminution tests were also conducted to enable sizing of the crushing circuit and subsequent crusher consumable estimates (power draw and liners) Tests were performed on the following samples:
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Page 1-9
PQ (4 composites) o PQ-OX1 (oxide) o PQ-OX2 (oxide) o PQ-TR (transition) o PQ-FR (fresh) RBG (5 composites) o RBG-1A (oxide) o RBG-1B (oxide) o RBG-2 (transition) o RBG-3A (fresh) o RBG-3B (fresh) TIBA (1 composite) o TIBA (oxide)
Comminution Testwork - Phillips Enterprises LLC completed seven Bond Ball Mill Work Index (BBWi) tests and seven abrasion (Ai) tests in 2010. The BBWi tests were conducted with a closing screen of 150m. The Ai and the BBWi results are shown in Table 1.9 below.
Table 1.9:
Ai and BBWi Testwork Results
Sample RBG-2 RBG-3A RBG-3B PQ-FR PQ-TR PQ-OX 1 PQ-OX 2
Ai 0.1232 0.2121 0.2569 0.0585 0.1254 0.2784 0.0214
BBWi (kWh/t) 11.02 15.84 16.37 10.76 10.31 6.93 5.98
Direct Cyanidation Bottle Roll Cyanidation Testwork - Leach tests were conducted for 96 hours except the leach tests using 106m pulverised samples which were carried out over 48 hours. Bottle roll cyanidation testwork results, summarised in the table below, show that the all the composites were amenable to direct cyanidation (CIL). The reagent (cyanide and lime) consumptions, for each test conducted on each of the composites, have also been tabulated below.
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Page 1-10
Table 1.10:
Summary of Direct Cyanidation Testwork Results

Time, hrs Unit % 96 kg/t kg/t % 96 kg/t kg/t % 96 kg/t kg/t % 96 kg/t kg/t % 48 kg/t kg/t % 48 kg/t kg/t % PQ-FR 75.4 0.14 4.1 63.7 0.23 3.8 92.2 0.07 5.4 93.1 0.3 3.4 0.9 PQ-OX1 92.8 0.08 2.7 89.4 0.07 3.0 93 0.09 2.7 91.3 0.07 3.1 98.3 0.3 2.5 7.0 PQ-OX2 84.7 <0.07 7.6 78.4 <0.07 8.4 79.9 0.1 8.1 81.8 0.07 8 90.2 0.21 7.2 8.4 PQ-TR 80.3 0.2 4.5 82 <0.07 4.9 94.9 <0.07 5.3 94.8 0.3 4.4 0.0 TIBA-1 68.0 0.16 2.60 67.6 0.20 2.70 74.7 0.12 2.80 78.1 0.07 2.60 RBG-1A 93.3 0.1 5.1 91.7 <0.07 5.6 89.2 0.11 5.7 85.5 0.09 5.8 RBG-1B 87.1 0.1 3.8 88.8 0.11 3.9 87.6 0.11 3.7 89 0.08 3.8 RBG-2 64.2 0.18 3.60 66.5 0.23 3.70 90.8 0.08 5.80 93.2 0.38 3.40 2.4 RBG3A 33.6 0.38 1.20 34.1 0.44 1.60 40.6 0.40 1.50 61.0 0.29 1.40 81.1 0.23 1.6 90.1 0.38 1.1 9.0 RBG-3B 28.5 0.36 1.40 38.8 0.60 1.20 65.8 0.29 1.10 83.2 0.15 1.50 95.7 0.45 1.10 12.5
Recovery Au, -12.5mm NaCN Consumed Lime Added Recovery Au, -12.5mm NaCN Consumed Lime Added Recovery Au, -6.3mm NaCN Consumed Lime Added Recovery Au, -1.7mm NaCN Consumed Lime Added Nominal -106um NaCN Consumed Lime Added Recovery Au [CIL -106um] NaCN Consumed Lime Added Preg Robbed Au
Column Leach Test Results - Column percolation leach tests were conducted on eight composites at P100 = -12.5mm feed size to determine gold recovery, recovery rate, and reagent requirements under simulated heap leaching conditions.
Table 1.11:
Column Leach Test Results

PQ-FR P1 17.7 40.2 59.6 66.4 69.6 75.8 77.5 79.0 1.58 0.42 2 2.09 0.59 5 4 11.4 11.5 76 PQ-TR P2 18.7 47.7 70.7 77.1 79.9 85.6 87.3 88.5 3.09 0.4 3.49 3.62 0.66 5 4 11.3 11.3 76 TIBA-1 P8 0.2 46.5 69.7 74.2 76.4 79.9 81.1 82.0 1.73 0.38 2.11 2.17 0.25 5 4 11.9 11.6 82 RBG-1A P3 7.0 38.2 76.2 82.4 84.9 88.8 90.0 91.3 1.57 0.15 1.72 1.55 0.79 5 4 11.1 11.0 80 RBG-1B P4 8.4 53.6 80.7 85.2 87.2 90.6 91.5 92.0 1.73 0.15 1.88 2 0.63 5 4 11.5 11.3 80 RBG-2 P5 10.1 34.0 54.7 61.8 65.9 73.8 76.7 79.2 1.18 0.31 1.49 1.74 0.65 5 4 11.6 11.4 80 RBG-3A P6 1 6.3 12.3 16.1 19 24.7 26.6 28.3 31.1 0.97 2.15 3.12 2.62 0.87 0 4 10.5 10.4 111 RBG-3B P7 0.3 2 4.5 6.3 7.7 11.8 14 15.7 20.7 0.82 3.15 3.97 3.54 0.81 0 4 10.8 9.9 111
Extraction% of Au 1st day effluent in 5 days in 10 days in 15 days in 20 days in 40 days in 60 days in 80 days End of Leach/Rinse Extracted, gAu/t Tail Screen, gAu/t Calculated head, gAu/t Average head NaCN consumed Lime added Cement added Final Solution pH pH After Rinse Leach/Rinse Cycle, Days
November 2012
Page 1-11
1.5.2
Mineral Processing
1.5.2.1 General Process Plant Criteria Parameters were selected for Sega using rates based on the existing Kalsaka operation but taking into account the results from metallurgical testwork as performed on Sega ore. The results are seen in the following table where the major parameters selected are exhibited.
Table 1.12:
General Process Plant Criteria
Description Final Crush Size (P100) Heap Leach Gold Recovery Cyanide Consumption Cement Consumption Other Reagents
Units mm % kg/t kg/t kg/t
Sega Oxide 12.5 87 0.45 9 As per Kalsaka
Sega Transition 12.5 70 0.63 7 As per Kalsaka
Source Amara/Testwork Amara /Testwork Amara /Testwork Amara /Testwork Amara
. 1.6 PROCESS PLANT DESCRIPTION
Process plant design was developed by Osborn Engineered Products using their own proprietary process design software packages. These have also been verified in-house by Amara for both flowsheet and individual equipment items using software readily available in the market as well as published capacity data. Ore is envisaged as being transported by truck from the various pits at Bakou, Gambo and Tiba to a ROM stockpile next to the Sega crushing facility which is to comprise an Osborn 42 x 48 modular primary jaw crusher installation coupled with the necessary transfer and stacking conveyors. Haul trucks will transport the crushed ore some 20km along a dedicated haul road from the Sega crushing facility to the existing Kalsaka heap leach plant for final treatment. Space provision has been made for the installation of a secondary jaw crushing module in the event that this is required, which is not planned at this stage. The process flow for the Sega Gold Plant is described in the flowsheet seen in Figure 1.1. The Kalsaka plant has already been subject to and continues to be upgraded to accept material of a harder nature from its pits which include significant hard rock stockpiles and transition material. Therefore it is deemed ideally suited to cater for the hard characteristics of the Sega ore and to enable the ore to be deposited, suitably crushed, upon the heap leach pads. The Kalsaka flowsheet has been verified as being suitable to receive Sega ore and is depicted in Figure 1.2. .
November 2012
Page 1-12
Figure 1.1:
Sega Overall Flowsheet

1 2 3 4 5 6 7 8
EMERGENCY ROM x ORE
ROM ORE
C
x ROM Emergency ROM Hopper ROM Bin
Vibrating Grizzly Feeder
Primary Jaw Crusher

D
Stockpile Feed Conveyor Primary Crusher Discharge Conveyor Stockpile
KALSAKA PLANT x
SEGA OVERALL FLOWSHEET

H H
November 2012
Page 1-13
Figure 1.2:
Kalsaka Overall Flowsheet

1 2 3 4 5 6 7 8
HARD ROCK S/PILEx

A A
HARD ROCK S/PILEx
SEGA ROM ORE
ROM Bin
B
ROM Bin
B
Vibrating Grizzly Feeder
Primary Jaw Crusher Vibrating Grizzly Feeder
Secondary Jaw Crusher
Primary Screen
Primary Crusher Discharge Conveyor

C
Primary Crusher Discharge Conveyor
Tertiary Cone Crusher
ROM ORE
ROM Bin
Apron Feeder
E
Mineral Sizer
Quaternary Crusher Secondary Screen
ROM ORE
G
x
G
KALSAKA OVERALL FLOWSHEET

Agglomeration Drum
H H
November 2012
Page 1-14
1.7
INFRASTRUCTURE AND OTHER SITE SERVICES
Logistics - Kalsaka, being a fully-fledged operating mine has successfully had all of its major equipment items and consumables transported by SDV logistics group, so the logistics route is well-understood. It is expected to continue to be so for the Sega Project. Existing Infrastructure - Upon acquisition of the Sega property from Orezone, certain fixed assets were also transferred to Amara in respect of an exploration camp. Proposed New Mine Infrastructure - Due to the nature of the proposed Sega Project, minimal infrastructure will be required at the Sega Project site, with the main activities being the open pit mining and primary crushing. Due to the processing taking place at Kalsaka Mine, much of the required infrastructure required for the operation of the Sega Project is already in place. The section below outlines the following infrastructure required for the Sega Project: Mine roads, including haul road; Heavy Equipment Mine Workshop / yard; Fuel farm installation with 2 x 30,000 litre tanks (supplied by contractor); Power generation plant with 2 x 410 kVA diesel generators; Water stand pipe which in turn may require pumps, pipelines, well/borehole fields if applicable for on-site water management. This includes the provision for dust suppression in the mining area, interconnecting and haul roads; Administration buildings; Production equipment; Perimeter fencing; Safety and environmental satellite facility including first aid station; Security satellite facility; Site illumination; and Radio repeater station.
1.8
IMPLEMENTATION
The full scope of Sega implementation project entails separate initiatives being undertaken not altogether independently but in some instances simultaneously. The drive to completion will take the following main project thrusts into consideration: Crusher installation; Haul road and other mining infrastructure; and ESIA and permitting.
1.8.1
Crusher Installation
It is envisaged that Amara will appoint an independent engineering company to execute the project on an EPCM basis. It is certain that a construction team alluded to elsewhere in this report and already based at Kalsaka will be utilised to effect the instructions from the EPCM contractor.
November 2012
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1.8.2
Haul Road and Other Sega Mining Infrastructure
BCM, the incumbent mining contractor at Kalsaka Mining SA were requested to provide assistance with regard to the haul road construction. They provided Amara the necessary technical assistance. Road formation width is assumed to be 14.0m, with a 12.0m wide running surface and 1.0m shoulders either side; Typical pipe culverts of dimensions 600mm and 1200mm diameter corrugated steel pipe were considered appropriate; and A construction duration of 3 months for budget pricing purposes has been assumed but final duration will depend on the actual amount of plant used, potential wet season delays, etc.
The installation of a water supply pipeline for dust suppression purposes and various other minor scope items as identified are to be most practically catered to directly by the Kalsaka/Sega operational team.
1.8.3
ESIA
Digby Wells has been appointed to undertake a comprehensive ESIA for the Sega Project including verification and gathering of baseline data. Their scope of work is described elsewhere in this report. Suffice to say that this schedule requires input from many sources indeed stakeholders. This process is being carefully managed to ensure compliance with regulatory bodies as well as voluntarily adopted world-practice policies. The schedule has also been subject to scrutiny with a view to ensure its duration and activities are carried out in the most efficient manner i.e. where activities may be performed simultaneously this is done, and every attempt is being made to reduce wait times for example where review time is necessary, this is being actively expedited though not, it must be said at the expense of the quality of the end product. Thus schedules of implementation are exhibited which though optimistic are believed that with judicially applied management these milestones may well be achieved both in terms of the ESIA submission as well as resettlement schedule.
1.8.4
Overall Project Execution Schedule
The Sega Project implementation exhibits a duration of about a year as is seen in the summarized project schedule below. This assumes many overlapping activities and though optimistic is believed that with the co-operation of all parties involved, is achievable. The implementation of the resettlement allocation plan is envisaged to have commenced before mining but will continue as necessary during the production phase.
November 2012
Page 1-16
Figure 1.3:
Project Execution Schedule
November 2012
Page 1-17
1.9
ENVIRONMENTAL
Soon after the acquisition of the Sega property by Amara, Digby Wells was tasked with visiting the Kalsaka mine in Burkina Faso for Amara and the recently purchased Sega property. They produced a report describing the Sega Project Social and Environmental Issues dated 14th March 2012 which was essentially a fatal flaw analysis. On the basis of this report it was decided to appoint Digby Wells to undergo a full ESIA process for the Sega Project. Substantial inroads have been made with this initiative to the extent that a draft ESIA document exists. The document is not complete and requires review and completion, something that is expected to be achieved over the next few months, however serves to demonstrate the considerable amount of effort already incurred and progress made to date.
1.9.1
ESIA Report
The ESIA draft report has been made available for stakeholders to review, for their comments and inputs. A summary of the report is to be made available in French to interested and affected parties (I&APs). In the period after the submission of the ESIA report to government authorities, it is anticipated that public hearings will be held by the Burkina Faso government to obtain additional comments directly from the stakeholders.
1.9.2
ESIA Baseline and Specialist Studies
Digby Wells have with the help of the subcontracted services of a local Burkinab environmental agency, Bureau detudes, de Conseils et de Restauration des Mines (BECoReM) conducted field research to cover all necessary aspects of the ESIA related issues not least of which is the development of Baseline information where it did not exist but more importantly describe the receiving environment including identifying any limitations and knowledge gaps. These sub-topics are given below and described in greater detail in the current draft ESIA which will be suitably updated as required before final issue: Visual and Topography Assessment; Air Quality; Noise Assessment; Biodiversity (Flora and Fauna) Assessment; Fauna and Flora Assessment; Aquatic and Wetland Assessments; Surface Water Assessment; Groundwater Assessment; Heritage and Archaeology Assessment; Health Assessment; and Socio-Economic Assessment.
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Page 1-18
1.9.3
Resettlement Action Plan
Digby Wells have compiled provisional cost estimates for resettlement / compensation options for the Amara Sega Project in Burkina Faso. The cost estimates provided in this memorandum were based on average resettlement implementation costs on other African mining projects. These cost estimates take into account the specific attributes of this project and the attributes of resettlement-affected communities. In particular they addressed the resettlement required for the mining project which has a mine life of less than 2 years and for which mining operations need to start early in 2013. The level of resettlement planning taken into account here may not necessarily be compliant with International Finance Corporation (IFC) Guidelines and Equator Principles but does take into account Burkinabe legislation and good mining industry practise.
1.9.3.1 Approach for Calculating Resettlement Costs The following approach has been adopted in order to provide a cost estimate: Four options for resettlement have been adopted and calculated; and Within the options for permanent resettlement different options have been inputted to give areas for resettlement of a buffer of 50m around waste rock dumps and 50m, 100m and 500m around the various pits.
1.9.3.2 Resettlement Options Provisional cost estimates for the following four resettlement / compensation options are presented here: Option 1 - Complete permanent resettlement of all physically and economically displaced individuals within the directly affected area and within a buffer zone around the pits and other infrastructure. The buffer zones are 50m, 100m and 500m. If people are not resettled then they assume that some compensation will be paid to them for the inconvenience or damaged houses; Option 2 - Resettlement of all people within the actual project footprint and a 50m buffer area and temporary evacuation of physically and economically displaced individuals (no more than 5 or 6 hours at a time) as required by project activities, such as blasting; Option 3 - Temporary resettlement of physically and economically displaced individuals, assuming the following: o That one mining area will be mined at a time and that the duration of the displacement period will be approximately 4 months; o That displaced individuals will return to their original settlements after mining of the area has been completed, after which the resettlement village will be occupied by the households affected by the next mining area; o That all damaged assets (including community infrastructure) will be compensated for in kind or cash, depending on the nature of the asset and extent of damage; and
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Page 1-19
That all permanently affected assets be replaced and compensated for (such as dwellings that had to be demolished due to mining activities). Option 4 - Providing a living out allowance for all physically and economically displaced individuals, thereby enabling the following: o The physically displaced individuals to find alternative accommodation for themselves for the mining period; and o The economically displaced individuals to either continue with their economic activity at an alternative location or reducing/eliminating their need to engage in their economic activity for the mining period.
This option is also based on the assumption that one mining area will be mined at a time, and that the duration of the displacement period will be approximately 4 months. Different categories of resettlement-affected households and individuals have been identified for the purpose of calculating this provisional cost estimate, as follows: Mandatory - This includes all households, agricultural fields and artisanal miners1 located on or active within the actual footprint area of project infrastructure, such as mining pits, the haul road, crusher area, waste rock dumps and other ancillary infrastructure; 50 metre buffer - Households, agricultural fields and artisanal miners within 50 metres of the aforementioned infrastructure; 100 metre buffer: Households, agricultural fields and artisanal miners within 100 metres of the pits and 50m from the other infrastructure; and 500 metre buffer - Households, agricultural fields and artisanal miners within 500 metres of the pits and 50m from the other infrastructure.
Within each resettlement option, estimated costs for various possibilities pertaining to the extent of resettlement (based on the abovementioned categories) were estimated.
1.9.3.3 Provisional RAP Cost Estimates Provisional cost estimates for each of the resettlement / compensation options was estimated. These costs include the resettlement / implementation costs, but exclude costs for the development of a resettlement action plan (RAP). The provisional costs forwarded fall between a range of US$0.73 million and US$4.1 million. It has therefore been assumed for PEA purposes that a provisional allowance of $2 million which includes the development of the RAP would be adequate to cater for this all-important item.
We are cognisant of the fact that technically they are mining illegally on property now owned by
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1.9.4
Closure Financial Provision
The closure cost assessment involves the quantification of mining and infrastructure components and applying rates to rehabilitate each area. The costing will be reviewed constantly for the duration of the project to ensure that the financial provision is sufficient for effective rehabilitation of the site. The approach followed during these calculations was to assume planned mine closure, i.e. costs have been calculated assuming that the mine will close after 21 months at current estimated rates. The Kalsaka example was used as a basis for the initial estimate which will be verified in due course. Therefore it was thought that a US$2 million provision would adequately satisfy the requirements for closure as exhibited in the table below.
Table 1.13:
Requirements for Closure
Description Infrastructure & Plant Pits Waste Rock Dumps Roads Monitoring Personnel & Management TOTAL
Provision (US$) 100,000 100,000 1,000,000 100,000 200,000 500,000 2,000,000
1.9.5
Environmental Conclusion
The Sega Project is being undertaken with due consideration of biophysical, health, social and economic factors, as well as the relevant legislative requirements. The Sega Project will have a range of both positive and negative impacts on the biophysical and socio-economic environments. Although some employment will be created, Amara cannot create employment for everybody in the project area, nor can it create individual benefits, however endeavours will be made to maximise these positive impacts as far as possible through the implementation of the social management plan (SMP). A significant negative impact identified includes the disturbance to the local economy through the impact on artisanal and small-scale miners (ASM); however, the prescribed mitigation measures should remedy this to a lesser degree, together with on-going stakeholder engagement and participation. Although the impacts to the biophysical environment were found to be largely negative, the poor existing environment leads the significance of the project impacts to be lower. These negative impacts are mostly reversible in the long term and with mitigation can be reduced to negligible levels. Effective monitoring will ensure that impacts are maintained at acceptable levels.
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With effective implementation of the environmental and social management programmes, none of the negative impacts are believed to be sufficiently significant so as to prevent the development of the proposed Sega Project.
1.10 CAPITAL AND OPERATING COSTS Costs were provided to a level that could be utilised to confidently assess the economics of the Sega Project. Capital costs, in particular of the major mechanical items, have been based on budgetary quotes from reputable suppliers and may be deemed to be accurate. Other costs have been provided through the assistance of various consultants and contractors which exhibit realistic values. Operating costs too are deemed to have a high level of accuracy as they are based on the existing cost structure that is well known and defined for the Kalsaka operation. Mining rates have been returned from several operating contractors based on indicative mine plans and are deemed to be a fair reflection of what would be realised upon actual implementation. Sega costs have captured all relevant taxes and duties be they capital or operating cost based. Other government taxes and royalties have also been captured directly within the cash flow model. The table below shows the exchange rates that were utilised.
Table 1.14:
Exchange Rates
Exchange Rates GBP to ZAR USD to ZAR USD to CFA Franc 1.10.1 Capital Expenditure
ROE 12.50 8.00 500
The overall capital cost summary includes the following major costs: Direct project costs; Project related costs; and Contingency.
The capital expenditure table for Sega is shown in the table below.
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Table 1.15:
Overall Capital Cost Estimate Summary
Capital Cost Item Sega Crusher Installation Sega Mining Capital (incl. haul road) Sega Infrastructure Costs Subtotal (Direct Project Costs) Pre-Project PEA Other Taxes ESIA RAP Subtotal (Project Related Costs) Contingency (10%) Total CAPEX
Cost (US$) 2 384 375 2 249 039 315 839 4 949 253 349 200 649 980 640 700 2 000 000 3 639 880 858 913 9 448 046
1.10.2 Operating Expenditure The Sega Projects operating costs were determined for the following cost centres: General & administration (G&A); Processing; Additional crushing; Mining technical services; ROM rehandle; and Mining.
Below is a table that shows a summary of the operating costs.
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Table 1.16:
Summary of the Operating Costs Sega Nameplate (1.6Mtpa) Operating Costs
Mining Area Ore Type Mining (incl drill and blast) Incremental Mining Cost for Ore (incl. haul to Sega crusher) Grade Control Owners Technical Services Mining Team Haul from Sega Crusher to Kalsaka Excess Fuel Charge Processing (excl. crushing) Crushing RoM Rehandle General and Administration Total Ore Processing Cost (excl mining) - Whittle
Main Zone - Gambo and Bakou Oxide 2.19 0.17 0.13 0.83 5.72 1.08 9.71 1.65 0.78 4.66 24.73 Transition 2.44 0.17 0.13 0.83 5.72 1.08 9.93 1.65 0.78 4.66 24.95 Oxide 2.24 2.07 0.16 0.83 5.72 1.08 9.71 1.65 0.78 4.66 26.66
Tiba Transition 2.49 2.07 0.16 0.83 5.72 1.08 9.93 1.65 0.78 4.66 26.88
Unit US$ per ANY ton mined US$/t ore US$/t ore US$/t ore US$/t ore US$/t ore US$/t ore US$/t ore US$/t ore US$/t ore US$/t ore
G&A Costs These are summarised in the table below.
Table 1.17:
Summary of G&A Costs

Unit Admin staff costs Construction staff costs Office costs Travel costs Legal and professional costs External relations costs Insurance Other site expenses Clinic costs Safety costs Camp costs Environmental costs Taxes and fees Finance costs Total G&A Costs Tonnage Treated Total G&A Costs US$ US$ US$ US$ US$ US$ US$ US$ US$ US$ US$ US$ US$ US$ US$ tonnes US$/t G&A Cost US$ 2 745 067 265 239 326 913 244 982 261 015 152 128 1 046 038 697 172 6 629 150 347 660 000 90 430 800 000 10 775 7 456 735 1 600 000 4.66
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General and administration expenses (G&A) have been calculated at US$4.66/t of ore processed based on a nameplate treatment rate of 133,000 tpm or 1.6 Mtpa. Processing Costs - The processing operating costs were estimated to be US$9.71/t for the oxide phase and US$9.93/t for the transition phase using Kalsakas known parameters. Sega ore by its nature exhibits slightly different reagent additions as stated elsewhere in this report and this has been taken into account and reflected in the figures given below. Below is a breakdown of the processing costs.
Table 1.18:
Summary of Processing Costs
Oxide Processing staff costs Engineering staff costs Power costs Total Reagent costs Cement Cyanide Caustic Soda Hydrochloric Acid Other Reagents Maintenance costs Other processing costs Total Processing Costs US$/t US$/t US$/t US$/t US$/t US$/t US$/t US$/t US$/t US$/t US$/t US$/t 1.36 0.77 1.31 4.49 2.30 1.80 0.03 0.04 0.32 1.23 0.55 9.71
Transition 1.36 0.77 1.31 4.71 1.79 2.53 0.03 0.04 0.32 1.23 0.55 9.93
Additional Crushing Costs The additional crushing costs were estimated to be US$1.65/t as derived from first principles which would include the costs of both Sega primary crushing circuits and include the crusher circuit pertaining to Kalsaka. Below is a summary of the total processing cost including additional crushing costs.
Table 1.19:
Additional Crushing Costs
Oxide Total processing costs Estimated Crushing Costs (Additional) Total Processing Cost (Including additional crushing costs) US$/t US$/t US$/t 9.71 1.65 11.36
Transition 9.93 1.65 11.58
Mining Technical Services - This comprises the owners mining team consisting of contract management personnel and costs relating to grade control. The mining technical costs were estimated to be US$0.83/t. ROM Rehandle - A rehandling cost of US$0.78/t was used for both oxide and transition ore.
November 2012 SEGA Gold Project PEA NI 43-101 Report Page 1-25
Mining Costs - The mining costs were based on the following: Ore mining costs including haulage; and Waste mining costs.
Below is a summary of the mining costs for the oxide and transitional ores.
Table 1.20:
Summary of the Mining Costs
Total Mining Costs Ore Mining Costs including haulage Less: Waste Mining Costs
US$/t US$/t US$/t
Oxide 7.10 9.29 2.19
Transition 7.10 9.54 2.44
The ore mining costs for the oxide and transition phase are summarised on the table below. Also included is the breakdown of the waste mining costs.
Table 1.21:
Breakdown of Ore and Waste Mining Costs Oxide Ore Oxide Waste 1.08 0.13 5.72 0.25 2.11 9.29 0.20 0.04 0.01 0.25 1.69 2.19 Transition Ore 1.08 0.13 5.72 0.50 2.11 9.54 Transition Waste 0.20 0.04 0.01 0.50 1.69 2.44
Fuel Excess (Mining) Fuel Excess (Haulage) Grade Control Drilling Ore Haulage Equipment Spares Tax Water for dust suppression Drill and Blast Mining Contractor Rates Ore Mining Costs including haulage
US$/t US$/t US$/t US$/t US$/t US$/t US$/t US$/t US$/t
1.11 ECONOMICS AND FINANCIAL ANALYSIS Project economics have been evaluated using the discounted cash flow method, by taking into account year on year milled tonnages and grades and the associated recoveries, gold price (revenue), operating costs, royalties and capital expenditure (both initial and sustaining). The Project has been evaluated as stand-alone and 100% equity financed, with no debt financing.
1.11.1 Assumptions Assumptions used in the financial analysis were provided by Amara and are summarised in the Table 1.22 and explained below.
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Table 1.22:
Financial Evaluation - Assumptions
Parameter Gold Price Nameplate Processing Rate NPV Discount Rate Royalty Payment Tax rate Diesel fuel price
Units US$/oz Mtpa % % % US$/l
Assumption 1,500 1.6 10% 6% 17.5% 1.54
Cash flow analysis is reported in United States Dollars. Plant and mine equipment salvage value has been assumed as zero. In line with the practice in the mineral industry, no inflation was applied to the cash flow analysis.
1.11.2 Summary of Financial Analysis Financial analysis results are summarized in the table below.
Table 1.23:
Summary of Financial Analysis Results
Summary (LoM Operating Costs) Cash cost (excl. royalty) Cash cost (incl. royalty) Mining (incl. hauling to Sega Crusher) Haulage (Sega Crusher to Kalsaka) Processing G&A
US$/oz 821 911 376 106 226 113
US$/t*
2.59 5.72 12.18 6.14
*Mining tonnes are per mined tonne. The rest are per processed tonne
General and administration costs were rounded to a figure of US$650,000 per month and take into account some months where mining and processing do not occur. The effect of this is that the operating costs as expressed here are higher than were they simply based on a pure nameplate throughput capacity rate of 1.6Mtpa. It was thus felt prudent to express the projected reality as per the financial model.
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Table 1.24:
Salient Features
Summary - Salient Features Ore Waste Strip ratio Average treated Au grade Overall Recovery Gold price Total gold sold Initial capex Average annual production LOM Total cash generation NPV NPV - pre tax 000 tons 000 tons w/o g/t % US$/oz (oz) (US$000) (oz) Months (US$000) (US$000) (US$000) 2,540 17,349 6.8 2.0 84 1,500 137,095 11,488 81,444 21 59,094 49,471 55,119
Major highlights of the financial analysis are as follows: Net Present Value (NPV) The Sega Project exhibits a final NPV of US$ 49.5 million using a discount rate of 10%. Pre-tax Net Present Value (NPV) The pre-tax NPV is given as US$ 55.1 million using the same discount rate. Net Cash Flow The total cash generation is US$ 59.1 Million based on a gold price of US$1,500 per ounce. Cash Operating Costs The total cash operating costs excluding royalties amount to US$ 821 per ounce produced. Internal Rate of Return (IRR) - When the acquisition costs are included the project still exhibits an attractive IRR of 48%. The calculated figure for this cash flow model where they are in fact excluded as sunk is in fact much higher. Contained gold After mining dilution and loss the contained gold is 162,825 ounces over the effective and initial mine life of 21 months. Gold produced At an average process gold recovery of 84% (87% for oxide ore and 70% for transition ore) total gold production over the life is 137,095 ounces.
Project Life Cash Flow The project LoM cash flows by year are given in Table 1.25.
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Table 1.25:
MINING RZ & GAMBO
Cash Flow Model Summary

Unit Waste tonnes mined Ore Mined (Oxide) Ore Mined (Transitional) Strip Ratio Grade (Oxide) Grade (Transitional) Contained gold (Oxide) Contained gold (Transitional) Waste tonnes mined Ore Mined (Oxide) Ore Mined (Transitional) Strip Ratio Grade (Oxide) Grade (Transitional) Contained gold (Oxide) Contained gold (Transitional) Ore Processed (Oxide) Head Grade (Oxide) Ore Processed (Transitional) Head Grade (Transistional) Contained gold Recovery (Oxide) Recovery (Transitional) Recoverable gold Month 1 Month 2 Month 3 Month 4 TOTAL PRODUCTION kt kt kt waste:ore g/t g/t oz oz kt kt kt waste:ore g/t g/t oz oz kt g/t kt g/t oz % % oz 50% 35% 10% 5% oz US$ 000 US$ 000 US$ 000 US$ 000 US$ 000 US$ 000 US$ 000 US$ 000 US$/oz US$ 000 US$/oz US$/t mined US$/thauled US$/t processed US$/t processed TOTAL 12 258 1 442 373 6.75 1.87 1.81 86 753 21 769 5 091 683 42 7.03 2.24 3.78 49 235 5 066 2 125 1.99 415 2.01 162 825 87% 70% 137 095 -1(+) Month -1 87% 70% 8 314 1 Month 1 633 10 1 56.65 1.39 2.29 457 72 372 28 13.25 2.35 2 118 38 2.09 1 2.29 2 646 87% 70% 2 290 1 145 1 145 132 2 232 289 33 381 65 31 650 1 665 103 3 419 2.36 5.72 12.15 16.57 1 134 2 000 1 145 1 717 (2 686) (476) (650) (103) (42) (2 239) 2 Month 2 597 31 13 13.55 2.12 2.06 2 133 848 443 75 5.87 2.30 5 584 107 2.25 13 2.06 8 565 87% 70% 7 307 3 654 801 4 455 409 2 343 857 99 1 164 197 93 650 795 401 1 395 2.61 5.72 12.16 5.44 4 455 6 683 (3 708) (1 454) (650) (401) (42) 428 3 Month 3 598 41 2 14.01 1.68 2.03 2 197 131 578 63 1 9.10 2.69 3.08 5 424 94 103 2.29 3 2.37 7 846 87% 70% 6 787 3 394 2 558 229 6 180 362 2 615 753 88 1 033 175 83 650 849 556 1 022 2.50 5.72 12.15 6.12 6 180 9 270 (3 819) (1 291) (650) (556) (42) 2 913 4 Month 4 739 99 15 6.45 2.11 1.44 6 712 714 364 65 5 5.22 2.85 3.45 5 952 528 133 2.40 10 258 87% 70% 8 924 4 462 2 376 731 114 7 683 645 2 466 1 214 153 1 290 219 104 650 755 691 967 2.66 7.93 12.14 4.89 7 683 11 524 (4 477) (1 613) (650) (691) (42) 4 051 5 Month 5 545 53 47 5.48 1.56 2.05 2 640 3 079 551 85 9 5.86 2.16 3.95 5 897 1 142 109 2.06 7 203 87% 70% 6 267 3 133 3 124 679 365 7 301 679 2 504 1 321 160 1 054 179 85 650 1 058 657 998 2.76 10.19 12.14 5.99 7 301 10 952 (4 665) (1 318) (650) (657) (42) 3 620 6 Month 6 618 7 14 28.90 1.58 2.07 380 926 562 78 17 5.91 2.02 4.06 5 104 2 174 127 1.96 8 016 87% 70% 6 974 3 487 2 193 892 339 6 912 396 2 737 884 97 1 236 210 99 650 905 622 1 003 2.66 5.23 12.14 5.11 6 912 10 368 (4 113) (1 546) (650) (622) (42) 3 396 7 Month 7 656 86 7.64 1.72 4 750 478 55 8 7.51 1.90 3.63 3 387 956 149 1.82 8 710 87% 70% 7 578 3 789 2 441 627 446 7 303 519 2 523 1 001 124 1 449 246 116 650 875 657 998 2.58 5.73 12.14 4.36 7 303 10 954 (4 168) (1 811) (650) (657) (42) 3 626 8 Month 8 998 26 38.50 2.41 2 012 191 37 2 4.88 2.19 2.54 2 603 171 74 2.21 61 2.58 10 300 87% 70% 8 102 4 051 2 652 697 313 7 714 222 2 616 462 54 1 322 222 105 650 698 694 823 2.38 2.76 12.24 4.82 7 714 11 571 (3 354) (1 650) (650) (694) (42) 5 181 9 Month 9 1 066 100 10.61 1.61 5 203 68 21 3.20 1.94 1 325 122 1.67 12 2.58 7 551 87% 70% 6 396 3 198 2 836 758 349 7 140 431 2 486 744 101 1 304 221 104 650 945 643 936 2.44 5.19 12.16 4.85 7 140 10 710 (3 763) (1 629) (650) (643) (42) 3 984 10 Month 10 1 116 118 9.43 1.83 6 965 30 118 1.83 12 2.58 7 984 87% 70% 6 773 3 386 2 238 810 379 6 814 426 2 513 677 98 1 271 216 102 650 879 613 964 2.40 5.18 12.16 4.98 6 814 10 221 (3 714) (1 588) (650) (613) (42) 3 614 11 Month 11 1 147 116 1 9.86 1.31 1.30 4 879 22 15 116 1.31 12 2.56 5 892 87% 70% 4 954 2 477 2 371 640 405 5 892 419 2 547 665 97 1 247 211 100 650 1 198 530 1 097 2.40 5.19 12.16 5.07 5 892 8 838 (3 728) (1 558) (650) (530) (42) 2 330 12 Month 12 1 019 205 11 4.72 1.61 1.51 10 632 537 45 120 1.61 6 244 87% 70% 5 432 2 716 1 734 677 320 5 447 780 2 347 1 234 179 1 168 198 94 650 1 224 490 1 311 2.58 10.26 12.14 5.41 5 447 8 170 (4 540) (1 460) (650) (490) (42) 988 13 Month 13 799 131 50 4.42 1.39 1.44 5 847 2 294 306 34 9.13 1.70 1 838 131 1.51 6 335 87% 70% 5 512 2 756 1 901 495 339 5 491 772 2 490 1 301 178 1 268 216 102 650 1 266 494 1 360 2.67 9.37 12.14 4.98 5 491 8 237 (4 740) (1 586) (650) (494) (42) 725 14 Month 14 891 154 79 3.83 2.25 1.45 11 132 3 674 162 21 7.81 1.85 1 238 136 1.92 8 413 87% 70% 7 320 3 660 1 929 543 248 6 380 926 2 391 1 498 210 1 323 225 106 650 1 001 574 1 239 2.73 10.64 12.14 4.77 6 380 9 570 (5 025) (1 655) (650) (574) (42) 1 624 15 Month 15 498 138 57 2.56 2.34 1.70 10 382 3 086 554 47 11.68 2.00 3 054 135 2.10 9 155 87% 70% 7 965 3 983 2 562 551 272 7 367 869 2 366 1 492 201 1 316 224 106 650 907 663 1 070 2.74 10.21 12.14 4.80 7 367 11 051 (4 927) (1 645) (650) (663) (42) 3 124 16 Month 16 276 83 83 1.67 2.15 2.34 5 724 6 207 286 54 5.25 2.10 3 673 133 2.11 9 031 87% 70% 7 857 3 929 2 788 732 276 7 724 793 1 279 1 381 182 1 290 219 104 650 751 695 854 3.04 9.45 12.14 4.89 7 724 11 586 (3 636) (1 613) (650) (695) (42) 4 950 17 Month 17 61 43 3 1.33 3.37 2.07 4 709 179 85 19 4.61 3.42 2 041 109 2.40 8 384 87% 70% 7 294 3 647 2 750 797 366 7 560 227 327 413 54 1 054 179 85 650 410 680 485 3.07 3.41 12.14 5.99 7 560 11 340 (1 021) (1 318) (650) (680) (42) 7 629 18 Month 18 127 2.40 9 836 87% 70% 8 558 4 279 2 553 786 398 8 016 1 236 210 99 650 257 721 364 12.14 5.11 8 016 12 024 (1 546) (650) (721) (42) 9 065 19 Month 19 37 2.40 112 1.82 9 425 87% 70% 7 085 3 543 2 995 729 393 7 660 1 473 246 116 650 351 689 415 12.31 4.36 7 660 11 490 (1 836) (650) (689) (42) 8 273 20 Month 20 135 1.82 7 886 87% 70% 5 520 2 760 2 480 856 365 6 460 1 338 222 105 650 420 581 448 12.36 4.82 6 460 9 691 (1 666) (650) (581) (42) 6 751 21 Month 21 54 1.82 3 143 87% 70% 2 200 1 100 1 932 709 428 4 168 533 89 42 650 597 375 405 12.36 12.10 4 168 6 253 (664) (650) (375) (42) 4 522 22 Month 22 87% 70% 770 552 354 1 676 650 151 478 1 676 2 514 (650) (151) 1 713 23 Month 23 87% 70% 220 276 496 650 45 1 401 496 744 (650) (45) 49 24 Month 24 87% 70% 110 110 650 10 6 000 110 165 (650) (10) (495) 25 Month 25 87% 70% (2 000) (7 282) (9 282)
TIBA
PROCESSING
137 095 9 007 38 783 16 186 2 108 24 751 4 190 1 981 15 600 821 12 339 911 2.59 5.72 12.18 6.14 9 448 2 000 137 095 205 643 (66 084) (30 922) (15 600) (12 339) (875) (2 000) (7 282) 70 542
COSTS mining mining mining mining processing processing processing
Mining Cost (Contractor - ore) Mining Cost (Contractor - waste) Ore haulage Mining Cost (Owner) Processing Cost Additional crushing ROM rehandle General & Administrative Cost C1 Cash Cost (gold produced) Royalty C2 Cash Cost (gold sold) Mining Haulage (exc Tiba to Sega) Processing G&A
COST METRICS
Cluff Gold Sega - CAPEX Total startup capex and project costs US$ 000 Net smelter royalty US$ 000 Sega Mining Co - OPERATIONS GOLD SOLD oz Revenue US$ 000 Mining US$ 000 Processing US$ 000 General & Administrative Cost US$ 000 Royalty US$ 000 Sustaining Capex US$ 000 Rehabilitation Provision US$ 000 Tax US$ 000 Cluff Gold Interest - Sega profit US$ 000 Sega cash flow Free Cash Flow Cash Balance Pre tax cash flow US$ 000 US$ 000 US$ 000
59 094
(8 314) (8 314) (8 314)
(5 373) (13 687) (5 373)
428 (13 259) 428
2 913 (10 346) 2 913
4 051 (6 296) 4 051
3 620 (2 675) 3 620
3 396 721 3 396
3 626 4 347 3 626
5 181 9 528 5 181
3 984 13 512 3 984
3 614 17 126 3 614
2 330 19 456 2 330
988 20 445 988
725 21 170 725
1 624 22 793 1 624
3 124 25 918 3 124
4 950 30 867 4 950
7 629 38 497 7 629
9 065 47 562 9 065
8 273 55 835 8 273
6 751 62 586 6 751
4 522 67 108 4 522
1 713 68 822 1 713
49 68 871 49
(495) 68 376 (495)
(9 282) 59 094 (2 000)
66 376
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1.11.3 Sensitivity Analysis Sensitivity analyses were performed on the after tax profits by varying the major key variables (gold price, capex, and opex) from -30% to +30% of the base case cash flow and each sensitivity was performed independent of the other. The results of the sensitivities are summarised in Table 1.26 to Table 1.28, which show gold price varying from US$1,050 to US$1,950 per ounce, capital and operating cost variations. The figure below shows the detailed sensitivity analysis of changing the key variables to 30%.
Table 1.26:
Gold Price Sensitivity
Gold Price Change % -30% -15% 0% 15% 30%

Table 1.27: Capex Sensitivity
NPV (US$000) 0% $8,384 $35,150 $59,094 $83,038 $106,982 5% $6,590 $31,519 $53,969 $76,306 $98,632 10% $5,056 $28,358 $49,471 $70,382 $91,277
CAPEX Change % -30% -15% 0% 15% 30%

Table 1.28: Operating Costs Sensitivity
NPV (US$000) 0% $61,641 $60,368 $59,094 $57,820 $56,547 5% $56,503 $55,238 $53,969 $52,700 $51,431 10% $51,989 $50,734 $49,471 $48,208 $46,945
OPEX Change % -30% -15% 0% 15% 30%
NPV (US$000) 0% $90,519 $74,853 $59,094 $43,243 $27,299 5% $83,458 $68,762 $53,969 $39,005 $23,952 10% $77,232 $63,400 $49,471 $35,309 $21,063
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Figure 1.4:
NPV Sensitivity at 10% Discount Rate
NPV Sensitivities
NPV Gold Price NPV CAPEX NPV OPEX
$100 000 $90 000 $80 000 $70 000 NPV US$ (000) $60 000 $50 000 $40 000 $30 000 $20 000 $10 000 $0 -40%
-30%
-20%
-10% 0% Percentage Change
10%
20%
30%
40%
Discussion When ranked, the sensitivity analysis indicates that the project is most sensitive to gold price followed by operating costs and then capital expenditure. This provides weight to the notion of robustness exhibited by the Sega economics where unexpected increases in expenditure may have a lesser impact, especially considering the current positive outlook for the gold price which at date of report issue was some US$200 higher than the assumed base case.
1.12 INTERPRETATION AND CONCLUSION
1.12.1 Interpretation The Sega Project as described exhibits a life-of-mine at 21 months and has both positive and negative implications. On the positive side the following points are made: Prolonged Cashflow Stream; Low Environmental and Social Disruption; Reliable Existing Processing Facility; Positive Gold Price; Positive Exploration Potential - Recent exploration drilling results, particularly at Touli which is an area close to the proposed Sega pits have been published which though
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not yet incorporated into a formal resource estimate certainly show positive results. These are as follows: o 26m at 3.05g/t from 8m in hole SRB0232; o 26m at 2.14g/t from 24m in hole SRC0119; and o 18m at 3.49g/t from 18m in hole SRB0290. It is therefore conceivable that going forward further resources will be identified which may result in an expanded mine plan thereby potentially increasing the life-of-mine further.
It should also be borne in mind that there are some potential negative issues which if not carefully managed and considered, could come to bear: Effects of Delayed Implementation on Cashflow; and Extent of Resettlement and Presence of Artisanals.
1.12.2 Conclusion Amara is of the opinion that based on its due diligence exercise, the Sega acquisition was a strategic step taken which is crucial to its success since it has the potential to extend the existing cashflow stream necessary to maintain its position in the market as it develops into a fully-fledged mid-tier gold producer. The results of this PEA have demonstrated robust economics and serve to further confirm this notion. What remains is to develop the project to its ultimate conclusion manifested by successful implementation. For this to be realised accordingly, care should be taken to ensure items related to budget and timing remain on track. It is considered that with appropriate intervention and management, where certain recommendations as set out next, are actively pursued, the Sega Project will indeed deliver and Amara is therefore confident that the Sega Project PEAs results are a fair and valid reflection of the asset.
1.13 RECOMMENDATIONS Each discipline needs to be carefully considered so that it can pass scrutiny both independently and together as a part of the all-encompassing, comprehensive yet rational implementation plan. Issues associated with each discipline in the form of recommendations are considered with a view to ensure its robustness, alignment and congruence with the stated goal which is the ultimate successful implementation of the Sega Project. These areas of focus will be in the following areas and are described in greater detail later in the report: Resources; Mining; Processing; Water and Power Management; Infrastructure; ESIA and RAP Related Issues; and Capex-Opex and Schedule Verification;
SEGA Gold Project PEA NI 43-101 Report Page 1-32
November 2012
Protraction of the cashflow stream to Amara, currently through Kalsaka, and envisaged to continue with Sega remains critical to the success of the corporate entity hence all of its subsidiaries and associated stakeholders. Its timeous implementation signifies a benefit not only for investors but all stakeholders including local communities and government and the project will be well served with all in support of this venture.
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SECTION 2.
2.1
INTRODUCTION AND SCOPE OF SERVICES
PURPOSE OF REPORT
Amara Mining plc (Amara) has carried out a Preliminary Economic Assessment (PEA) of the Sega Project located in Burkina Faso, West Africa. It should be noted that Amara Mining plc, a dual AIM and TSX listed West African focused gold mining company was formerly known as Cluff Gold plc. This name change became effective on 1st October 2012 following a rebranding exercise. Amara is a gold developer-producer with assets in West Africa. The Company already generates significant cash flow through its Kalsaka gold mine in Burkina Faso. On 3rd February 2012, it was announced that Cluff Gold plc entered into a conditional agreement with Orezone Gold Corporation for the acquisition of its Sega Project (Sega), located approximately 20km by road from Cluff Golds Kalsaka project in Burkina Faso. On 17th May 2012 this acquisition was announced to have been successfully completed. Sega hosts an indicated resource of 450,366oz (8.3Mt at 1.69g/t) and an inferred resource of 147,344oz (2.9Mt at 1.58g/t). The purchase and development of the proposed Sega Project provided an opportunity to enhance Kalsakas production profile. Since Kalsakas ore reserve continues to be depleted, this would allow for the mining of Sega ore, which could then be hauled to Kalsakas existing heap leach processing facility. This synergistic initiative is expected to provide advantages for both Sega and Kalsaka by allowing development of mining at Sega with very limited other infrastructural requirement but simultaneously allows Kalsakas life-of-mine to be lengthened through the continued use of its already substantial and existing mine infrastructure and processing facility. This report presents the findings of a PEA undertaken for the proposed development of the Sega Project, with a view that aims to maximise the positive aspects of the project and to minimise or manage any negative implications. This study has been prepared following the guidelines of the Canadian Securities Administrators National Instrument 43-101 (NI 43-101). Amara Mining retained the services and coordinated the work of various subcontractors and accepts ultimate responsible for the final PEA document, being assisted by SENET Engineering in its compilation. Amara Mining prepared the process/metallurgy, infrastructure, and economics sections of the report; The resources have been based on a previous NI 43-101 resource update report filed in January 2010 by Orezone Gold Corporation and for this report therefore remains unchanged; SRK (SA) completed the mining sections of the document based on input supplied by Amara Mining; SRK (Ghana) have performed geotechnical investigative work; The environmental section of the report has been based on input directly obtained from Digby Wells Environmental (Digby Wells) who are also performing a
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comprehensive environmental and social impact assessment ESIA in conjunction with Bureau detudes de Conseils et de Restauration des Mines (BECoReM), an environmental consultancy local to Burkina Faso; and SENET has provided valuable assistance in respect of their drawing office and survey services. They were also instrumental in compiling the report into a format suitable for filing with the Canadian Securities Administrators.
The Sega Project involves the integrated development and exploitation of several mineralised zones, which hosts both oxidized and unoxidized (in particular transition material) gold mineralisation. According to NI 43-101 guidelines, this PEA is considered preliminary in nature, as a portion of the process feed identified in the development plan is classified as inferred resources. Inferred resources are considered too speculative geologically to serve as an economic basis for project mineral reserves. Mineral resources that are not mineral reserves do not have demonstrated economic viability. There is no certainty that these inferred mineral resources will be converted to measured and indicated categories through further drilling, or into mineral reserves, once economic considerations are applied. Amara appointed the various consultants as mentioned above for the Sega Project which is envisaged to be a 1.6 million tonnes per annum (MTPA) open pit mining whose ore is intended to be treated at Amaras existing heap leach processing facility at Kalsaka. The consultants scope of services is discussed in greater detail below. The results of all work carried out to date have been compiled into this report and conclusions and recommendations have been made.
2.2
SCOPE OF SERVICES
2.2.1
Orezone Gold Corporation
2.2.1.1 Geology and Resource Modelling The most recent Sega Resource Update that was published with its associated database will be accepted without change. This was sourced directly from Orezone Gold Corporation.
2.2.2
SRK Scope of Services
SRK provided services in respect of geotechnical input and mining aspects validation. SRK (Ghana) provided the geotechnical services. Mining input was largely undertaken in-house by suitably qualified Amara Mining personnel however this work was formally reviewed and validated by SRK (SA).
2.2.2.1 Geotechnical Investigation and Pit Slope Design The scope of work in this area is as follows:
Geotechnical holes planning; Geotechnical core logging; Laboratory tests; Analysis of the geotechnical data; and Preparation of a geotechnical report.
2.2.2.2 Open Pit Design and Optimisation Collection of open pit optimisation parameters and validation thereof; Perform a series of open pit optimisations; Validation of practical design pits as delivered by Amara based on the Orezone Resource Update, taking into account results of the geotechnical evaluation; The mining schedule will be reviewed on a bench by bench (for each rocktype), period by period basis. Checks will be carried out for vertical advance rate per pit per period; Ensure adequate bench sizing, mining method, grade control system etc. This data to be used for equipment sizing and selection, and manpower planning; Carry out review of pit design for PEA based on Resource Update and use this data to verify production scheduling; and Validate conceptual design and specification of mine offices, change houses, workshops and stores.
2.2.2.3 Equipment Selection, Production Scheduling and Manpower Planning Review contractor quotes received from Amara based on first pit optimisations so as to validate equipment selection and costs; Check manpower schedule; and After final pit design, validate detailed production schedule for PEA.
2.2.2.4 Operating Cost Estimation Validate mining cost estimates received from contractors for each pit based on manpower and production schedules.
2.2.2.5 Capital Cost Estimation Ensure capital cost estimates for the mining infrastructure is based on sound principles.
2.2.2.6 Reporting for PEA Prepare the report for insertion into the PEA based on the optimisations, design, schedules and costs prepared by Amara and sign-off as the relevant qualified person (QP).
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2.2.3
Digby Wells Environmental Scope of Services
2.2.3.1 Introduction Digby Wells Environmental (Digby Wells) has been contracted by Amara Mining to submit an Environmental and Social Impact Assessment (ESIA) for the proposed Sega Project. This included developing a terms of reference (ToR) for an Environmental and Social Impact Assessment (ESIA), request and evaluation of quotes from local social and environmental consultants, provide a defence for the ToR after they have been presented to government and then assist in compiling the final ESIA. This process will include presentations made to government authorities for the relevant mining applications and also the compilation of a Resettlement Policy Framework (RPF) and a conceptual mine closure plan. The terms of reference for the proposed project are: Compile a terms of reference for the proposed ESIA in a format acceptable to the Burkinabe authorities and present this to the authorities; Conduct stakeholder engagement as required for the various permitting processes and conduct some associated specialist studies; Compile a terms of reference to be used to obtain quotations from local consultants; Appoint and manage local consultants. Depending on the experience of local consultants, specific tasks and/or studies will be delegated in which Digby Wells will fulfil a management and review role to ensure quality of deliverables; and In association with local consultants, conduct an ESIA, stakeholder engagement process and associated specialist studies for the proposed Sega Project.
2.2.3.2 Deliverables The deliverables for the proposed Kalsaka ESIA project are: Compilation of project terms of reference; o Compilation of a set of ToRs which can be presented to the authorities to initiate this project; and o Get the ToRs reviewed by local consultants and the Amara/Kalsaka project team and then present these to the authorities. Association with Local Consultants; o Compilation of a terms of reference to be used in obtaining quotations from local Burkina Faso consultants; and o Appoint, delegate, manage and review deliverables from local consultants. Environmental Baseline Report (EBR): o The classification of the project in terms of the World Bank classification criteria; o The identification of International Finance Corporation (IFC) performance standards applicable; o Baseline environmental and social conditions and impact identification; and o Terms of reference (ToR) for specialist studies to be conducted during the ESIA.
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ESIA: o Project permitting application in accordance with local legislative requirements; o Stakeholder engagement process (SEP); o Environmental specialist reports; and o An ESIA covering the findings of various specialist investigations and the impacts associated with above mentioned projects and incorporating an environmental and social management plan (ESMP).
2.2.3.3 Methodology and Scope of Work The scope of work was thought best to conduct in three phases albeit simultaneously. All studies including the ESIA will comply with local requirements as well as be guided by international standards IFC performance standards, Equator Principles and the World Bank Guidelines).
Phase 1: EBR Conduct environmental and social baseline studies. All the specialist studies will be undertaken requiring site visits.
Phase 2: ESIA and SEP The following activities will be undertaken: ESIA report compilation; o Project classification in terms of the World Bank criteria; o Confirmation of in-country legislation and processes; o Generation of terms of reference for specialist investigation; o Compile a draft environmental and social impact assessment report (ESIA); o Compile a final ESIA report; o Compile a draft environmental and social management plan (EMP); and o Distribution of copies of the final ESIA to relevant authorities. SEP - Public consultation will be initiated during the baseline studies and will involve the following: o Compilation of information and notification documentation; Background Information Document, including allowance for illiterate people; Newspaper advertisements in national (if applicable) and local newspapers; Site notices/posters; Comprehensive stakeholder database in Microsoft Excel; and Notification and invitation letters to information sharing meeting and availability of environmental reports for public review and comment
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An information-sharing meeting with the local stakeholders, the public, community groups, environmental groups and NGOs will be held and minutes of all meetings will be kept; SEP Report with an issues and response table and proposed Grievance Mechanism and Stakeholder Engagement Plan (SEP) will be compiled. The Scoping document will be distributed for the required public review periods and the SEP will be updated for submission to the authorities; and ESIA study On-going public consultation will take place with stakeholders including authorities during the specialist studies and drafting of the ESIA Report; A feedback meeting will be held with competent and key national, provincial, local, and district authorities once the ESIA is complete and minutes thereof distributed; A feedback meeting will be held with the local stakeholders, community groups, environmental groups and NGOs once the ESIA is complete and minutes of these meetings will be kept; An issues and response report will be compiled for inclusion in the ESIA, following the consultation process; and The draft ESIA Report will be made available to stakeholders and the authorities for the required review periods.
Phase 3: ESIA Specialist Studies The specialist studies below are to be conducted for the compilation of the Environmental and Social Impact Assessment Report. All studies will be conducted jointly with the local consultants and Digby Wells staff to ensure that the final product reflects the best of local knowledge and international expectations and expertise. To be undertaken are the following: Soils and Land Capability Assessment; Fauna and Flora (Biodiversity) Assessment; Hydrology (Surface Water) Assessment; Hydrogeology (Groundwater) Assessment, including drilling; Aquatic and Wetlands Assessment; Noise Assessment; Air Quality Assessment; Topography and Climate Assessment; Visual Assessment; Heritage and Archaeology Assessment; GIS and Mapping; Health Baseline Assessment; Socio-economic Assessment; Resettlement Action Plan Framework (in preparation for possible economic resettlement); and Closure Cost Assessment.
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2.2.4
SENETs Scope of Services
During the study period SENET will provide the following services:
2.2.4.1 Study Management Preparation of the overall PEA report incorporating information from all consultants; Report compilation in line with requirements of the Canadian Standards (NI: 43-101); Review all the metallurgical test work carried out to PEA level; Define the process plant design criteria following Amaras recommendations which include the findings of the laboratory tests and operating data from the existing heap leach treatment facility; Process flow sheet depiction and layouts to the level of accuracy consistent with PEA requirements; and Preparation of plant and implementation report for inclusion into the overall PEA document.
2.2.5
AMARAs Scope of Services
2.2.5.1 Introduction Amara is providing the lead in the development of the PEA since much of the information is already well defined on account of the accurate information available from its existing Kalsaka heap leach facility and as such is best placed to provide the information. The scope of work covered by Amara is as follows:
2.2.5.2 Plant In conjunction with reputable crushing and screening suppliers, verify the flowsheet design and capability of both existing plant at Kalsaka and envisaged new processing plant for Sega.
2.2.5.3 Haul Road Develop the conceptual haul road route and positioning of the Sega facilities using onsite resources of survey and mining personnel but in conjunction with assistance provided by recognised mining contractors.
2.2.5.4 Infrastructure and Logistics Power supply; Water supply; Carry out infrastructure planning and design; and Perform logistical estimates insofar as the importation of materials into the Burkina Faso and subsequent road transportation to site.
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2.2.5.5 Capital and Operating Cost Estimate Generation of reliable detailed plant and infrastructure project capital cost estimates of an accuracy consistent with the level desired for a PEA; Generation of Processing and General and Administration (G&A) operating costs; and Specification of Processing and G&A staffing levels, operating spares, consumables and reagents.
2.2.5.6 Financial Modelling Prepare a financial model based on a 100% equity, post-tax and royalty basis; Review the project returns by means of a discounted cash flow analysis, with results reported as Net Present Value (NPV) and Internal Rate of Return (IRR); Conduct a sensitivity analysis to examine the changes in return with changes in selected major input parameters; Perform an analysis to identify areas of major risk and/or opportunity; and Draw conclusions regarding the viability/robustness of the project and give recommendations accordingly.
2.3
CAUTIONARY NOTES
This Study Report has been prepared by Amara in collaboration with SENET, Digby Wells Environmental and SRK and presents the proposed design concept, estimated costs, and development schedule for Amaras Sega Project in Burkina Faso. SENET has assisted in the compilation of the overall documentation to provide consistency of presentation. The content of this study is based exclusively on the following described sources of data (Underlying Information): Written data developed by others and provided by Amara for the PEA; and Oral data, descriptions and instructions provided by Amara personnel regarding the Project to SENET personnel and others in the course of final preparation of this PEA.
All geologic interpretations and resource modelling were prepared by others without the involvement of SENET. SENET did not perform any drilling, sampling, assaying, environmental sampling, nor any other field sampling or testing to prepare this PEA. SENET did not conduct a legal review of ownership, property boundaries, lease agreements or claim notices. The use and/or reliance on the contents of this PEA are at the sole risk of the user. Nothing in this study shall constitute or provide for, and SENET shall not be considered to have rendered, any legal or financial opinion(s) regarding the feasibility of the Project or regarding any other matter. Regarding the appearance of the SENET name and/or logo on any figure or table in the Study that is identified as being prepared by others, such name and/or logo appears solely for the purpose of identifying such figure or table as being part of this PEA.
Richard Quarmby retains overall responsibility for issuing this PEA Report. He is suitably qualified for the task but is an employee of and therefore not independent of Amara Mining plc which is a producing issuer. Notwithstanding this, every effort has been made to ensure that all sections have been undertaken in a most professional manner, both in terms of definition and the concomitant costing thereof. For those chapters where this could not be performed, being of a different discipline, suitably qualified persons or consultants were contracted to provide the necessary engineering or professional input and signoff. The mine plan has taken into account both indicated and inferred mineral resources and under the rules of aforesaid instruments therefore may not be termed as mineral reserves. Nevertheless the resulting mine plan is considered to provide a reasonable input for the generation of a representative financial model in line with the requirements for a PEA. According to NI 43-101 guidelines, this PEA is considered preliminary in nature. Inferred resources are considered too speculative geologically to serve as an economic basis for project mineral reserves. Mineral resources that are not mineral reserves do not have demonstrated economic viability. There is no certainty that these inferred mineral resources will be converted to measured and indicated categories through further drilling, or into mineral reserves, once economic considerations are applied.
2.4 QUALIFICATIONS The following table lists the qualifications of each author as well as the sections of report for which they are responsible.
Table 2.1:
Authors Qualifications
Author Richard Quarmby Pascal Marquis Mark Sturgeon Johan Hayes
Qualification BSc CEng BSc PhD OGQ BSc PrEng MSc PriSciNat
Company Amara Orezone SRK Digby Wells
Report Section(s) of Responsibility All chapters except as set out below Resources related chapters Mining chapter Environmental chapter
2.5 INSPECTIONS OF THE PROPERTY All persons above have visited the property with the exception of Mark Sturgeon of SRK. Most of the information provided to Mark Sturgeon was provided by Mohammed Alhassan, the Amara mine-planning engineer already based at Kalsaka who has visited the Sega site on several occasions. The geotechnical information was gathered by an SRK engineer at the Sega site, who was personally supervised by SRKs John Kwofie, based in Ghana. The geotechnical investigation report is referenced in the Mining chapter performed by Mark Sturgeon of SRK. Digby Wells by virtue of their scope of work have had a considerable portion of their personnel conduct extended site visits to Sega in the fulfilment of their brief. BCM, a mining contractor established at Kalsaka has visited the site and assisted with mining scope including mining rates and haul road capex.
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SENET personnel have undertaken several site visits to garner information necessary for input into this PEA.
2.6 RELIANCE ON OTHER EXPERTS This report was prepared using information published in the NI 43-101 Resource Update Report on Sega by Pascal Marquis in January 2010. That report also includes its own reference to reliance on other experts which is not repeated here. In addition to the above - mentioned qualified and other persons, several others may be identified as providing input directly relevant to this PEA and these are summarised in the table below.
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Table 2.2:
Other Experts
Person or Company John Maartens
Type Consultant
Purpose John Maartens was appointed by Amara to oversee much of the design input required for the PEA. His expertise lies in electrical and mechanical engineering and he has been responsible for much co-ordination with SENET and site for the delivery of suitable quotes of mechanical and electrical equipment from suppliers and their depiction on general arrangement drawings and layouts. Osborn have verified both the incumbent and proposed process designs of the Kalsaka and Sega crushing plant circuits through the use of their proprietary software design packages. Suitable flowsheets were supplied along with the recommendation of sized mechanical items coupled with accurate quotes. Orezone undertook several metallurgical test campaigns on Sega ore both in-house and externally. Mc Lelland Laboratories have supplied metallurgical test reports whose results are described elsewhere in the PEA. These tests were performed subsequent to the issue of the Resource model being used for this PEA, but whose results are considered both relevant and vital for determining suitable operating parameters for the Sega ore. Pascal Marquis, Vice President Exploration of Orezone Gold corporation was the responsible and qualified person cited in the NI 43-101 report published in January 2010 in respect of the Sega Resources Update. It can be said that Amara has indeed conducted its own due diligence exercise prior to the acquisition of the Sega property which included a review of this report. For the purposes of this PEA however, it was deemed pertinent for Amara to accept the resources as defined and not provide any other update despite the fact that a further 10 000 meter exploration drilling campaign was already being conducted at the time of the acquisition and active artisanal mining has taken place on the property since the modelling of the resources in 2010. Amara therefore rely entirely upon this report in respect of the Resource definition.
Osborn Engineering
Manufacturer
Mc Lelland
Laboratory
Pascal Marquis
Orezone
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SECTION 3.
3.1
PROPERTY DESCRIPTION & LOCATION
PROPERTY DESCRIPTION
On 3 February 2012, the Company entered into a binding, conditional sale and purchase agreement with Orezone Gold Corporation ("Orezone") for the acquisition of the licences and associated property comprising Orezone's Sega Project ("Sega") in Burkina Faso (the "Sega Acquisition"). Sega at the time hosted NI 43-101-compliant gold resources comprising 450,366oz Indicated (8.3Mt at 1.69 g/t) and 147,344oz Inferred (2.9Mt at 1.58g/t). On 24 May 2012, the Company announced the successful completion of the Sega Acquisition following approval from the Burkinabe government. As part of the consideration for the Sega Acquisition, the Company issued 11 million new shares of 1p each to Orezone (the Sega Acquisition Shares) and US$15 million in cash. T he Sega Acquisition Shares were admitted to trading on the AIM market of the London Stock Exchange and trading commenced on 28 May 2012. The Sega Acquisition shares rank pari passu with the Company's existing Shares. Any disposal of the Sega Acquisition Shares are subject to orderly marketing arrangements for a period of two years from 24 May 2012 as set out in the sale and purchase agreement. The original Sgunga permit acquired by Orezone in 2002 expired in January 2007, and was replaced by the Tiba Exploration Permit ("Permis de recherche minire") which covers a smaller area than the expired Sgunga permit but includes the Gambo, Bakou, RZ and Tiba deposits. The Sega Project consists of the Tiba and Namasa permits. The Tiba Permit is situated in the Yatenga Province, in the north-central part of Burkina Faso, some 120km to the north-northwest of Ouagadougou (Figure 3.1). The Permit has an irregular shape but is centered around 1,480,500mN and 611,100mE, using UTM coordinates Zone 30N in the WGS84 Ellipsoid. The permit covers an area of 124km and is registered under an "Arrt ministriel" which defines the boundaries by the coordinates of the ten corners formed by E-W and N-S lines (Appendix 3-A, Table 3.1 and Figure 3.2).
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Figure 3.1:
Sega Project Location, Burkina Faso
Table 3.1:
Tiba Permit Coordinates
APEX A B C D E
Easting 604 641 611 164 611 164 615 162 615 162
Northing 1 483 790 1 483 790 1 484 904 1 484 904 1 486 886
APEX F G H I J
Easting 617 629 617 629 612 680 612 680 604 641
Northing 1 486 886 1 476 982 1 476 982 1 474 124 1 474 124
The legal limits of the property can be established by surveying and positioning the mapdesignated limits in the field. The Bakou prospect is located in the south-western sector of the permit and is connected to the RZ deposit to the NW. The Gambo 2 South (G2S) and Gambo 2 North (G2N) prospects are situated to the SW of Bakou. The Tiba 1, Tiba 1E, Tiba 2, Tiba 3 and Tiba 3SE deposits are located in the north-eastern sector of the permit in the area located to the east of the Tiba village.
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Figure 3.2:
Sega Project Tenements
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Figure 3.3:
Location of the Bakou, Gambo, RZ and Tiba Deposits (Tiba Permit)
3.2
TITLE
A copy of the "Arrt ministriel" for the Tiba permit is provided in Appendix 3-A. The original Sgunga Permit was granted to Mutual Resources Ltd./Burkina ("Mutual Burkina") in 1995 and transferred to Repadre in 2000. The same year, Placer Dome took an option on the property but relinquished it in 2001. In 2002, Orezone signed a purchase option agreement with Repadre. The title of the Sgunga Permit was transferred to Orezone in September 2003. In July 2005, Orezone was granted an extension of the permit for 18 months, as an exception, in order to complete exploration work and a pre-feasibility study. Finally, the Sgunga permit expired in January 2007. Orezone applied for a new permit to cover the Gambo, Bakou, RZ and Tiba deposits. The permit is referred to as Tiba under Arrt No. 2012/12/121/MCE/SG/DGMGC and is registered under the name of Cluff Gold Sega SARL. The permit was valid for an initial period of three years and can be renewed for two additional three-year periods. The second renewal expires on 27 March 2013, following which it will have a further renewal of three years. The permit is granted for exploration for gold and related mineral substances. The Tiba Permit is 100% held by Cluff Gold Sega SARL, a wholly-owned subsidiary of Amara Mining plc (formerly Cluff Gold plc). However in accordance with Burkinab law, the Government of Burkina Faso will be issued with a 10% free carried interest when a mining licence (Permis d'exploitation industrielle de grande mine) is granted (Loi No. 031-2003/AN Portant code minier au Burkina Faso).
Annual fees on the permit amount to 2,500 F CFA per km during the first year, increasing to 7,500 F CFA in the fourth year. The holder of an exploration permit (Permis de Recherche) has to commit to carry out a yearly exploration program with minimum expenditures set at 270,000 F CFA per km (1,000 CFA Franc = approximately CA$2.28). Repadre retained a 3% Net Smelter Royalty (NSR) on the Sgunga permit that expired in January 2007. Amara has the option to buy back two thirds of this royalty for USD 2 million. Repadre/IAMGOLD sold this royalty to Battle Mountain who in turn sold the royalty to Royal Gold. The Tiba permit is part of a land package of 313km2 including the contiguous Namasa permit granted to Orezone Inc. in 2006.
3.3
ENVIRONMENTAL CONSIDERATIONS
In addition to a standalone environmental section elsewhere in this report as initiated by Amara, where this discipline is described in greater detail, it was thought pertinent to also include some historical information as reported by Orezone Gold Corporation. Genivar completed an environmental study in 2006 as part of a technical mining and environmental scoping study (Genivar, 2007). A baseline study has been conducted by SOCREGE, an Environmental Consulting firm in Ouagadougou. The final version of the report titled "tude de l'tat initial du projet aurifre de Sgunga" was delivered to Orezone in November 2005. No particular problem with the planned mining activities was raised by the study.
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SECTION 4.
ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, PHYSIOGRAPHY AND INFRASTRUCTURE
4.1
ACCESSIBILITY
The Tiba property is located in the north central part of Burkina Faso, West Africa, about 120km N-NW of Ouagadougou. The Sega Project area is readily accessible from Ouagadougou by paved National Highway N22 toward the north to Kongoussi (110km) and then via a well maintained lateritic gravel road (N15) 55km toward the northwest, to the village of Sgunga. The project is also accessible during the dry season by local roads through Kalsaka off Highway N2 at Yako. Access to the different prospects on the property is provided by local trails or roads constructed for the purpose of exploration activities.
4.2
CLIMATE
The climate of the Sgunga region is tropical of Sudano-Sahelian type. A dry season extending from November to February alternates with a rainy season for the rest of the year, with maximum precipitations occurring during the month of August. Annual rainfalls recorded at Sgunga for the last 30 years averaged 675mm and ranged from 400mm to 1,100mm. The prevailing winds are from the S to SW during the rainy season (monsoon winds), reach speeds of 13m/s to 15 m/s, and blow from the N or NE (harmattan) during the dry season, with average velocities of 2m/s to 4m/s, seldom exceeding 10m/s. The harmattan winds carry fine air-suspended particles that can exceed the World Health Organization (WHO) norm of 500 micro grams of dust per cubic meter of air during the months of NovemberFebruary. Temperatures vary between 15C and 42C, reach peaks in April and in October, and drop to their minimum in January and August. Evaporation was in the range of 366cm per year over the last ten years, which corresponds to 3 times to 9 times the annual precipitations.
4.3
LOCAL RESOURCES AND INFRASTRUCTURE
The local populations depend on subsistence farming and cattle herding for their livelihood. The farmers tend fields with low levels of soil fertility, degraded by erosion and overgrazing. Gold mining is used to compensate for poor crops. Artisanal mine workings are scattered over the Sega Project area. Sacred grounds represented by hills, thickets, and streams or burying grounds are present on the property. Some 80 sacred places have been counted in the project area studied by SOCREGE (SOCREGE, August 2005). One such major site is the Sacred Mountain located to the South of the RZ prospect. Land is largely managed by traditional chiefs, although it is regulated by the Law on Agrarian and Land Reform ("Loi sur la rforme agraire et foncire") enacted in 1984. Diesel generated electrical power is available in Ouahigouya. The region is not connected to the national railway system.
A medical center with one physician and an operating theater at Sgunega and a dispensary at Gambo with a nurse are the main providers of medical care to the population of the Tiba, Bakou, Guibou, Gambo and Kybelga villages.
4.4
PHYSIOGRAPHY AND VEGETATION
The village of Sgunga is at an elevation of 307m above sea level. The topography on the property consists of hills formed by outcrops and sub-crops and by lateritic cuirasse dominating by 80m the gently west sloping plateau the average elevation of which is about 300m above sea level. Outcropping conditions are fair. The Tiba Permit is drained by the Goubr River (70% of the permit area, in the northern sector), the Gutti (Bakou area) and the Gambo (southern sector), all part of the catchment area of the Nakamb River to the west. Water is collected by four dams, at Bakou, Sgunga and Tiba. Vegetation consists of savannah shrubs and sparse trees, with a gradual increase in density toward the low grounds, and abundant shrubs along the rivers. Inexistent or stunted vegetation prevails at the top of some hills due to the erosion process and the presence of lateritic cuirasse. 15 out of the 65 woody plant species encountered on the property are included in some environmental protection plan (SOCREGE, August 2005). Fauna within the permit area has all but disappeared, owing to the pressure from human presence, activities and hunting. Hares, porcupines, pythons, crocodiles, hyenas, bats and long-tail monkeys (patas) have been observed. Bird diversity is relatively poor.
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SECTION 5.
5.1 INTRODUCTION
EXPLORATION HISTORY
This section summarizes the work that was completed on the Sgunega permit between 1995 and 2006, and used for the Met-Chem October 2007 mineral resource estimate on the property (Buro and Saucier, October 2007) and later re-qualified for Orezone Gold Corporation by Met-Chem ((Buro and Saucier, February 2009).
5.2
EXPLORATION ACTIVITIES
The Sgunga Exploration Permit was granted to Mutual Burkina (Mutual) by the Ministry of Energy and Mines in July 1995. Golden Knight Resources Inc. ("Golden Knight") purchased all the shares from Mutual in October 1995 and merged with Repadre in 1999. The permit was transferred to Repadre in July 2000. In September of the same year, Placer Dome Inc. took an option but relinquished the property in 2001. In 2001, Orezone signed a purchase option agreement with IAMGOLD/Repadre. The property was transferred to Orezone on September 24, 2003. The original 400km2 permit had been reduced to 164km2 with the last renewal on June 28, 2002, as required by the mining laws. Repadre merged into IAMGOLD in 2003. In July 2005, Orezone was granted an extension of the permit. The Sgunga permit expired on January 4, 2007. On January 5, 2007, Orezone applied for a new permit to cover the Gambo, Bakou, RZ and Tiba deposits. The permit covers an area of 124km and is referred to as Tiba. On February 25, 2009, Iamgold Corporation acquired Orezone Resources Inc. and spun off several of Orezones exploration properties including the Sega Project to the newly formed Orezone Gold Corporation, of which Iamgold hold a 17% interest. Historical soil surveys by the United Nations delineated a broad zone of anomalous gold that followed the regional structural trends on the Sega Project area. Artisanal mining activities (orpaillage) started in 1985 and spread all over the permit area. However, the property remained largely unexplored by modern techniques until Mutual carried out ground and airborne geophysical surveys and RC drilling in 1996-1998. Initially, the exploration work focused on the areas of artisanal mine workings but was eventually successful in identifying gold resources at Gambo, Bakou, RZ, Tiba and gold mineralisation in a number of other zones on the project. A combination of field mapping, geophysical and geochemical surveying, trenching and drilling has been used by Orezone and the previous operators to define the geology and structure, in addition to mineralisation and its controlling factors. The results from RC and core drilling have been used for the resource estimate. Consequently, the data from RAB drilling and surface trenching need not be considered for the purposes of this report. Since their involvement in the project, Orezone have discovered the RZ, RZE, Tiba 1E, Tiba 2 and Tiba 3SE zones. The mineral resources within the Gambo, Bakou, RZ and Tiba deposits have been successfully expanded and largely brought to the Indicated category.
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A summary on the main exploration activities completed on the Sgunega permit is provided in Table 5.1.
Table 5.1:
COMPANY Mutual Burkina
Main Exploration Activities Completed on the Sgunega Permit

YEAR 1996 EXPLORATION ACTIVITIES Reconnaissance exploration; Soil samples (7,115) at 40 by 100m grid spacing, locally 200 by 50 m; Au and Cu analyses; Prospecting over outcrops and "orpaillage" sites: 250 samples of quartz and host rock assayed for Au; Trenching: o Tiba: 3,844m in 29 trenches; o Bakou- Gambo: 4,133m in 30 trenches; o Kyebelga : 2,371m in 17 trenches; RC drilling, with Au assays on 1m samples: o Gambo 2 : 1,037m in 12 holes; o Tiba 1: 310m in 4 holes; o Tiba 3: 525m in 6 holes; o Kyebelga : 617m in 10 holes; Detailed mapping; Structural study incorporating geophysical data; Ground geophysical survey: o Gambo: IP (38.05km), ground MAG and VLF (28.15km); o Tiba: IP (8.8km); Airborne MAG and radiometric survey (2,248.8km); RC drilling: o Gambo 2: 30 holes totalling 2,852 m; o Tiba 1: 265m in 3 holes; o Bakou: 750m in 9 holes; Drill hole deviational survey (Gambo II, Tiba and Bakou); Interpretation Aerial photographs (1:50 000); Airborne geophysical surveys; Geological mapping (1: 5 000 scale, over 15km2 at Tiba; Stream sediment sampling (139 samples, 1 by 1km); Follow-up soil sampling (400 by 50 m, 821 samples) at Napalgue area; IP survey at Tiba (14.2km), Bakou and Gambo 2 (5.7km); 3-km IP traverse across Bakou; 3-km IP traverse across Kamense; Rotary Air Blast (RAB) drilling: o Tiba: 4,555m in 190 holes; o Bakou: 4,952m in 240 holes; o Gambo: 3,143m in 141 holes; o Kamense : 566m in 24 holes; o RZ: 800m in 34 holes Detailed mapping at Bakou Tiba 3: trenching (200m trench as RAB follow-up) Tiba: ground MAG (22.5km) RC drilling: o Bakou: 34 holes totalling 2,688 m o Tiba 1: 202m in 2 holes Compilation of all previous exploration data, construction of a MapInfo database Detailed geological mapping (Bakou, Gambo 2) Discovery of the RZ showing RC drilling (Bakou, Gambo 2, Tiba 3, RZ): 12,546m in 128 holes
1996-97
1997-98
Repadre Dome Inc.
Placer
2000-01
Orezone Resources Inc.
2002-03
Orezone Resources Inc.
2003-04
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COMPANY
YEAR 2004-05
EXPLORATION ACTIVITIES Compilation, petrographic studies, multi-element analyses Mapping at RZ-Bakou ,Gambo 2 and Tiba Structural interpretation Mapping and sampling of newly-discovered orpaillage zones; IP survey at RZ (17km gradient, 4km pole-pole) Infill drilling: Prospect RC holes RC m Core holes Core m Bakou Gambo 2 RZ Tiba 1 Tiba 3 Kyebelga 93 65 172 24 33 4 9,641 5,509 18,973 2,346 3,005 306 2 4 5 2 450 395 1,186 133
Metallurgical tests (RC composite samples from Bakou, Gambo 2 and RZ) at Queens University, Kingston, Canada Start of scoping and baseline and environmental impact studies
2005-06
Mapping at RZ-Bakou ,Gambo 2,Tiba, Guibou, Gambo SW and Sampelga Structural study Lag sampling survey (1,604 samples) over a 32 sq.km centred on the Guibou prospect Ground geophysical survey: o Bakou-RZ-Gambo: IP (27km), ground MAG (20.25km) o Tiba: IP (52.5km) o Guibou: IP (31.5km) o Gambo SW: IP (21.0km) o Kyebelga: IP (41.5km) and ground MAG (85.8km) o Sampelgua: IP (52km) RC drilling : 31,398m in 433 holes on 19 prospects Core drilling: 5,553m in 37 holes on the RZ, Gambo2, Bakou, Tiba 1E and Tiba 3SE deposits, including 9 metallurgical PQ holes for 700m Petrographic study on 14 samples from Gambo 2, Bakou and RZ deposits Implementation on the permit of four trigonometric beacons tied up on the national grid and Total Station survey of all preserved drill collars Photogrammetric survey over a 132 sq.km area, based on high-resolution digital photographs Heap leach column test work on eight samples from RZ and Bakou deposits Mineral resource estimate by Met-Chem from Montreal, Canada
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SECTION 6.
6.1
GEOLOGICAL SETTING
REGIONAL GEOLOGY
Burkina Faso covers two geological terranes: the Proterozoic Baoul-Mossi Domain, which corresponds to the eastern portion of the West African craton, and the sedimentary cover of lower Precambrian to recent age. The Baoul-Mossi Eburnean orogenic domain contains Birimian (Lower Proterozoic) volcano-sedimentary units arranged in elongated belts, and relics of the Archean basement that outcrops in the south-western portion of the craton (Man Rise). The belts generally trend N-NE but curve into a NW direction to the north of Ouagadougou. They are bound by older granite gneiss terrains and have been intruded by syn- to late tectonic granite bodies. The Birimian Supergroup has been divided into a Lower sequence comprised of wackes, argillites and volcaniclastic rocks, and an Upper sequence of basalts with interflow sedimentary rocks. The Lower Proterozoic sequences are unconformably overlain by postEburnean sedimentary dry units of marine and continental origins. The Birimian formations have been affected by three tectono-metamorphic phases and have reached the greenschist facies of metamorphism. The Sega Project lies within the Boromo-Goren volcano-sedimentary belt, close to the inflection of the belt near the junction of the NNE trending Boromo belt to the south and the ESE trending Goren belt to the north (Figure 3.1).
6.2
PROPERTY GEOLOGY
Mapping by Orezone and the airborne magnetic data suggest the property lies within a regional asymmetric S fold defined by the volcanic and sedimentary sequences. This package wraps around the NW contact of a crescent shaped biotite granite intrusive. (Figure 3.2). The Sega Project area can be divided into two domains, based on aeromagnetic data, along a 055 trending discontinuity passing through the Sgunga village. The domain to the west has an N-S grain, whereas the eastern domain exhibits a varied 060 striking texture and has a sub-vertical dip. Most significant occurrences at Sega are concentrated in a 4km to 8km wide corridor trending 055. The structures controlling the gold mineralisation are often second-order shears that differ from the first-order structures that parallel the corridor. Gold mineralisation in the Sega region is Late Eburnean in age and occurs principally as shear-controlled quartz lodes. The mineralised shears are preferentially focused on heterogeneities favored by sedimentary volcanic rock contacts. A spatial, and probable genetic, link of mineralisation to minor felsic intrusions is apparent. Veins vary from single or parallel shear veins to complex anastomosing arrays including splays. The granite body to the south of the property postdates the volcano-sedimentary formations as well as the regional deformation episode, as evidenced by the superimposed hornfels aureole. Andalusite-sillimanite assemblages characterise the metamorphic halo at Gambo and biotite is commonly found in the sedimentary units at RZ.
The post-Eburnean sedimentary units have not been recognised on the Sega property. The Bakou mineralised structure is associated with N-S trending sedimentary sequences intruded by quartz-feldspar porphyry dykes and bracketed by an assemblage of mafic volcanic rocks and gabbro intrusives. The RZ mineralisation is associated with an E-W shear zone along a metasedimentary-metavolcanic contact and is connected in a large-scale fold with Bakou. Mineralisation of the two Gambo deposits is associated with a NE-dipping shear along the contact of hangingwall metabasalts with footwall metasedimentary rocks. Gold mineralisation at Tiba 3 is associated with shear zones in a sediment dominated domain, whereas the other Tiba deposits are related to sheared contact zones between metavolcanic and meta-sedimentary rocks. The rocks in the permit area have undergone surface weathering that has formed a lateritic profile typical of humid tropical climate conditions. Drilling by Orezone and previous operators has shown that the depth of weathering reaches averages of 60m to 70m at Bakou and Tiba, 40-90m at RZ and 30m to 40m at Gambo. The geological knowledge of the property is restricted due to the lack of outcrops and locally deep lateritic weathering profile.
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Figure 6.1:
Geology of the Sega Property
6.3
PETROGRAPHY AND PETROCHEMISTRY
The Birimian lithostratigraphy within the Sega Project area is dominated by clastic metasediments with subordinate occurrence of massive and pillowed mafic metavolcanites. This lithological assemblage is characterised by a heterogeneous deformation, with the ductile deformation preferentially concentrated in the metapelitic units and brittle-ductile deformation, quartz and quartz-carbonate veins, metasomatism and syn-tectonic dykes focused along the contact between rheologically contrasted rock types. This lithological assemblage displays a regional metamorphic grade typical of the greenschist facies with mineralogical assemblages representative of the epidote zone in the mafic metavolcanites and of the biotite zone in the metasedimentary units. In the northeastern portion of the project area, the Saspelga hornblende monzogranite is intruding the volcano-sedimentary sequence. The Saspelga monzogranite is not metamorphosed and lacks a contact metamorphism halo, suggesting that it was emplaced shortly after the thermal peak of the regional metamorphism. In the southern portion of the project area, the Bakou biotite monzogranite is intruding the volcano-sedimentary sequence, which is overprinted by a well-developed contact metamorphism halo characterised by the presence of cordierite, chiastolite, garnet and staurolite porphyroblasts. This halo suggests a later emplacement when the volcano-sedimentary sequence was relatively cool compared to the thermal peak regional metamorphism conditions.
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6.3.1
Metasediments
6.3.1.1 Metapelites This lithology occurs as intercalations with meta-sandstone beds of centimetric to plurimetric thickness and can contain carbonaceous matter and graphite. It is typically schistose and frequently crenulated, with the foliation defined by phyllosilicates such as muscovite, sericite and biotite as well as by the graphite and chlorite. Other major minerals include quartz, chlorite, epidote, and calcite.
6.3.1.2 Meta-greywacke This lithology occurs as intercalations with metapelite beds of centimetric to pluri-metric thickness. This unit is characterised by quartz and feldspar porphyroclasts and lithic clasts with pressure shadows and a mylonitic foliation in the zones that have been drilled. The plagioclase is typically saussuritized and the groundmass between the clasts is typically made of the assemblage muscovite-biotite-sericite-graphite-quartz.
6.3.1.3 Cherts Thin, often boudinaged, centimetric to decimetric beds of chert represent less than 1% of the metasedimentary sequence. They are made of cryptocrystalline quartz and hematite that are occurring as crude laminations.
6.3.2
Metavolcanites
6.3.2.1 Metabasalts They occur as massive and pillowed units that appear to be folded and dislocated within the metasedimentary sequence and closely associated with metagabbro and metadiorite intrusives that are probably cogenetic. They are characterised by a microlitic texture with elongated quartz-carbonate-filled vacuoles or by feldspar phenocrysts within a groundmass of plagioclase microlites partly recrystallized to a chlorite-carbonate-zoisite-clinozoisitequartz metamorphic assemblage and by zoisite-clinozoisite-titanomagnetite assemblage pseudomorphs of mafic precursors, possibly hornblende or pyroxenes.
6.3.2.2 Felsic pyroclastics One occurrence of a thin tuff bed made of blue quartz crystals and metapelitic clasts has been observed in the Tiba east area, within the metasedimentary sequence. The tuff is made of fractured sub-idiomorphic or corroded quartz phenocrysts, together with plagioclase and orthose phenocrysts and quartz-plagioclase aggregates within a chlorite-muscovitecarbonate groundmass characterised by a tuffaceous texture.
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6.3.2.3 Metarhyolite One occurrence of massive metarhyolite intercalated between metabasalts and metasediments was recorded in the Gambo area. This lithology is aphanitic with bipyramidal or corroded quartz phenocrysts, together with sanidine and plagioclase phenocrysts and quartz-plagioclase aggregates within a glassy groundmass partly recrystrallized to a muscovite-micro-quartz assemblage.
6.3.3
Intrusives
6.3.3.1 Synvolcanic mafic intrusives They occur within the metabasalts as elongated bodies of fine-grained foliated metadiorite and metagabbro that are made of plagioclase, amphibole and biotite partly replaced by an assemblage of chlorite, titanomagnetite and epidote, with minor amounts of quartz and orthose. In the Gambo and RZ area, the metagabbros and metabasalts are cut by discontinuous dykes of pyroxenite characterised by a porphyritic texture where serpentine-magnetitechlorite assemblage pseudomorphs have replaced the primary pyroxene and the interstitial plagioclase has been replaced by carbonates.
6.3.3.2 Syn-tectonic intermediate to felsic porphyries They occur within the Bakou and Gambo shear zones, are para-conformable to the main mylonitic foliation, in places overprinted by that foliation, and have been metamorphosed. They display a monzodiorite to quart monzodiorite composition and a porphyritic texture with relics of primary plagioclase phenocrysts in a groundmass of orthose, interstitial quartz, biotite and amphibole partly recrystallized to a new assemblage of quartz-chlorite-sericitealbite-calcite-epidote. In the Kyebelga area, microgranodioritic dykes are present within a NS shear zone. They are characterised by a microporphyritic texture with sub-idiomorphic quartz, orthose, microcline and plagioclase set in a groundmass of quartz-biotite-muscovite. In the southeastern portion of the property, those dykes are crosscutting the syn-tectonic intermediate to felsic porphyries.
6.3.3.3 Late-tectonic porphyritic gabbros and dolerites Late porphyritic gabbros are cross-cutting the syn-volcanic gabbros in the Gambo area. They are made of idiomorphic hornblende phenocrysts, pyroxene crystal replaced by antogorite and saussuritized plagioclase. The dolerites occur in the Bakou area as thin, often sub-metric sub-vertical dykes parallel to the NS Bakou shear zone. They are characterised by brecciated margins and made of plagioclase, olivine and pyroxene.
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6.3.3.4 Late plutons In the northeastern portion of the area, a hornblende-arfvedsonite porphyritic monzogranite forms a large intrusion that we will refer to as the Saspelga monzogranite. This intrusive is medium-grained with gabbro xenoliths. It is composed of sub-idiomorphic quartz associated with orthose, microcline and zoned or myrmekitic plagioclase, together with biotite, green hornblence, arfvedsonite, zircon, apatite and sphene. In the south-central portion of the property a biotite monzogranite is present, which we will refer to as the Bakou monzogranite. The Bakou monzogranite is made of quartz, twinned plagioclase, microcline and zoned orthose together with minor amounts of biotite, muscovite, zircon and apatite.
6.3.4
Metasomatism and Mineralisation
The gold deposits are preferentially located in brittle-ductile strain zone best developed at the contact between rheologically contracted lithologies. Those zones are characterised by the presence of several generations of dykes and of quartz and quartz-carbonate veins and stockwork and by a retrogressive metasomatism that is overprinting both the regional and contact metamorphism mineral assemblages. Within the Bakou monzogranite contact metamorphism halo, the chiastolite and the staurolite are retrogressed to a phyllosilicate assemblage within the brittle-ductile shear zones that are host to the gold mineralisation. The metasediments and mafic metavolcanites are characterised by ankerite-calcite alteration. The metagabbros and metadiorites alteration is characterised by a sericite-calciteankerite-quartz assemblage and by quartz-albite veinlets. The syn-tectonic porphyritic dykes alteration is characterised by a quartz-albite-calcite-damourite-biotite assemblage. The quartz and quartz-carbonate veins and stockwerk are accompanied by a sericitepyrrhotite-pyrite-chalcopyrite-arsenopyrite alteration halo.
6.3.5
Petrochemistry
Two different magmatic suites have been recognised within the project area using the Jensen (1976) cationic discrimination plot, i.e.: A tholeiitic suite that includes the mafic metavolcanites, the rhyolitic tuff, the synvolcanic mafic intrusives (metagabbro and metadiorite) and the late tectonic doleritic gabbros. Except for the rhyolitic tuff, this tholeiitic suite is characterised by rather flat chondrite-normalized rare-earth elements (RRE) patterns, i.e. a low La/Yb ratio. This suite shows a volcanic arc affinity using the Mullen (1983) discrimination plot. A calc-alkalic suite that includes the metarhyolite and the syn-tectonic porphyritic dykes. This calc-alkalik suite is characterised by high La/Yb ratios and sloped chondrite-normalized rare-earth elements (RRE) patterns.
6.4
STRUCTURAL GEOLOGY
Most mineralised fault systems were active in response to sub-horizontal, WNW-ESE shortening. Strike-slip displacement dominates over dip-slip displacement, except in
moderately dipping structures, and most high-grade shoots plunge steeply within steeplydipping planes. Gold mineralisation at Sega is interpreted to postdate D1 folding and penetrative fabric development as well as a contact metamorphism event (between D1 and D2). This event is responsible for the formation of hornfels in the SE sector of the property that affects the host rocks to the Gambo South and Bakou South zones. Mineralised zones are overprinted by D3 folding and crenulation. In most cases on the permit, competency contrast at contacts between volcanic and sedimentary rocks seems to have played an important role in focusing strain and developing auriferous veins. Three major deformation episodes of the Paleo-proterozoic Eburnean Orogeny (D1, D2 and D3), as well as intrusion of mafic to felsic stocks, sills and dykes, with associated contact metamorphism, have been recognise d in the Birimian rocks on the Sgunga permit: D1: NW-SE compression, creating upright, shallowly-plunging, NE-trending folds; massive, white quartz veins occur in bedding-parallel thrusts and NW faults that cut lithological contacts. WNW-ESE-directed compression event generating moderately to steeply ENE plunging folds with steep axial planar foliation. Vitreous grey quartz veins developed during early D2. Early faults, such as Gambo, appear to have been reactivated during this event. The intensity of the deformation varies greatly; interpretation of kinematic indicators on the Sega property suggest D3 has only caused local kinking, but this event is believed to be responsible for the regional re-organisation of the belt hosting the Sega deposits.
D2:
D3:
A single progressive deformation event during the Birimian has been proposed by some, instead of three distinct orogenic events.
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SECTION 7.
7.1 INTRODUCTION
DEPOSIT TYPES
The West African Lower Proterozoic greenstone belts have produced world-class gold deposits, such as the Obuasi mines of Ashanti Goldfields Corp. in Ghana that have been in continuous production since 1897. The primary gold deposits occur in the sedimentary and volcano-sedimentary formations that have undergone multi-phase deformation.
7.2
DEPOSIT TYPES
The gold deposits in West Africa have been classified into the following types: Structurally-controlled, epigenetic lode or stockwork mineralisation related to major shear zones with native gold and polymetallic sulphides (Poura, Burkina Faso; Kalana and Mali); Structurally-controlled, epigenetic lode or stockwork mineralisation related to major shear zones and characterised by the inclusion of gold in the crystals structure of the sulphides, often locked in arsenopyrite (Ashanti type: Obuasi, Ghana); Syngenetic, stratabound deposits hosted in tourmalinized turbidites (Loulo, Mali); Disseminated sulphides hosted in volcanic or plutonic rocks (Syama, Mali; Yaour, Ivory Coast; granitoid-hosted Ayanfuri, Ghana); and Paleo-placer deposits; auriferous quartz-pebble conglomerates (Tarkwa, Ghana); modern placers (eluvial, alluvial).
A direct spatial association has been observed between major shear zones and the Bakou, Gambo, RZ and Tiba deposits. The classic shear-hosted quartz, sericite schist gold mineralisation model (Type 1) appears to apply at Sega.
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SECTION 8.
8.1 INTRODUCTION
MINERALISATION
The Sgunga Permit is host to numerous gold occurrences, many of which have been worked by artisan miners. The gold mineralisation is hosted in shear zones and is closely associated with syntectonic quartz veins. The auriferous veins occupy openings within the shears and in the adjacent altered rocks. Gold mineralisation is associated with dominantly strike-slip shear zones that developed in response to sub-horizontal WNW-ESE compression. The composite shear zone array includes reactivated, pre-existing structures (probably Gambo) as well as newly-formed shear zones (RZ). Non-vertical structures such as Gambo underwent oblique thrusting instead of strike-slip shearing.
8.2
BAKOU-RZ DEPOSITS
The Bakou deposit consists of vein and stockwork quartz-carbonate-sulphide mineralisation occurring within an array of sub-parallel N-S structures within a steeply west-dipping to subvertical, dominantly sinistral shear zone with a normal component of movement ( D, Kerr, 2005). The mineralisation is spatially associated with pre-mineral and late mineral feldsparquartz porphyry dykes. The mineralisation is accompanied by strong sericite-carbonate-quartz-chlorite-biotite alteration and the sulphides are represented by disseminated pyrite, arsenopyrite, pyrrhotite and chalcopyrite. The mineralised structures have been traced over some 2km and have been defined by drilling locally as deep as 250m below surface. The main mineralised zone is about 20 to 40m wide, while the splays and parallel zones are a few tens of cm to 5m wide. The proportion of quartz material is much lower than for the other gold deposits on the property, and the gold mineralisation appears to be related to the disseminated sulfides within the shear zone to a significant extent. Although all pre-mineral lithologies can be sheared and mineralised, including the metabasalts, the metasediments and the porphyritic dykes, the mineralisation is best developed in the meta-sandstone beds. The shear zone is up to 150m to 200m wide and cuts through a package of clastic sedimentary and volcano-sedimentary rocks that is bounded west and east by mafic metavolcanic rocks and gabbro intrusives. Toward the north, the main mineralised structure splits into several N-S and N-NW horsetail splays compatible with a sinistral shear. However, one continuous mineralised structure extends into RZ and connects the two in a large-scale fold. Most of the known gold resource at RZ is associated with subparallel, sulphide-bearing quartz veins within an E-W, steeply N-dipping (70 to 80), dextral shear zone that juxtaposes clastic metasedimentary rocks to the north with pillowed metabasalts and metagabbros to the south. The quartz veins are preferentially hosted in metasandstones but also in strongly sheared metabasalts and metagabbros. The veins are composed of quartz with trace pyrite and arsenopyrite and visible gold. They are about 5m to 10m wide and they have been defined by drilling to a maximum depth of about 250m. Gray quartz veins and pyrite-chalcopyrite disseminations occur in the wall rock.
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The zone extends into RZ East which constitutes via a large-scale fold the junction with the N-S trending Bakou mineralisation. RZ West lies on the west side of a major NNW-striking fault exhibiting a sinistral apparent sense of displacement. Gold mineralisation also occurs in a set of narrow subparallel N-S trending, sub-vertical quartz-carbonate veins zones hosted by mafic volcanic rocks south of RZ main zone within a broadly flat dipping envelope that is progressively dipping more steeply in the vicinity of the shear contact zone that is hosting the bulk of the RZ mineralisation.
8.3
GAMBO DEPOSITS
The Gambo gold mineralisation is hosted in two distinct bodies made of vein arrays controlled by a NE-dipping, oblique (sinistral-reverse) shear zone. The bulk of the resource is contained in the Gambo South deposit, in C-parallel quartz veins with pyrite, pyrrhotite, arsenopyrite and trace chalcopyrite and within an envelope of hydrothermal alteration and quartz veining containing up to 2% sulphides. The mineralisation is associated with a shear zone developed within metasedimentary rocks, which consist of predominant graphitic argillite and minor deformed meta-sandstone beds that are the main mineralised unit together with a smokey grey quartz vein. Pre- and syn-mineral porphyritic monzodioritic dykes are also closely associated with the mineralisation. The shear zones straddle the contact with the metabasalts on the structural hangingwall and with a syn-volcanic porphyritic gabbro on the structural footwall of the metasedimentary sequence. Late-stage quartz extension veinlets marginally contribute to the resource at Gambo. Sub-vertical narrow massive gabbro dykes oriented NNE are crosscutting all other lithologies as well as the mineralised shear zone in the central portion of the Gambo South deposit. The zones dip 45 to 50 in the south sector and steepen up to 65 to 70 in the north. The dip change is accompanied by a strike change from NW in the south to N-NW in the north. The width of the main deposit, Gambo 2 South, varies from 5m to 10m at the extremities to about 30m in the core. The mineralised structure has been defined by drilling over about 500m along strike and to a maximum depth of about 150m below surface. The Gambo 2 North deposit is a single, 65 to 70 NE-dipping body with average widths ranging from 3m to 10m. The trend of the zone changes from NW on the south to N-NW at the NW end. The mineralised structure has been defined by drilling over some 600m of strike length and to a maximum depth of about 140m below surface. The geology is similar to that of the Gambo South deposit, which is located along strike some 600m to the southeast.
8.4
TIBA DEPOSITS
The Tiba prospects are located in the northern part of the property, where the metabasalts and associated syn-volcanic metagabbros form an irregular mafic lithostratigraphic domain that is probably affected by an interference folding pattern. Resources were delineated in the Tiba 1 and Tiba 1E area that are located along the same structure, which is sub-vertical to steeply south-dipping. The Tiba 2, Tiba 3 and Tiba 3SE deposits are located along the southern contact of the mafic lithostratigraphic domain where the stratigraphic sequence is interpreted to be overturned and dipping steeply to the north.
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8.4.1
Tiba 1 Deposit
The Tiba 1 zone has been defined over a strike length of about 350m and consists of narrow, ENE-trending, steeply north-dipping structures within a sinistral shear zone. The gold is associated with parallel sulphide-bearing milky quartz vein hosted by sheared and metasomatized metasediments, i.e. 30m to 40m thick meta-sandstone (locally conglomeratic) units interbedded with meta-argillite (locally graphitic) units more than 45m in thickness, in the vicinity of the contact zone between the metasediments to the south and a metagabbro unit to the north. The contact between the metagabbro, the meta-sandstone and the meta-argillite units are all oriented EW and dipping about 70 to 75 to the south. The quartz veins and the mineralised envelope are oriented ENE and dipping about 80 to the north. Even pervasively altered wall rock assays carry only 100's of ppb Au.
8.4.2
Tiba 1E Deposit
The Tiba 1E lies about 1km to the east of Tiba 1. It has been delineated over a strike length of about 700m. The western portion is predominantly hosted in metasediments, with an EW subvertical orientation, and is closely associated with several narrow syn-tectonic microporphyritic to aphanitic dykes that are parallel to the mineralised envelope. The eastern portion is hosted in an array of subvertical milky quartz veins associated with NE, ENE and ESE sinistral shear zones within a thin metasedimentary unit oriented ESE and bracketed by mafic pillowed metavolcanite and metagabbro units. The mineralisation is essentially related to disseminated sulfides east of section 3750E. Late sub-vertical NNE faults are dissecting the mineralised zones.
8.4.3
Tiba 3SE Deposit
The Tiba 3SE prospect is located about about 800m to the ESE of Tiba 1E. The E-W trending, steeply N-dipping mineralisation has been traced over a strike length of about 300 m. The mineralisation is contained in a shear zone cutting through sedimentary units, near a contact with metagabbros to the north. The meta-sedimentary rocks have been intruded by at least two generations of narrow porphyritic monzodioritic dykes. The metasedimentary sequence is dominated by meta-argillite unit that are 15m to 20m thick, with the dykes and the mineralisation located in the vicinity of the northern contact of a meta-sandstone unit that is about 10m to 15m thick. Further to the south, about 35m from the mineralised zone is a felsic tuff unit that is also about 10m to 15m thick. All lithological contacts, including the dykes, as well as the mineralised envelopes are dipping about 70 to the north.
8.4.4
Tiba 3 Deposit
The Tiba 3 prospect is located about 800m to the ESE of Tiba 1 and 400m to the SW of Tiba 1E. The mineralisation is hosted by three subparallel, highly deformed quartz veins dipping 45 to 55 N, in sheared metasedimentary rocks, chloritic and sericitic schist, and weakly foliated hornblende diorite. The Tiba 3 mineralisation is characterised by low gold grades (< 1g/t).
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8.4.5
Tiba 2 Deposit
The Tiba 2 prospect was discovered during the 2007 exploration drilling program. It is located in a similar geological setting to that of T3SE, about 1,000m SW of Tiba 1 and 2,600m WSW of T3SE. The mineralisation is hosted by a milky quartz vein oriented EW and dipping steeply to the north, in the vicinity of a felsic dyke and within a shear zone that is developed within metasediments along the contact with a metagabbro unit located to the north, on the structural hangingwall of the mineralised zone. The zone has been intersected on three sections over 250m and is open to the west.
8.5
OTHER PROSPECTS
Beside the Bakou, RZ, Gambo, and Tiba deposits that have been the focus of most of the exploration work so far, significant mineralisation has also been documented in other sectors of the property (see Figure 6.1), namely at: Bakou South, located 1.3km along the southern extension of the N-S Bakou Shear Zone and 0.4km east of Gambo South. The prospect, previously referred to as "Gambo 1", has been interpreted as a steeply E-dipping, sinistral-reverse shear zone with narrow quartz veins; Guibou, a prospect located about 3km along strike to the WSW of Tiba-1. It consists of a metasedimentary-hosted, E- to ENE-trending quartz vein array. The principal quartz vein is rarely more than 0.5m wide, and is characterised by minor pyrite along its margins and wall rock alteration; Kybelga is located in the south-central sector of the permit. The mineralisation is associated with shear-hosted quartz veins in paraschist and sheared granite. At least six NNE- to NE-striking veins, most of them with north-westerly dip of 70 - 90, have been outlined. The veins are hosted in sedimentary units located immediately to the north of the biotite granite that borders the south part of the permit; Kybelga North hosts gold mineralisation associated with NW, N-S and NNE-striking quartz veins in narrow shear zones within basaltic lavas and mafic intrusive rocks. First-order milky quartz veins rarely exceed 2m in true width and have limited sericite-pyrite-carbonate-quartz alteration selvages. There is a spatial association with sericitized felsic porphyry dykes; The Kybelga NW prospect is located 2km to the east of the Bakou prospect and at about 1.2km to the N-NW of the Kybelga showing. The mineralisation is associated with variously oriented quartz veins, with predominant systems along N-NE and NW, hosted by a N-S shear zone cutting through mafic meta-volcanic rocks, focused along the east margin of a felsic intrusive. Low grade mineralisation over widths on the order of 10m were defined by Orezone; The Kamense showing is located in the central portion of the permit, between the Bakou and Tiba prospects and to the north of the Kybelga and Kybelga NW showings. A line of RAB holes completed by Placer Dome intersected a 20m wide gold anomalous zone; The RZ South prospect is located some 250m due south of the western end of RZ-1 Central. It is interpreted to include 4 or 5, subvertical and narrow, NNW-trending shear zones hosted by chloritized and carbonatized mafic intrusives and basalts. This mineralisation is characterised by cm-scale to dm-scale quartz veins (with
November 2012
accessory sulphides and tourmaline) accompanied by second-order extension quartz veinlets. This zone may be the major NNW cross-fault that separates RZ from RZ West; At least three mineralised quartz veins have been recognise d in a NNE-striking vein array on the southeast flank of the "Montagne Sacre". Orezone's initial drilling plan was prevented on religious grounds but for a single drill hole collared 50m SSW of its planned position. Gambo SW located to the W of Gambo N consists in a narrow mineralised zone associated with a felsic dyke; Sampelga, 2.5km to the NE of Tiba 1E, is a NE trending mineralised zone associated with sheared metasedimentary rocks near a contact with metavolcanic rocks; and Other targets that have been mapped and sampled by Orezone, such as Gambo MS to the NE of Gambo N or a NNW-striking quartz vein about 400m SW of Bakou exploited by orpailleurs.
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SECTION 9.
TIBA PERMIT 2007 2009 EXPLORATION PROGRAMS
9.1
INTRODUCTION
Orezone continued the definition drilling of the known gold deposits in 2007 and 2008 and also tested a number of new targets which resulted in the discovery of the Tiba 2 zone. Several programs were implemented to further improve the resource models for each deposit, including detailed check mapping and high-resolution (50m by 10m grid) resistivity surveys over all the known deposits, a new high-resolution magnetometry and radiometry survey over the entire project area, the completion of a high-resolution base map and photogrammetric topographic survey, Total Station check surveys, the sponsoring of an academic petrographic and structural study, the validation and, where required, the relogging of all definition drill holes supporting the resource models.
9.2
EXPLORATION PROGRAMS
Several exploration e\activities were completed by Orezone Resources Inc. on the Tiba permit during 2007 to 2009. Details of the exploration programs/activities are shown in the table below.
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Table 9.1:
Main Exploration Activities Completed on the Tiba Permit YEAR 2007-08 EXPLORATION ACTIVITIES Detailed mapping and check sampling on all the deposits; High-resolution resistivity surveys on all the deposits: o Bakou-RZ-Gambo: 34.04km; and o Tiba: 16.6km. Airborne magnetometry and radiometry survey: 3,751km on Tiba and Namasa permits; Photogrammetric topographic base map and digital colour photomosaic delivered by GISAIR; NI 43-101 technical report on the preliminary economic evaluation of the Sega Project delivered by Genivar; RC definition drilling, with Au assays on 1m samples: o Gambo 2: 1,024m in 14 holes; o Bakou: 344m in 8 holes; o RZE: 329m in 7 holes; o RZ: 418m in 5 holes; o Tiba 1E: 717m in 18 holes; and o Tiba 2 (new discovery): 235m in 3 holes. DD definition drilling, with Au assays on 1m samples: o Gambo 2 : 181.5m in 1 holes; o Bakou: 1,525m in 9 holes; o RZE: 430m in 4 holes; o Tiba 3SE: 279.5m in 3 holes; and o Tiba 1E: 1,006.5m in 9 holes. NI 43-101 technical report on the mineral resource estimation of the Sega Project delivered by Met-Chem. Based on data available to the end of 2006. Detailed mapping and check sampling on several target areas; 3D-IP trial survey in the RZ-Bakou-Gambo area on a 50m by 50m grid for 44.6km; RC definition and exploration drilling, with Au assays on 1m samples: o RZW: 462m in 6 holes; o RZ: 552m in 7 holes; o RZE: 300m in 3 holes; o Bakou: 2,034m in 24 holes; o Kyebelga: 630m in 8 holes; and o Tiba 2: 705m in 9 holes. DD definition drilling, with Au assays on 1m samples: o Bakou: 879.7m in 4 holes; and o RZE: 125m in 1 hole. Initiation of a Ph.D. study titled Petrography, structural geology and metallogeny of the Sega prospect, northern Boromo-Goren Greenstone belt, Burkina Faso; Compilation of the penetration rate data for all Orezone RC holes to further validate the weathering profile interpretation; Vectorization of all useful information gathered from the May 2006 high-resolution digital colour photograph; and Validation and complementary acquisition of density data and structural measurements from all available core holes. Detailed mapping and check sampling on several target areas; 422-sample check assaying program; Total Station check survey ; and New in-house geological model and mineral resource estimate.
COMPANY Orezone Resources Inc.
Orezone Inc.
Resources
2008-09
Orezone Corporation
Gold
2009-10
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SECTION 10.
10.1 INTRODUCTION
DRILLING
PROCEDURES
The RC method has been widely used by Orezone for the exploration and definition drilling of the deposits. However, an increased proportion of core holes versus RC holes have been drilled since June 2006, bringing the ratio core/RC meterage from about 11% to about 14% (Table 10.1) for the holes used in the present resource estimation and bringing the proportion of holes drilled by Orezone on the project from 93.4% in the previous estimate to 94.2% (Tables 10.2) for the current estimate.
Table 10.1: Deposit Bakou G2S G2N GSW MS RZ RZE RZW Tiba 1 Tiba 1E Tiba 2 Tiba 3 Tiba 3SE TOTAL
Proportion of Core versus RC Drill Holes Used in the Resource Estimation RC Holes Number 255 122 56 30 6 184 114 6 31 107 10 34 61 1,016 Meterage 23,942.0 10,548.0 5,143.0 2,205.0 485.0 19,595.0 11,095.0 462.0 2,989.0 7,262.0 780.0 3,129.0 4,251.0 91,886 21 10 0 0 0 28 8 0 2 15 0 0 6 90 Core Holes Number Meterage 3,613.1 1,510.4 0.0 0.0 0.0 4,155.8 1,457.7 0.0 133.0 1,496.5 0.0 0.0 499.5 12,866 Core vs RC holes % meterage 15% 14% 0% 0% 0% 21% 13% 0% 4% 21% 0% 0% 12% 14% M+I Resource % 31.9% 16.6% 3.6% 1.6% 1.3% 20.2% 8.2% 2.2% 0.8% 5.1% 1.7% 2.0% 4.9% 100%
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Table 10.2:
Proportion of Core and RC Holes Drilled by Orezone and Used in the Resource Estimation Deposit Bakou G2S G2N GSW MS RZ RZE RZW Tiba 1 Tiba 1E Tiba 2 Tiba 3 Tiba 3SE TOTAL Holes Drilled By Orezone 267 106 40 30 6 212 122 6 26 122 10 28 67 1042 Total 276 132 56 30 6 212 122 6 33 122 10 34 67 1106 % Orezone 96.7% 80.3% 71.4% 100.0% 100.0% 100.0% 100.0% 100.0% 78.8% 100.0% 100.0% 82.4% 100.0% 94.2%
The additional core holes provide details on the geology and structure of the deposits. After October 2005 and until 2008, the core was oriented using the spear marking system. For the 2008 program, Orezone used the ACE orientation tool. It is generally accepted that 5% to 15% of core drilling, including twinned core-RC holes, is necessary to validate the results from the RC chips. Met-Chem had emphasized (Buro and Saucier, February 2009) that some of the vein arrays seem to be rather complex, particularly the northern termination of Bakou. Orezone added in 2007 and 2008 thirty-two additional core holes in that area and others with a low proportion of core drilling to facilitate the interpretation of the geometry and distribution of the vein sets and enhance the confidence in hole-to-hole correlations. All of the recent drilling (2007 and 2008) has been completed by Boart Longyear. RC drilling commissioned by Orezone was carried out with a 5-inch hammer bit. Diamond drilling was done with rigs equipped with a conventional core barrel to retrieve HQ (63.5mm) core within the weathering zone, then reduced to the NQ (47.6mm) diameter in the lower part of the hole. Historically, only four RC holes were deepened by core drilling. Recoveries in the RC holes are based on sample weights and have been calculated by Orezone to be typically 95% to 100% of the material expected. The core recovery averages 90% in the saprolite and transitional zones and 98% in the primary zone: such recoveries are considered as very good by industry standards. The RC and core holes have largely been drilled against the dip of the mineralised zones. The final drill pattern was achieved at 25m spacing in most of the deposits. However, the holes drilled toward the east at -70 into the sub-vertical N-S veins at RZ do not cut the mineralised zones at an optimal angle. The steep angle was selected in order to investigate flat-lying to shallowly north-dipping veins, in addition to the sub-vertical zones. Although they
were cut at low angle by the drill holes Met-Chem considers the width of the sub-vertical mineralised zones should be reasonably determined by these holes, considering the tight hole spacing (25m) and the control on the deviation achieved by the down-hole surveys. A portion of RZ East was investigated by holes drilled to the north, along the dip, due to the presence of the Bakou village in the area where it would have been optimal to collar the holes.
10.2 HOLE PLANNING, SITE PREPARATION AND SET-UP The procedure followed by Orezone to plan new RC and diamond drill holes starts with the project geologist laying out proposed holes with the help of maps and sections drawn with MapInfo-Discover and Gemcom software. The recommended holes are revised by the Exploration Manager and the Vice President of Exploration of Orezone. Finally, the drill program is discussed, agreed upon and lastly double-checked by the project geologist to eliminate all errors. A hand-held GPS is used to locate and prepare the pads for the planned holes. The hole collars are spotted in the field and pegged using a Differential Global Positioning System (DGPS) that is set to deliver a sub-metric precision. The field geologist uses the DGPS to mark the fore and back sights using pickets for drill rig alignment and orientation purposes. The geologist assists the positioning of the drill and checks the requested dip angle. Once drilled, the casing was surveyed using a DGPS. The DGPS accuracy is validated on a known control station and 10cm accuracy is sought. Finally, Orezone had all the drill holes surveyed by a local contractor, St La Boussole, Ouagadougou using a Leica total station instrument. Four geodetic stations tied to the national grid system were set up on the property by La Boussole in order to build a network of control survey stations allowing the resurvey of all the drill holes collars back to 1997. Since July 2006, Orezone has acquired a Total Station and all the new collars are routinely surveyed by Orezone staff. Several check surveys were also completed to validate the work performed previously by St La Boussole from Ouagadougou. The planned and final collar coordinates are transferred into the database as "collar" files.
10.3 ORIENTATION SURVEY An Orezone crew is routinely conducting the down-the-hole deviational surveys in the open RC holes shortly after drilling is completed. Readings are taken at 25m increments starting at 6m below the collar. Readings in core holes are taken once or twice a day as drilling is in progress with the instrument positioned 6m ahead of the drill string to avoid magnetic interference. If the distance between successive tests exceeds 30, drill rods are removed to take additional reading and maintain on average 25m between successive readings. The path of the holes is surveyed using a Reflex instrument that measures several parameters, among them the plunge and the three components of the magnetic field, and relies on a compass to read the azimuth. The azimuth angles are validated by the measure of the intensity of the magnetic field, which indicates whether the compass readings were affected by local magnetism and by an accelerometer that tells whether the instrument was still at the time the measurement was taken.
The hole deviation at Sega is typical of most projects where the vast majority of the holes flatten with depth and wander off section to the right of a straight line. A hexagonal core barrel and an eighteen-inch reaming shell were used only for holes BKD034, BKD035 and RZD036 to RZD038 to minimize deviation. All other holes were drilled with a six-inch reaming shell and a normal core barrel. Even though state-of-the-art technology, the instrument occasionally produces some obvious incorrect results. However, these spurious readings can be filtered out and the deviation path can be calculated. In Met-Chem's opinion, the method adequately determines the position of the samples from which the true widths of the mineralised structures is defined and the resources calculated.
10.4 HOLE LOGGING PROCEDURE
10.4.1 Core Logging The core is recovered by the drillers and stored in boxes with wooden blocks inserted after each run to indicate the depth. A technician calculates the Rock Quality Designation (RQD) at the drill. At the end of the shifts, the boxes are closed and transported to a new, covered but not enclosed storage area in Sgunga. Prior to logging, the core pieces are fitted together in order to check the depth markers placed by the drillers and possible core mixups, and to calculate the core recovery. The reference line of the oriented core is drawn from the spear imprint and the geotechnical parameters are logged. The core is placed back in the boxes to clearly display the line of reference or the angle between the dominant fabric (bedding, foliation) and the core axis. Then the lithological contacts, the structural features, the mineralised zones and the samples are marked up. The following information is recorded in the core logs in an Excel spreadsheet: Geology - Lithology, Colour (using a standard soil colour chart), Texture, Grain size, Weathering (oxide/semi-oxide, transition, fresh), Alteration, Quartz veins, Sulphides, Mineralogy; Structure - AZ and dip of S0, S1, shear, fracture, joint, infill, colour, thickness, bedding, crenulation, veins, quality of the measurement, geologist, date; Samples - Number (allowing for the control samples), Weight, Mineralogy and abundance (volume%) of Veins and Mineralisation; and Geotechnical - Rock strength, weathering, joint sets with type, count, angle, roughness, alteration, infill, roughness.
All the core boxes were photographed before the core was marked and cut for assaying, and then again after sampling. The photographic records were downloaded as individual computer files. All drill core is laid out in clearly marked one meter long galvanized metal boxes stored in racks at Orezone's storage area in Sgunga.
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10.4.2 RC Chips Logging A quick log of the chips is done at the drill to check for the mineralised zones and extend the hole if necessary. The bags containing the RC chips are transported from the drill to Orezone's storage area in Sgunga where they are weighed to estimate recovery and submitted to magnetic susceptibility measurements. The detailed description of the cuttings is done in a manner similar to the core. The RC chips left after sampling are saved in plastic bags at the Sgunga storage area. Small samples of screened and washed chips from all the 1m runs are saved in clearly labelled plastic boxes (chip boxes) bearing the assay results for the mineralised intercepts. All the measurements in the field, the parameters related to geological and geotechnical logging and sampling of the RC and core holes were captured directly in fixed forms with menus on an Excel platform loaded in handheld computers, to eliminate description and transcription errors. All the features were logged using standard codes. The logs were checked daily by the project geologist for completeness and accuracy.
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SECTION 11.
11.1 INTRODUCTION
SAMPLING METHOD & APPROACH
Each core or RC sample is given a unique identification number by numerical order, rather than setting aside specific series of numbers for different projects, prospects or sample type, thus reducing the risk of errors. The numbers attributed to the field samples incorporate the pre-determined numbers assigned to the Quality Control (QC) samples, according to the procedure outlined in Section 12.
11.2 REVERSE CIRCULATION DRILLING The RC samples are systematically collected every meter, for the entire length of the holes. The material from the cyclone underflow is placed in polypropylene bags labelled with the sample identification and hole numbers. The samples averaging 20kg to 35kg, are transported to the storage area where they are reduced by multistage riffle splitters to obtain 5kg sub-samples for the 2007 program, and 2.5kg sub-samples for the 2008 program. The field duplicates are prepared at this stage and inserted into the sample stream. The splitter is cleaned after each sample with a brush or a rag. The damp samples are dried in the sun. The rejects for all the samples are kept until assay results are available. Then, all the samples carrying more than 100ppb of gold are saved at the campsite in thick polypropylene bags and others are discarded. The 5kg or 2.5kg samples are transported in rice bags to the Orezone's warehouse in Ouagadougou. The following information is entered into the sample book and tabulated in computer files: Date, Hole-ID, Interval, Sample Number, Number of Samples, Sampler, and Type of Analysis requested.
11.3 DIAMOND DRILLING The sample intervals are usually chosen at 1m lengths by the geologist, after adjustments with the contacts of the mineralised intervals and the lithological units. The sample intervals are lengthened in the sections of reduced core, poor recovery or for the ones selected for field duplicates in order to obtain enough material for assay purposes. A diamond blade rock saw is used to cut the core lengthwise, along the reference line of the oriented core, or following a line drawn by the geologist across the dominant fabric. The core is washed before logging, but the rock saw uses decanted but re-circulated water. The technician responsible for sawing the core adds a note in the assay book if visible gold has been observed on the cut surface, for validation of the analytical results. One half of the core, always the same marked with the barbs of the reference line, is weighed and submitted to analytical work while the second half is retained as a reference sample. A stub from the assay book is placed in the bag with the sample to be sent to the laboratory. Another stub is left underneath the core at the end of the sample interval. The sample numbers are also written on the boxes with a felt marker.
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SECTION 12.
SAMPLE PREPARATION, ANALYSES & SECURITY
12.1 INTRODUCTION Since 2007, three commercial laboratories are now established in Ouagadougou, i.e. ALS Chemex (formerly Abilab), SGS and BIGS, all of them offering sample preparation services and a range of analytical services including bottle-roll cyanidation and fire assay. This has resulted in shorter turnaround time and easier supervision by Orezone of the quality of the services performed by the laboratories.
12.2 SAMPLE PREPARATION The 5kg (2007) or 2.5kg (2008) RC and 2.5kg core sub-samples are shipped from the site to Orezone's warehouse in Ouagadougou with a shipment form filled by the project geologist. The information provided includes the project number, sample type, weight and interval, as well as a request for inclusion of the QC samples other than the field duplicates. The form is sent by e-mail and as a paper copy. Upon receipt at Orezone's warehouse, the samples are checked against the list, sorted and verified for spilled, mislabelled or missing samples before being shipped to a lab for preparation. The samples are returned to the warehouse and then riffle split to 2kg (for the 2007 LeachWELL analyses), 1kg (for the 2008 LeachWELL analyses) or 50 g (for Fire Assays): this is valid for all original samples, blind duplicates and Lab-Aware duplicate samples. The remaining portion is stored for future reference. The combined field and QC samples are dispatched to the various laboratories for analysis. A submittal form indicating the batch and samples numbers, the number of samples and of bags accompanies the samples to the laboratory. All three laboratories essentially use the same preparation methodology, and more details are provided in the appendices. After drying, the entire 5kg (2007) or 2.5kg (2008) RC sample is crushed to 6mm and ground in a vertical continuous Keegor disc pulverizer to achieve 85% passing 75 microns. A chart illustrating the sample preparation procedures used for the 2007 and 2008 drilling programs are provided under Appendix 12-A and Appendix 12-B, respectively. Several steps are taken in order to prevent sample-to-sample contamination at the preparation stage. The sample bags are emptied into metal pans that have been blown clean with compressed air. The samples are recovered at the underflow of the pulverizer in a clean pan lined with a single-use thin plastic bag, at Orezone's request. The saved fraction will be left in this bag inserted into a new, thick plastic bag. The apparatus is cleaned by feeding it barren material and by using vacuum and compressed air.
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12.3 SAMPLE ANALYSIS The RC samples from the 2007 program were analysed using the LeachWELL accelerated cyanide extraction process on 2kg samples. The sample size was reduced to 1kg for the 2008 program. Leach tail samples were analysed by fire assay on all samples exceeding 500ppb. The core samples were assayed for gold by fire assay on 50g aliquots. SGS, BIGS and ALS Chemex all use basically the same procedure (see Appendix 12-A and Appendix 12-B). Samples weighing 2kg in 2007 and 1kg in 2008 were analyzed using bottle roll cyanide leach. The samples are poured into a bottle with water, a leaching solution and LeachWELL tablets and then are placed on a roller for twenty-four hours. LeachWELL is a catalyst formulated to increase the dissolution rate of gold in the samples. The gold is dissolved through formation of its cyanide complex, which can be concentrated through the process of solvent extraction. Gold content in the solution (liquor) is determined using atomic absorption analysis. For all the samples having liquor grade over 500ppb Au, the tail is washed, dried and a 50g charge is split and submitted to fire assay. The laboratories provide the assay results on electronic text files. The original files are saved "as received" in a global database by Orezone's GIS (Geographic Information System) geologist. A copy is transferred into Excel files and the blank cells are removed and the "less than" signs are replaced by a negative number to be saved as a "sampling" file. The assay results are automatically merged with the drill logs using the VLOOKUP worksheet function of Excel. The sample intervals in the "From" and "To" fields are cross-checked by applying formulas. The BLEG method, as well as the results obtained from the samples submitted to Transworld in Ghana was discussed in Met-Chem's Technical Report dated February, 2006. The fact that Orezone discovered that Transworld used the added LeachWELL reagent process for a while without informing them is also mentioned in this report.
12.4 SAMPLE SECURITY The RC samples and the drill core retrieved by the drillers are collected and handled at the drill site by Orezone personnel. The samples are transported to the storage area in Sgunga, split and sent to the Orezone warehouse in Ouagadougou. The storage area is fenced and security is provided permanently by a watchman. The warehouse in Ouagadougou is an enclosed building. From there, the samples are checked, sent to the preparation facilities in Ouagadougou and returned to Orezone's warehouse. Finally, the samples are dispatched to the analytical laboratories. The samples are continually under the direct control of Orezone, who monitors the preparation and shipment of the samples. This ensures reasonable chain of custody by Orezone from the drill sites to the analytical laboratory.
12.5 MONITORING OF THE PREPARATION AND ANALYTICAL SERVICES The SGS, ALS Chemex (formerly Abilab) and BIGS Global laboratories located in Ouagadougou are all routinely used by Orezone. Until mid-2007, Orezone was also using the former Abilab laboratory in Bamako (ALS-Chemex since September 2006) for fire assays.
Although they are not ISO accredited, SGS, ALS-Abilab and BIGS in Ouagadougou are internationally recognise d laboratories and have built a reputation based on the results from large volumes of samples processed for many mining companies and from the experience of their management. SGS ALS-Abilab and BIGS follow a program involving quality control procedures for sample preparation and analysis, plus a quality assessment stage. The analysis of quality control samples (reference materials, duplicates and blanks) with all sample batches is part of the program. As well, they participate in inter-laboratory test programs (Round Robin Exchanges). The BIGS Global laboratory is owned by a former Abilab manager. Furthermore, these laboratories are being audited repeatedly on behalf of large and small mining companies. In addition to the internal quality assurance program, Orezone's own quality control samples and monitoring by dedicated QC Manager L. Coulibaly ensure that the results can be trusted and the problem batches are re-processed. Once a week, an Orezone representative visits the laboratories unannounced. All three facilities use essentially the same preparation procedures and the analytical methods used by ALS-Abilab, SGS and BIGS are similar. In general: Drying - Ovens at 90C to 106C run for 2 hours to 8 hours for core, 1 day or as needed for RC chips; Comminution - Jaw crushers, vertical Keegor disc pulverisers, 85% passing 75 microns; Single-use thin plastic bag lining the pan collecting the pulverized sample and inserted into thick plastic bag; Sieve analysis - Every 20 samples; BLEG analyses - 24 hour non-stop leach, using LeachWell; Fire Assay - Fusion ovens with 50-sample capacity, cupellation ovens of 100 samples capacity, gasoil-fired; SpectrAA 55B Spectrometer - Linked to LIMS (SGS), dedicated to Au (ALS-Abilab and BIGS); and Lab QC samples - 1 BLK to 2 BLK, 2 STD, 2 DUPL, 2 REPL or 4 REPEAT with each 50 FA sample batch, STD and BLK also added with each lot of 20 BLEG.
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SECTION 13.
13.1 INTRODUCTION
DATA VERIFICATION
The Quality Assurance program employed at Sega consists of a quality management system covering all stages, from the exploration activities to the resource estimation and is designed to involve all employees. The system starts with the recording of all field data into hand-held computers and then the downloading of this data into the mainframe computer. The database is checked for errors at different levels, from the field office to the head office in Ottawa. The master database is managed by a GIS geologist in Ouagadougou. Monitoring the analytical results relies on the use of control samples included by Orezone and by the laboratory.
13.2 DATABASE VALIDATION The data acquisition of all the field data relies entirely on the use of hand-held computers loaded with commercial and in-house software. The data captured by all the electronic instruments (computers, GPS, survey) are directly downloaded into the mainframe computer. The database is first checked for errors and validated on site by the project geologist using the built-in validation modules of the different software and plotting the data using MapInfo and Gemcom. The information is then transferred into the master database managed by a GIS geologist in Ouagadougou. Additional checks are carried out by the GIS geologist, the exploration vice president, exploration manager, and the QA person in Ouagadougou, and the resource geologist in Ottawa. The information is saved in different files, mostly built as Excel spreadsheets, but Orezone is switching to Microsoft Access software with a direct link with MapInfo. The data in the master database can easily be tracked by project number, date and activities. Orezone tracks the samples by recording the project, job and certificate numbers, with the dates at the different stages followed by the samples. The maps and the original signed laboratory certificates are saved and the old files are archived. The integrity of the database is protected by restricted access, transfer of data using the VLookup function, filters and control formulas of Excel, validation by Gemcom and visual examination of the data. The IT personnel keep backups of the data in different buildings.
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13.3 QUALITY CONTROL OF THE LABORATORIES
13.3.1 Introduction Since 2006, a sophisticated QA-QC system has been in place, with Mr. Laurent Coulibaly as a dedicated specialist responsible to monitor the program for Orezone. In addition to monitoring the current laboratory results, Mr. Coulibaly has started reviewing the results obtained in previous years, with a plan to revise all data back to the year 2000. The QA-QC system implemented by Orezone includes the insertion of blind standards, blanks, field and pulp duplicates into all the sample batches to monitor the performance of the analytical laboratories (Table 13.1). A total of 5% of blind control samples were added to the project samples before February 2005, and twice that many after that. In addition, 10% pulp duplicates (labelled in our database as Lab-aware) are also provided by Orezone to the analytical laboratory, bringing the total number of QC samples provided to Orezone to 20% since February 2005. The type and location of the control samples in the sample stream has been determined on the basis of randomly generated numbers. In this system, a control sample of predetermined type is intercalated each time the last three digits in the sample numbering sequence correspond to these random numbers. A series of one hundred random numbers between 1 and 999 is used since February 2005 (Appendix 13-A). The procedure insures the absence of bias that could be introduced by the geologist into the location of the control samples. However, this system results in a larger proportion of control samples located in waste material, where they provide limited information. The control samples inserted by Orezone into the RC and core sample stream are listed in Table 13.1. As part of the control samples, the laboratory is requested by Orezone to implement analysis on pulp duplicate samples collected every 10 samples in the sequence. These samples are referred to as Lab-Aware (LA_PD) and are designed as a test against the blind duplicate samples inserted by Orezone to monitor the laboratory performance on duplicate assays.
Table 13.1:
Control Samples Inserted with the Field Samples
Control Sample Blind - Blank Blind - Standard Blind - Field Duplicate Blind - Crush Duplicate Blind - Pulp Duplicate
RC Holes 2% 2% 2%
Core Holes 2% 3% 2%
4%
2%
In addition, between November 2005 and September 2007, Orezone has been systematically selecting 10% of the samples submitted to BLEG analysis to also be assayed by FA. The proportion was reduced to 5% in March 2006. A 100g split is taken from the riffle splitter at the 2kg BLEG sample reduction stage for that purpose.
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The control samples inserted by Orezone into the samples selected for FA are listed in Table 13.2 and Appendix 13-B. Both the blanks and standards are selected on the basis of their colour.
Table 13.2:
Control Samples Inserted into the Samples Selected for FA
Control Sample Blind - Blank, certified Blind - Blank, Orezone Blind - Standard, certified Blind - Pulp Duplicate Total
100 g Head Assay Samples 2% 3% 5% 10% 20%
The 2007 RC sample preparation was performed by BIGS laboratory from Ouagadougou, and the 2008 RC samples were prepared by ALS-Chemex from Ouagdougou. The preparation of the 2007 core samples was divided between BIGS (82%) and ALS-Chemex (18%) in Ouagdougou. BIGS prepared all the core samples from the 2008 program. It is the policy of Orezone to assign the preparation of the samples and the analytical work to different laboratories, i.e. that a sample prepared by a laboratory is always analyzed somewhere else.
Table 13.3:
2007 Tiba RC Program Control Samples
Control sample Blind - In-house Blank (BLKORZ) Blind - In-house Standards (IHS) Blind - Field Duplicates (FD) Blind - Pulp Duplicates (PD) Lab-Aware Pulp Duplicates (LAPD) Total
Frequency (%) 2 2 2 4 10 20
Quantity 68 68 68 136 339 679
Table 13.4:
2008 Tiba RC Program Control Samples Control sample Blind - In-house Blank (BLKORZ) Blind - In-house Standards (IHS) Blind - Field Duplicates (FD) Blind - Pulp Duplicates (PD) Lab-Aware Pulp Duplicates (LAPD) Total Frequency 2% 2% 2% 4% 10% 20% Quantity 111 110 110 221 552 1104
November 2012
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Table 13.5:
2007 Tiba DD Program Control Samples Control sample Blind - Certified Blanks (BLK9 & BLK10) Blind - Certified Standards (CS) Blind - Crush Duplicates (CD) Blind - Pulp Duplicates (PD) Total Frequency (%) 2 2 2 4 10 Quantity 74 74 74 148 370
Table 13.6:
2008 Tiba DD Program Control Samples Control sample Blind - Certified Blanks (BLK12) Blind - Certified Standards (CS) Blind - Crush Duplicates (CD) Blind - Pulp Duplicates (PD) Total Frequency (%) 2 2 2 4 10 Quantity 22 22 23 45 112
13.3.2 Blanks Met-Chem reviewed the QA-QC procedures and also examined the results from the QC samples inserted by Orezone during the period October 2003 to August 2006 (Buro, Youne and Saucier, February 2006; Buro and Saucier, February 2009). The main issues noted by Met-Chem with respect to the blanks were: The control blanks were prepared separately and in advance from the field samples and only inserted before shipping to the analytical laboratory; this has been implemented since 2007. The proportion of blank samples that returned gold analyses exceeding twice the detection limit was high at 25.5% for the period October 2003-September 2005, 20.6% for the period January 2005-December 2005 and 16.0% for the period January 2006-August 2006. The results for the 2007-2009 period show a significant improvement with only 4.3% of the blanks exceeding twice the detection limit.
Sterilized RC chips from the Orezone project were used as blank material for the stream of RC samples in 2007. Several hundreds of kilograms of this material have been totally pulverized, homogenized by the preparation laboratory and by Orezone, using a concrete mixer prior to the field campaign. The material is bagged, clearly labeled as BLK and stored at the Orezone facility in Ouagadougou. The blanks (matching as best as possible their colour with that of the adjacent samples) are inserted in the stream of field samples prior to shipping to the preparation facility. Since September 2007, Orezone is using a new in-house blank made of barren granite saprolite, collected near Ouagadougou (669155E, 1368336N WGS84, Zone 30N) and tested to ascertain that it is gold free on a batch by batch basis before it can be inserted in a stream of exploration samples. This blank (coded BLKORZ in our sampling database) material is
prepared in bulk by a commercial laboratory and stored in 2kg bags. The blank material has been dried and Keegor-milled and is similar in appearance to the RC chip samples. Since February 2005, two blank samples are added to each batch of 100 field samples (up from one blank per 100 field samples prior to February 2005). The fail-pass threshold applied by Orezone is 5 times the lower detection limit. A factor of twice the detection limit in 80% and 90% of the cases is commonly used in the industry for the coarse and pulp blanks, respectively. Blanks help monitor the carry-over contamination and improper sequencing of samples during sample preparation and analysis, as well as analytical precision close to detection limit. The random insertion of blanks is a more robust test of the laboratory. However, to fully serve their purpose, some blanks should be inserted within or immediately following visually identified high grade samples. Met-Chem considers the performance of these blanks is not outstanding, although higher variability can be expected from these projects blanks as compared to certified blanks. The performance from the various laboratories involved in the analysis of the 2007 and 2008 RC programs was very good with an overall pass rate of 97.6% (see figures below).
Figure 13.1 :
Performance of Blind In-house Control Sample BLKORZ by Abilab-Ouagadougou, 2007 RC program (Pass rate = 97.1%)
AO - BLKORZ
30 25 Au ppb 20 15 10 5 0
1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 55 58 61 64 67
BLKORZ (Expected value =<5 ppb) Max
November 2012
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Figure 13.2:
Performance of Blind In-house Control Sample STD6 by Abilab-Ouagadougou, 2007 RC program (Pass rate = 96.6%)
Figure 13.3:
Performance of Blind Certified Control Blank Sample BLKORZ by BIGS-Ouagadougou, 2008 RC Program (Pass rate = 98.2%)
BIGS - BLKORZ
30 25 Au ppb 20 15 10 5 0
1 7 9 16 21 26 33 35 43 46 51 53 57 66 69 75 81 82 92 98 99 103 111
BLKORZ (Expected value =<5 ppb) Max
For the 2007 and 2008 core drilling programs, Orezone used certified blanks supplied by Rocklabs Ltd New Zealand in 100g sachets. The material was certified to carry less than 0.003ppm and 0.002ppm, respectively, for BLK9 and BLK10 with a 5% tolerance. The acceptable upper limit for the blanks was set to 5 times the lower detection limit of the FA 50g method.
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The certified blanks help monitor the carry-over contamination and improper sequencing of samples during analysis.
Figure 13.4:
Performance of Blind Certified Control Blank Sample BLK9 by Abilab-Bamako, 2007 DD Program (Pass rate = 100%)
AB - BLK9
0.2
0.15 Au (FA 50 g) ppm
0.1
0.05
0
1 3 5 7 9 11 13 15 17 19 21 23 25 27
Certified BLK9 (Expected value =<0.05 ppm)
Max
Figure 13.5:
Performance of Blind Certified Control Blank Sample BLK10 by Abilab-Bamako, 2007 DD Program (Pass rate = 95.8%)
AB - BLK10
0.2
0.15 Au (FA 50 g) ppm
0.1
0.05
0
1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47
Max
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Figure 13.6:
Performance of Blind Certified Control Blank Sample BLK10 by ALS-ChemexVancouver, 2007 DD Program (Pass rate = 100%)
ALS - BLK10
0.2
0.15 Au (FA 50 g) ppm
0.1
0.05
0
1 2 3 4 5 6 7 8
Max
Figure 13.7:
Performance of Blind Certified Control Blank Sample BLK12 by SGS-Ouagadougou, 2008 DD Program (Pass rate = 95%)
SGS - BLK12
0.2
0.15 Au (FA 50 g) ppm
0.1
0.05
0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22
Max
November 2012
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13.3.3 Standards The standard reference materials (STD) used at Sega for insertion with the 2007 RC samples were prepared from lithologies encountered on the properties of Orezone ( Table 13.3 and Table 13.4). As for the blanks, several hundreds of kilograms of the various standards have been totally pulverized prior to the field campaign, bagged, clearly labeled and stored at the Orezone QC facility in Ouagadougou. A mix of in-house standards and certified standard reference material is used as control samples for the Fire Assays (Appendix 13-C and Appendix 13-D).
Table 13.7:
List of In-house Standard Materials Used by Orezone in 2007
IHS STD6 STD7 STD9
Location Djarkadougou (Outcrop) BDT02: 28-42m (Trench) BDT12: 34-44m (Trench)
Easting 438200 434749 434827
Northing 1204700 1207375 1207192
Colour Greenish Yellow-beige Beige
Geology Fresh basalt Quartz sandstone saprolite Silicified quartz sandstone saprolite
Met-Chem reviewed the QA-QC procedures and also examined the results from the QC samples inserted by Orezone during the period October 2003 to August 2006 (Buro, Youne and Saucier, February 2006; Buro and Saucier, February 2009). The main issues noted by Met-Chem with respect to the standards were: The advantage of using in-house standards over commercial standards is that they have a matrix identical, or similar to, the samples being assayed. However, the customized standards used by Orezone do not constitute certified standard reference materials. Since their true or accepted values and their level of homogeneity do not seem to have been very well established, they can only partially serve their purpose. The results from the standards in 2005 and part of 2006 show a performance that is not outstanding. However, one has to consider that the standards are not certified and their variability can be expected to be higher than the commercial certified reference materials.
Given the poor quality of the 2007 in-house standards (HIS), Orezone adopted a new protocol for their preparation in September 2007. IHS are since then produced by adding a measured (standardized packages by supplier) quantity of certified reference materials to a BLKORZ. The in-house blank is prepared in bulk from a fixed source, dried and stored in 2kg samples. Certified standards are incorporated into the coarse blank (matrix) in specified ratios using pre-packaged material to obtain calculated grades of ca. 500ppb, 800ppb and 1500ppb. Table 13.8 to Table 13.10 lists the in-house standards and the acceptable limits for BIGS Global laboratory, where acceptable limits fit with calculated value 2 standard deviations (SD).
November 2012
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The standards prepared and reported in Table 13.9 are AR26-220 and AA23-230 where the first letter the blank source (e.g., A = Ouaga granite), the second is the company code (e.g., Rocklabs), the two digits are part of the original standard code (e.g., SN26), the first number from the last three digits is the indication of the total sample mass (e.g., 1 = 1kg or 2 = 2kg) and the last two digits are a subscript on the seed mass (e.g., 10 = 100g; 30 = 300g etc.).
Figure 13.8:
In-house Standard Coding
Prefix
AR26-220
Rocklabs
SN26
2kg
200g
Prefix
AA23-230
AMIS
23
2kg
300g
Note that the calculated value is computed based on at least five assay results or a population with a coefficient of variation of <1%; in all cases this minimum requirement was fully satisfied. As there are inter-labs biases, a calculated mean was performed per lab and per standard after removing outliers. Then for each in-house standard the acceptable limits are define by the calculated average 2 SD. These values where used to validate corresponding lab data.
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Table 13.8: IHS STD6 STD7 STD7 STD9 STD9 Batch
List of 2007 IHS Batches with Acceptable Limits Preparation Date Outliers From 7 5 6 1 2 15-05-2006 19-01-2005 09-03-2007 18-10-2006 12-03-2007 To 04-12-2007 22-01-2007 02-10-2007 12-03-2007 07-11-2007 10 19 22 2 13 546 183 181 45 79 2 1563 2015 2948 2546 1 1593 1805 3012 2598 2 276 779 415 495 Used Average Median STDEV Expected Value 1 1593 1805 3012 2598 AVERAGE 2 STDEV Exp. Min 0 1041 248 2182 1608 Exp. MAX 4 2145 3362 3842 3588
Table 13.9:
List of Certified Standard Materials Used by Orezone for the Preparation on In-house Standards (IHS) Certified Material SN38 (8.573 ppm 0.158 ppm gold) SQ36 (30.04 ppm 0.60 ppm gold) AMIS0023 (3.57 ppm 0.26 ppm gold) Supplier Rocklabs Rocklabs African Mineral Standards
Table 13.10:
List of 2008 IHS Batches with Acceptable Limits In-house Standards AA23-230 AR36-205 AR36-210 AR38-210 AR38-220 Calculated value 536 751 1439 427 858 MIN 470 630 1270 337 768 MAX 574 810 1619 464 901
November 2012
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IHS were prepared and submitted to each lab in Ouagadougou (i.e. ALS Ouagadougou (AO), BIGS global (BIGS) and SGS Ouagadougou (SGS) as part of a round robin program prior to a major drilling campaign to ensure basic quality and compliance during the actual production run. Ideally two or more labs pass the round robin testing and the top two are selected for the production runs. Quality is continuously monitored during the production run and sample throughput is adjusted to the lab with the best performance and away from the lab with the lesser performance as determined by Orezones on-going production QCP program. For the Tiba production run BIGS was selected. Note that SGS Ouaga (SGS) and BIGS Global (BIGS) were selected from the round robin program and during the course of the preceding Bombor program production; throughput was shifted from 50/50 to 100% through BIGS. Hence, selecting BIGS was a choice of continuity and proven quality.
Figure 13.9:
Performance of Blind In-house Control Sample STD7 by Abilab-Ouagadougou, 2007 RC Program (Pass Rate = 100%)
AO - STD7
5000
4000
Au ppb
3000
2000
1000
0
1 2 3 4 5 6 7 8 9 101112131415161718192021222324252627282930313233343536373839
In House STD7 (Calculated value = 1805 ppb)
+2x SD
- 2x SD
November 2012
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Figure 13.10:
Performance of Blind In-house Control Sample STD9 by Abilab-Ouagadougou, 2007 RC Program (Pass Rate = 100%)
AO - STD9
5000
4000
Au ppb
3000
2000
1000
0
1 2 3 4 5 6 7 8 9 10
In House STD9 (Calculated value = 2598 ppb)
+2x SD
- 2x SD
Figure 13.11:
Performance of Blind Certified Control Sample OxL51 by Abilab-Bamako, 2007 DD Program (Pass Rate = 80%)
AB - OxL51
7
Au (FA 50 g) ppm
3
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Standard OxL51 (Expected value =5.850 ppm)
+2x SD
-2x SD
November 2012
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Figure 13.12:
Performance of Blind Certified Control Sample SF23 by Abilab-Bamako, 2007 DD Program (Pass Rate = 59%)
Figure 13.13:
Performance of Blind Certified Control Sample SH24 by Abilab-Bamako, 2007 DD Program (Pass Rate = 76%)
November 2012
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Figure 13.14:
Performance of Blind Certified Control Sample OxJ47 by ALS-Chemex-Vancouver, 2007 DD Program (Pass Rate = 100%)
ALS - OxJ47
3
Au (FA 50 g) ppm
0
1 2 3 4
Standard OxJ47 (Expected value =2.384 ppm)
+2x SD
-2x SD
Figure 13.15:
Performance of Blind Certified Control Sample SH24 by ALS-Chemex-Vancouver, 2007 DD Program (Pass Rate = 50%)
ALS - SH24
2
Au (FA 50 g) ppm
0
1 2 3 4
Standard SH24 (Expected value =1.326 ppm)
+2x SD
-2x SD
November 2012
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Figure 13.16:
Performance of Blind In-house Control Sample AR38-220 by BIGS-Ouagadougou, 2008 RC Program (Pass Rate = 100%)
Figure 13.17:
BIGS - AR36-205
1200 1000 800 Au ppb 600 400 200 0
1 4 7 10 13 16 19 22 25 28
In House AR36-205 (Calculated value = 750 ppb)
+2x SD
- 2x SD
November 2012
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Figure 13.18:
BIGS - AR36-210
2000
1500 Au ppb
1000
500
0
1 4 7 10 13 16 19 22 25 28 31 34
In House AR36-210 (Calculated value = 1439 ppb)
+2x SD
- 2x SD
Figure 13.19:
Performance of Blind In-house Control Sample AA23-230 by BIGS-Ouagadougou, 2008 RC Program (Pass Rate = 86%)
BIGS - AA23-230
800
600 Au ppb
400
200
0
1 3 5 7 9 11 13 15 17 19 21
In House AA23-230 (Calculated value = 536 ppb)
+2x SD
- 2x SD
November 2012
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13.3.4 Duplicates Orezone's fail-pass criterion applied to the duplicates, either pulps or coarse, is based on the calculation of the variance and the acceptance if the bias between the two is less than 25%. A generally accepted pass/fail threshold for the duplicates is based on the difference of the assay results between each pair over the mean of the pair. For the samples whose mean is less than 15 times the detection limit, 90% of the pairs should have a difference less or equal to 3 times the detection limit (coarse duplicates) or twice the detection limit (pulps). For the samples whose mean exceeds 15 times the detection limit, 90% of the pairs should have a difference over mean ratio less or equal to 20% for the coarse duplicates and 10% for the pulps. In addition, the difference between the mean of all the original analyses must be 5% or less the mean of the duplicate analyses.
Figure 13.20:
Performance of Blind Field Duplicate Samples by ALS-Ouagadougou, 2007 RC Program (Pass Rate = 96%)
AO - Scatter Plot FD vs Parent, n = 68, R2 = 0.83
100000
FD Au ppb
1000
10 10 1000 Original Au ppb 100000
November 2012
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Figure 13.21:
Performance of Blind Pulp Duplicate Samples by ALS-Ouagadougou, 2007 RC Program (Pass Rate 98%)
AO - Scatter Plot PD vs Parent, n = 136, R2 = 0.96
100000
PD Au ppb
1000
10 10 1000 Original Au ppb 100000
Figure 13.22:
Performance of Lab-Aware Pulp Duplicate Samples by ALS-Ouagadougou, 2007 RC Program
AO - Scatter Plot LAPD vs Parent, n = 339, R2 = 0.99
100000
LAPD Au ppb
1000
10 10 1000 Original Au ppb 100000
November 2012
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Figure 13.23:
Performance of Blind Crush Duplicate Samples by ALS-Bamako, 2007 DD Program (Pass Rate 95%)
AB - Scatter Plot CD vs Parent, n = 74, R2 = 0.97
10
CD Au ppm
0.1
0.001 0.001
0.1 Original Au ppm
10
Figure 13.24:
Performance of Blind Pulp Duplicate samples by ALS-Bamako, 2007 DD Program (Pass Rate 89%)
AB - Scatter Plot PD vs Parent, n = 147, R2 = 0.95
10
PD Au ppm
0.1
0.001 0.001
0.1 Original Au ppm
10
November 2012
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Figure 13.25:
Performance of Blind Crush Duplicate Samples by ALS-Vancouver, 2007 DD Program (Pass Rate 100%)
ALS - Scatter Plot CD vs Parent, n = 8, R2 = 0.98
10
CD Au ppm
0.1
0.001 0.001
0.1 Original Au ppm
10
Figure 13.26:
Performance of Blind Pulp Duplicate Samples by ALS-Vancouver, 2007 DD Program (Pass Rate 100%)
ALS - Scatter Plot PD vs Parent, n = 16, R2 = 0.99
10
PD Au ppm
0.1
0.001 0.001
0.1 Original Au ppm
10
November 2012
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Figure 13.27:
Performance of Blind Field Duplicate Samples by BIGS-Ouagadougou, 2008 RC Program (Pass Rate = 100%)
BIGS - Scatter Plot FD vs Parent, n = 110, R2 = 0.84
100000
FD Au ppb
1000
10 10 1000 Original Au ppb 100000
Figure 13.28:
Performance of Blind Pulp Duplicate Samples by BIGS-Ouagadougou, 2008 RC Program (Pass Rate = 99%)
BIGS - Scatter Plot PD vs Parent, n = 221, R2 = 0.99
100000
FD Au ppb
1000
10 10 1000 Original Au ppb 100000
November 2012
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Figure 13.29:
Performance of Lab-aware Pulp Duplicate Samples by BIGS-Ouagadougou, 2008 RC Program
BIGS - Scatter Plot LAPD vs Parent, n = 552, R2 = 0.99
100000
FD Au ppb
1000
10 10 1000 Original Au ppb 100000
Figure 13.30:
Performance of blind Crush Duplicate Samples by SGS-Ouagadougou, 2008 DD Program (Pass Rate 100%)
SGS - Scatter Plot CD vs Parent, n = 23, R2 = 0.98
10
CD Au ppm
0.1
0.001 0.001
0.1 Original Au ppm
10
November 2012
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Figure 13.31:
Performance of Blind Pulp Duplicate Samples by SGS-Ouagadougou, 2008 DD Program (Pass Rate 100%)
SGS - Scatter Plot CD vs Parent, n = 23, R2 = 0.98
10
CD Au ppm
0.1
0.001 0.001
0.1 Original Au ppm
10
13.4 UMPIRE ASSAYS Sample batches who failed to pass our QAQC criterion are routinely resubmitted, at least for the batches or portion thereof that were showing significant gold anomalism (>100ppb), either to the same laboratory or to an alternate laboratory. In addition, some batches from previous (2003-2006) programs were also submitted for check assays, either because the QAQC results were poor of the results at odds with the model. In addition, a comprehensive check assay program was undertaken as part of a due diligence exercise by Cluff Gold plc through their subsidiary Cluff Mining (West Africa) Limited who is operating the Kalsaka heap leach mine about 20km south of the Bakou-RZ-Gambo area. The results from this program are presented and discussed below. A series of 160 core samples previously assayed by ALS (Abilab) - Bamako were resubmitted to SGS-Ouagadougou. This program was meant to verify the results of AbilabBamako for several batches that returned rather poor QA-QC results. The SGS assay results were consistent with the original Abilab results, with a slight positive bias for the samples above a threshold of about 1.5g/t.
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Figure 13.32:
Check Assays by SGS-Ouagadougou on Abilab-Bamako Core Sample Pulps
QQ Plot of Abilab Bamako FA vs SGS Ouaga FA on SEGA 2005 DD

Check Assay - SGS Ouagadougou FA50g- ppm
25 20 15 10 5 0 0 5 10 15 20 1/1 Line 25
Original Assay - Abilab Bamako FA 50g - ppm
Original FA vs SGS Check FA
13.5 INTERNAL LABORATORY QUALITY CONTROL ALS (Abilab), SGS and BIGS operate laboratories under a Quality Assurance and Quality Control system that is not certified by any standards association, but conforms to most of the ISO 17025 guidelines. The QC samples inserted by the laboratory consist of blanks, certified standard materials, duplicates, replicates and repeat samples with each batch of 50 Fire Assay samples or 20 BLEG samples. The laboratories supply the results from their QC samples, and Orezone closely monitors the results, in conjunction with the results from the Orezone blind QA-QC sample results.
13.6 INDEPENDENT CHECK SAMPLING During November, 2008, a Confidentiality Agreement was signed with Cluff Gold plc (Cluff) in order for them to review Orezone exploration data on the Sgunga (Sega) Project Area. As part of this evaluation, it was decided by Cluff to conduct check assays on RC and core samples with the objective to: Check the head assay values used for the resource calculations through FA and Bottle rolling; Determine recovery rates through proper washing and FA on the bottle roll tails; and Assess preg-robbing characteristics for the graphitic samples.
The samples were chosen within mineralised intervals based on the following criteria: Samples to cover a wide range of gold grades; Samples to be widely spread through all deposits; and Samples to be taken in different units of the alteration profile.
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Based on these criteria, a total of 311 RC samples and 133 DD pulps were selected by Cluff. However, 37 selected RC samples and 5 DD pulps were not available for sampling, reducing the actual number of check samples to 274 RC samples and 128 DD pulps. The RC samples were pulverized to 95% passing 75 microns and submitted to 24 hour bottle rolling with 0.5% NaCN solution. The DD pulps were assayed via Fire assay on 50g charge-AAS finish. Fire assay was also performed on the washed tails of the bottle rolls in order to define calculated recoveries. Duplicates and blanks were inserted after every twentieth sample, and every fortieth sample was a standard. DD pulps and bottle roll tails were assayed at ALS lab in Ouaga. Of the 274 RC samples, 131 were bottle rolled at ALS and 143 samples were bottle rolled at Kalsaka.
Figure 13.33:
Cluff Gold plc Check Assays Performed on Orezone Sega Core Sample Pulps SEGA PROJECT OREZONE HEAD ASSAYS Versus CHECK ASSAYS CORRELATION COEFFICIENT
15
13
y = 1.0678x + 0.0209 R = 0.9151
10
CHECK ASSAYS
0 0 2.5 5 7.5 10 12.5 15
OREZONE HEAD ASSAYS
The descriptive statistics (Figure 13.33) for the core samples are very similar, with the mean, median and standard error slightly higher for the Cluff check assays, but with a good Pearson R2 correlation coefficient of 0.92 (Figure 13.33). This is true even for the core and RC samples from batches that displayed a poor performance according to Orezone internal QA-QC system (Figure 13.33), suggesting that the problems identified by Orezone with those batches have more to do with the poor quality of the ancient in-house reference materials that with the analytical performance of the laboratories.
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Figure 13.34:
Cluff Gold plc Check Assays Performed on Orezone Sega RC Coarse Reject Samples by ALS Ouagadougou
45 40 35 ALS Check Assays 30 25 20 15 10 5 0 0
y = 0.8366x + 0.7073 R = 0.4595
10
20
30
40
50
Orezone Head Assays ALS Checks Vs OZN Head 45 Axis Linear (ALS Checks Vs OZN Head)
Figure 13.35:
Cluff Gold plc Check Assays Performed on Orezone Sega RC Coarse Reject Samples by Kalsaka Laboratory
45 40 Kalsaka Lab Check Assays 35 30 25 20 15 10 5 0 0 10 20 30 40 50 Orezone Head Assays Kalsaka Lab Checks 45 Axis Linear (Kalsaka Lab Checks)
y = 0.8313x + 0.3212 R = 0.88
November 2012
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Table 13.11:
Descriptive Statistics, Original Orezone Core Assays and Cluff Check Assays Descriptive Statistics Mean Standard Error Median Mode Standard Deviation Sample Variance Kurtosis Skewness Range Minimum Maximum Sum Count Orezone 3.21 0.23 2.13 1.06 2.61 6.81 1.34 1.37 11.07 0.19 11.26 410.55 120 Cluff 3.45 0.26 2.34 2.98 2.91 8.48 2.11 1.52 14.56 0.19 14.75 441.08 128
Figure 13.36:
Cluff Gold plc Check Assays Performed on Orezone Sega Core Sample Pulps
12 10 Cluff check assay (ppm) 8 6 4 2 0 0
Cluff check assay vs Orezone Failed certificate - QQ plot
10
12
Orezone faile assay (ppm)
Cluff vs ORE
1/1 Line
November 2012
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SECTION 14.
14.1 INTRODUCTION
ADJACENT PROPERTIES
The Sega Project area is partly surrounded by permits operated by other companies. Nearby properties owned / operated by Amara are described below plus other properties which may too have the potential for synergy and hence influence the future development of the area. Though this report focuses on the Tiba permit of Sega it should be remembered that the 189km2 Namasa permit is located south of the Tiba permit. The Zouma Prospect is the most advanced new prospect on the Namasa permit and includes a well-defined NE-trending structural corridor of mineralisation that hosts several gold occurrences over a 9-km strike.
14.2 AMARA MINING PLC
14.2.1 Kalsaka Gold Mine The Sega Project is adjacent to the Amara Kalsaka property that is located to the south and where the 60,000oz per annum heap leach mine has been in operation since October 2008. The Kalsaka Gold Mine lies about 20 km south of the Sega Project. Kalsaka remains a producing gold mine that is expected to produce 55,000 oz of gold in 2012. Kalsaka produced over 71,000 oz of gold in 2011, exceeding its 70,000 oz guidance for the year. As at 31 December 2011, Kalsaka had an estimated 82,000 ounces of proven and probable reserves at an average grade of 1.5 g/t. Inclusive of the mineral reserves, it hosted 276,000 ounces of gold in the measured and indicated categories at an average grade of 1.5g/t, with an additional 147,000 ounces of gold in the inferred category in the current mine area.
14.2.2 Yako In addition to Sega and Kalsaka, Amara also holds the neighbouring Yako licence, located some 20km away with an inferred resource of 150,000oz, as well as four new exploration licences in Eastern Burkina Faso, providing a pipeline of future projects to the Group. The neighbouring Yako licence covers an area of 414 sq. km.
14.3 RIVERSTONE RESOURCES INC.
14.3.1 Karma Project Riverstone Resources Inc. has four properties in Burkina Faso one of which is their Karma Project, situated only some 60km to the Northwest of the Sega-Kalsaka complex. Mineral resources are given by the following: Indicated NI 43-101 Global Mineral Inventory Resource: 1,774 koz Au at1.02g/t & Inferred NI 43-101 Resource: 959 koz Au at 0.8g/t; and
November 2012
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Indicated NI 43-101 In Pit Resource: 1,634 koz Au at 1.07g/t & Inferred NI 43-101 Resource: 566 koz Au at 0.93g/t.
A PEA was recently filed in September 2012 which indicates the following: Robust economics: After-tax NPV $192 M, IRR 37%, 2 year payback, 10 year mine life; Definitive Feasibility Study to commence in Q4 2012; and Excellent upside potential to expand current deposit.
14.4 PINSAPO GROUP
14.4.1 Peleguetenga, Tibou and Sassa Pinsapo Gold SA was established in Burkina Faso as a fully owned subsidiary of the Pinsapo Group AG (Switzerland) in February 2010. Currently Pinsapo Gold owns 3 permits in Burkina Faso: Peleguetenga (exploration) 2.58 sq. km; Tibou (exploration) 121 sq. km; and Sassa (mining) 1sq. km.
Exploration drilling at the Tibou permit, which is situated close to Yako town, which includes almost 3km of strike length of the Bouda zone, has been completed, resulting in a JORCcompliant resource estimate. The inferred resource of the Bouda deposit is approximately 143,000 oz of gold at 2.03 g/t (assuming 1g/t lower and 14g/t top cut-off grade). Mineralisation is open at depth and along strike. A pilot heap leaching plant at Bouda has been producing gold since 2012.
14.5 HIGH RIVER GOLD
14.5.1 Bissa Hill High River Gold Bissa project is the largest and the most advanced gold project in the area. It is located about 55km to the ESE of the Sega Project. High River Gold released in an independent NI 43-101 Technical report prepared by Wardell Armstrong in 2012. The Bissa Group Permits cover an area of approximately 1,000 square kilometres in the province of Sanmatenga, approximately 80 kilometres north of the capital city of Ouagadougou in Burkina Faso.
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Table 14.1:
Bissa Resource Estimate (WAI, 01 January 2012)
Resource Category Measured Indicated M&I Inferred
Gold Grade (g/t) 2.47 1.21 1.25 1.05
Contained Gold (oz) 156,000 2,404,000 2,560,000 663,000
Reported Resources are within optimised pit shells at a cut-off grade of 0.5 g/t gold
14.6 GOLDRUSH RESOURCES 14.6.1 Ronguen The Ronguen Gold Deposit is owned by Goldrush Resources and located on the Kongoussi 1 and Tikare permits which are located less than ten kilometres northwest of the High River Gold Mines Ltd. (TSX-HRG) Bissa Deposit, which in turn is approximately 55km east of the Kalsaka-Sega complex. Goldrush released in May 2008 an independent NI 43-101 Technical report stating a mineral resource of 5.9Mt at a grade of 1.31g/t in the Inferred category. In May, 2012 SRK provided an update to the 2008 resource report which redefined Ronguen as follows: In the near-surface oxide zone: 4.143 million tonnes grading 1.12 grams of gold per tonne for 150,000 ounces of gold in the Measured category; 3.861 Mt at 1.28 g/t Au for 159,000 oz. Au in the Indicated category; and 136,000 t at 1.91 g/t Au for 8,000 oz. Au in the Inferred category.
In the deeper fresh rock (sulphide) zone: 483,000 t at 1.51 g/t Au for 23,000 oz. Au in the Measured and Indicated categories; and 754,000 t at 1.83 g/t Au for 44,000 oz. Au in the Inferred category.
The global resource estimate in all categories totals 384,000 oz. Au. A highlight from the resource report stated, SRK is of the opinion that additional drilling below the 280 metre elevation may extend the gold mineralisation at depth and has the potential to significantly increase the mineral resources. This suggests that further drilling at depth is highly warranted.
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SECTION 15.
MINERAL PROCESSING & METALLURGICAL TESTING
15.1 INTRODUCTION Orezone has conducted several test programs although no detailed mineral processing or metallurgical testwork has been performed on bulk samples from the Sega deposits. However, an indication of the gold recoveries is provided by the results from the systematic 2kg BLEG samples. A preliminary study was carried out at the Department of Mining Engineering at Queen's University, Kingston, Ontario, Canada, and was covered in MetChem's technical report of 2006. In addition, a mineral processing study was included in the GENIVAR Technical Report - Mining Scoping Study delivery in September 2007. Further testwork was conducted in 2010 by McClelland Laboratories Inc. as part of the current study to confirm gold recovery efficiencies through a combination of gravity separation and cyanidation leaching, sulphide flotation, column leach tests, agglomeration tests and screening and grading to support the design parameters for a conventional gold recovery plant. The testwork programme was undertaken on a total of 10 drill core composites from the Sega Project to evaluate possible processing alternatives for the various ore types represented by the composites.
15.2 REVIEW OF SCOPING STUDY METALLURGICAL TESTWORK 15.2.1 Queens University Test Program Six composite samples made of RC cuttings were collected and submitted to the Mining Engineering Department of Queens University, Kingston, Ontario, Canada for a series of metallurgical test work including gravimetric and cyanidation gold recovery. The six samples were from the Bakou, Gambo 2 and RZ deposits and included one sample made of saprolite or oxidized material (OX) from each deposit and one sample made of transition or partly oxidized (TR) material from each deposit (Amankwah R.K. et Yen W.T., April 2005). The results are summarized in the table below.
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Table 15.1: Sample
Testwork results from Queens University, April 2005 Hole From To kg Au BR g/t
2
Au Calc g/t
Cyan kg/t
CaO
Gravity %
Total %
kg/t 3.20 1.36 1.14 1.36 1.36 1.14
BK-OX1 G2-OX1 RZ-OX1 BK-TR1 G2-TR1 RZ-TR1
BKC276 GRC346 RZC228 BKC278 GRC306 RZC048
20 15 15 130 103 105
31 25 25 138 114 114
22 18 20 20 22 18
1.77 2.18 3.65 2.64 4.26 2.44
3.14 2.06 3.68 2.62 3.96 2.57
0.96 0.38 0.14 0.25 0.21 0.50
50.00 16.80 39.50 48.30 55.20 15.00
99.70 98.30 99.30 90.60 94.20 99.20
The calculated head grade was consistent with the grade indicated by the routine BLEG analyses performed on definition drill holes. The recovery by gravity was substantial for this type of material. The overall recovery exceeded 90% for all samples and 94% for five of the six samples.
15.2.2 Heap Leach Column Test Work 760m of PQ core were drilled on the Bakou, Gambo, RZ and Tiba deposits in order to collect mineralised material to implement preliminary metallurgical tests that started in November 2005. A line of eight columns 4.5m high and 0.17m in diameter was set up by Orezone at the Abilab facilities in Ouagadougou. One low grade sample from Bakou submitted to the column leach test showed that gold recovery reached a plateau after 17 days and 85% of the gold was recovered in four days. The recovered grade exceeded by 21% the expected value estimated from the closest drill hole. Seven samples from RZ showed that column leaching achieved 75% gold recovery after 11 days, 85% of the gold recovered in 25 days and 95% after 84 days, on average. The recovered grade largely exceeded (300%) the expected grade. Table 15.2 summarizes the results of these leach tests. RZD014 and RZD015 are 10m apart and the BLEG analysis is from RC hole RZC397. BKD003 is 1m south of BKC398 which provided the BLEG sample.
2 3 4 5 6 7
Expected grade based on exploration drilling BLEG analyses Calculated head grade based on metallurgical test work Cyanide consumption Lime consumption Gravimetric recovery (Knelson) Total recovery (gravity + cyanidation)
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Table 15.2: Column 1 2 3 4 5 6 7 8
Summary Results from Column Leach Tests Borehole RZD014 RZD014 RZD014 RZD014 RZD015 RZD015 RZD015 BKD003 From (m) 0.0 15.0 32.0 47.0 0.0 27.0 54.0 0.0 To (m) 15.0 32.0 47.0 63.0 27.0 54.0 80.0 11.3 Recovered Gold (g/t) 4.27 2.06 13.59 48.49 20.47 71.01 14.61 1.26 BLEG Lithology (g/t Au) 2.96 2.70 3.59 12.55 2.78 4.92 6.27 1.04 Pelite Pelite Pelite Pelite Pelite Pelite Sandstone Sandstone Oxide Oxide Oxide Transitional Oxide Oxide Transitional Oxide <5 25 10 85 65 75 <5 <5 Weathering Veins%
15.2.3 Bottle-Roll Test Program An extensive bottle roll test program was undertaken by Orezone in 2006 to further characterise the resources of the Sega Project. The program was done on a suite of RC samples from the most prominent sub-zones on the Sega property. An attempt was made to systematically collect the samples: On regular spacing; Similar to the average grade of the lens being tested; From a complete cut across the zones; and Lying only in one unit of the weathering profile.
The following is a summary of a report by H. Osborne dated December 2006 on the test program. 1,055 one-meter intervals of RC cuttings were composited into 173 six-meter composite samples. Three kg from each interval were blended into an 18kg sample from which three 2kg splits were taken. The remaining 12kg were retained for future testing. The 173 samples were split into three 2kg samples for bottle roll testing by various methods. The calculated head grades from the three splits compared very well with one exception (BKC 261, 13m to 18m; Splits 1 to 3 respectively at 1.18gAu/t, 26.0gAu/t and 0.83gAu/t). The remaining samples assayed within 60% precision of each other with no bias. Split 1 was reduced to 200mesh and submitted to 24 hour BLEG test with FA on the residual tails. This procedure established the sample grade and the percentage of cyanide-soluble gold at a 200mesh size in the three weathering units in the following table.
Table 15.3:
Split 1 - Percentage of Cyanide Soluble Gold at 200mesh Grind High 95.4 89.2 91.4 Low 77.4 75.5 56.4 Average 87.2 86.0 80.0
Weathering Oxide Transition Fresh
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The oxide and transition samples show a slight difference in overall recovery. The fresh mineralised materials show a more pronounced difference. The Split 3 samples done at the "as received" size ( 50% at 10mesh) show a dramatic decrease in recovery. This indicates that the gold recovery is size-sensitive to recovery, but not inherently refractory. Orezone estimates an 84% recovery based upon the Split 1 results. Split 2 was screened at 10mesh with the entire oversize fraction being submitted to FA and the 10mesh analyzed by BLEG with FA on the residue. The purpose of the test was to determine the amount of coarse gold in the +10mesh and to get an indication of the hardness of the ore for the different units in the weathering profile. A very slight trend to concentration is apparent in the +10mesh material throughout the grade range, but the assays were nearly identical in the 0gAu/t -3gAu/t range. The effective gold grain range is somewhat less than 10mesh. The size range of the cuttings is summarized in the table below.
Table 15.4:
Split 2 - Percentage of +10mesh Material in the "As Received" RC Samples High 30 45 60 Low 1.4 20 34 Average 15 30 45
The results indicate that most of the oxide samples have sufficient solid rock content to promote good agglomeration. Split 3 was subjected to a 72-hour bottle roll with timed interval assays and reagent control. This procedure was used to establish leach rate and reagent consumption. The leach curves for each of the 173 tests gave the results presented in the table below.
Table 15.5:
Split 3 - Percentage of Samples with Almost Essentially Complete Dissolution of Gold At 24 hours 45 43 42 At 48 hours 35 32 26 At 72 hours 20 24 32
The difference in the response from the different weathering units is deemed by Osborne to be most likely a reflection of the sample make up size (+10mesh) than a metallurgical response. The extended leach time improved recoveries over the Split 1 results by an average of 3% in the oxide and transition zones. A marked difference (up to 50% recovery) was noted from the Split 1 results in the fresh mineralisation. The Split 1 was at 200mesh, whereas the Split 3 was at 50% of + 10mesh. The recovery differential is size-specific and is likely due to locking of the gold in the gangue. The Sega gold mineralisation contains discrete gold particles in the >150mesh range. When done with standard procedures, assay repeatability (precision) is extremely poor (less than
10%). A procedure utilizing 2kg bottle rolls that gives the precision necessary to develop the mineral resource and was initiated by Orezone. The variability in the analysis of the Sega mineralisation was found to be in the sample preparation process rather than in the assaying. Consequently, the samples must be thoroughly blended after each size reduction stage, and be as large as reasonably possible. The bottle roll tests showed no evidence of preg-robbing, meaning adsorption of dissolved gold onto carbon or clays. There was evidence of preg-borrowing, that is, weak adsorption of dissolved gold onto clays. The 72-hour leach results tend to confirm an 84% recovery. The recovery should be at least that amount in the oxide and transition ores. However, H. Osborne believes the fresh mineralisation must be dropped from the resource or a lower recovery assigned. Still, Split 3 results show that leaching was still continuing after the 72-hour tests on these samples. Also noteworthy is the fact that poor recoveries in the samples of fresh mineralisation were uneven, as some samples showed good recoveries. The pH of each test taken prior to lime addition is provided in the table below.
Table 15.6:
pH Tests Prior to Lime Addition Weathering Oxide Transition Fresh % pH 7.0 59.5 15.4 55.0
The lowest pH occurred in the fresh samples. However, the amount of lime required to raise and maintain the pH was far less that the CaO equivalent of the cement required for agglomeration. The cyanide consumption, when adjusted for heap leach conditions is expected to be 0.28kg/ton. The report by H. Osborne includes recommendations for column testing on mineralisation in the oxide and transition zone and column testwork on bulk samples or diamond drill core. Orezone is planning to complete a comprehensive metallurgical test work program on the in 2010.
15.3 REVIEW OF FURTHER METALLURGICAL TESTWORK (2010) 15.3.1 Sample preparation A total of ten drill core composites were sent to McClelland, these samples were as follows: PQ (4 composites); o PQ-OX1 (oxide); o PQ-OX2 (oxide); o PQ-TR (transition); and o PQ-FR (fresh).
November 2012
RBG (5 composites); and o RBG-1A (oxide); o RBG-1B (oxide); o RBG-2 (transition); o RBG-3A (fresh); and o RBG-3B (fresh); TIBA (1 composite). o TIBA (oxide).
Samples received for heap leach amenability testwork labelled: TB1 (TIBA) trench material (oxide); TB2 trench material (oxide); BK1 (BAKU) trench material (oxide); BK2 trench material (oxide); RZ1 trench material (oxide); RZ2 trench material (oxide); TB5 trench material (oxide); and TB6 trench material (oxide).
15.3.2 Head Analyses Head samples were assayed using conventional fire assay fusion procedures and an ICP Metals analysis was conducted on each composite. The table below shows the average head assay results for each composite sample.
Table 15.7: Determination Average Aug/t
Gold Head Assay Results Oxide PQ-OX1 3.96 PQ-OX2 1.34 RBG-1A 1.55 RBG-1B 2.00 TIBA 2.17 Transition PQ-TR 3.62 RBG-2 1.74 PQ-FR 2.09 Fresh RBG-3A 2.62 RGB-3B 3.54
Gold Silver Copper Arsenic -
Gold grades ranged from 1.34g/t to 3.96g/t over all the composites and are shown in the table above. None of the composites contained more than 5 Ag/t. Copper concentrations ranged between 56ppm and 182ppm over all the composites. Arsenic concentrations ranged between 161ppm and 1,980ppm over all the composites. Samples RBG-2, RBG-3A and RBG-3B were monitored as they contained a fair quantity of arsenic, which could have detrimental effects on gold recovery. Arsenic should be monitored in the leach solution and final residue. None of the samples contained more than 0.02 ppm mercury. Antimony levels range from <5ppm to 9ppm. These values are low and will not significantly affect the gold recovery.
Mercury Antimony November 2012
Detailed ICP analyses can be found in Appendix 15-A.
15.3.3 Comminution Testwork Phillips Enterprises LLC completed seven Bond Ball Mill Work Index (BBWi) tests and seven abrasion (Ai) tests in 2010. The BBWi tests were conducted with a closing screen of 150m. The Ai and the BBWi results are shown in Table 15.8 below.
Table 15.8:
Ai and BBWi Testwork Results
Sample RBG-2 RBG-3A RBG-3B PQ-FR PQ-TR PQ-OX 1 PQ-OX 2
Ai 0.1232 0.2121 0.2569 0.0585 0.1254 0.2784 0.0214
BBWi (kWh/t) 11.02 15.84 16.37 10.76 10.31 6.93 5.98
The BBWi testwork results range between 5.98kWh/t and 16.37kWh/t and the Ai testwork results range between 0.0214 and 0.2569.
15.3.4 Direct Cyanidation Bottle Roll Cyanidation Testwork Detailed metallurgical results from the bottle roll tests and gold leach rate profiles are presented in Appendix 15-A. Leach tests were conducted for 96 hours except the leach tests using 106m pulverised samples which were carried out over 48 hours. Bottle roll cyanidation testwork results, summarised in the table below, show that the all the composites were amenable to direct cyanidation (CIL). The reagent (cyanide and lime) consumptions, for each test conducted on each of the composites, have also been tabulated below.
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Table 15.9:
Summary of Direct Cyanidation Testwork Results

Time, hrs
Unit PQ-FR PQ-OX1 PQ-OX2 PQ-TR TIBA-1 RBG-1A RBG-1B RBG-2 RBG-3A RBG-3B
Recovery Au, -12.5mm NaCN Consumed Lime Added Recovery Au, -12.5mm NaCN Consumed Lime Added Recovery Au, -6.3mm NaCN Consumed Lime Added Recovery Au, -1.7mm NaCN Consumed Lime Added Nominal -106um NaCN Consumed Lime Added Recovery Au [CIL -106um] NaCN Consumed Lime Added Preg Robbed Au 48 48 96 96 96 96
% kg/t kg/t % kg/t kg/t % kg/t kg/t % kg/t kg/t % kg/t kg/t % kg/t kg/t %
75.4 0.14 4.1 63.7 0.23 3.8 92.2 0.07 5.4 93.1 0.3 3.4 0.9
92.8 0.08 2.7 89.4 0.07 3.0 93 0.09 2.7 91.3 0.07 3.1 98.3 0.3 2.5 7.0
84.7 <0.07 7.6 78.4 <0.07 8.4 79.9 0.1 8.1 81.8 0.07 8 90.2 0.21 7.2 8.4
80.3 0.2 4.5 82 <0.07 4.9 94.9 <0.07 5.3 94.8 0.3 4.4 0.0
68.0 0.16 2.60 67.6 0.20 2.70 74.7 0.12 2.80 78.1 0.07 2.60 -
93.3 0.1 5.1 91.7 <0.07 5.6 89.2 0.11 5.7 85.5 0.09 5.8 -
87.1 0.1 3.8 88.8 0.11 3.9 87.6 0.11 3.7 89 0.08 3.8 -
64.2 0.18 3.60 66.5 0.23 3.70 90.8 0.08 5.80 93.2 0.38 3.40 2.4
33.6 0.38 1.20 34.1 0.44 1.60 40.6 0.40 1.50 61.0 0.29 1.40 81.1 0.23 1.6 90.1 0.38 1.1 9.0
28.5 0.36 1.40 38.8 0.60 1.20 65.8 0.29 1.10 83.2 0.15 1.50 95.7 0.45 1.10 12.5
Gold recoveries achieved on the coarser grind testwork (P100 = -12.5mm & -6.3mm) for the following composites: PQ-FR, PQ-OX1, PQ-OX2, PQ-TR, TIBA-1, RBG-1A, RBG-1B, RBG2, ranged between 63.7% and 93.3%. On the other two composites (RBG-3A and RBG-3B) lower gold recoveries ranging between 28.5% and 40.6% were achieved. Gold recoveries achieved during finer grind testwork (Nominal 106um) ranged from 81.1% to 95.7%. Gold recovery is significantly affected by preg-robbing in the following composites: PQ-FR, PQ-OX1, PQ-OX2, RBG-2, RBG-3A, and RBG-3B. This indicates that the process route selection should be selected to accommodate the presence of preg-robbers. Cyanide consumptions range between 0.07kg/t and 0.45kg/t and lime additions range between 1.1kg/t and 8.1kg/t.
15.3.5 Gravity Concentration Testwork Gravity concentration tests were conducted on seven composites at a nominal 106um feed size; to determine concentrate grade, concentration ratio and gold recovery. The gravity testwork results are summarised in the table below.
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Table 15.10:
Gravity Concentration Tests

Unit % wt.% g/t % PQ-FR 84 0.05 493 14 PQ-OX1 74 0.07 166 3.3 PQ-OX2 80 0.09 91.9 8.6 PQ-TR 77 0.06 582 11.8 RBG-2 91 0.03 3618 53.1 RBG-3A 81 0.07 536 18.6 RBG-3B 80 0.11 863 22.6
Gravity Concentrate Results Feed size passing 106um Mass pull Au (g/t) Au distribution
The RBG-2 composite indicated a significant quantity of gravity recoverable gold in comparison to the other six composite. Microscopic examination of the gravity cleaner concentrates revealed the presence of liberated particle gold values in composites PG-OX2, RBG-2, and RBG-3B. The observed gold particles ranged in size from 0.6mm to 2.0mm.
15.3.5.1 Gravity Tailings Cyanidation Bottle roll cyanidation tests were conducted on the seven gravity middlings and tails composite samples. The testwork results are summarised in the table below.
Table 15.11:
Gravity Tailings Cyanidation

Unit % % % % % kg/t kg/t PQ-FR 84 CY-40 13.2 77.8 91 0.22 3.8 PQ-OX1 74 CY-42 3 94 97 0.22 2.5 PQ-OX2 80 CY-43 6.7 83.2 89.9 0.21 9.0 PQ-TR 77 CY-41 12.3 80.4 92.7 0.22 4.3 RBG-2 91 CY-37 48.6 44.8 93.4 0.39 2.7 RBG-3A 81 CY-39 15.6 73.8 89.4 0.52 1.2 RBG-3B 80 CY-38 26.9 67.8 94.7 0.46 1.1
Gravity Tailings Cyanidation Feed size passing 106um Au extraction In gravity concentrate In tailings leach Combined total NaCN consumed Lime added
The seven composites were readily amenable to gravity concentration, with agitated cyanidation of the resulting recombined middlings and tails. Combined gold recovered from the gravity concentration combined with the middlings and tailings cyanidation ranged from 89.4% to 97.0%. These combined recoveries were essentially the same as that obtained during the direct cyanidation testwork at a nominal 106um grind size. Although recoveries were the same, gravity was recommended as it would reduce retention time in the leaching process. Cyanide consumptions when leaching the gravity tailings were low, and nearly the same as encountered during direct cyanidation testing. Lime requirements were moderate to high, and again similar to those observed during direct cyanidation testing.
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15.3.6 Sulphide Flotation Sulphide flotation tests were conducted on five composites (transition and fresh ore types) at a nominal 106um feed size to determine Au concentrate grade and recovery. Bulk sulphide flotation test results are detailed in the table below.
Table 15.12:
Bulk Sulphide Flotation Tests
Unit Percentage passing 106um Flotation Cleaner Concentrate Mass pull Assayed concentrate Gold recovery Cleaner Tails Mass pull Assayed concentrate Gold recovery Combined Rougher Concentrate Mass pull Assayed concentrate Gold recovery wt% gAu/t % wt% gAu/t % wt% gAu/t % %
PQ-FR 83
PQ-TR 71
RBG-2 88
RBG-3A 84
RBG-3B 79
3.90% 33.6 61.10%
3.80% 41.02 42.80%
2.30% 46.76 66.60%
5.00% 41.71 73.30%
6.50% 41.24 82.40%
9.80% 1.91 8.70%
14.3% 6.38 25.0%
4.00% 1.54 3.80%
3.10% 16.5 18.0%
4.80% 6.75 10.0%
13.7% 11.0 70.0%
18.1% 14.0 67.8%
6.30% 18.0 70.4%
8.10% 32.0 91.3%
11.3% 27.0 92.4%
Flotation test results showed that the Sega transition composites PQ-FR, PQ-TR and RBG-2 responded moderately well to sulphide flotation at a nominal 106m feed size. Gold values reporting to the flotation rougher concentrates ranged from 67.8% to 70.4%. The RBG-3 fresh composites responded well to flotation with gold recoveries of 91.3% to 92.4%.
15.3.7 Agglomerate Strength and Stability Testwork Agglomerate strength and stability tests were conducted on 8 composites at a -12.5mm feed size to optimise agglomerating conditions.
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Table 15.13:
Agglomerate Strength and Stability Testwork Results

Blinder Addition kg/t Cement Lime N/A N/A 3 0 5 0 7.5 0 N/A 3 5 7.5 N/A 3 5 7.5 N/A 3 5 7.5 N/A 3 5 7.5 N/A 3 5 7.5 N/A 3 5 7.5 N/A 3 5 7.5 N/A 0 0 0 N/A 0 0 0 N/A 0 0 0 N/A 0 0 0 N/A 0 0 0 N/A 0 0 0 N/A 0 0 0 Agglomeration Moisture % 0 6.8 7.4 6.9 0 7.9 7.6 7.7 0 13.1 13.1 13.1 0 16.4 15.4 15.0 0 13.4 13.5 13.8 0 7.7 7.3 7.3 0 3.6 3.2 3.0 0 3.4 3.0 2.4 Retained On 1.7mm Screen Wt.% 73.9 80.6 87.8 93.4 74.4 77.3 85.5 89.5 50.5 81.4 86.5 99.2 63 84 85.6 86.8 57.4 85.8 89 90.8 72.9 87.3 89.1 91.3 79.1 88.3 89.2 89.2 80.1 89.0 90.3 87.9 Submersion Observation (degree of degradation) 10 minutes 24 hours Dry screened Total Total No Degradation Partial Partial Partial Dry screened Partial Partial Partial Dry screened Total Partial No Degradation Dry screened Total Total Partial Dry screened Total Partial Partial Total Total Partial Total Total Partial Partial Partial Partial
Composite PQ-FR PQ-FR PQ-FR PQ-FR PQ-TR PQ-TR PQ-TR PQ-TR TIBA TIBA TIBA TIBA RBG-1A RBG-1A RBG-1A RBG-1A RBG-1B RBG-1B RBG-1B RBG-1B RBG-2 RBG-2 RBG-2 RBG-2 RBG-3A RBG-3A RBG-3A RBG-3A RBG-3B RBG-3B RBG-3B RBG-3B
Total Partial Partial
Dry screened Partial Partial No Degradation No Degradation No Degradation No Degradation Dry screened No Degradation No Degradation No Degradation No Degradation No Degradation No Degradation Dry screened No Degradation No Degradation No Degradation No Degradation No Degradation No Degradation
A total of three agglomerate strength and stability tests were conducted on each composite. Binder additions evaluated were 3.0kg, 5.0kg, and 7.5kg cement/t. The fresh ore type composites (RBG-3A and 3B) contained very little fines (3% - 4% passing 75um). The transition ore type composites (PQ-FR, PQ-TR and RBG-2) contained between 10% and 20% passing 75m material. Results from agglomerate strength and stability tests conducted on transition and fresh composites that a cement addition of 5.0kg/t to 7.5kg/t was optimum for agglomeration pretreatment of those ore types. The oxide ore type composites (TIBA, RBG-1A and RBG-1G) had relatively high fines content (33% to 52% passing 75m). The optimum binder additions for oxide composites were 7.5kg cement/t, or higher. Based on these results and bottle roll test lime requirements, an agglomeration binder addition of 4.0kg/t cement plus 5.0kg/t lime was selected for column leach testing of the oxide and transition ore types. A cement addition of 4.0kg/t was selected for column leach testing of the fresh ore type.
15.3.8 Column Leach Test Results Column percolation leach tests were conducted on eight composites at P100 = -12.5mm feed size to determine gold recovery, recovery rate, and reagent requirements under simulated heap leaching conditions.
Table 15.14:
Column Leach Test Results

PQ-FR PQ-TR P2 18.7 47.7 70.7 77.1 79.9 85.6 87.3 88.5 3.09 0.4 3.49 3.62 0.66 5 4 11.3 11.3 76 TIBA-1 P8 0.2 46.5 69.7 74.2 76.4 79.9 81.1 82.0 1.73 0.38 2.11 2.17 0.25 5 4 11.9 11.6 82 RBG-1A P3 7.0 38.2 76.2 82.4 84.9 88.8 90.0 91.3 1.57 0.15 1.72 1.55 0.79 5 4 11.1 11.0 80 RBG-1B P4 8.4 53.6 80.7 85.2 87.2 90.6 91.5 92.0 1.73 0.15 1.88 2 0.63 5 4 11.5 11.3 80 RBG-2 P5 10.1 34.0 54.7 61.8 65.9 73.8 76.7 79.2 1.18 0.31 1.49 1.74 0.65 5 4 11.6 11.4 80 RBG-3A P6 1 6.3 12.3 16.1 19 24.7 26.6 28.3 31.1 0.97 2.15 3.12 2.62 0.87 0 4 10.5 10.4 111 RBG-3B P7 0.3 2 4.5 6.3 7.7 11.8 14 15.7 20.7 0.82 3.15 3.97 3.54 0.81 0 4 10.8 9.9 111
Extraction% of Au 1st day effluent in 5 days in 10 days in 15 days in 20 days in 40 days in 60 days in 80 days End of Leach/Rinse Extracted, gAu/t Tail Screen, gAu/t Calculated head, gAu/t Average head NaCN consumed Lime added Cement added Final Solution pH pH After Rinse Leach/Rinse Cycle, Days
P1 17.7 40.2 59.6 66.4 69.6 75.8 77.5 79.0 1.58 0.42 2 2.09 0.59 5 4 11.4 11.5 76
Column leach testwork results show that composites PQ-FR, PQ-TR and TIBA-1 were amenable to simulated heap leach cyanidation treatment at a -12.5mm feed size. Gold recoveries were 79.0%, 88.5% and 82.0%, respectively, in 76 days to 82 days of leaching and rinsing. Cyanide consumptions for composites PQ-FR and PQ-TR were 0.59kgNaCN/t and 0.66kgNaCN/t, respectively. Cyanide consumption for composite TIBA-1 was lower (0.25kgNaCN/t ore). The 4.0kg/t lime addition and 5.0kg/t cement addition during agglomeration pretreatment was sufficient for maintaining protective alkalinity during leaching.
15.3.9 Head Screening Analysis The following analyses were performed on samples PQ-FR, PQ-TR, TIBA-1, RBG-1A, RBG1B, RBG-2, RBG-3A and RBG-3B:
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Head screen analyses; Tail screen analysis on column leached residue; and Recovery by size fraction testwork.
Metallurgical balances were conducted on the column leach tests and can be found in the following report by McClelland Laboratories. 25 March 2011, McClelland Laboratories INC, 2010 Metallurgical Testing-Sega Project Report No. MLI Job 3435.
Assay by Size Table for PQ-FR, PQ-TR and TIBA1
Table 15.15:
Head screen analysis results show that composites PQ-FR, PQ-TR and TIBA-1 contained 2.22gAu/t, 3.81gAu/t and 2.12gAu/t, respectively. Contained gold values were fairly evenly distributed throughout the various size fractions. Tail screen analysis results show that the -12.5mm column leached residues for composites PQ-FR, PQ-TR and TIBA-1 contained 0.42gAu/t, 0.40gAu/t and 0.38gAu/t. Residual gold values were not evenly distributed throughout the various size fractions but tended to be depleted in the finer size fractions. Recovery by size fraction data for composites PQ-FR and TIBA-1 indicates that grinding finer than 250m in size may significantly increase gold recovery by cyanidation and that grinding finer than 75m may be required to maximize gold recovery by cyanidation. Recovery by size fraction data for composite PQ-TR indicates that gold recovery may gradually increase with decreasing feed size and that grinding finer than 75m may be required for maximum recovery by cyanidation.
Table 15.16:
Assay by Size Table for RBG-1A, RBG1B and RBG-2
Head screen analysis results show that composites RBG-1A, RBG-1B, and RBG-2 contained 1.52gAu/t, 1.92gAu/t and 1.93 gAu/t ore, respectively. Contained gold values of composites RBG-1A an RBG-1B were not evenly distributed throughout the various size fractions but tended to be enriched in the (-250 +150) m and -150+75m size fractions. Contained gold values of composite RBG-2 were fairly evenly distributed among the various size fractions.
Tail screen analysis results show that the -12.5mm column leached residues for composites RBG-1A, RBG-1B, and RBG-2 contained 0.15gAu/t, 0.15gAu/t and 0.31gAu/t, respectively. Residual gold values were not evenly distributed throughout the various size fractions but tended to be depleted in the finer size fractions. Recovery by size fraction data for composites RBG-1A, RBG-1B, and RBG-2 indicates that grinding finer than 250m in size may significantly increase gold recovery by cyanidation and that grinding finer than 75m may be required to maximize gold recovery by cyanidation.
Table 15.17:
Assay by Size Table for RBG-1A, RBG1B and RBG-2
Head screen analysis results show that composites RBG-3A and RBG-3B contained 3.45gAu/t and 3.88gAu/t ore, respectively. Contained gold values were fairly evenly distributed throughout the various size fractions. Head screen size fraction assays tended to be somewhat "spotty". Tail screen analysis results show that the -12.5mm column leached residues for composites RBG-3A and RBG-3B contained 2.15gAu/t and 3.15gAu/t. Residual gold values were not evenly distributed throughout the various size fractions but tended to be depleted in the finer size fractions. Recovery by size fraction data for composites RBG-3A and RBG-3B indicates that grinding finer than 1.7mm in size may significantly increase gold recovery by cyanidation and that grinding finer than 75m may be required to maximize gold recovery by cyanidation.
15.3.10
Physical Ore Characteristic
Data shows that little slumping of ore charges occurred during leaching.
15.3.11
Moisture Requirements for Composites
Moisture requirements for these composites during agglomeration and for saturation ranged from 12% to 14% and from 25% to 31%, respectively. A very high amount of fines was measured in these feeds (18% to 56% passing 75m). The moisture requirements for the RBG-2, PQ-FR and PQ-TR composites were in ranges typical for finely crushed feeds. The moisture requirements for the RBG-3A and RBG-3B feeds were low. The moisture requirements for all feeds correlated to the fines content.
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15.3.12
Geotechnical (Load/Permeability) Testing
Geotechnical testing conducted on the six oxide and transition ore type column leached residues to determine permeability of the leached ore under simulated heap stack height compressive loading. Samples of the leached agglomerates were taken before drying and in a manner to reduce degradation of agglomerates during blending and splitting. Testing was done by Ausenco Vector and their results can be found in Appendix 15-A.
15.3.13
Fixed Wall Hydraulic Conductivity
Fixed wall hydraulic conductivity results showed acceptable permeability for composites PQFR, PQ-TR, TIBA-1, RBG-1B and RBG-2 column leached residues under simulated heap stack heights of up to 7m. The leached agglomerate residue from composite RBG-1A did not show an acceptable hydraulic conductivity for a stack height higher than 3m. Further optimisation of the agglomeration binder addition will be required to determine if that material can be effectively heap leached.
15.3.14
Further Column Leach Tests
Further column leach testwork was conducted on fresh ore composites RBG-3A/3B by McClelland Inc. due to the poor recoveries obtained during the previous testwork programme (20.7% to 31.1% in 111 days at a grind size of 12.5mm). Hence, a finer grind was tested to improve gold recovery. The details of the results are included in the following report found in Appendix 15-B. June 2011, Follow up column leach testing on fresh ore type material. Report no. 3435
Further Column Leach Testwork
Table 15.18:
Extraction% of total Au Grind size passing 1.7mm 1st effluent 5 days 10 days 15 days 20 days 40 days 60 days End of Leach NaCN Consumed Lime Added Cement added
Unit % % % % % % % % % kg/t kg/t kg/t
RBG-3A/3B 93.0 1.80 16.2 45.8 57.9 63.7 72.3 75.3 77.3 0.9 2.0 7.0
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The testwork results shown above indicate that composite RBG-3A/3B was amenable to simulated heap leach cyanidation treatment at a 93%-1.7mm feed size. Gold recovery was 77.3% in 96 days of leaching and rinsing. Cyanide consumption for this composite was moderate (0.90kgNaCN/t ore). The 7.0kg cement/t ore added during agglomeration pre-treatment was sufficient for maintaining protective alkalinity during leaching. 15.3.15 Heap Leach Testwork
The heap leach amenability testwork was carried out by KMSA metallurgical laboratory on trench material. The objective of this testwork was to confirm results on testwork performed previously. The details of this testwork are included in Appendix 15-C in report: August 2012, Metallurgical Test Report Column Leach Test Work Draft. Report no. DRAFT Sample ID and Head Assays
15.3.15.1
The table below shows the sample inventory and gold head assays.
Table 15.19:
Sample ID and Head Assays Sample ID TB1 TB2 BK1 BK2 RZ1 RZ2 TB5 TB6 Ore Type Oxide (Trench material) Oxide (Trench material) Oxide (Trench material) Oxide (Trench material) Oxide (Trench material) Oxide (Trench material) Oxide (Trench material) Oxide (Trench material) Ore Size P80 = 26.5 P80 = 26.5 P80 = 26.5 P80 = 26.5 P80 = 26.5 P80 = 26.5 P80 = 26.5 P80 = 26.5 Head Assay 0.10 0.09 1.06 0.94 0.17 0.19 1.03 0.33
15.3.15.2
Summary of Head Size Analysis
A head size analysis was performed to determine the size distribution of the trench material. Results showed that the samples averaged 80% passing 26.5mm.
15.3.15.3
Column Leach Testwork
Column leach tests were performed on the trench material to determine the gold recoveries that could be achieved. The results showed high gold recoveries averaging 88% which is high for a heap leach process.
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Table 15.20: Sample ID TB1 TB2 BK1 BK2 RZ1 RZ2 TB5 TB6 Ore Type Oxide Oxide Oxide Oxide Oxide Oxide Oxide Oxide
Summary of Column Leach Tests Sample Weight 56.46 58.39 56.55 58.24 57.57 59.00 54.68 68.98 Ore Size P80 = 26.5mm P80 = 26.5mm P80 = 26.5mm P80 = 26.5mm P80 = 26.5mm P80 = 26.5mm P80 = 26.5mm P80 = 26.5mm Fire Assay (g/t) 0.10 0.09 1.06 0.94 0.17 0.19 1.03 0.33 Calculated Head (g/t) 0.127 0.132 1.762 1.384 0.416 0.253 1.345 0.16 Actual Recovery (%) 79.00 82.37 94.79 95.65 87.99 82.89 92.19 71.83 Fire Assay on Residue (g/t) 0.027 0.023 0.09 0.06 0.05 0.043 0.105 0.045 Days Leached 25 25 67 69 24 24 20 20 Optimum Cement (kg/t) 10 10 10 10 10 10 10 10
15.3.15.4
Stability Tests
Stability tests were carried out on the trench samples to predict optimum cement requirements for agglomeration.
Table 15.21:
Predicted Field Heap Cement Requirement testwork
Cement Additions (kg/t) Initial Height (cm) Final Height (cm) % Slump % pelet breakdown Out for solution colour and clarity Flow (ml/min) measured 1 2 3 Flow (ml/min) average Flow minimum (ml/minute) Pass or Fail
9 53 49 8% 20 clear 820 800 700 773.3 257 Pass
Test Conditions 10 11 53 51 4% 15 very clear 1520 1520 1580 1540 257 Pass 49 48 2% 10 very clear 1460 1460 1460 1460 257 Pass
12 48.5 48 1% 10 very clear 1680 1580 1600 1620 257 Pass
The table above shows that the optimum cement addition is 9kg/t to 10kg/t. This cement addition was therefore selected for rest of this testwork. The agglomerate showed excellent stability with only minor slumps resulting during the column leaching.
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15.3.15.5
Compacted Permeability Tests
Compact permeability tests were performed to ascertain the competency of the agglomerates from 9kg/t cement addition and the heap percolation rate at the very bottom of the heap.
Table 15.22:
Dry Compacted Height (cm) 30.5 30.5 Final Wet Compacted Height (cm) 28.0 27.5
Compacted Permeability Tests

Load Equiv. of 1.8 MT/M3, Estimated Heap Ht (m) 10 19 Out Flow Solution Colour and Clarity clear clear
Load Applied (kg) 1,364 2,727
Dry - Wet (% Slump)
Flow (Litres)
Flow Time (min) 3 3
Flow Out (LpHr) 324 133
Flow Out (LpHr/m2)
% Pellet Breakdown
Overall Result
8.2 9.8
16.2 6.67
4,158 1,710
10 10
PASS PASS
The above table shows that both the permeability tests passed the minimum criteria for heap leaching. The testwork shows that the fluid will percolate through the heap successfully at both a normal load equivalent and an almost doubled load equivalent.
15.4 METALLURGICAL TESTWORK CONCLUSIONS The following are conclusions that were derived from the metallurgical testwork programmes during the various study phases: The Sega drill core composites generally contained significant quantities of particulate, free milling gold values, and displayed very spotty gold occurrence; The Sega oxide ore type and transition ore type composites were amenable to simulated heap leach cyanidation treatment at a -12.5mm feed size; The Sega fresh ore type composites were not amenable to simulated heap leach cyanidation treatment at the -12.5mm feed size; Simulated heap leaching gold recovery rates were fairly rapid for the oxide and transition ore type composites; Cyanide consumptions were fairly low to moderate; Base requirements for agglomeration pre-treatment and pH control were high; Composites representing all three ore types were amenable to simulated milling/cyanidation treatment at a nominal 106m feed size; Pulverizing the oxide ore type composites to a nominal 106m feed size before leaching generally did not significantly improve gold recoveries compared to those obtained by simulated heap leaching treatment; Pulverizing the transition ore type composites to a nominal 106m feed size before leaching moderately improved gold recoveries compared to those obtained by simulated heap leaching treatment; Pulverizing the fresh ore type composites to a nominal 106m feed size before leaching substantially improved gold recoveries compared to those obtained by simulated heap leaching treatment; Milling/cyanidation reagent consumptions for the fresh ore type composites were low; Results from comparative CIL testing at the 106m feed size generally did not indicate significant preg-robbing, but were inconclusive with respect to four of the
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composites evaluated. Further testing would be required to determine if any pregrobbing character was displayed; Gold recoveries obtained by whole ore gravity concentration, followed by cyanidation of the gravity tailings, at a 106m feed size, were essentially the same as obtained by whole ore milling/cyanidation treatment at the same feed size. It was unclear whether or not gravity treatment was effective in significantly decreasing required leach retention time; The transition ore type composites did not respond particularly well to conventional bulk sulphide flotation treatment, at a nominal 106m feed size; The fresh ore type composites responded well to conventional bulk sulphide flotation treatment at a nominal 106m feed size; The Sega fresh ore type composite RBG-3A/3B was amenable to simulated heap leach cyanidation treatment at the 93%-1.7mm feed size; Simulated heap leaching gold recovery rate was moderate for the Sega fresh ore type composite; Cyanide consumption was moderate; The 7.0kg/t ore cement added was sufficient for pH control during simulated heap leaching; Permeability of the leached agglomerates, under simulated heap stack height loadings was relatively low. Further optimisation of agglomerating conditions will be required for the 1.7mm feed; Samples tested were highly amenable to heap leaching at the coarser crush size of 26.5mm; The overall gold recovery and the rate of gold dissolution at 26.5mm crush size were exceptionally high for heap leaching. The achieved average gold dissolution of 88.6% (raw) was highly encouraging; Cement consumption for the optimised condition tests were shown to be moderate at 9.0kg/t ore; and Test samples received from exploration were assayed to be in the range of only 0.10g/t 1.03g/t.
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SECTION 16.
16.1 INTRODUCTION
Mineral Resource and Mineral Reserve Estimate
The current mineral resource, comprised of thirteen different block models was estimated by Mr. Andr Labont, Resource Geologist for Orezone, using Gemcom (version 6.2.2) mining software (Gemcom Software International Inc.).
Table 16.1:
List of Current Estimate Block Models Deposit RZ RZE RZW Bakou Gambo South Gambo North Gambo SW MS Tiba 1 Tiba 1E Tiba 2 Tiba 3 Tiba 3SE Previous Estimate Included but combined with RZE Included but combined with RZ Included Included Included but combined with Gambo North Included but combined with Gambo South Included Included Included Included Included Included Included
The resource calculation was performed in accordance with "National Instrument 43-101, Standards of Disclosure for Mineral Projects" and the "CIM Definitions Standards on Mineral Resources and Mineral Reserves" adopted by CIM Council (2004). Orezone cautions that mineral resources do not have demonstrated economic viability. In addition, there is no certainty that all or part of the mineral resource will be converted into reserve.
16.2 DRILL HOLES DATABASE
16.2.1 Database Construction The current resource estimation is based on all data obtained from the drill programs performed by Orezone and by previous owners up to December 2009. The results from RC and diamond drilling were used to complete the mineral resource estimate, while the data from the RAB and trench samples were only used as a complement to the geological interpretation. The combined holes drilled by Orezone and previous operators achieve a final square drill pattern with 25m spacing, in most cases.
A master database was constructed by Orezone from the amalgamation of Excel files. Handheld computers are used to collect field data and drill hole logs. Assay results from the laboratories are automatically transferred by way of the VLookup function in Excel by Edwin Maes, GIS geologist at Orezone's Ouagadougou office. All the sampling and assay data used for this resource estimate, including the QA-QC data, was imported and validated in Datashed by Orezone QAQC manger Laurent Coulibaly. The validated data was then extracted from Datashed and exported to the Gemcom package used by A. Labont for the resource modeling.
Table 16.2: Table AS Assay Header
Content of Drill Hole Database Type of Data Arsenopyrite content Assay results Drill Hole collar Fields From, To, Code, Date_logged, Geologist From,To, Au_ppm, Sample_ID, Weight,MagSus, Date_Sampled, Tech, Tails, BLEG, Meth_Analy, Lab Hole-ID, Company, Length, Location_X, Location_Y, Location_Z, Prospect, Type, Permit, Date_Started, Date_Finished, Section, Coord_Type From, To, Code, Date-logged, Geologist Distance, Density From, To, Density From, To, Code, Date-logged, Geologist From, To, Code, Date-logged, Geologist From, To, Code, Date-logged, Geologist From, To, Code, Date-logged, Geologist Distance, Type, Measured_Az, Measured_Dip, Alpha, Beta, QV_Colour, QV_thickness From, To, Code, Date-logged, Geologist From, To, Code, Date-logged, Geologist From, To, Code, Date-logged, Geologist
Deformation Density Density_Bulk Litho1 Litho2 Oxidation PY Structural Texture Veins VG
Intensity and type of deformation Specific density Bulk density based on whole core box weight Primary lithology Regolith and weathering data Oxidation facies Pyrite content Structural data from oriented core Rock texture % of vein material Occurrence of visible gold
16.2.2 Database Validation The integrity of the drill hole database is protected by Orezone at several stages. The correctness of the intervals for the RC samples is checked by visual inspection of the drill logs and section plots, and by various mathematical formulas by the project geologist as drilling progresses. The GIS geologist in Ouagadougou, Edwin Maes, and the QA-QC dedicated specialist, L. Coulibaly, completes additional checks and validation of the data entries when transferring the field data into the database. Assay results are checked with the geological descriptions. The GIS Geologist in the Ouagadougou office is responsible for building and maintaining the database, and controls virtually all changes, modifications or add-ons. Additional checks are completed by the Resource Geologist in Ottawa and by the validation process built in Gemcom when importing the data. As and when required, field checks are performed at all stages of the geological modeling process to insure the correctness of the interpretation and validate original observations and measures.
16.2.3 Collar Location The collars of all the holes back to 1997, (except for some old ones drilled by Mutual); have been surveyed by a differential GPS and a total station instrument. The holes deviation was measured at 25m intervals with an instrument relying on the earth magnetic field for the azimuth readings. The holes at Sega did not show any unusual deviation and the survey results were incorporated into the construction of the model. Several check surveys were conducted by Orezone to validate the network of control stations established on the property and the collar locations attached to each control station.
16.2.4 Density Determinations Orezone started a systematic program of density determination in 2005 when the first core holes were drilled on the project. Since 2007, Orezone doubled the number of determinations in the holes used for the previous minerals resource estimate. A total of 5,501 density determinations were used for the current density model (see Table 16.3 and Table 16.4 for details). Orezone is routinely recording the following information in a spreadsheet for each measurement: interval, depth, oxidation, rock type, water content. The dry weight of the samples used ranged from 159.2g to 2.629.9g and the results ranged from 1.102g/cm3 and 5.382g/cm3. Since 2007, Orezone is routinely weighting the core boxes with the whole core. The weight of the core box is subtracted and a bulk density is calculated for the volume of core contained in the box. This bulk density data has been used to validate the spot density determinations and there is a good agreement between both datasets (see Table 16.3 and Table 16.4 for details). For the current mineral resource model, Orezone has used the average density calculated for each lithology and each oxidation facies based on the 5,501 validated determinations in our database (see Table 16.3 and Table 16.4 for details), rather than a unique density for each of the three major oxidation facies (i.e. Oxide, Transition and Fresh). The expanded database and the average density calculated for each weathering zone are essentially consistent with the previous data (see Table 16.3). These figures are also consistent with specific gravities calculated for deposits of similar types and settings in Burkina Faso and elsewhere in West Africa.
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Table 16.3:
Bulk Density Calculated and Used by Orezone in the Tonnage Calculations

Bulk Density
Weathering Zone
Previous Model (All Deposits) Number of samples Measured Density 1.94 2.41 2.76 Density Used 1.90 2.35 2.70
Current Model Tiba Deposits Number of Samples 504 139 313 Measured Density 1.99 2.31 2.77 RZ-BK-Gambo Deposits Number of Samples 1,508 820 2,217 Measured Density 1.98 2.41 2.78
Oxide Transition Fresh
783 646 888
Table 16.4:
Bulk Density Calculated and Used by Orezone in the Tonnage Calculations for the Tiba Deposits
Tiba 1, 1E, 2, 3 & 3SE Summary of Oxide & Lithology
Facies
Litho 1 I1 I1C 7 4 100 4 359 30 504 4 3 1 39 50 1 41 139 6 80 67 8 152 313 956
Density (s.g.) Count Average 1.98 2.13 2.03 2.33 1.98 1.85 1.99 2.46 2.56 1.82 2.36 2.21 2.41 2.37 2.31 2.52 2.83 2.65 2.73 2.80 2.77 2.29 36 19 5 77 137 390 15 11 1 31 61 116 11 192 1 2 62 3
Bulk Density Count Average 1.83 1.97 2.02 2.00 2.00 2.38 2.29 2.35 2.20 2.34 2.26 2.27 Count 10 4 162 4 475 41 696 5 5 1 54 61 2 72 200 6 2.68 2.55 2.68 2.62 2.63 2.26 116 86 13 229 450 1346
All Density Average 1.94 2.13 2.01 2.33 1.99 1.89 1.99 2.45 2.45 1.82 2.36 2.21 2.38 2.32 2.30 2.52 2.78 2.63 2.71 2.74 2.73 2.28
Oxide
I3 R S3 & S4 V3 Ox Total I1 I1C I2 I3 S3 & S4 tlc V3 Tr Total I1 I1C & I2(E,G,H & I)
Fresh
Transitional
I3 & I3B S3 & S4 tlc V3 Fr Total Grand Total = Finalized Value to be used
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Table 16.5:
Bulk Density Calculated and Used by Orezone in the Tonnage Calculations for the Tiba Deposits
RZ, BK, Gambo N & S Summary of Oxide & Lithology
Facies
Litho 1 CNR I1 I1C I3 R S3 & S4 V3 Ox Total I1 I1C I2 I3 S3 & S4 tlc V3 Tr Total I1 I1C & I2(E,G,H & I)
Density (s.g.) Count 1 10 20 106 41 1128 202 1508 6 14 124 551 125 820 9 120 237 1200 651 2217 4545 Average 2.03 1.80 2.11 1.86 2.17 2.01 1.88 1.98 2.07 2.04 2.57 2.37 2.49 2.41 2.72 2.76 2.85 2.72 2.87 2.78 2.45 299 25 338 3 10 21 113 10 157 1 25 20 275 58 379 874 4 6 4
Bulk Density Count Average 2.04 2.16 2.34 2.04 1.99 2.04 2.05 2.24 2.39 2.36 2.67 2.37 2.50 2.65 2.69 2.67 2.75 2.68 2.38 Count 1 14 26 110 41 1427 227 1846 9 24 145 664 135 977 10 145 257 1475 709 2596 5419
All Density Average 2.03 1.87 2.12 1.88 2.17 2.01 1.89 2.00 2.07 2.12 2.55 2.37 2.50 2.40 2.70 2.74 2.84 2.71 2.86 2.76 2.44
Fresh
Transitional
Oxide
I3 & I3B S3 & S4 tlc V3 Fr Total Grand Total
= Finalized Value to be used
16.2.5 Assays Statistics and Upper Cut-Off From the drill hole database, Orezone performed basic statistics on the total gold value (Auppm), including histograms, cumulative frequency plots, probability distributions and variograms. Figure 16.1 to 16.5 present log normal histograms for each of the major zones (Bakou, Gambo 2 South, RZ, RZ East, Tiba 1E and Tiba 3SE). Similarly, Orezone generated normal cumulative frequency plots for each of the zones. The normal cumulative frequency plot was used to determine high-grade cut-off values and these values are presented in Table 16.6 to 16.10.
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Figure 16.1:
Bakou Deposit, BK1 Zone, Log Normal Histogram
Figure 16.2:
Gambo 2 South, GS1 Zone, Log Normal Histogram
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Figure 16.3:
RZ Deposit, RZ1 Zone, Log Normal Histogram
Figure 16.4:
RZ East Log Normal Histogram
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Figure 16.5:
Tiba 1E Deposit, T1E-6 Zone, Log Normal Histogram
Figure 16.6:
Tiba 3SEE Log Normal Histogram
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Figure 16.7:
Bakou Normal Cumulative Frequency Plot
Figure 16.8:
Gambo 2 South Normal Cumulative Frequency Plot
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Figure 16.9:
RZ Normal Cumulative Frequency Plot
Figure 16.10:
RZ East Normal Cumulative Frequency Plot
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Figure 16.11:
Tiba 1E Normal Cumulative Frequency Plot
Figure 16.12:
Tiba 3SEE Normal Cumulative Frequency Plot
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The modeling of the mineralisation zones were done as best as possible using the 500ppb composite grade envelope to best capture the bulk of similar and typical grade value, but the 300ppb or 100ppb composite grade envelopes were used in some instances. Orezone used histograms, cumulative frequency plots and the coefficient of variation to determine the capping of the exceptionally high gold values for each mineralised zone that must be modeled. This process is meant to eliminate the effect of uncommonly extreme values over the distribution of grades within the orebody. Table 16.6 presents the capping values for the various mineralised structures. Although the top cut was evaluation separately for each of the 87 different grade envelopes, only one top cut was used for each of the thirteen deposits, with the following exceptions: For RZ deposit, each of the four modeled zones was assigned its own cut-off due to the significant disparities between the populations of each envelope. In addition, the zones RZ-1 and RZ-4 were assigned two different top cut each to better account for the grade zoning within each zone; and For Gambo 2N and Gambo 2S deposits, a higher grade mineralised envelope at 500ppb was created within the 300ppb envelope to better control and restrict the higher grade material, and a different top cut was calculated for each of the 300ppb and 500ppb envelopes.
All the mineralised zones were physically cut on the lateritic unit, which is usually 1 to 5m thick and forms a flat skin on top of the in-situ deposits. Any sample data which fell within these lateritic envelopes was treated and kriged accordingly as a separate mineralised unit. The top cuts for the two lateritic units were calculated to be less than 0.5g/t, which excluded all the lateritic resources from the minerals resource inventory. Grade capping was applied before the interpolation stage on the 1m assay composites.
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Table 16.6:
Top Cut Applied to the Various Mineralised Zones Based on 500ppb Envelopes Statistics Percentile 90th 5.938 4.622 2.900 5.692 3.316 2.872 4.311 1.734 2.768 2.515 4.314 2.788 3.004 1.931 3.004 13.333 1.187 1.340 4.506 5.840 2.733 1.280 1.827 1.160 2.942 1.760 2.539 3.686 4.518 1.935 3.785 4.419 1.377 1.799 1.424 1.421 95th 10.023 6.908 5.856 8.789 5.068 3.237 6.389 2.441 4.094 6.351 9.263 4.489 4.537 6.355 4.537 27.217 1.721 2.315 6.844 10.285 3.728 2.020 2.815 3.343 2.942 9.047 3.621 3.994 5.335 1.935 4.929 4.964 1.705 3.362 1.653 1.944 97.5th 24.662 10.078 6.706 8.789 6.260 4.052 9.437 2.917 7.840 10.875 15.992 10.322 5.251 10.530 5.251 40.165 2.202 4.674 9.264 24.020 5.120 2.563 5.875 3.343 3.735 15.758 4.987 8.488 5.830 1.940 6.456 5.906 2.412 4.226 2.150 2.960 Top Cut Grade Used for Modeling 5.938
Grade Envelope
Block Model G2N
Zone GN - 1 Total GS - 1 GS - 2 GS - 3 GS - 4 GS - 5 Total GSW - 1 GSW - 2 GSW - 3 GSW - 4 Total MS - 1 MS - 2 Total RZ - 1 RZ - 2 RZ - 3 RZ - 4 Total RZE - 1 RZE - 2 RZE - 3 RZE - 4 RZE - 5 RZE - 6 Total RZW - 1 RZW - 2 RZW - 3 Total T2 - 1 Total T3 - 1 T3 - 2 T3 - 3 Total
Count 329 329 1034 148 7 42 59 1290 18 89 98 32 237 56 17 73 595 132 66 986 1779 1085 85 118 28 14 19 1349 75 83 13 171 81 81 303 84 75 462
Mean 3.279 3.279 2.424 1.428 2.306 1.243 1.080 2.209 0.668 1.345 1.151 1.651 1.255 1.166 1.256 1.187 5.882 0.536 1.097 1.829 3.062 1.181 0.572 1.363 0.562 0.867 1.365 1.145 1.545 1.517 0.910 1.483 1.662 1.662 0.597 0.905 0.579 0.650
Coefficient of Variation 3.303 3.303 3.531 1.898 1.279 1.170 0.960 3.503 1.170 1.870 2.484 2.414 2.241 1.163 1.952 1.395 2.783 1.071 2.973 2.978 3.434 1.248 1.163 4.485 1.503 1.223 2.591 2.001 1.976 1.101 0.827 1.577 0.982 0.982 1.321 1.315 0.984 1.313
G2S
4.311
GSW
2.788
MS
5.251 13.333 & 27.217 2.202 1.340 4.506 & 6.844 5.120
ORE 500
RZ
RZE
2.539
RZW
4.929
T2
5.905
T3
2.960
November 2012
Page 16-13
Table 16.7:
Top Cut Applied to the Various Mineralised Zones Based on 300ppb Envelopes Statistics Percentile 90th 3.179 1.841 1.992 3.445 3.339 3.128 1.752 2.129 1.857 2.718 2.831 6.329 95th 4.518 3.109 2.728 4.564 5.290 4.130 2.741 3.054 2.534 3.860 4.132 9.373 97.5th 6.454 4.288 3.621 6.509 7.289 5.115 4.079 3.882 3.657 4.964 5.562 10.047 Top Cut Grade Used for Modeling
Grade Envelope
Block Model
Zone BK - 1 BK - 2 BK - 3 BK - 4 BK - 5 BK - 6 BK - 7 BK - 8 BK - 9 BK - 10 Total T1 - 1 T1 - 2 T1 - 3 T1 - 4 T1 - 5 T1 - 6 T1 - 7 Total T1E - 3 T1E - 4 T1E - 5 T1E - 6 T1E - 7 T1E - 8 T1E - 9 T1E - 10 T1E - 11 Total T3SE - 1 T3SE - 2 T3SE - 3 T3SE - 4 T3SE - 5 T3SE - 6 Total
Count 1882 244 217 71 687 447 126 262 414 108 4458 139 4 2 68 10 5 7 235 81 45 4 848 2 4 7 10 62 1063 4 64 273 3 11 13 368
Mean 1.192 0.821 0.839 1.268 1.351 1.096 0.816 0.811 0.767 0.966 1.093 2.491 5.070 0.432 1.618 0.733 0.393 1.001 2.101 1.499 0.971 1.764 2.567 1.615 0.640 1.008 2.368 3.060 2.422 0.369 2.424 2.981 0.475 0.529 0.689 2.681
Coefficient of Variation 1.585 1.283 1.108 1.420 1.619 1.293 1.496 1.420 1.265 1.554 1.558 1.155 1.615 0.047 1.595 0.688 0.555 1.026 1.363 1.936 0.910 1.246 1.555 0.387 0.747 0.449 1.042 2.212 1.666 0.098 1.174 1.195 0.282 0.451 0.402 1.251
BK
5.562
T1
3.543
6.000
7.125
9.694
ORE 300
5.908 2.862 2.105 6.139
8.338 4.363 2.605 8.668
9.694 11.198 3.836 11.669 8.415
T1E
7.084 5.863 7.914 7.324
8.535 8.415 8.548 8.751
11.707 11.434 8.866 11.753 10.523
T3SE
7.070
8.574
10.523
November 2012
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Table 16.8:
Top Cut Applied to the Various Mineralised Zones Based on Other Envelopes Statistics Percentile 90th 0.359 0.357 0.504 0.484 0.488 0.413 0.426 0.412 0.479 1.466 0.692 95th 0.640 0.655 0.805 0.827 0.957 0.614 0.483 0.697 0.767 2.376 1.098 97.5th 0.898 1.149 1.221 1.527 1.320 0.770 0.498 0.862 1.300 3.277 1.844 Top Cut Grade Used for Modeling 0.359 0.357 0.503
Grade Envelope Lat2 Laterite
Block Model All Tiba RZ-BK-GS-GN G2N
Zone Lat2 Laterite GN - 11 Total GS - 11 GS - 12 GS - 13 GS - 14 GS - 15 Total T1E - 1 T1E - 2 Total
Count 582 2406 675 675 732 377 36 61 54 1260 176 118 294
Mean 0.161 0.222 1.754 1.754 0.335 0.466 0.182 0.206 0.178 0.357 0.567 0.329 0.471
Coefficient of Variation 2.686 7.117 4.419 4.419 2.762 8.325 1.028 0.684 1.080 6.275 1.551 1.492 1.604
ORE 100
G2S
0.479
T1E
2.376 1.844
16.2.6 Assays compositing Orezone composited the assay data from 1,208 drill holes. Were excluded all the RAB drill holes, all metallurgical drill holes and one RC drill hole with missing (stolen) samples: this hole was twinned and the twin hole used for the modeling. The compositing of the dataset was done at 1m interval from the top of the mineralised zone and excluded any remainders of the mineralised zone with a length of less than 0.5m or intervals with no assay information. This process created 16,771 intervals of almost all equivalent length for the 71 mineralised zones that were modeled. Table 16.9 presents the Au grade (g/t) for each zone, within the mineralised vein at cut-offs 0.0g/t and 0.5g/t. The difference between assay values and composite values is almost insignificant as the majority of the sample intervals were one meter in length.
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Table 16.9:
Comparison of Assay Statistics for each RZ-Bakou-Gambo Area Mineralised Envelope at 0.0g/t and 0.5g/t Cut-Off 0.0g/t Cut-Off 0.5g/t Cut-Off Number of Samples 448 55 37 486 691 35 49 8 7 9 49 54 8 931 120 110 43 383 221 58 115 177 51 872 130 9 34 44 274 7 50 35 10 32 11 Assays Au Grade (g/t) 7.624 1.043 1.752 3.548 1.721 1.077 3.030 1.456 1.586 2.760 2.257 2.198 1.396 2.218 1.482 1.401 1.909 2.264 2.039 1.493 1.608 1.482 1.805 2.945 2.436 1.965 1.499 1.432 4.069 1.385 2.261 2.999 4.997 1.905 1.813
Model
Zone
Number of Samples 592 132 65 986 1085 85 118 28 14 19 75 83 13 1882 244 217 71 687 447 126 262 414 108 1766 524 43 103 113 675 18 89 98 32 56 17
Assays Au Grade (g/t) 5.827 0.536 1.110 1.829 1.181 0.572 1.363 0.562 0.867 1.365 1.545 1.517 0.910 1.192 0.821 0.839 1.268 1.351 1.096 0.816 0.811 0.767 0.966 1.556 0.738 0.528 0.628 0.648 1.754 0.668 1.345 1.151 1.651 1.166 1.256
RZ
RZE
RZW
BK
GS
GN
GSW
MS
RZ 1 RZ 2 RZ 3 RZ 4 RZE 1 RZE 2 RZE 3 RZE 4 RZE 5 RZE 6 RZW 1 RZW 2 RZW 3 BK 1 BK 2 BK 3 BK 4 BK 5 BK 6 BK 7 BK 8 BK 9 BK 10 GS 1 GS 2 GS 3 GS 4 GS 5 GN 1 GSW 1 GSW 2 GSW 3 GSW 4 MS 1 MS 2
November 2012
Page 16-16
Table 16.10:
Comparison of Assay Statistics for Each Tiba Area and Lateritic Mineralised Envelope at 0.0g/t and 0.5g/t Cut-Off 0.0g/t Cut-Off 0.5g/t Cut-Off Number of Samples 102 3 39 6 1 3 53 20 51 25 3 651 2 2 6 9 49 60 117 53 30 48 208 1 5 11 171 42 7,424 Assays Au Grade (g/t) 3.303 6.624 2.600 0.981 0.656 1.860 1.475 1.102 2.211 1.471 2.221 3.261 1.615 0.973 1.113 2.589 3.799 2.150 1.233 1.336 1.115 3.149 3.824 0.596 0.724 0.742 1.913 1.175 2.778
Model
Zone
Number of Samples 139 4 2 68 10 5 7 176 118 81 45 4 848 2 4 7 10 62 81 303 84 75 4 64 273 3 11 13 2400 581 16,771
Assays Au Grade (g/t) 2.491 5.070 0.432 1.618 0.733 0.393 1.001 0.567 0.329 1.499 0.971 1.764 2.567 1.615 0.640 1.008 2.368 3.060 1.662 0.597 0.905 0.579 0.369 2.424 2.981 0.475 0.529 0.689 0.223 0.161 1.323
T1 - 1 T1 - 2 T1 - 3 Tiba 1 T1 - 4 T1 - 5 T1 - 6 T1 - 7 Tiba 1E - 1 Tiba 1E - 2 Tiba 1E - 3 Tiba 1E - 4 Tiba 1E - 5 Tiba 1E Tiba 1E - 6 Tiba 1E - 7 Tiba 1E - 8 Tiba 1E - 9 Tiba 1E - 10 Tiba 1E - 11 Tiba 2 T2 -1 T3 -1 Tiba 3 T3 -2 T3 -3 T3SE - 1 T3SE - 2 T3SE - 3 Tiba 3SE T3SE - 4 T3SE - 5 T3SE - 6 Laterite Laterite Lat 2 Lat 2 8 Total
16.2.7 Variogram Analysis Orezone used variograms to determine the continuity of the mineralisation, trends distribution in the high grade, its geometry, orientations and ultimately, parameters for the various search ellipsoids. Figure 16.13 to 16.20 present variograms for the major zones: Bakou, Gambo 2S, RZ, RZE, Tiba 1E and Tiba 3SE.
All 87 mineralized envelopes.

November 2012
Figure 16.13:
Bakou Deposit BK1 Zone Variogram on Primary Axis (Az 60, Dip -70)
Figure 16.14:
Bakou Deposit BK1 Zone Variogram on Secondary Axis (Az 234, Dip -18.5)
November 2012
Page 16-18
Figure 16.15:
Gambo 2S Deposit GS1 Zone Variogram on Primary Axis (Az 40, Dip -70)
Figure 16.16:
Gambo 2S Deposit GS1 Zone Variogram on Secondary Axis (Az 310, Dip 0)
November 2012
Page 16-19
Figure 16.17:
RZ East Deposit RZ1 Zone Variogram on Primary Axis (Az 60, Dip -70)
Figure 16.18:
RZ East Deposit RZ1 Zone Variogram on Secondary Axis (Az 83, Dip 18)
November 2012
Page 16-20
Figure 16.19:
RZ East Deposit RZE1 Zone Variogram on Primary Axis (Az 45, Dip -70)
Figure 16.20:
RZ East Deposit RZE1 Zone Variogram on Secondary Axis (Az 150, Dip 15)
November 2012
Page 16-21
16.3 GEOLOGICAL INTERPRETATION
16.3.1 Introduction Orezone performed the geological interpretation, spatial data analysis and presentation essentially with MapInfo software and the Encom Discover extension for most of the 2D GIS work and with Gemcom for the 3D modeling of the geology and the mineral resources. The mineralisation on the Sega Project is contained in generally steeply-dipping subparallel or anastomosing mineralised structures with various orientations. The shear-hosted type of mineralisation present on the property generally exhibits fair continuity. This knowledge is based on a wealth of integrated information derived from geophysical and geochemical surveys, field mapping, structural studies and fairly tight definition drilling interpreted by a team of experienced people, Orezone employees or consultants. The present resource estimation includes these portions of the several mineralised zones exhibiting good geological and grade continuity and in large part defined by drilling at 25m spacing. All RC and core holes were re-logged by the project geologist, F. Sombi, who produced a 2D cross-sectional geological interpretation in Gemcom. This interpretation was validated and 3D solids created from the 2D polygons by Orezone senior geologist A. Zongo in Ouagadougou. This interpretation was then validated by the author in Gemcom, and finally by Orezone resource geologist A. Labont in Ottawa. At all stages, checks were performed to insure the correctness of the primary observations, measurements and interpretations. The mineralised envelopes were created using for most zones a 500ppb grade envelope that was then adjusted to respect the geological solids that were independently created. For some zones, a 300ppb or, exceptionally, 100ppb grade envelope was used. The interpreted geological solids were validated against the magnetic susceptibility data acquired by Orezone on a routine basis for each sample at the sampling stage, and against the density data and the weathering (or oxidation) model. Orezone refined the geological model by subdividing the undifferentiated metasedimentary unit used for the previous mineral resource estimates into separate meta-sandstone and meta-argilite units: this was considered necessary as the bottle-roll metallurgical tests completed in 2006 suggest that the heap leach recovery could vary according to the type of metasediments. Orezone also recognise d and coded separately each generation and type of dykes within and in the vicinity of the mineralised zones. This work was supported by a petrographic study and limited lithogeochemical investigations. This exercise was deemed important as some of the dykes are post-mineral: modeling them separately will allow a better estimation of the internal dilution within the mineralised zones. In addition, the geometry of the various generations of dykes can provide important clues regarding the dynamic regime that was responsible for the development of the brittle-ductile shear zone and the related metasomatism and mineralisation.
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Page 16-22
16.3.2 Mineralised Envelope Definition Using the drill hole information, Orezone defined three-dimensional envelopes encompassing mineralised vein intersections. The extent, size and shape of these envelopes depend on many parameters such as drill spacing, geological settings, orientations, continuities and drill hole cut-off grades. For the present resource estimate audit, a cut-off grade of 0.5g/t was used for defining the mineralised envelopes, except for Bakou, Tiba 1E and Tiba 3SE where a 0.3g/t grade envelope was used. A very low-grade envelope of 0.1g/t was also used to capture some mineralisation around the Gambo 2N, Gambo 2S and Tiba 1E deposits outside the higher-grade envelopes.
16.3.3 Surface Topography The topographic surface was generated from a Digital Terrain Model (DTM) with 1m resolution for the property, complemented by the survey of drill hole collars by a total station instrument. The DTM model is consistent with the elevations derived from the DGPS collar readings. Where the topography has been modified since the May 2006 photogrammetric survey, Orezone completed Total Station profiles to actualize the DTM model. Changes are due either to the site preparation related to the Orezone drilling programs, and to a lesser extent to the artisan miners activities.
16.3.4 Weathering Profile The degree of weathering was described by the Orezone's logging geologists and used to break down the mineral resource in three sub-units: Oxide, Transitional and Primary (Fresh) mineralisation. The cap rock was distinguished as a separate solid coded R in the Litho1 table and further described in the Litho2 table. As much as possible, the discrepancies resulting from the original descriptions of the geologists have been eliminated by the complete re-logging of the RC chips and core at Sega. In addition, the weathering model has been validated against the density data collected in core holes, both the spot readings and the core box bulk density data. Furthermore, Orezone compiled in the project database all the penetration rate data that was accumulated on the project in manuscript format for the RC drill holes and also used that information to validate the weathering model.
16.4 BLOCK MODELING
16.4.1 Model Definition A total of thirteen (13) three-dimensional block models were constructed by Orezone in order to estimate the geological resources. All block models have sizes of 5m (major axis - along strike) by 2.5m (minor axis) by 2.5m (elevation). An illustration of the block models for Bakou, RZ and Gambo in section and plan views is provided in Appendix 16-A of this report.
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Table 16.11: Model RZ 4 Zones Azimuth 090 RZE 6 Zones Azimuth 305 RZW 3 Zones Azimuth 090 BK 10 Zones Azimuth 000 Gambo 2S 5 Zones Azimuth 315 Gambo 2N 1 Zones Azimuth 315 Gambo SW 4 Zones Azimuth 300 MS 2 Zones Azimuth 090 Tiba 1 7 Zones Azimuth 000 Tiba 1E 11 Zones Azimuth 000 Tiba 2 1 Zones Azimuth 000 Tiba 3 3 Zones Azimuth 000 Tiba 3SE 6 Zones Azimuth 000
Block Model Definition Details Lower Left Corner of Block Model Easting Northing Elevation Easting Northing Elevation Easting Northing Elevation Easting Northing Elevation Easting Northing Elevation Easting Northing Elevation Easting Northing Elevation Easting Northing Elevation Easting Northing Elevation Easting Northing Elevation Easting Northing Elevation Easting Northing Elevation Easting Northing Elevation 607,500 1,477,550 50 607,940 1,477,900 50 607,250 1,477,450 50 608,500 1,476,600 0 608,025 1,476,120 0 607,360 1,476,800 0 606,570 1,476,500 0 607,900 1,476,650 70 612,100 1,482,800 200 613,250 1,482,800 200 611,800 1,481,900 200 612,950 1,482,550 200 614,250 1,482,300 200 Upper Right Corner of Block Model 608,250 1,478,200 400 608,831 1,477,734 400 607,650 1,477,900 400 608,975 1,477,800 400 608,803 1,475,979 400 608,155 1,476,535 400 607,141 1,476,488 400 608,125 1,477,050 420 612,700 1,483,175 400 614,150 1,483,238 400 612,300 1,482,275 400 613,450 1,483,000 400 614,950 1,482,750 400 Size (m) 5.0 2.5 2.5 5.0 2.5 2.5 5.0 2.5 2.5 2.5 5.0 2.5 5.0 2.5 2.5 5.0 2.5 2.5 5.0 2.5 2.5 2.5 5.0 2.5 5.0 2.5 2.5 5.0 2.5 2.5 5.0 2.5 2.5 5.0 2.5 2.5 5.0 2.5 2.5 Number of Blocks 150 260 140 165 150 140 80 180 140 190 240 160 130 180 160 150 150 160 100 110 160 90 80 140 120 150 80 180 175 80 100 150 80 100 180 80 140 180 80 None None None None None None AZ 300 AZ 315 AZ 315 None None AZ 305 None Block Model Rotation
November 2012
Page 16-24
16.4.2 Density Density values were assigned to each block based on the three-dimensional weathering and lithological solids delineated by the drill hole information and according to the bulk density assigned to each unit.
16.4.3 Mineralised Envelopes Mineralised envelopes were coded into the block model and each block was assigned a percentage item (PERC), corresponding to the portion of the block inside the envelope. Orezone uses a single percentage per block (PERC) to define mineralised zones.
16.4.4 Grade Interpolation Grade interpolation was performed using the inverse weighted distance squared (IWD2). The search ellipsoids parameters were determined from statistical analysis, variograms, structural geology field reports and grade continuity. In areas where the drill hole data density was very high, such as RZ and Bakou, the search ellipsoid was considered equivalent to measured resource, and a search ellipsoid of size twice (2) times the value of the Measured resources was used for the Indicated resource. For Indicated Resources, a minimum of 3 samples up to a maximum of 6 samples (maximum of 3 per hole) were used in the interpolation. The table below presents the various parameters used for indicated resources. For Inferred Resources, a minimum of 2 samples up to a maximum of 4 samples (maximum of 3 per hole) were used in the interpolation. A search ellipsoid of size twice (2) times the value of the Indicated resources was used for all Inferred zones.
November 2012
Page 16-25
Table 16.12: Zone Name RZ 1 RZ 2 RZ 3 RZ 4 RZE 1 RZE 2 RZE 3 RZE 4 RZE 5 RZE 6 RZW 1 RZW 2 RZW 3 BK 1 BK 2 BK 3 BK 4 BK 5 BK 6 BK 7 BK 8 BK 9 BK 10 GS 1 GS 2 GS 3 GS 4 GS 5 GN 1 GSW 1 GSW 2 GSW 3 GSW 4 MS 1 MS 2
Interpolation Parameters for Indicated Resources, RZ-Bakou-Gambo Deposits Upper-Grade CutOff (g/t) 27.217 &13.333 2.202 1.340 6.844& 4.506 5.120 Major (X) axis (m) 10/20 20 20 20/40 38 38 38 38 36 36 31 31 31 18 18 18 18 18 18 18 18 18 18 30 30 30 30 30 25 25 25 25 25 25 25 Minor (Y) axis (m) 20/40 40 40 22.5/45 24 24 24 24 24 24 22 22 22 36 36 36 36 36 36 36 36 36 36 17 17 17 17 17 20 20 20 20 20 20 20 Perpendicular (Z) axis (m) 5/10 10 10 5/10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 Azimuth () 60 60 60 37.5 20/45 20 20 20 45 45 60 60 60 60 70 100 100 60 50 90 100 90 90 40 40 40 40 40 40 40 40 40 40 195 195 Dip Major Axis () -70 -70 -70 0 -70 -70 -70 -70 -70 -70 -60 -60 -60 -70 -70 -70 -70 -70 -70 -70 -70 -90 -70 -70 -70 -70 -70 -70 -70 -70 -70 -70 -70 -85 -85 Dip Minor Axis () 18 18 18 -22.5 0 0 0 0 0 0 30 30 30 -18.5 -18.5 -18.5 -18.5 -18.5 -18.5 -18.5 -18.5 0 -18.5 0 0 0 0 0 0 0 0 0 0 0 0
2.539
4.929
5.562
4.311 & 0.479
5.938 & 0.503
2.788
5.251
November 2012
Page 16-26
Table 16.13: Zone Name T1 - 1 T1 - 2 T1 - 3 T1 - 4 T1 - 5 T1 - 6 T1 - 7 Tiba 1E - 1 Tiba 1E - 2 Tiba 1E - 3 Tiba 1E - 4 Tiba 1E - 5 Tiba 1E - 6 Tiba 1E - 7 Tiba 1E - 8 Tiba 1E - 9 Tiba 1E - 10 Tiba 1E - 11 T2 -1 T3 -1 T3 -2 T3 -3 T3SE - 1 T3SE - 2 T3SE - 3 T3SE - 4 T3SE - 5 T3SE - 6 Laterite Lat 2
Interpolation Parameters for Indicated Resources, Tiba Deposits Upper-Grade Cut-Off (g/t) Major (X) axis (m) 8.0 8.0 8.0 8.0 8.0 8.0 8.0 20.0 20.0 8.0 8.0 8.0 8.0 8.0 8.0 8.0 8.0 8.0 22.0 22.0 22.0 22.0 22.0 22.0 22.0 22.0 22.0 22.0 23.5 48.0 Minor (Y) axis (m) 12.0 12.0 12.0 12.0 12.0 12.0 12.0 10.0 10.0 12.0 12.0 12.0 12.0 12.0 12.0 12.0 12.0 12.0 33.0 33.0 33.0 33.0 33.0 33.0 33.0 33.0 33.0 33.0 23.5 36.0 Perpendicular (Z) axis (m) 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 10.0 10.0 10.0 5.0 5.0 5.0 5.0 5.0 5.0 10.0 5.0 Azimuth () 341 341 341 341 341 341 341 180 180 180 180 180 160 160 160 160 160 160 341 0 0 0 121 121 121 121 121 121 0 112.5 Dip Major Axis () -85 -85 -85 -85 -85 -85 -85 -70 -70 -70 -70 -70 -85 -85 -85 -85 -85 -85 -85 -50 -50 -50 63 63 63 63 63 63 0 0 Dip Minor Axis () 0 0 0 0 0 0 0 0 0 0 0 0 5 5 5 5 5 5 5 0 0 0 -23 -23 -23 -23 -23 -23 0 0
9.694
2.376 1.844
8.415
5.905 2.960
10.523
0.359 0.357
16.5 MINERAL RESOURCE CLASSIFICATION The mineral resources were classified based on the density of drill hole data and the geological and grade continuity of the auriferous zones. The "CIM Definition, Standards on Mineral Resources and Mineral Reserves" (2005) have been used for the resource classification. Details can be found in Appendix 16-B of this report. All the mineral resources at Sega have been classified as Indicated and Inferred Resources. These two categories have been further broken down into resources within the oxide, transitional and fresh facies of weathering. The auriferous zones show a good continuity from section to section and have been defined by envelopes generated by gold grade contours at 0.50 or 0.30g/t Au. This grade is arbitrary, but is close to the expected cut-off generally applicable for deposits of this type. The total indicated resource for the Sega Project at 0.5g/t cut-off is 8.29 million tonnes with an average grade of 1.69g/t Au (450,400 ounces of gold). The total inferred resource at 0.5g/t cut-off is 2.91 million tonnes with an average grade of 1.58g/t Au (147,300 ounces of gold). The indicated and inferred resources are presented below. They have also been
November 2012
Page 16-27
presented by mineralised zones and by weathering facies. The resources have not been audited by an independent consultant.
Table 16.14:
Total Indicated Mineral Resources above a Lower cut-off of 0.5g/t Category Model RZ RZE RZW BK GS Indicated GN GSW MS Tiba 1 Tiba 1E Tiba 2 Tiba 3 Tiba 3SE Total Indicated Tonnes 905,000 901,000 206,000 3,123,000 1,458,000 291,000 171,000 146,000 40,000 329,000 141,000 327,000 250,000 8,289,000 Grade (g/t) 3.12 1.28 1.50 1.43 1.60 1.71 1.27 1.27 2.69 2.17 1.74 0.87 2.72 1.69 Grams 2,823,000 1,151,000 310,000 4,466,000 2,327,000 499,000 217,000 185,000 107,000 713,000 244,000 284,000 681,000 14,009,000 Ounces 90,800 37,000 10,000 143,600 74,800 16,000 7,000 6,000 3,400 22,900 7,900 9,100 21,900 450,400
Table 16.15:
Total Inferred Mineral Resources above a Lower cut-off of 0.5g/t Category Model RZ RZE RZW BK GS Inferred GN GSW MS Tiba 1 Tiba 1E Tiba 2 Tiba 3 Tiba 3SE Total Inferred Tonnes 187,000 433,000 111,000 896,000 190,000 76,000 96,000 184,000 73,000 376,000 157,000 97,000 30,000 2,908,000 Grade 2.10 1.15 1.20 1.41 1.61 1.27 1.29 1.57 2.66 2.32 1.65 0.74 2.70 1.58 Grams 394,000 500,000 133,000 1,263,000 306,000 96,000 123,000 289,000 195,000 873,000 259,000 72,000 81,000 4,583,000 Ounces 12,700 16,100 4,300 40,600 9,800 3,100 4,000 9,300 6,300 28,100 8,300 2,300 2,600 147,300
November 2012
Page 16-28
Table 16.16:
Indicated Mineral Resources above a Lower cut-off of 0.5g/t by Mineralised Zone for the RZ-Bakou-Gambo Deposits Zone RZ 1 RZ RZ 2 RZ 3 RZ 4 RZE 1 RZE 2 RZE RZE 3 RZE 4 RZE 5 RZE 6 RZW 1 RZW RZW 2 RZW 3 BK 1 BK 2 BK 3 BK 4 BK BK 5 BK 6 BK 7 BK 8 BK 9 BK 10 GS 1 GS 2 GS GS 3 GS 4 GS 5 GN GN 1 GSW 1 GSW GSW 2 GSW 3 GSW 4 MS MS 1 MS 2 ALL Tonnes 507,000 51,000 47,000 300,000 730,000 47,000 98,000 8,000 8,000 11,000 45,000 147,000 14,000 1,099,000 162,000 136,000 54,000 823,000 276,000 83,000 122,000 321,000 48,000 1,201,000 136,000 2,000 45,000 74,000 291,000 13,000 83,000 64,000 12,000 135,000 11,000 7,203,000 Grade (g/t) 4.37 0.79 0.72 1.78 1.38 0.82 0.85 0.69 0.90 0.87 1.66 1.48 1.15 1.45 1.27 1.03 1.52 1.61 1.67 1.13 1.19 1.07 1.61 1.66 1.36 1.77 1.24 1.19 1.71 1.23 1.44 1.01 1.56 1.30 0.91 1.66 Grams 2,213,000 41,000 33,000 536,000 1,007,000 38,000 83,000 6,000 7,000 10,000 76,000 218,000 16,000 1,594,000 206,000 140,000 81,000 1,327,000 460,000 94,000 144,000 342,000 77,000 1,995,000 185,000 4,000 55,000 89,000 499,000 15,000 119,000 64,000 18,000 175,000 10,000 11,979,000 Ounces 71,100 1,300 1,100 17,200 32,400 1,200 2,700 200 200 300 2,400 7,000 500 51,300 6,600 4,500 2,600 42,700 14,800 3,000 4,600 11,000 2,500 64,100 5,900 100 1,800 2,800 16,000 500 3,800 2,100 600 5,600 300 385,100
Model
TOTAL
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Table 16.17:
Indicated Mineral Resources above a Lower cut-off of 0.5g/t by Mineralised Zone for the Tiba Deposits Model Zone T1 - 1 T1 - 2 Tiba 1 T1 - 4 T1 - 6 T1 - 7 Tiba 1E - 1 Tiba 1E - 2 Tiba 1E - 3 Tiba 1E - 4 Tiba 1E - 5 Tiba 1E Tiba 1E - 6 Tiba 1E - 7 Tiba 1E - 8 Tiba 1E - 9 Tiba 1E - 10 Tiba 1E - 11 Tiba 2 T2 -1 T3 -1 Tiba 3 T3 -2 T3 -3 T3SE - 2 T3SE - 3 Tiba 3SE T3SE - 4 T3SE - 5 T3SE - 6 TOTAL ALL 1,000 4,000 1,087,000 0.67 0.64 1.87 1,000 3,000 2,030,000 0 0 65,300 1,000 2,000 18,000 141,000 181,000 90,000 56,000 48,000 198,000 1.10 2.40 2.22 1.74 0.85 1.02 0.68 2.20 2.90 1,000 6,000 41,000 244,000 154,000 92,000 38,000 105,000 573,000 0 200 1,300 7,900 5,000 3,000 1,200 3,400 18,400 232,000 2.54 588,000 18,900 Tonnes 32,000 1,000 7,000 0 1,000 38,000 9,000 21,000 8,000 Grade (g/t) 2.94 3.97 1.63 0.51 0.83 0.87 0.68 1.35 1.26 Grams 92,000 3,000 11,000 0 1,000 33,000 6,000 28,000 10,000 Ounces 3,000 100 400 0 0 1,100 200 900 300
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Table 16.18:
Inferred Mineral Resources above a Lower cut-off of 0.5g/t by Mineralised Zone for the RZ-Bakou-Gambo Deposits Model Zone RZ 1 RZ RZ 2 RZ 3 RZ 4 RZE 1 RZE 2 RZE RZE 3 RZE 4 RZE 5 RZE 6 RZW 1 RZW RZW 2 RZW 3 BK 1 BK 2 BK 3 BK 4 BK BK 5 BK 6 BK 7 BK 8 BK 9 BK 10 GS 1 GS 2 GS GS 3 GS 4 GS 5 GN GN 1 GSW 1 GSW GSW 2 GSW 3 GSW 4 MS TOTAL MS 1 MS 2 ALL Tonnes 12,000 35,000 25,000 1,000 295,000 35,000 60,000 13,000 15,000 14,000 42,000 65,000 5,000 251,000 70,000 32,000 22,000 282,000 58,000 7,000 28,000 136,000 12,000 130,000 42,000 1,000 6,000 11,000 76,000 19,000 50,000 19,000 8,000 150,000 35,000 2,174,000 Grade (g/t) 2.74 0.67 0.94 1.35 1.31 0.71 0.80 0.63 1.23 0.89 0.77 1.49 0.99 1.70 1.30 0.75 1.15 1.45 1.94 1.38 1.03 0.87 1.66 1.65 1.61 1.14 0.79 1.62 1.27 1.19 1.51 0.80 1.26 1.54 1.67 1.43 Grams 346,000 24,000 23,000 1,000 387,000 25,000 48,000 8,000 19,000 13,000 32,000 96,000 5,000 427,000 91,000 24,000 25,000 408,000 112,000 9,000 29,000 118,000 21,000 214,000 68,000 2,000 5,000 17,000 96,000 22,000 75,000 15,000 11,000 231,000 58,000 3,104,000 Ounces 11,100 800 800 00 12,400 800 1,600 300 600 400 1,000 3,100 200 13,700 2,900 800 800 13,100 3,600 300 900 3,800 700 6,900 2,200 100 200 600 3,100 700 2,400 500 300 7,400 1,900 99, 800
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Table 16.19:
Inferred Mineral Resources above a Lower cut-off of 0.5g/t by Mineralised Zone for the Tiba Deposits Model Zone T1 - 1 T1 - 2 Tiba 1 T1 - 4 T1 - 5 T1 - 7 Tiba 1E - 1 Tiba 1E - 2 Tiba 1E - 3 Tiba 1E - 4 Tiba 1E - 5 Tiba 1E Tiba 1E - 6 Tiba 1E - 7 Tiba 1E - 8 Tiba 1E - 9 Tiba 1E - 10 Tiba 1E - 11 Tiba 2 T2 -1 T3 -1 Tiba 3 T3 -2 T3 -3 T3SE - 2 T3SE - 3 Tiba 3SE T3SE - 4 T3SE - 5 T3SE - 6 Total All Tonnes 60,000 1,000 9,000 2,000 1,000 12,000 5,000 14,000 10,000 1,000 289,000 2,000 0 3,000 6,000 34,000 157,000 51,000 37,000 9,000 2,000 26,000 0 0 1,000 733,000 Grade (g/t) 2.92 3.61 1.33 1.04 0.93 0.71 0.71 1.64 1.18 2.08 2.54 1.61 0.94 1.09 2.60 1.99 1.65 0.65 0.88 0.63 1.07 2.93 0.51 0.80 0.82 2.02 Grams 175,000 5,000 12,000 2,000 1,000 8,000 4,000 23,000 12,000 2,000 735,000 3,000 70 3,000 14,000 69,000 259,000 33,000 33,000 6,000 2,000 77,000 0 0 1,000 1,749,000 Ounces 5,600 200 400 100 0 300 100 700 400 100 23,600 100 0 100 500 2,200 8,300 1,100 1,100 200 100 2,500 0 0 0 47,500
Table 16.20:
Total Indicated Mineral Resources above a Lower cut-off of 0.5g/t by Weathering Facies Weathering Facies OX - LAT Contact Oxide Transitional Fresh Total Zone ALL ALL ALL ALL Tonnes 17,000 3,279,000 1,594,000 3,399,000 8,289,000 Grade (g/t) 1.52 1.67 1.58 1.76 1.69 Grams 26,000 5,463,000 2,523,000 5,997,000 14,009,000 Ounces 800 175,600 81,100 192,800 450,400
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Table 16.21:
Total Inferred Mineral Resources above a Lower cut-off of 0.5g/t by Weathering Facies Weathering Facies OX - LAT Contact Oxide Transitional Fresh Total Zone Total Total Total Total Tonnes 9,000 740,000 422,000 1,737,000 2,908,000 Grade (g/t) 1.75 1.50 1.47 1.63 1.58 Grams 16,000 1,112,000 622,000 2,833,000 4,583,000 Ounces 500 35,800 20,000 91,100 147,300
16.6 PREVIOUS MINERAL RESOURCE ESTIMATE Orezone Resources Inc. performed an in-house resource estimate for the Gambo, Bakou and RZ deposits in 2005. Met-Chem validated this estimate and produced a technical report in accordance with NI 43-101 dated February 2006. Orezone Resources Inc. performed in 2007 an in-house resource estimate update for the Gambo, Bakou and RZ deposits, to which were added the Tiba deposits. Met-Chem validated that new estimate and produced a technical report in accordance with NI 43-101 dated October 2007. Met-Chem resubmitted a technical report based on the October 2007 to Orezone God Corporation in February 2009. The current resource estimate is an update of the 2009 estimate and includes new resources delineated at RZ West, Gambo SW, MS and Tiba 2.
16.7 CONCLUSIONS Orezone has defined mineral resources in the Bakou, RZ, Gambo and Tiba deposits on the Sega Project in Burkina Faso. Most of the drilling that has been added since the last mineral resource estimate was infill drilling. This and the various steps taken by Orezone to improve the geological models, i.e. re-logging of all RC and core holes, a more detailed level of geological description, especially to model separately the meta-sandstones and metaargillites as well as the various generations of dykes, the modeling of the RC penetration rates, the increased number of density determinations, the cross-validation of the weathering logs with the specific density, bulk density and RC penetration rate databases, the petrographic and lithogeochemical studies, etc. all contribute to a more robust geological interpretation. In spite of the additional infill drilling, which essentially confirmed the previous model, the Indicated gold resource has little changed, mostly due to the fact that most of the mineralisation is hosted in metasediments that have a lower bulk density that the ones used for the previous mineral resource estimate. The short range step-out drilling added Inferred resources, mostly in the Fresh zone at Bakou and in the Oxide zone at the newly discovered Tiba 2 deposit.
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Table 16.22: Year 2007 2009 2009 vs 2007 Change 2007 2009 2009 vs 2007 Change 2007 2009 2009 vs 2007 Change 2007 2009 2009 vs 2007 Change
Comparative Summary of the Current and Previous Minerals Resource Estimates for the Sega Project Category Measured + Indicated Measured + Indicated Weathering All Zones All Zones Tonnes 7,150,000 8,289,000 1,139,000 16% Inferred Inferred All Zones All Zones 1,320,000 2,908,000 1,588,000 120% Measured + Indicated Measured + Indicated Oxide + Transition Oxide + Transition 4,368,000 4,890,000 522,000 12% Inferred Inferred Oxide + Transition Oxide + Transition 526,000 1,171,000 645,000 123% g/t 1.94 1.69 -0.25 -13% 1.50 1.58 0.08 5% 1.89 1.64 -0.25 -13% 1.21 1.49 0.29 24% Oz 446,000 450,400 4,400 1% 64,000 147,300 83,300 130% 265,000 257,600 -7,400 -3% 21,100 56,300 35,200 167%
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SECTION 17.
MINE STUDY
17.1 PRELIMINARY ECONOMIC ASSESSMENT
17.1.1 Mineral Reserve Estimate This section of the report details the results of a series of open pit optimisations, practical pit design and the production scheduling carried out in conjunction between SRK Consulting (South Africa) (Pty) Ltd. (SRK (SA)) and Amara. This study has been based on the Mineral Resources that have been estimated by Orezone in January 2010. There are three main deposit areas. These are the Bakou-RZ deposits, the Gambo deposits and the Tiba deposits. These main areas are in turn split into a number of separate deposits. Updated mining operating costs have been supplied by mining contractors currently working in Burkina Faso. These have been used for this study. A geotechnical report has been prepared by SRK Ghana. Refer to Appendix 17-A for the report and the addendum. It has been assumed that a conventional open pit shovel and truck method will be used over a period of 17 months, exclusive of any pre-stripping period. Finally, SRK (SA) has presented estimates of Mineral Inventory in this report. The table below shows the Mineral Resource classifications within the Sega Ore Bodies using a cut-off-grade of 0.5 g/t. Note that the pit optimisation and the production schedule have been based on the Indicated and Inferred categories of the Mineral Resources.
Table 17.1:
Mineral Resource Classification (+0.5g/t)

Indicated Transition Ounces 51,100 28,900 3,900 31,300 7,000 500 1,300 200 3,300 15,100 7,100 9,100 17,400 176,200 Tonnes 107,000 140,000 105,000 823,000 225,000 43,000 81,000 44,000 1,000 29,000 14,000 23,000 1,634,000 Grade (g/t Au) 2.75 1.22 1.54 1.44 1.64 1.58 1.15 1.28 4.05 3.26 1.56 2.67 1.58 Ounces 9,400 5,500 5,200 38,200 11,900 2,200 3,000 1,800 100 3,000 700 2,000 83,000 Tonnes 58,000 75,000 46,000 46,000 6,000 8,000 30,000 70,000 224,000 85,000 89,000 3,000 740,000 Inferred Oxide Grade (g/t Au) 0.84 0.9 0.8 1.37 1.41 1.01 1.56 2.61 1.95 1.74 0.72 1.08 1.51 Ounces 1,600 2,200 1,200 2,000 300 300 1,500 5,900 14,000 4,700 2,100 100 35,800 Tonnes 27,000 89,000 29,000 88,000 5,000 1,000 8,000 40,000 3,000 53,000 72,000 8,000 3,000 426,000 Inferred Transition Grade (g/t Au) 1.22 1.08 1.12 1.18 1.22 0.74 1.04 1.71 3.98 2.65 1.54 0.91 1.9 1.47 Ounces 1,000 3,100 1,100 3,300 200 300 2,200 300 4,500 3,600 200 200 20,100
Indicated Oxide Deposit RZ RZE RZW BK GS GN GSW MS Tiba 1 Tiba 1E Tiba 2 Tiba 3 Tiba 3SE TOTAL Tonnes 654,000 715,000 86,000 728,000 121,000 13,000 32,000 4,000 39,000 252,000 126,000 325,000 198,000 3,293,000 Grade (g/t Au) 2.43 1.26 1.4 1.34 1.79 1.23 1.22 1.1 2.68 1.86 1.76 0.87 2.73 1.66
17.2 GEOTECHNICAL INVESTIGATION AND SLOPE STABILITY ANALYSIS The geotechnical investigation and slope stability analysis was prepared and reviewed by SRK Ghana. Refer to the report and addendum in Appendix 17-A.
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17.3 OPEN PIT OPTIMISATION
17.3.1 Introduction The following addresses the mining components of the Preliminary Economic Assessment and is based on the geological block models generated by Orezone. A conventional open pit shovel and truck method will be used for the mining of ore and waste from the open pits. It has been assumed that the mining functions of the operation will be carried out by a mining contractor to be selected by the Amara mining team. The open-pit optimisation studies were performed using the Whittle/Gemcom Four-X Analyser (Whittle 4X) software package to provide guidance to the potential economic final pit geometries. Whittle 4X compares the estimated value of the individual mining blocks at the pit boundary versus the cost for waste stripping. It establishes the pit walls where the ore revenue and waste stripping cost balance for maximum net revenue. The selected optimum pit shell is then engineered to generate a practical pit design that incorporates the design slope angles and access ramps / haul roads for an operating pit. The ore / waste tonnages in the practical pit can be calculated, and scheduled to determine the ore production and the waste stripping requirements. The Whittle process requires various input data including the resource block model, unit costs and other physical parameters such as the slope angles at which the pits can be mined. Appropriate unit costs specific to the Sega operation were provided by Amara and other relevant parties. The following sections describe the methodology and derivation of the initial Whittle input parameters and assumptions
17.3.2 Resource Block Models Multiple computer block models were used as the basic resource models for the pit optimisation study. The Orezone models (in GEMS format) were converted to Datamine format by Amara. These resource models (both in GEMS and Datamine) were exported to Whittle 4X. Mineralised material in the Indicated and Inferred categories was taken into account. Only oxide and transitional mineralised material was considered for the optimisation. Dual optimisations were prepared by Amara and SRK for comparison purposes which were favourable.
17.3.3 Geotechnical Based on the slope parameters derived by SRK Ghana for the PEA, the following overall slope angles were used for the pit optimisation: Overall slope angle in oxide material of 46 Overall slope angle in transitional material of 46
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17.3.4 Cost Inputs Cost input parameters were obtained from Amara and mining contractors operating in Burkina Faso. For the purpose of the Whittle optimisation, capital costs, depreciation, amortisation and other interest / finance charges have been excluded.
17.3.5 Mining Costs For the pit optimisation analysis mining contractors have provided unit mining costs by rocktype, by deposit and by bench. Refer to Appendix 17-B showing details of mining contractor rates per deposit.
17.3.6 Processing and General Administration Cost Amara provided the metallurgical processing recovery factors and costs for ore, and the overall General and Administration (G&A) costs based on a throughput of 1.6Mtpa. A breakdown of the costs and parameters used in the Whittle optimisation runs are shown in the table below.
Table 17.2: Type Ore
Whittle Parameters for the Open Pit Optimisation Oxide Recovery - 87% Processing, Trans & Admin cost BK RZ US$ 24.73 / t Processing, Trans & Admin cost Tiba US$ 26.67 / t Oxide - US$ 83.4/oz Transition Recovery - 70% Processing, Trans & Admin cost BK RZ US$ 24.95 / t Processing, Trans & Admin cost Tiba US$ 26.89 / t Trans - US$ 83.4/oz
Royalty
17.3.7 Mining Factors From previous experience it was decided that the mining dilution factor be set at 5% (at 0 g/t grade) and mining recovery at 95% based on the block size used in the mining model.
17.3.8 Gold Price and Royalties An average gold price of US$1300/oz was selected by Amara which corresponds to other economic mining studies being undertaken elsewhere at this time.
17.3.9 Cut-off Grade Calculations The Cut-off Grade, (COG) was derived calculating the overall cost of producing one tonne of ore divided by the recovered value of the gold contained therein. This is shown in the table below.
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Table 17.3:
Cut-Off grades for FGO and MGO
Pit RZ / BK Tiba
Distance km 19 27
FGO Cut-Off Grade g/t Oxide Transition 0.73 0.91 0.78 0.98
MGO Cut-Off Grade g/t Oxide Transition 0.52 0.67 0.59 0.75
Cut-off grade for Full Grade Ore (FGO) is that grade (break-even) where revenue from the gold produced equals the cost of treating the ore, refining and selling the gold. Cut-off grades are calculated for each material type in each pit. That is: Incomes = Costs where: g is the (break-even) grade (g/t); r is the metallurgical recovery (%); P is the planning gold price in US$/oz; Cs is the cost of selling and refining gold in US$/oz; Cp is the total Processing Costs (Fixed & Variable) in $/t treated; Ca is Administration & General including Mine closure and rehabilitation cost in $/t treated; Cmf is Mining and Geology Fixed cost in $/t treated; Cr is the cost of rehandle in US$/t treated; and Com is the additional Ore mining cost above waste mining cost in US$/t mined. or g * r * (P Cs) = Cp + Ca + Cmf + Cr + Com
The FGO cut-off grade is then calculated as:
g=
Cp + Ca + Cr + Cmf + Com r * (P - Cs )
The marginal ore is that material that could be treated profitably at the end of the mine's life when certain costs can be eliminated and/or reduced. That is:
MO =
Where:
Cp + Ca + Cr + Cmf r * (P - Cs )
MO is the Marginal cut-off grade (g/t); r is the metallurgical recovery for lower grade ore (%); P is the gold price in US$/oz; Cs is the cost of selling and refining gold in US$/oz; Cp is the total Plant Costs in US$/t treated (Lower Fixed Cost etc.); Ca Administration & General including Mine closure and rehabilitation cost in US$/t treated (Reduced); Cr is the cost of rehandle in US$/t treated for 100% rehandle; and
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Cmf is mining and geological fixed cost (reduced only for stockpile control) in US$/t treated.
17.3.10
Whittle Results
The results from the pit optimisation, for the parameters and assumptions stated, are shown in the table below. The selection of the optimum pit shells were based on maximum undiscounted cash flow. The results shown were prepared by SRK.
Table 17.4:
Optimum Pit
Whittle Optimisation Results

RoM Oxide Ore Tonnes 349,198 191,871 29,210 474,454 105,628 7,467 18,422 26,777 51,586 277,947 133,931 34,501 145,410 1,846,402 grade g/t 3.31 1.66 1.79 1.59 1.88 1.55 1.46 1.66 3.02 2.40 1.99 1.46 3.11 2.25 Transition Ore grade Tonnes g/t 1,421 1,167 0 199,422 88,981 16,684 2,306 39,276 0 41,887 485 17 11,523 403,169 2.59 1.99 0.00 2.14 2.05 2.36 1.87 1.85 0.00 3.80 2.44 1.20 3.29 2.31 Waste Tonnes SR t:t Total Tonnes Cashflow Gold Rec oz 32,376 8,964 1,462 30,701 9,658 1,211 851 2,881 4,363 22,275 7,472 1,411 13,504 137,128 Operating Cost US$/oz 678.6 865.4 860.1 921.1 810.8 907.0 978.1 871.6 851.7 678.3 872.6 869.3 575.2 772.1
RoM Ore grade Tonnes g/t
RZ RZE RZW BK GBS GBN GBSW MS Tiba1 Tiba1E Tiba2 Tiba3 Tiba3SE Total
350,619 193,038 29,210 673,876 194,609 24,151 20,728 66,052 51,586 319,834 134,416 34,517 156,933 2,249,569
3.30 1.66 1.79 1.75 1.96 2.11 1.51 1.77 3.02 2.59 1.99 1.46 3.12 2.26
3,668,289 722,558 154,098 3,099,805 687,053 132,064 86,430 171,150 564,814 1,781,271 817,374 48,917 924,129 12,857,952
10.5 3.7 5.3 4.6 3.5 5.5 4.2 2.6 11.0 5.6 6.1 1.4 5.9 5.7
4,018,908 915,596 183,308 3,773,681 881,662 156,215 107,158 237,202 616,400 2,101,105 951,790 83,434 1,081,062 15,107,521
20,123,021 3,896,939 643,166 11,637,648 4,725,544 476,198 273,978 1,234,417 1,956,402 13,850,890 3,194,576 607,954 9,789,928 72,410,661
Details of individual deposit optimisations can be found in Appendix 17-C.
17.3.11
Practical Pit Design
The practical pit designs were prepared using the optimised pit shells as templates. Datamine software was used to prepare the practical pits and to incorporate the haul roads, ramps together with the appropriate inter-ramp slope angles. The open pit design criteria were: A nominal bench height of 10m Inter-ramp slope angles of 46 in the oxide material and 46 in the transitional material. Inclusion of the ramping systems results in overall slope angles of less than 46o Haul road widths of 20m including safety berms providing sufficient room for two-way traffic for the planned 42t capacity truck fleet. Minor ramps at the lower elevations of the pits have been reduced in width where traffic density will be minimal Haul road grades at a 10% continuous gradient External haul roads to have a 14m width
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A total of thirteen pits have been designed as follows:
RZ Main
RZ Main is the largest pit on the Sega Project. It occupies a surface area of about 8.4ha and is about half a kilometre from Bakou village. The pit is about 100m deep with 10m benches and 5m berms.
RZ East
This pit is about 300m to the east of RZ main and 200m from the Bakou village. RZ East is very close to the artisanal settlement and occupies a surface area of about 2.9 ha. It is about 50m deep and also designed on 10m benches and 5m berms.
Bakou
The Bakou pit is about 300m to the east of RZ East and part of the pit falls within the artisanal settlement. It is also about 200m from the Bakou village. The Bakou pit occupies a surface area of 7.6 ha and about 90m deep with 10m benches and 5m berms.
RZ West
The RZ West Pit is about 200m to the west of RZ Main and occupies a surface area of about 1.0ha. It is relatively shallow - the depth ranges from 20m to 40 m. It is also designed on 10m benches and 5m berms.
Gambo North
This pit is about a kilometre to the south of the RZ main pit. The surface area is 0.7 ha. It is also relatively shallow with the depth ranging from 15m to 40m. It is also designed on 10m benches and 5m berms.
Gambo South
Gambo South has three pits with a total surface area of 2.9ha. It is about half a kilometre to the south-east of Gambo North. The main pit is about 30m deep. It is also designed on 10m benches and 5m berms.
MS
The MS pit is occupies a surface area of about 1.0ha and is about 300m to the north-east of Gambo North pit. It is fairly shallow with the depth ranging from 30 to 50m and also designed on 10m benches and 5m berms.
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Gambo South-West
Gambo South-West is made up of two small pits and about 800m to the west of Gambo North pit. It is occupies a total surface area of 0.38ha and is about 25m deep.
Tiba 1E
Tiba 1E is the biggest pit among the Tiba pits. It is about 700m from the Tiba village and occupies a surface area of 5.2ha. The deepest portion of the pit is about 60m below surface.
Tiba 3SE
This pit is about 600m to the south-east of Tiba 1E pit and occupies a surface area of 2.3ha. It is about 50m deep and 1.9km away from the village.
Tiba 3
This pit is about 300m to the south-west of the main Tiba 1E pit and about half a kilometre from the village. It occupies a total surface area of 0.47ha and the deepest portion of the pit is about 20m below surface.
Tiba 2
Tiba 2 pit is about a kilometre from the village and 1.5km to the south-west of the main Tiba 1E pit. It occupies a total surface area of 2.4ha and the deepest portion of the pit is about 60m.
Tiba 1
Tiba 1 pit is immediately adjacent to the village and about a quarter of the village is occupied by this pit. The pit has a total surface area of 2.3ha and the deepest portion is about 50m. Principal haul roads have been designed to connect the working areas to the waste dumps and a surface loading area for hauling to Kalsaka. The final pit designs are shown in the figures below.
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Figure 17.1:
BK RZ Practical Pits
RZE RZ RZE
BK
MS
GBSW GBW
GBS
BK RZ Practical Pits
Project No. 447301
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Figure 17.2:
Tiba Practical Pits
TIBA 1
TIBA 1E
TIBA 3
TIBA 3SE
TIBA 2
Tiba Practical Pits
Project No. 447301
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17.3.12
Mine Production Schedule
The scheduling process consists of developing a mine plan that is optimum using the inventory included in the practical pits. Schedule methodology was based on a simple bench by bench basis. Ore in the indicated and inferred categories is scheduled for processing. A summary of the mining schedule is shown in the table below.
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Table 17.5:
LOM Production Schedule
LoM RZ MAIN Ore (kt) Grade (g/t) Waste (kt) Ore (kt) Grade (g/t) Waste (kt) Ore (kt) Grade (g/t) Waste (kt) Ore (kt) Grade (g/t) Waste (kt) Ore (kt) Grade (g/t) Waste (kt) Ore (kt) Grade (g/t) Waste (kt) Ore (kt) Grade (g/t) Waste (kt) Ore (kt) Grade (g/t) Waste (kt) Ore (kt) Grade (g/t) Waste (kt) Ore (kt) Grade (g/t) Waste (kt) Ore (kt) Grade (g/t) Waste (kt) Ore (kt) Grade (g/t) Waste (kt) 451.7 2.79 5 521 215.4 1.46 999.3 818.6 1.49 4 149.9 22.3 1.80 189.6 1 508.0 1.88 10 859.8 322.1 2.34 2 212.8 148.1 3.01 863.5 254.4 1.92 2 014.9 724.7 2.33 5 091.2 216.3 1.81 1 066.6 90.6 1.58 331.5 2 539.6 1.99 17 349.1
Month 1 2.2 1.70 334
Month 2 15.5 2.72 303
Month 3
285
Month 4 27.0 2.87 284
Month 5
Month 6
323
276
Month 7 27.0 2.54 408
Month 8 25.9 2.41 674
Month 9 24.2 2.26 518
Month 10 44.9 2.55 565
Month 11
RZ EAST
BAKOU
RZ WEST
Total RZ
Tiba 1E
Tiba 3SE
0.7 1.43 26.3 2.9 1.63 360.8 17.1 2.14 112.3 11.0 2.67 259.3
2.9 1.76 39.7 18.4 2.56 342.8 38.0 2.11 245.7 37.5 2.50 196.9
9.2 1.93 90.7 9.2 1.93 375.3 27.6 2.50 296.8 35.9 2.86 281.5
5.6 1.84 221.3 9.4 1.72 32.9 42.1 2.48 537.9 37.6 2.53 281.6 32.1 3.31 82.8
28.0 1.49 36.6
320.7
58.8 1.34 248.1
324.0
76.2 1.40 548.2
73.4 1.39 551.7
223 37.0 1.20 377.7 79.4 1.36 546.4
Month 12 26.3 3.08 257 33.9 1.40 240.6 148.9 1.40 466.4
Month 13
99 33.1 1.47 80.8 132.3 1.37 538.6
Month 14 85.0 2.92 472 31.5 1.51 159.3 102.2 1.38 232.3
Month 15 82.1 2.90 265 51.5 1.54 104.2 56.8 1.69 89.1
Month 16 56.3 2.39 177 28.4 1.68 36.6 56.8 2.61 26.5
Month 17 35.2 3.82 59
Tiba 1 & 2 & 3
Total Tiba Gambo North/South Gambo SouthWest/ MS SEGA TOTAL
28.0 2.35 371.6 8.2 1.41 272.1
75.5 2.30 442.6 25.7 1.77 254.7
63.6 2.70 578.3 33.5 1.63 223.1
69.8 2.89 364.4 72.4 1.75 201.0
39.2 2.10 1 004.5
119.6 2.23 1 040.1
106.3 2.30 1 176.7
184.2 2.35 1 103.3
28.0 1.49 359.9 41.4 2.42 472.0 23.4 3.58 40.6 29.3 1.20 38.6 94.0 2.33 551.2 62.7 2.00 113.1 8.6 1.27 71.6 193.3 2.05 1 095.8
596.7 77.2 2.35 551.9 8.2 3.64 2.5 9.7 1.52 7.4 95.1 2.38 561.8 13.8 2.08 2.6 7.6 1.57 18.6 116.5 2.29 1 179.7
85.8 1.72 655.8 52.7 2.20 197.8
25.9 2.41 998.2 25.0 2.47 51.8
100.4 1.61 1 065.9 5.5 2.58 2.8
118.4 1.83 1 116.4
116.3 1.31 1 147.0
209.2 1.61 964.3
165.4 1.39 718.5
218.7 2.00 863.8
190.3 2.17 458.1
141.6 2.33 239.8
35.2 3.82 58.8
11.0 1.72 280.6 63.7 2.12 478.4
14.1 1.73 139.3 39.1 2.21 191.1
15.7 1.72 65.1 21.2 1.94 67.9
30.3
15.1
45.4
30.3
15.1
45.4
33.5 1.70 306.2 33.5 1.70 306.2
20.8 1.85 162.5 20.8 1.85 162.5
47.4 2.00 553.5 47.4 2.00 553.5
54.4 2.10 285.6 54.4 2.10 285.6
18.6 3.42 85.5 18.6 3.42 85.5
149.5 1.89 1 134.2
65.0 2.29 1 189.2
121.7 1.67 1 133.8
118.4 1.83 1 146.6
116.3 1.31 1 162.1
6.6 1.51 55.2 215.8 1.61 1 064.8
15.1 1.57 80.0 214.0 1.45 1 104.7
14.0 1.66 27.5 253.6 1.97 1 053.8
4.1 1.29 39.4 241.8 2.12 1 051.0
23.7 1.73 36.5 219.6 2.21 562.0
10.9 1.60 2.7 64.7 3.33 146.9
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17.3.13
Sega Mineral Inventory
The Mineral Inventory Statement is based on Indicated and Inferred Resources within the designed practical open pits. The table below shows the Mineral Inventory estimated to be contained in the Sega practical pit designs and the production schedule.
Table 17.6:
Summary of Sega Mineral Inventory Deposit Tonnes kt BK / RZ Tiba TOTAL 1,815 724 2,539 Grade (g/t Au) 1.86 2.33 1.99 Ounces koz 109 54 163
17.4 MINING OPERATIONS
17.4.1 Introduction SRK understands that contractor-based mining is preferred by Amara. The selected mining contractor will thus be responsible for the site preparation (including removal of vegetation) haul road construction, excavation and haulage of ore to the Run of Mine (ROM) pad and waste to the waste dumps, oversize breakage and equipment maintenance. The mining operations are based upon the usage of hydraulic excavators and haul truck fleets engaged in conventional open pit mining techniques. The excavators load the material into the haul trucks, with the ore being transported to a surface loading area the waste to the designated local waste dumps. Access roads will be developed as required for access into new areas. The main arterial roads where necessary will be constructed to a minimum 14m width, including berms and drainage areas. Topsoil in mining areas will be recovered during the pit preparation phase and stockpiled for future use with progressive waste dumps and possible pit rehabilitation. Pit benches will be developed to conform to the specific excavating equipment, but generally in 5m or 10m horizontal lifts. The majority of the gold mineralised material will be transported to the ROM loading area and re-loaded for hauling to the Kalsaka heap-leach plant. All of the waste material from the excavation area will be hauled to external waste dumps, adjacent to the operational pits. The total waste to be moved is about 17Mt, which approximates to 8Mm3 of dumping volume. End tipping will be utilised as much as possible and the dump profile will be progressively extended outwards. Generally, construction industry standards will be followed to ensure a good geotechnical design. It has been assumed that on-site staff at Kalsaka / Sega will also undertake mine planning, mine scheduling, grade control and performance monitoring.
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17.4.2 Mining Equipment Requirements The mine equipment in the table below has been selected based upon the annual mine production schedule. This has been prepared by the mining contractor.
Table 17.7:
Mining Equipment Requirements
Equipment Excavator
Dozer Grader Truck Water Cart Wheel Loader Drill Lighting Towers
Type & Model Komatsu PC1250SP CAT 385ME CAT 330D CAT D9R CAT 14H CAT 777D CAT 773B CAT 773 CAT 966 II Atlas Copco L7
Quantity 3 1 1 3 1 12 5 1 1 1 6
17.4.3 Mine Work Schedule The table below summarises the working schedule, the scheduled shifts per year and the expected shifts available, accounting for holidays. The mine is initially scheduled to work 365 days per year, less time for holidays and inclement weather. It will operate three shifts per day, 8 hours per shift for 1065 available shifts each year for the mine life. A 3-crew roster system will be required to maintain this schedule.
Table 17.8: Scheduled Working Periods Parameter Calendar Days Days per Week Holidays Weather Scheduled Days Shifts/Day-Ore Shifts/Day-Waste Annual Work Shifts-Ore Annual Work Shifts-Waste Hours per Shift-Ore Hours per shift-Waste Scheduled Hours_ore Scheduled Hours_Waste Units days days days days days shifts shifts shifts shifts hrs hrs hrs hrs Value 365 7 15 21 329 2 3 658 987 8 8 5,264 7,896
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The operating time per shift will be the actual time during the shift that the equipment is productively working at its capacity. This is equal to total scheduled time less all scheduled and unscheduled delays.
17.4.4 Open Pit Dewatering The hydrogeological study will require some additional holes to be drilled and tests to be done. Allowance has been made in the capital estimates for raft-mounted-pumps in the open pits to cater for the rainfall discharge within the pit limits.
17.4.4.1 Mine Infrastructure Due to the nature of the proposed Sega Project, minimal infrastructure will be required at the Sega Project site, with the main activities being the open pit mining and primary crushing. Besides the open pits, waste rock dumps, primary crushing facility and associated ore stockpile, the proposed infrastructure to be developed for the Sega Project will include the following: Mine roads, including haul road from Tiba to primary crusher facility situated at the Gambo/Bakou area and a further 20km to the existing Kalsaka Mine; Heavy Equipment Mine Workshop including: o A 200 x 200m yard with security fencing; o 2 x 40 container as store for critical items; o 1 x 40 container as office and storage for supervisors; o 1 x 20 container for lube/fuel bay; o 1 x Service truck; o 1 x station wagon (Personnel carrier); and o 1 x 40 KVA generator. Fuel farm installation with 2 x 30,000litre tanks (supplied by contractor); Power generation plant with 2 x 410kVA diesel generators, by Amara; Water stand pipe which in turn may require pumps, pipelines, well/borehole fields if applicable for on-site water management. This includes the provision for dust suppression in the mining area, interconnecting and haul roads; Administration buildings; Production equipment, including: o 1 x 40 container as office for supervisors; o 1 x 20 and 1 x 40 containers for chop kitchen for junior staff; and o Ablution facilities. Perimeter fencing; Safety and environmental satellite facility including first aid station; Security satellite facility; Site illumination; and Radio repeater station.
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17.4.4.2 Mining Manpower The mining personnel include all salaried staff working in the mine operations, maintenance, and engineering departments, and the operational labour required to operate and maintain the drilling, blasting, loading, hauling, and mine support activities. A summary of estimated labour requirements is shown in the tables below.
Table 17.9:
Summary of Amara Labour
Personnel Mining Technical Services Process and Engineering Administration TOTAL 45 176 114 335
Table 17.10:
Summary of Mining Contractors Labour
Personnel DT Operators Digger Operators Dozer Operators Drilling Blasting Maintenance Management / Support TOTAL 45 10 11 4 9 43 119 241
17.4.4.3 Capital and Operating Cost The mining capital cost has been estimated to be US$2.25 million. Details of this can be found in Appendix 17-D. From the contractors rates provided the total mining operating cost for ore and waste (excluding ore haulage from Sega to Kalsaka is US$2.59/t. The ore haulage cost has been estimated to be US$5.7/t. 17.5 FURTHER WORK REQUIRED Further investigation required into the possibility of steepening the pit slopes; and An investigation should be carried at regarding the viability of the mining and processing of the sulphide mineralisation of the deposits.
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17.6 INTERPRETATION AND CONCLUSIONS For the PEA pit optimisations were prepared using the indicated and inferred oxide and transitional resources from which practical pits were designed and a mining schedule estimated. The deposits have been scheduled to be mined in a relatively short period of 17 months. An economic analysis has been prepared by Amara.
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SECTION 18.
PROCESS PLANT
18.1 PROCESS PLANT DESIGN CRITERIA The process design criteria for the Sega crushing plant and stockpile is shown in the table below.
Table 18.1:
Process Design Criteria for the Sega Crushing Plant Units Ore 1 SEGA PROJECT SP496 Amara Burkino Faso Open Cast Oxide 1 Truck/FEL Static grizzly 650 700 394 152 250 VIB GRIZ 100 Jaw 150 250 Open Cast Transition 1 Truck/FEL Static grizzly 650 700 394 152 250 VIB GRIZ 100 Jaw 150 250 Ore 2 Source Client SENET Client Client Client Client Client Client Client Osborn Client/Osborn Osborn Osborn Client Client Osborn Osborn Osborn Osborn
Description SITE DATA Project Name Project Number Client Name Location CRUSHING Ore Source Ore type Number of Primary Crushing Circuits Method Feeding of ROM Bin ROM oversize handling Selected grizzly spacing Max Lump Size F100 Max Lump Size F80 Max Lump Size F50 Feed Tonnage Treated Withdrawal Method From Bin Selected grizzly spacing Type of Primary Crusher Primary Crusher CSS Primary Crusher Product Size P100 STOCKPILE Kalsaka Plant Feed Stockpile Type of Feed Conveyor No of Stockpiles Withdrawal Method From Stockpile Crushed ROM transport to Kalsaka
# mm mm mm mm mm tph mm mm mm
Spreader Conveyor 1 FEL Truck
Spreader Conveyor 1 FEL Truck
Client Client Client
18.1.1 General Process Plant Criteria Kalsaka ore exhibits its own parameters in respect of reagent consumptions and recoveries. These prices and rates are well known. What remained was to judiciously select those parameters pertaining to the Sega ore based largely on the testwork performed to date both by others as well as in-house. The result is seen in the following table where the major parameters selected are exhibited.
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Table 18.2:
General Process Plant Criteria Description Units mm % kg/t kg/t kg/t Sega Oxide 12.5 87 0.45 9 As per Kalsaka Sega Transition 12.5 70 0.63 7 As per Kalsaka Source Client/Testwork Client/Testwork Client/Testwork Client/Testwork Client
Final Crush Size HL Gold Recovery Cyanide Consumption Cement Consumption Other Reagents
. 18.2 PROCESS PLANT DESCRIPTION Process plant design was developed by Osborn Engineered Products using their own proprietary process design software packages. These have also been verified in-house by Amara for both flowsheet and individual equipment items using software readily available in the market as well as published capacity data. Results have been replicated onto flowsheets produced by SENET. The process plant description was divided into two parts taking into account the Kalsaka flowsheet and the new Sega crushing plant.
18.2.1 Sega Process Plant Description The figure below shows the process flow diagram for Sega crushing plant.
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Figure 18.1:
Sega Primary and Secondary Crushing Plant PFD
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Figure 18.2:
Sega Crushing Plant Proposed Layout
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The process flow for the Sega gold plant is described below: Ore is transported by truck from the various pits depicted at Bakou, Gambo and Tiba to be deposited at a ROM stockpile adjacent to the Sega crushing facility which comprises essentially an Osborn 42 x 48 modular primary jaw crusher installation. ROM ore will either be transported from the ROM stockpile to the Sega crushing plant using front end loaders or directly tipped into the crusher feed bin from the trucks. The ROM ore will be loaded onto a horizontal static grizzly situated on top of the ROM tip bin with a 700mm aperture. The grizzly mounted above the ROM tip bin will scalp off the oversize material. Ore will be reclaimed from the ROM bin using a primary vibrating grizzly feeder with 100mm spacing. The undersize from the vibrating grizzly feeder will discharge onto the primary crusher discharge conveyor. The vibrating grizzly oversize will report to a 42 x 48 single toggle Osborn primary jaw crusher before being discharged onto the primary crusher discharge conveyor. The crushed material will then be transferred onto an intermediate conveyor over which an emergency feed hopper stands which will then convey the material onto the stockpile feed or stacker conveyor. An allowance will be made for ROM ore from the tip to bypass the primary crushing unit. If required, material will be loaded into an emergency ROM feed bin. The discharge from the bin will be transferred, together with the crushed material from the primary crushing unit, onto the stockpile feed conveyor. The crushed ore will be reclaimed from the stockpile using front end loaders. The front end loaders will transfer the material from the stockpile into transport trucks. The trucks will transport the crushed ore some 20km along a dedicated haul road from the Sega crushing facility to the existing Kalsaka plant for final treatment. Space provision has been made for the installation of a secondary jaw crushing module in the event that this is required. The current philosophy suggests that the hauling of minus 250mm material is suitable without causing material or excessive damage to haul trucks and moreover, that this will not be required since the Kalsaka possesses sufficient and adequately sized crushing plant to accept the primary crushed product as feed. The emergency loading facility only becomes relevant should there be a secondary jaw crusher module in place, which is not planned at this stage.
18.2.2 Kalsaka Process Plant Description The process flowsheet at the Kalsaka Gold Plant is shown in the figure below and has also been verified by Osborn Engineering as being suitable for the feed of Sega type ore.
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Figure 18.3:
Kalsaka Mine Upgrade PFD
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Figure 18.4:
Kalsaka Overall Site Plan
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The Kalsaka plant has already been subject to and continues still to be upgraded to accept material of a harder nature from the Kalsaka pits including significant hard rock stockpiles and transition material therefore it is deemed ideally suited to cater for the hard characteristics of the Sega ore and to enable the ore to be deposited, suitably crushed, upon the heap leach pads at Kalsaka. Primary jaw crushing This comprises a two-stage jaw crusher installation configured in series. The first jaw is described as being of a similar design described at the Sega crushing facility i.e. a ROM tip bin with static grizzly feeder. This grizzly though is sloped at 30 angle with a 650mm aperture. Similar to the Sega ROM tip, the ore will be loaded onto the static grizzly on top of the ROM tip bin which will scalp off any oversize material. The oversize from the grizzly discharges into a 32 x 40 jaw crusher with a 100mm CSS (potentially could double as the Sega secondary crushing plant). The grizzly undersize and the modular jaw crusher discharge are conveyed to a secondary jaw crushing plant of size 24x 36 exhibiting a CSS of 50mm. Secondary cone crushing This operates in essentially an open circuit configuration but with the facility for the removal of fines for efficiency purposes. Classification occurs via a doubledeck horizontal vibrating screen of dimensions 900mm x 3600mm. The top screen has an aperture of 30mm. The bottom screen has an aperture of 12.5mm for the purpose of removing product sized ore. Screen oversize passes to a 4 Symons cone crusher with a 19mm CSS. The intermediate screen product falls directly onto the crusher discharge belt, bypassing it in effect for further processing and is conveyed to the tertiary cone crushing feed for further processing. The screen undersize which is of product size is directed onto the back end of the agglomerator drum feed belt via a dedicated conveyor. The removal of the fines at this early stage prevents overloading of the secondary cone crusher and further downsteam screening and crusher circuits. This bypass conveyor even allows the ore to bypass the tertiary crusher. Tertiary Cone Crushing - The product stream from the secondary cone crushing circuit passes to a tertiary cone crushing facility where classification occurs via a double deck horizontal vibrating screen of dimensions 2400mm x 6700mm. The upper screen or top deck has apertures of 20mm whilst the lower deck representing the product screen is sized to have 12.5mm apertures. Oversize and intermediate screen product is directed via conveyor to the side where a 5 Symons cone crusher with 10mm CSS is installed. This crushing circuit may be operated in either an open or a closed circuit configuration. Crusher product is typically recycled to the screen feed conveyor to ensure that all product is subjected to the 12.5mm cut size. In the unlikely event that an overload situation occurs either at the crusher or the classification screen decks then the configuration can be changed to open circuit whereupon all cone crusher product is conveyed. The added benefit of this is that the way is laid open to increase plant capacity provided that gold recovery is not affected adversely by an increase in product size. In-house metallurgical testing especially on Sega ore seems to indicate that this may well be possible however in the interests of prudence it was felt to initially ensure that the more conservative closed circuit configuration be maintained. Screen undersize represents the feed to the agglommerator drum from where water and cyanide is added. Cement too is added to the product stream prior to the drum. Further discussion on the Kalsaka heap leach process was not deemed necessary here as there is adequate explanation of the downstream heap leach and gold recovery circuits in other
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publications. Suffice to say that the downstream plant circuit operates quite adequately to achieve the nameplate capacity and has done so for several years. It is felt necessary to explain the crusher circuit at Kalsaka as this has a direct bearing on the treatment of Sega ore. This is to give the reader a degree of confidence that the Kalsaka plant, though originally designed for soft ores and later upgraded for the harder ores experienced, remains ideally suited to accept the Sega ore for treatment. Finally it remains just to say that the original oxide mineral-sizer feed bin arrangement will continue to remain an integral part of the Kalsaka processing circuit. It means that there are three feed points for ore to the circuit and along with other bypass chutes creates what is thought to be a flexible yet robust and indeed reliable circuit well suited to continue in some operational configuration in spite of the potential breakdown of individual items of equipment. The continuous upgrading of the Kalsaka crusher circuits also eventually necessitated additional power generating capacity. This took the form of two additional 410kVA diesel generation sets. In addition, an upgrade of the electrical reticulation system was required necessitating further transmission lines and transformers.
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SECTION 19.
INFRASTRUCTURE AND OTHER SITE SERVICES
The following is a summary of logistical/infrastructure information both existing and anticipated pertaining to the Sega Project.
19.1 LOGISTICS The SDV logistics group is a French owned company whose activities cover the supply chain including clearing and forwarding of import and export cargo. With a global footprint, they cover the whole of West Africa including Ghana and Burkina Faso. SDV are typically used to facilitate the movement of cargo / consumables from source to the mine site in Burkina Faso. Sea freight typically arrives via Tema or Takoradi, Ghana (approximately 1,000km to the south of Ougadougou) which is thought to be the best entry point for ocean freight. Travel time from a Ghanaian port to the Burkina Faso border would take a minimum of 2 days. Final clearance can be made at Ougadougou. No estimate has been made for travel time to the site from Ougadougou though this could conceivably be accomplished in a single day. These transit periods do not take into account stand-time which can often occur at the nodal points including border crossings. Notwithstanding this, Kalsaka, being a fully-fledged operational mine has successfully had all of its major equipment items and consumables transported in this fashion, so the logistics delivery route is well-proven. Thus it is expected to continue to be so for the Sega Project.
19.2 EXISTING INFRASTRUCTURE Upon acquisition of the Sega property from Orezone Gold Corporation, certain fixed assets were also transferred to Amara in respect of an existing plot of land that is equipped with a high security perimeter fence and guarded access gate, used for the purpose of housing an exploration team and a base from which to conduct their activities. The exploration camp sits very near to the village of Tiba on the national road linking Kalsaka to Seguenega and consists of the following elements: Potable water borehole of capacity 5m3/h (duty); Potable water borehole of capacity 1.2m3/h (standby); Landline telephone system (40 55 65 41); Computer network cabling; Covered core shed (100m x 25m); Air conditioned main office area; 10 x air-conditioned accommodation rooms; Air-conditioned mess hall; Air-conditioned food store; Air-conditioned kitchen; Analytical laboratory; Electrical generator set; 5 x external washrooms; 5 x shower cubicles;
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5 x toilets; Hot water electrical geyser system; 15,000 l Shell fuel tank plus distributor pump (Shell installed); and 15,000 l Tamoil fuel tank plus distributor pump (Tamoil installed).
The above facility has provided adequate and comfortable accommodation for a select group of personnel in order to fulfil their activities for long periods of time and will to all intents and purposes serve an equivalent duty now on behalf of Amara
19.3 PROPOSED NEW MINE INFRASTRUCTURE The requirement and development of mine infrastructure is described further below. Due to the nature of the proposed Sega Project, minimal infrastructure will be required at the Sega Project site, with the main activities being the open pit mining and primary crushing. Similarly, due to the processing taking place at Kalsaka Mine, much of the required infrastructure required for the operation of the Sega Project is already in place. The section below thus outlined infrastructure required for the Sega Project. In addition to the open pits and waste rock dumps envisaged including the primary crushing facility and associated ore stockpile, the proposed infrastructure to be developed for the Sega Project will include the following: Mine roads, including haul road i.e. 8km from Tiba to primary crusher facility situated at the Gambo/Bakou area and a further 20km from there to the existing Kalsaka Mine; Heavy Equipment Mine Workshop / yard, including: o A 200 x 200m yard with security fencing; o 2 x 40 container as store for critical items, filters etc; o 1 x 40 container as office and storage for supervisors; o 1 x 20 container for lube/fuel bay; o 1 x Service truck; o 1 x station wagon (Personnel carrier); and o 1 x 40 KVA generator. Fuel farm installation with 2 x 30,000 litre tanks (supplied by contractor); Power generation plant with 2 x 410 kVA diesel generators; Water stand pipe which in turn may require pumps, pipelines, well/borehole fields if applicable for on-site water management. This includes the provision for dust suppression in the mining area, interconnecting and haul roads; Administration buildings; Production equipment, including: o 1 x 40 container as office for supervisors; o 1 x 20 and 1 x 40 containers for chop kitchen for junior staff; and o Ablution facilities. Perimeter fencing; Safety and environmental satellite facility including first aid station; Security satellite facility; Site illumination; Radio repeater station.
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SECTION 20.
20.1 INTRODUCTION
IMPLEMENTATION
The full scope of Sega implementation project entails separate initiatives being undertaken not altogether independently but in some instances simultaneously. The drive to completion will take the following main project thrusts into consideration: Crusher installation-The project implementation schedule for the crusher installation reflects the work required from detailed engineering, construction and through to commissioning and includes provision for power generation and fuel supply; Haul road and other mining infrastructure There is a possibility that early works on the haul road can commence subject to an environmental notice on account of the fact that a road could be considered to be a public infrastructure, ultimately of benefit to the community despite its interim sole use as a dedicated mine-related facility over the relatively short period of the mine life; and ESIA and permitting This initiative is required to commence as soon as possible so as to obtain the necessary permits for operation timeously.
20.2 CRUSHER INSTALLATION MILESTONES The project milestones include the following: Order placement start 1st Deliveries on site Construction Start Project Completion Month 1; Month 3; Month 3; and Month 7.
20.3 LONG LEAD ITEMS Long lead items include the following: Crusher MCCs Belting 10 weeks; 08 weeks; and 16 weeks.
20.4 EPCM CONSULTANT It is envisaged that Amara will appoint an independent engineering company to execute the project on an EPCM basis. It is certain that a construction team alluded to elsewhere in this report and already based at Kalsaka will be utilised to effect the instructions from the EPCM contractor. The total EPCM duration is anticipated to be 7 months. Design & Engineering Drawing Office 1.5 months; 1 months;
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Procurement Equipment Supply and Fabrication Construction detail).
2 months; 3.5 months; and 3.5 months (See below section for
20.5 HAUL ROAD AND OTHER MINING INFRASTRUCTURE
20.5.1 Introduction BCM, the incumbent mining contractor at Kalsaka Mining SA were requested to provide assistance with regard to the haul road construction. They were pleased to provide Amara the necessary technical assistance with the understanding that this would not mean necessarily that they would automatically be awarded the contract for the haul road or indeed the mining to be undertaken at Sega. Their report was purchased at arms-length and may therefore be considered independent and generic regardless of who implements its construction. Some excerpts of their report are shared below.
20.5.2 Scope of Works The Scope of Works for the construction of the proposed Kalsaka to Sega Haul Road consists of all earthworks and related activities required to construct a gravel sheeted haul road originating near the Kalsaka West Waste Dump and terminating near the proposed Sega (Tiba) open pit. Pertinent parameters include: Quantity estimates are based on the in-car survey of the proposed alignment conducted on 12th April 2012. Chainages used were determined by the vehicle odometer and various assumptions were made regarding the location of the alignment, quantities of cut and fill, location of culverts, etc.; Road formation width is assumed to be 14.0m, with a 12.0m wide running surface and 1.0m shoulders either side; Gravel sheeting to the running surface is assumed to be 0.15m depth and sourced from suitable borrow locations along the alignment; All cut to fill has been assumed to have a maximum one way haul distance of 1.0 kilometre and all borrow to fill material including gravel sheeting, has a maximum one way haul distance of 2.0 kilometres; We have assumed that all clearing debris and topsoil would be windrowed to the side of the alignment and not loaded and hauled to stockpile; and Typical pipe culverts of dimensions 600mm and 1200mm diameter corrugated steel pipe were considered appropriate.
A sketch of the typical cross section is seen in the figure below.
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Figure 20.1:
Haul Road Cross Sections
The Construction Contractor will be expected to provide all suitable construction plant and equipment, experienced supervision for carrying out works of this type and have sufficient maintenance capacity and spare parts to ensure a high level of mechanical availability to ensure the work is carried out in a timeous manner. The Contractor in conjunction with the Principals Supervising Engineer and other technical staff will provide all set out survey services, preliminary ground surveys, as built surveys and provide regular volume and quantity reports to track progress and for payment purposes. Initial control points along the proposed alignment will be provided by the Principal for the Contractors use for the duration of the Works. The Contractor will have to work closely with the Principals Community Liaison Officers to ensure minimal disturbance to existing roads, tracks, farms, etc, and where the alignment passes close to villages or settlements that all care is taken to reduce any problems caused by vibration, dust, noise, etc. Erosion and sediment control measures are an important part of the approach to develop this project in an environmentally sound manner and in keeping with the Principals commitment to developing projects with sound environmental stewardship. Best Management Practice (BMP) erosion and sediment control should be undertaken at all times during the duration of the Works. Best Management Practices are schedules of activities, recommendations of commonly accepted and utilized practices, maintenance procedures, and other management practices to prevent or reduce erosion and sediment from leaving the road right-of-way or other areas of development. Construction work shall not start until the Contractor has reviewed and has agreed to an Environmental Management Plan (EMP) with the Principal. The Principal welcomes
suggestions from the Contractor on BMPs that have been shown to be effective locally. The EMP will include measures for erosion and sediment control both during construction and for the life of the roads and other earthworks, as listed below. Dust Control
All haul roads and work areas will have dust suppression carried out by suitable water trucks for the duration of the construction works. Any stockpiles and other temporary work areas including disturbed ground in borrow pits, etc, will be monitored and water trucks used to suppress dust in these areas. Personnel
It is envisage d that the personnel mentioned in the following table will be required for the haul road construction. Also note that the construction will be subject to the following principles: Day shift only; Working hours from 07h00 18h00; and 12 day fortnight worked.
Table 20.1:
Manpower Schedule
Description Earthworks Supervisor Maintenance Supervisor Surveyor Engineer Safety Officer Site Clerk Plant Operators Survey Assistants Tallymen Labourers (flagmen, etc.) Total Personnel Earthmoving Plant Required
No. 2 1 1 1 1 1 18 4 1 6 36
The construction of the haul road requires the uses of special earthmoving equipment as specified in the table below.
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Table 20.2:
Earthmoving Equipment List
Description 85t Excavator 30t Excavator 50t Dump Truck Tipper Trucks Bulldozer Grader Vibrating Flat Drum Roller Water Cart Front End Loader 20.6 PROJECT DURATION
Make Caterpillar Caterpillar Caterpillar Various Caterpillar Caterpillar Bomag Various Caterpillar
Model 385B 330C 777B D8R 14H
Capacity/Output 6m3 2m3 50t 10m3 228kW 164kW 12t 15kL 3.5m3
No. 1 1 5 4 2 2 2 2 1
966G
A construction duration of 3 months for budget pricing purposes has been assumed but final duration will depend on the actual amount of plant used, potential wet season delays, etc.
20.7 OTHER SEGA MINING INFRASTRUCTURE The installation of a water supply pipeline for dust suppression purposes and various other minor scope items as identified are thought to be most practically catered to directly by the KMSA operational team. These will not therefore be included in the EPCM contractor or Haul Road Constructions scope of works.
20.8 ESIA Digby Wells Environmental have been appointed to undertake a comprehensive ESIA for the Sega Project including verification and gathering of baseline data, Their scope of work is described elsewhere in this report. Suffice to say that this program requires input from many sources indeed stakeholders. This process is being carefully managed to ensure compliance with regulatory bodies as well as voluntarily adopted world-practice policies. The program has also been subject to scrutiny with a view to ensure its duration and activities are carried out in the most efficient manner i.e. where activities may be performed simultaneously this is done, and every attempt is being made to reduce wait times for example where review time is necessary, this is being actively expedited though not, it must be said at the expense of the quality of the end product. Thus programs of implementation are exhibited which though optimistic are believed that with judicially applied management these milestones may well be achieved both in terms of the ESIA submission as well as resettlement schedule.
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Figure 20.2:
Steps to Resettlement Schedule
Week 1
Week 2
Week 3
Week 4
Week 5
Week 6
Week 7
Week 8
Week 9
Week 10
Week 11
Week 12
Week 13
Week 14
Week 15
Activity Review of data collected by local consultants Development of additional survey instruments for RAP data collection Drafting terms of reference for local consultants for resettlement data collection and moratorium activities Declaration of moratorium: drafting of letter and approval by Amara Declaration of moratorium: translation of letter Declaration of moratorium: consultation with Ministry of Mines, Quarries and Energy Declaration of moratorium: consultation with local governmental representatives, authorities, chiefs Declaration of moratorium: public meetings declaring the moratorium Demarcation of moratorium area Appointment of people to monitor moratorium area Data collection of affected individuals and assets Data capture and analysis Report compilation: Chapter 1 - project description Report compilation: Chapter 2 - overview of legislation and best practice Report compilation: Chapter 3 - summary of affected individuals and assets Report compilation: Chapter 4 - Resettlement options (including estimations of cost and timeframe) Report compilation: Chapter 5 - next steps in the resettlement process
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Week 16
20.9 OVERALL PROJECT EXECUTION SCHEDULE The summarized project schedule is provided in the figure below.
Figure 20.3: Project Execution Schedule
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SECTION 21.
21.1 INTRODUCTION
ENVIRONMENTAL AND SOCIAL STUDY
Soon after the acquisition of the Sega property by Amara, Digby Wells Environmental (Digby Wells) was tasked with visiting the Kalsaka mine in Burkina Faso for Amara and the recently purchased Sega property. They produced a report describing the Sega Project Social and Environmental Issues dated 14th March 2012 which was essentially a fatal flaw analysis. A summary table of the findings of their initial report is seen below from which Terms of Reference were drawn up so that a proposal could be agreed upon for the full ESIA (Environmental and Social Impact Assessment) programme to follow.
Table 21.1: Issue 1.
Suggestions for Successful Execution of Sega Project Summary Table Possible Consequence Suggested method of dealing with the issue Clearly formulate a strategy and plan for dealing with the large amount of artisanal miners. Get out a clear message as to the order of events and the procedure which will be followed. Understand the potential area required by the mine pits and the associated infrastructure and see what areas could potentially be left for mining by artisanals. Do a decent economic assessment of the current impacts and benefits of artisanal mining vs the benefits of the proposed project. Prepare to have artisanal miners operating near or adjacent to the current pits in areas deemed to be uneconomic. Conduct an extensive social investigation of orpailleurs origin, social group, and tribe.
Orpailleurs Community resistance. Delay in being able to access the pits Claims that more people may lose their jobs than the economic benefit created by the proposed project.
Clearing artisanal miners off the deposit and movement of their support structures. Most of the economy in the area depends on the artisanal gold mining activity and the revenue generated by them and the associated support services. Gold deposits are being mined in a traditional and on a semi-industrial scale. The gold mining deposits are seen to be the property of the different villages near to them.
2.
Sacred sites Community resistance to the project. Delay in project execution timing Clearly map out where these areas are so that they can be avoided wherever possible and if they cannot be avoided then an action plan needs to be implemented to deal with each one. Define the role and importance of each site for the community. Classify the cultural sensitivity level of each site. Define strategy to manage the site: Also if it is possible to avoid, diverting roads, to relocate or to compensate
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Dealing with sacred sites associated with the Mossi people. There are many of them in the areas to be impacted upon.
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for them. 3. Relocation of people Community resistance. Timing delays to certain pits. Costs for the re-establishment of the various villages. Compile a resettlement action plan report (RAP). Consider the possible delays in timing of some of the pits in the mine planning process. Find alternative host sites. Budget for the required work. Movement of villages affected by the pits. In the Bakou area a number of permanent dwellings will be affected by the RZ and Bakou pits as well as a large amount of temporary artisanal and processing facilities. At Tiba village the western most pit will affect a few artisanal structures but also the whole of the Tiba permanent village. 4. Haul road impacts Dealings with impacts on a number of villages fields, safety, social, sacred sites, animal crossing. The number of different villages will be affected or village lands and orpailleurs sites depending on the haul road route and the final design. Currently we expect about 12 villages: Tiba, Bakou, Gambo, Guibou, Kiebelga, Zetouli, Toumini, Touma, Zongo, Namassa, Seguenega and Kalsaka to be affected. Note that the villages are spread out on the village land. Safety of people and animals crossing the road. Impacts on crops, people and houses around mine and along the haul road. Get a detailed aerial or satellite image to assist in the design of a suitable route. Try to avoid impacts in the route design. Design suitable safety measures such as crossings and fences. Impact of the proposed Haul route on fields and the local populace.
5. Dust
Dust Design dust mitigation measures into each aspect of the project. Know where sensitive receptors are such as fields and villages.
6.
Water Competition for water resources. Design in a haul road surface where dust generation is minimal and watering is not required. Understand impacts of abstraction. Plan to have an effective buffer zone around the pit (e.g. 500m) Design safety systems into mine plan for orpailleurs. Record the state of all buildings which could be affected. Design appropriate blasting programmes.
Water usage from the Seguenega dam in a very dry area.
7.
Noise and vibration Danger to orpailleurs working in pits Community complaints and resistance. Allegations of damage to housing and infrastructure. Danger of fly rock.
Vibration and noise from the mining pits
8.
Social demands Demand from the mayor of Seguenega as to benefits for his people. Start planning early on for benefits to be sold to the community there such as social investment, employment, long term water source etc.
The competition between the two communes as the mining will take place in Seguenega commune and the processing will take place in Kalsaka
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On the basis of this report it was decided to appoint Digby Wells to undergo a full ESIA process for the Sega Project. Substantial inroads have been made with this initiative to the extent that a draft ESIA document exists. The document is not complete and requires review and completion, something that is expected to be achieved over the next few months, however serves to demonstrate the considerable amount of effort already incurred and progress made to date.
21.2 Objectives of the ESIA Report The objectives of the ESIA report for the Sega Project were to: Provide background information of the Sega Project, including details of the applicant and project context; Describe the need and desirability of the proposed Sega Project; Describe the Sega Project and its proposed activities in terms of the project location and site description, mining and processing, project scale, timing, duration and sequence; Identify all legal and legislative requirements that should be fulfilled prior to the commencement of the proposed project; Consider and analyse all possible alternatives to the proposed Sega Project; Indicate the stakeholder engagement process (SEP) that was conducted in support of this ESIA; Describe the existing physical, biophysical, cultural and social environment of the Project area; Identify the potential environmental impacts, health impacts and socio-economic impacts associated with each phase of the proposed Sega Project and a quantitative determination of the its significance; Describe cumulative impacts of the proposed Sega Project; Formulate an EMP for achieving the environmental and social objectives for the Sega Project and mitigate the identified impacts; and Formulate a preliminary rehabilitation and closure plan for the proposed Sega Project.
Some of these points are now discussed in greater detail.
21.3 REGULATORY AND ADMINISTRATIVE FRAMEWORK The Sega Project will be subject to the laws of Burkina Faso but also consider those voluntary principles as defined by typical best international practice. A summary of the applicable local and international legislative requirements is discussed below followed by the international guidelines.
21.3.1 Burkinabe Policy and Legislation The primary legislation considered with the study of environmental and social impacts includes:
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The Environmental Code (Law No. 005/ADP of 30 January 1997): This Code is devoted to the undertaking of an EIA (or ESIA) and a Notice of Environmental Impact article 5, paragraph 4, 17-23. The ESIA study and the impact statement must identify the difference between the potential future environment as result of the execution of an activity, against the future environment as it would normally have evolved without the realisation of that activity; and The Mining Code (Law No. 031/2003/AN of 8 May 2003): This Code requires that the project promoter applies for an operating license to the Ministry of Mines. The Code applies to exploration, research and mining of mineral substance deposits as well as treating, transporting, and processing of mineral substances except water and liquid and gaseous hydrocarbons. The procedure for requesting a mining or extraction license is coupled with a requirement for the applicant to undertake an EIA in accordance with the Environment Code and Articles 17 and 77 of the Mining Code.
Various other regulatory forms are taken into account some of which are described below: Agrarian and Land Reform (RAF); Forestry Code (Act O6/97/ADP of 31 January 1997); and Orientation law on water management (Act No. 002/AN of 08 February 2001).
21.4 INTERNATIONAL GUIDELINES
21.4.1 International Finance Corporation 2012 The International Finance Corporation (IFC) has formulated a set of Performance Standards on Social and Environmental Sustainability. These Performance Standards address social and environmental issues and impacts associated with project development. The IFC Performance Standards consists of eight performance standards: Performance Standard 1 - Assessment and Management of Environmental and Social Risks and Impacts; Performance Standard 2 - Labour and Working Conditions; Performance Standard 3 - Resource Efficiency and Pollution Prevention; Performance Standard 4 - Community Health, Safety, and Security; Performance Standard 5 - Land Acquisition and Involuntary Resettlement; Performance Standard 6 - Biodiversity Conservation and Sustainable Management of Living Natural Resources; Performance Standard 7 - Indigenous Peoples; and Performance Standard 8 - Cultural Heritage.
21.4.2 Project Categorisation As part of the review of environmental and social risks and impacts of a proposed investment, IFC uses a process of environmental and social categorization to reflect the magnitude of risks and impacts. The Sega Project is classified as a Category A project, as it
entails: Business activities with potential significant adverse environmental or social risks and/or impacts that are diverse, irreversible, or unprecedented. Although this project is classified as a Category A project, it should be noted that the local environment has already been impacted by historical and current artisanal and small-scale mining (ASM) activities.
21.4.3 Land Acquisition and Involuntary Resettlement This Performance Standard applies to physical or economic displacement resulting from land transactions where the mine is required to develop a Resettlement Action Plan (RAP) or a resettlement framework.
21.4.4 Biodiversity Management IFCs Performance Standard 6: Biodiversity Conservation and Sustainable Management of Living Natural Resources, the ESIA process must include the assessment of the significance of the project impacts on all levels of biodiversity.
21.4.5 Closure Requirements The EHS Guidelines for Mining includes particular requirements for closure and post-closure activities.
21.5 STAKEHOLDER ENGAGEMENT PROCESS
21.5.1 Introduction This section presents a record of the stakeholder engagement activities which were conducted as part of the ESIA process for the proposed Sega Project. A comprehensive SEP is being followed for the ESIA for the proposed Sega Project which will include the activities footprint and the proposed haul road.
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Figure 21.1:
Preliminary Mine Plan Overview
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Figure 21.2:
Preliminary Mine Plan Tiba Operations
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Figure 21.3:
Preliminary Mine Plan - Gambo
21.5.2 Objectives of the SEP The objectives of stakeholder engagement in an ESIA are to provide sufficient and accessible information to Interested and Affected Parties (I&APs) in an objective manner to: Assist the I&APs to identify issues of concern, and provide suggestions for enhanced benefits and alternatives; Contribute their local knowledge and experience; Verify that their issues have been considered and to help define the scope of the technical studies to be undertaken during the Impact Assessment; Verify that their issues have been considered either by the ESIA specialist studies, or elsewhere; and Comment on the findings of the ESIA, including the measures that have been proposed to enhance positive impacts and reduce or avoid negative ones.
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21.5.3 Communication with the Authorities The decree No2001-342/PM/MEE dated 17 July 2001 regulating the Environmental and Social Assessment procedure in Burkina Faso required that the developer has to present the Term of Reference (ToR), before undertaking the proposed ESIA activities. The ToR of the Sega Project was presented at the National Office of the Environmental Studies on 18 July 2012 and comments were raised by those in attendance. In addition to the meeting held on 17 July 2012, a meeting was also held on 9 August with authorities of the local towns and the region.
21.5.4 Announcing the Proposed Projects The proposed project and the environmental authorisation process were announced to stakeholders to invite their participation through: Advertisements; Radio Announcements; Notices; Background Information Documents; and Public Meetings.
21.6 ESIA REPORT The ESIA draft report has been made available for stakeholders to review, for their comments and inputs. A summary of the report is to be made available in French to I&APs. Public meetings in the villages along the road and at the villages that may be directly affected by the proposed mining operations are to be commenced in November 2012. The purpose of these meetings is to provide a summary of the Draft ESIA Report, the findings of the specialists as well as proposed mitigation and enhancement measures. The meetings were advertised as previously carried out for the previous round of meetings. The comments recorded during these follow-up meetings will be considered in the finalisation of the ESIA report. In the period after the submission of the ESIA report to government authorities, it is anticipated that public hearings will be held by the Burkina Faso government to obtain additional comments directly from the stakeholders.
21.7 ENVIRONMENTAL AUTHORISATION Should environmental authorisation and approval for the proposed project be provided, stakeholders will be notified of the decision and the way forward.
21.8 ESIA BASELINE AND SPECIALIST STUDIES Digby Wells Environmental, in addition to performing thorough literature surveys have with the help of the subcontracted services of a local Burkinab environmental agency, Bureau detudes, de Conseils et de Restauration des Mines (BECoReM) conducted field research to cover all necessary aspects of the ESIA related issues not least of which is the
development of Baseline information where it did not exist but more importantly describe the receiving environment including identifying any limitations and knowledge gaps. These subtopics are given below and described in greater detail in the current draft ESIA which will be suitably updated as required before final issue: Visual and Topography Assessment; Air Quality; Noise Assessment; Biodiversity (Flora and Fauna) Assessment; Fauna and Flora Assessment; Aquatic and Wetland Assessments; Surface Water Assessment; Groundwater Assessment; Heritage and Archaeology Assessment; Health Assessment; Socio-Economic Assessment; and Closure Framework.
21.9 IMPACT ASSESSMENT The impact rating process is designed to provide a numerical rating of the various environmental impacts identified by use of the Input-Output model.
21.9.1 Construction Phase Impact This section deals with socio-economic impacts that are expected to occur as a result of construction activities. Impact significance ratings and summarised mitigation measures are provided in this section. Full impact descriptions and impact management measures are to be provided in the SIA report. Construction phase impacts include the following: Two positive impacts (job creation; and multiplier effects on the local economy); and Five negative impacts (displacement of current land uses; construction-related health, safety and physical intrusion impacts; disruption of daily movement patterns; impacts related to population influx; and social pathologies).
21.9.2 Job Creation The employment workforce required for the construction phase of the proposed project amounts to 347 individuals: 115 Amara personnel and 232 mining contract personnel. Few new employment opportunities will become available as a result of the proposed project (use of existing employees), although the employment of current personnel will be extended by approximately two years. Indirect employment creation or the extension of benefits associated with employment. This could involve formal employment (for example, refuse removal from the Kalsaka camp or the construction of replacement houses). If at least some of the additional positions on the construction workforce are filled by local persons, the significance of the socio-economic benefit associated with local job creation
depends on the pre-project levels of unemployment and poverty in local communities, as well as on the number of persons who would benefit indirectly from such job creation by virtue of their being economically dependent on the successful job applicants. Construction workforce will also benefit in the long term through the enhancement of their work-related skills.
Table 21.2:
Pre & Post Mitigation Ratings Job Creation
IMPACT DESCRIPTION: Construction: Job creation

Predicted for Pre-construction project phase: Dimension Rating PRE-MITIGATION Duration Short term (2) Province/ Region (5) Construction Motivation Equal to the duration of the construction phase Some positions will be filled by Consequence: persons living in the Project area; Moderately the rest from elsewhere in the beneficial (10) country and from abroad Construction workforce just more than 300 Proponent is dedicated to employing local labour Operation Decommissioning
Extent
Significance: Minor - positive (40)
Intensity x type Moderate of impact positive (3) Probability Probable (4) MITIGATION: - Maximise & monitor local recruitment - Database of skilled local persons & suppliers - Contract conditions to stipulate local employment targets - No on-site hiring - Labour-based methods where possible POST-MITIGATION Duration Short term (2) As for pre-mitigation Province/ Region Consequence: Extent As for pre-mitigation (5) Moderately beneficial (11) Intensity x type Moderately high - Mitigation will maximise local job of impact positive (4) creation Mitigation will maximise probability that local recruitment Probability Likely (5) targets are achieved and local benefits optimised
21.9.3 Multiplier Effects on Economy The economic benefits of the construction phase will not be limited to the effects of direct and indirect employment opportunities. By creating demand for goods and services, the project will stimulate development in a vast array of smaller, secondary industries in the local area and beyond.
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Table 21.3:
Pre & Post Mitigation Ratings Multiplier Effects on Economy
IMPACT DESCRIPTION: Construction: Multiplier effects on economy

Predicted for Pre-construction project phase: Dimension Rating PRE-MITIGATION Duration Short term (2) Construction Motivation Operation Decommissioning
Equal to the duration of the construction phase Indirect economic benefits will be felt at Consequence: Extent Province/ Region (5) regional level; some at national Moderately beneficial (10) Will derive from increased cash flow Intensity x type Moderate - positive from wages, local procurement and of impact (3) taxes/royalties Probability Probable (4) Local expenditure possible MITIGATION: - Contract conditions to stipulate local procurement targets - Collaboration with institutions involved in SMME development POST-MITIGATION Duration Short term (2) As for pre-mitigation Consequence: Extent Province/ Region (5) As for pre-mitigation Moderately beneficial Intensity x type Moderately high - Mitigation will increase benefits for local (11) of impact positive (4) economy Mitigation will maximise probability of economic benefits Probability Likely (5) materialising
21.9.4 Physical and Economic Displacement One of the most significant social impacts that may result from land acquisition is the displacement of persons residing on or making use of that land. This includes physical displacement (the loss of a home and the necessity of moving elsewhere) and economic displacement (the loss of sources of income or productive assets such as cultivated fields or business stands). Physical and economic displacement has the potential to give rise to severe negative impacts for resettled communities. The primary factor determining the magnitude of this impact would be the buffer zones defined around the pits and other infrastructure to ensure the safety of surrounding communities from fly-rock, traffic and other project-related impacts. Impacts related to Physical Displacement include: Displacement of households currently residing in the project footprint or buffer zones, which would necessitate the replacement of primary residential structures; Displacement of other household structures (livestock pens, storage sheds, etc.) that would have to be replaced or compensated for; and Communal infrastructure (schools, churches, mosques, water supplies, etc.).
Economic displacement includes: Loss of agricultural fields, crops and fruit trees; Displacement of artisanal miners; and Loss of cultural resources, including graves and other sites of spiritual/ cultural significance.
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The resulting displacement estimates are shown in the table below. 9
Table 21.4:
Displacement Estimates
Item
Primary residential structures Secondary household structures (livestock pens, storage sheds, etc.) Communal infrastructure (schools, churches, mosques, water supplies, etc. assuming 3 types of structures and 1 structure per 50 households) Agricultural assets (agricultural fields, crops and fruit trees) Artisanal miners Graves Sites of spiritual significance (shrines, etc.)
Affected assets Project Footprint Footprint footprint (no plus 50m plus 100m buffer) buffer buffer Physical displacement 55 140 265 55 140 265
Footprint plus 500m buffer 800 800
Unit
Households Structures
15
48
Structures
Economic displacement 110 150 27 18 170 225 Cultural resources 70 46 225 525 132 88 700 2850 400 266 Hectares Miners Graves Sites
The significance of displacement-related impacts is determined by: The dependence of affected communities on displaced assets and livelihood resources; and The vulnerability of displaced persons in terms of their ability to reinstate their livelihoods or secure alternative livelihoods during and after relocation.
Artisanal mining (officially illegal in the concession area) constitutes one of the mainstays of the local economy. Many people have temporarily moved into the area because of the opportunities offered by ASM. Miners displaced out of the Project area may be forced to resort to alternative means of survival. Households who do not earn an income from artisanal mining have no choice but to rely on subsistence agriculture to maintain their food security. The project may deprive them of this survival mechanism and food security. The vulnerability of local communities to displacement-related impacts is evidenced by the fact that: Food insecurity and malnutrition is rife;
It should be noted that these are provisional estimates only, and may vary greatly. The exact number of affected households, structures and arable land, etc. will be known by January 2013.
Females outnumber males in the study area, and can thus be considered as vulnerable; and High dependency ratio within households, given the large proportion of the population being under the age of 15 (not economically active).
Table 21.5:
Pre & Post Mitigation Ratings Physical and Economic Displacement
IMPACT DESCRIPTION: Physical and economic displacement

Predicted for Pre-construction project phase: Dimension Rating PRE-MITIGATION Duration Project Life (5) Construction Motivation Operation Decommissioning
Relocation/ displacement will be for project life Consequence: Will affect households and assets in Extent Local (3) Moderately project footprint detrimental (-13) Intensity x type High - negative (- Effects of displacement can be of impact 5) severe Probability Certain (7) Displacement in unavoidable MITIGATION: - Minimise displacement where possible - Planning for relocation/ compensation through RAP POST-MITIGATION Duration Project Life (5) As for pre-mitigation Consequence: Extent Local (3) As for pre-mitigation Moderately Intensity x type Moderately high - Adequate resettlement planning will detrimental (-12) of impact negative (-4) reduce severity of impact Highly probable Adequate resettlement planning will reduce probability of Probability (6) negative impacts
Significance: Moderate - negative (-91)
Significance: Minor - negative (-72)
21.10 RESETTLEMENT ACTION PLAN
21.10.1
Purpose
Digby Wells have compiled provisional cost estimates for resettlement / compensation options for the Amara Sega Project in Burkina Faso. The cost estimates provided in this memorandum were based on average resettlement implementation costs on other African mining projects. These cost estimates take into account the specific attributes of this project and the attributes of resettlement-affected communities. In particular we try and address the resettlement required for the mining project as described to us which preliminarily has a mine life of approximately 15 months to 18 months and for which mining operations need to start early in 2013. The level of resettlement planning taken into account here may not necessarily be compliant with IFC Guidelines and Equator Principles but does take into account Burkinabe legislation as far as we are currently aware of it and good mining industry practise.
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21.10.2
Approach for Calculating Resettlement Costs
The following approach has been adopted in order to provide a cost estimate: Four options for resettlement have been adopted and calculated; and Within the options for permanent resettlement different options have been inputted to give areas for resettlement of a buffer of 50m around waste rock dumps and 50m, 100m and 500m around the various pits.
21.10.3
Resettlement Options
Provisional cost estimates for the following four resettlement / compensation options are presented here: Option 1 - Complete permanent resettlement of all physically and economically displaced individuals within the directly affected area and within a buffer zone around the pits and other infrastructure. The buffer zones are 50m, 100m and 500m. If people are not resettled then they assume that some compensation will be paid to them for the inconvenience or damaged houses; Option 2 - Resettlement of all people within the actual project footprint and a 50m buffer area and temporary evacuation of physically and economically displaced individuals (no more than 5 or 6 hours at a time) as required by project activities, such as blasting; Option 3 - Temporary resettlement of physically and economically displaced individuals, assuming the following: o That one mining area will be mined at a time and that the duration of the displacement period will be approximately 4 months; o That displaced individuals will return to their original settlements after mining of the area has been completed, after which the resettlement village will be occupied by the households affected by the next mining area; o That all damaged assets (including community infrastructure) will be compensated for in kind or cash, depending on the nature of the asset and extent of damage; and o That all permanently affected assets be replaced and compensated for (such as dwellings that had to be demolished due to mining activities). Option 4 - Providing a living out allowance for all physically and economically displaced individuals, thereby enabling the following: o The physically displaced individuals to find alternative accommodation for themselves for the mining period; and o The economically displaced individuals to either continue with their economic activity at an alternative location or reducing/eliminating their need to engage in their economic activity for the mining period.
This option is also based on the assumption that one mining area will be mined at a time, and that the duration of the displacement period will be approximately 4 months. Different categories of resettlement-affected households and individuals have been identified for the purpose of calculating this provisional cost estimate, as follows:
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Mandatory - This includes all households, agricultural fields and artisanal miners10 located on or active within the actual footprint area of project infrastructure, such as mining pits, the haul road, crusher area, waste rock dumps and other ancillary infrastructure; 50 metre buffer - Households, agricultural fields and artisanal miners within 50 metres of the aforementioned infrastructure; 100 metre buffer: Households, agricultural fields and artisanal miners within 100 metres of the pits and 50m from the other infrastructure; and 500 metre buffer - Households, agricultural fields and artisanal miners within 500 metres of the pits and 50m from the other infrastructure.
Within each resettlement option, estimated costs for various possibilities pertaining to the extent of resettlement (based on the abovementioned categories) were estimated.
21.10.4
Provisional Cost Estimates
Provisional cost estimates for each of the resettlement / compensation options was estimated. These costs include the resettlement / implementation costs, but exclude costs for the development of a resettlement action plan (RAP). The provisional costs forwarded fall between a range of US$0.73 million and US$4.1 million. It has therefore been assumed for PEA purposes that a provisional allowance of $2 million which includes the development of the RAP would be adequate to cater for this all-important item.
21.11 MONITORING PLANS As part of the Environmental Management System, the following monitoring plans have been proposed as well as certain specialist recommendations. Dust Monitoring; Aquatic Biomonitoring; Groundwater Monitoring; Surface Water; Groundwater Levels; and Heritage and Archaeology Monitoring Plan.
10
We are cognisant of the fact that technically they are mining illegally on property now owned by Cluff but that they should be removed for safety reasons as their presence is incompatible with a modern mining operation. The reality of the situation is that they cannot easily be removed but their presence at the proposed mining sites is both impractical and dangerous. Some form of compromise between the miners and Cluff would have to be reached, such as providing alternative mining areas or allowing them to return upon completion of formal mining operations.
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21.12 CLOSURE FRAMEWORK
21.12.1
Mine Closure
The Burkina Faso legislation and IFC Performance Standards including intimate knowledge from the Kalsaka operation will be the main guiding principles governing the rehabilitation and closure of the Sega development.
21.12.2
Objectives for Mine Closure
Since the Sega Project has not yet commenced, the following objectives are proposed based on the current design of the project: To return the land, other than the pits (Gambo South-West Pit, MS Pit, RZ East Pit, RZ Main Pit, RZ West Pit, Tiba 1 Pit, Tiba 1E Pit, Tiba 2 Pit, Tiba 3 Pit, Tiba 3, and South-East Pit) and waste rock dumps (Gambo Waste Dump, RZ Waste Dump, Tiba 2 Waste Dump and Tiba Waste Dump) to a land use similar to that which existed prior to mining; To ensure pits are made safe by constructing a berm wall around the relevant pits, and that the waste rock dumps maintain a minimum of 1:3 slope. Where possible, natural colonization of vegetation should be allowed on the waste rock dump, otherwise re-vegetate with indigenous vegetation; To demolish and rehabilitate all mine infrastructure and processing plant, which cannot be utilised by subsequent land users or any third party. Once demolition of infrastructure has occurred prompt topsoil application and re-vegetation should take place to avoid erosion. Where buildings can be used by a third party, arrangements will need to be made to ensure their long term sustainable use; To clean up all spills on site; To assess the closure impacts halfway into the operation (7.5 months) thereby ensuring progressive, integrated and more detailed closure throughout the life of the project; To leave a stable, sustainable environment that is site-specific and contains a selfsustaining ecosystem, and an environment that is safe for both humans and animals; To maintain and monitor all rehabilitated areas following re-vegetation; and To involve all relevant stakeholders, authorities and communities in the mine closure process.
21.12.3
Activities for Mine Closure
Steel and reinforced concrete structures and housing, facilities and services - All steel, brick and concrete structures need to be demolished to 1m below ground level; Opencast rehabilitation - Berm walls will be constructed around the pit to limit access to the pits. The final void may fill with water (pending acid base accounting) thereby minimising the risk to both humans and animals. Signage will be placed around the pits, warning the public of the danger posed by them;
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Overburden and spoils - Any remaining overburden, waste rock and spoils with a low pollution potential, need to be piled, shaped and replaced with 300mm of topsoil soil and vegetated; General rehabilitation - General surface rehabilitation must involve the shaping of the surface topography to match the surrounding landscape; and Maintenance and aftercare - Maintenance and aftercare must be planned for three years after the mining production has ceased. Maintenance will specifically focus on re-vegetation, and on rehabilitated areas, as well as any alien vegetation that needs to be controlled. Furthermore, monitoring will have to take place for both surface and groundwater at the rehabilitated areas once occupied by the pits.
21.12.4
Financial Provision
The closure cost assessment involves the quantification of mining and infrastructure components and applying rates to rehabilitate each area. The environmental liability is described in monetary terms in order for a financial provision to be set aside in a dedicated fund for closure and rehabilitation purposes. The costing will be reviewed constantly for the duration of the project to ensure that the financial provision is sufficient for effective rehabilitation of the site. The approach followed during these calculations was to assume planned mine closure, i.e. costs have been calculated assuming that the mine will close after 21 months at current estimated rates. The Kalsaka example was used as a basis for the initial estimate which will be verified in due course. Therefore it was thought that a $2 million provision would adequately satisfy the requirements for closure as exhibited in the table below.
Table 21.6:
Requirements for Closure Description Infrastructure & Plant Pits Waste Rock Dumps Roads Monitoring Personnel & Management TOTAL Provision (US$) 100,000 100,000 1,000,000 100,000 200,000 500,000 2,000,000
21.13 CONCLUSION The Sega Project is being undertaken with due consideration of biophysical, health, social and economic factors, as well as the relevant legislative requirements. The Sega Project will have a range of both positive and negative impacts on the biophysical and socio-economic environments. Some of the positive impacts that have been identified as having the most potential to benefit the social are direct local employment, local procurement and the development of local infrastructure. These impacts will start at the construction phase of the Sega Project but
are likely to be more significant during the operational phase. Skills development for local employees is similarly a significant social impact during the operational phase of the mine; however these will be limited due to the short LOM. Implementation of the proposed mitigation will ensure that these positive benefits are enhanced. Although some employment will be created, Amara cannot create employment for everybody in the project area, nor can it create individual benefits, however endeavours will be made to maximise these positive impacts as far as possible through the implementation of the SMP. A significant negative impact identified includes the disturbance to the local economy through the impact on ASM; however, the prescribed mitigation measures should remedy this to a lesser degree, together with on-going stakeholder engagement and participation. Although the impacts to the biophysical environment were found to be largely negative, the poor existing environment leads the significance of the project impacts to be lower. These negative impacts are mostly reversible in the long term and with mitigation can be reduced to negligible levels. Effective monitoring will ensure that impacts are maintained at acceptable levels. With effective implementation of the environmental and social management programmes, none of the negative impacts are believed to be sufficiently significant so as to prevent the development of the proposed Sega Project.
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SECTION 22.
22.1 INTRODUCTION
OPERATING COSTS AND CAPITAL COSTS
The purpose of the capital and operating cost estimates is to provide costs to a typical PEA accuracy level that can be utilised to confidently assess the economics of the Sega Project. Capital costs in particular of the major mechanical items have been based on budgetary quotes from reputable suppliers and may be deemed to be accurate. Other costs have been provided through the assistance of various consultants and contractors which exhibit realistic values for the described item. Operating costs too are deemed to have a high level of accuracy as they are based on the existing cost structure that is well known and defined for the Kalsaka operation. Mining rates have been returned from several operating contractors based on indicative mine plans and are deemed to be a fair reflection of what would be realised upon actual implementation
22.2 SCOPE OF THE ESTIMATE The capital and operating cost estimates were developed for an operation capable of treating 1.6Mtpa and will include: A conventional open pit mine; A crushing plant; Support infrastructure and utilities; and Haul road.
22.3 RESPONSIBILITIES The work breakdown and the responsibilities for the estimate are as follows: Resource modelling and quantification unchanged previous Orezone publication; Mining (mine plan, capital cost and operating cost) SRK; Process plant and infrastructure Amara/SENET; and Environmental management Digby Wells.
22.4 EXCLUSIONS The following were not included in this estimate: Sega acquisition costs - These were deemed to be strategic rather than directly related to the parameters described for the Sega Project PEA. Nevertheless, even with their inclusion it can be demonstrated that the economics remain favourable; Exploration - These are strategic or corporate-approved expenditures which have no direct bearing on the exhibited resources in this PEA along with the associated economics thereof and are instead used to enhance the property value to attain its potential maximum through to the future; Working capital - This omission from the initial capital figure is thought to be justified given the nature of this project. Being essentially an existing heap leach operation means that a cashflow stream will continue from the Kalsaka ore even as first ore
November 2012
from Sega is loaded upon the heap. The cashflow model does make provision for a 4-month ramp-up to full gold production from Sega, which has the effect of increasing the indicative peak-funding figure. In reality, new capital has been confined to that which is required over and above normal operation in this PEA. By the same token in the cashflow model these costs are recovered at the end of the Sega mine life as the cost stream diminishes accordingly, especially in respect of mining well before the revenue stream ceases. Further, since Kalsaka is already an operational mine there is already an ample supply of reagents on site thus provision for additional capital for this purpose was deemed unnecessary; Pre-strip - No additional capital allowance has been made for pre-stripping. The cashflow model indicates mining commencing in the same month that first ore is being treated. There is expected to be a seamless transition from Kalsaka to Sega mining and treatment nevertheless there is sufficient ore mined in each of the first three months of Sega mining to ensure an adequate feed to the plant; Kalsaka capital - Since being commissioned in 2008, The Kalsaka heap leach operation has facilitated a profitable era of gold exploitation for Amara. Initially designed to treat oxide material only, the processing plant has been subject to ongoing upgrade activities to ensure continuity of this success. In particular this has been manifested by the addition of a hard rock crushing circuit which supplements that of the oxide mineral-sizer circuit. Such equipment was first procured and installed in 2011 and the crusher circuit has been continually modified and expanded to cater for the ever-increasing amount of harder material being unearthed and treated. This is because certain pits hold a greater occurrence of rock associated with the oxide material and the expected incidence of transitional material being unearthed at deeper levels. This by its very nature is much harder than oxide yet is successfully treated in the Kalsaka facility, indeed exhibiting a healthy gold recovery. The ore produced by Kalsaka increasingly holds greater percentages of hard rock material necessitating the reliable operation of the crusher circuit in order to maintain the nameplate throughput capacity at 1.6Mtpa of ore. This ongoing circuit enhancement is primarily directed at maintaining successful operation for the Kalsaka ore being encountered in addition to treating not insignificant existing stockpiles of oversize hard material. Though the Kalsaka processing plant is ideally suited to treat Sega material, any past or present capital costs associated with the Kalsaka plant are not considered relevant to the Sega operation as these have been justified and implemented by Kalsaka independently of the Sega ore incorporation; and Closure costs - An allowance has been made in the cashflow model which is incurred at the end of the mine life. It has therefore not been included in the initial capital allowance. An overall assessment based upon experience with other similar projects that an overall cost of $2 million dollars will be adequate to rehabilitate all the disturbed areas.
22.5 ESCALATION No escalation has been allowed for in the estimate. All equipment costs have a base date of 4th Quarter 2012.
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Page 22-2
22.6 EXCHANGE RATES The table below shows the exchange rates that were utilised.
Table 22.1:
Exchange Rates
Exchange Rates GBP to ZAR USD to ZAR USD to CFA Franc
ROE 12.50 8.00 500
22.7 TAXES AND DUTIES The following set of tables describes the generic taxes relevant in Burkina Faso. It should be noted that the expressed regime may be slightly different for any costs associated with Kalsaka since Kalsaka is subject to a signed convention. Sega costs have captured all relevant taxes and duties be they capital or operating cost based. Other government taxes and royalties have also been captured directly within the cash flow model.
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Page 22-3
Table 22.2:
TAX
Performance Related Taxes

SCOPE OF APPLICATION Due on net profit after deduction of depreciation cost. FREQUENCY Rate for mining companies 17.50% PHASE RESEARCH Exempted DEVELOPMENT Not relevant 17.5%. Exemption for 7 years to a maximum of half the expected duration for mines whose duration is less than 14 years. EXPLOITATION
IS - Impt sur les socits (Corporation Tax) IMFPIC (Contractual minimum tax on Industrial and Commercial Professions)
Annual Monthly with payment due by the 20th of the following month
Advance on corporation tax, applicable on the turnover excluding VAT of each month.
5%
Exempted
Not relevant
IRVM (Dividend tax)
It applies to stocks and shares of corporations and limited liability companies and to the products of bonds and loans of the state, municipalities, departments, public institutions, and borrowings of corporations and limited liability companies and to remuneration of Board members. SCOPE OF APPLICATION
Due within 30 days after payment of dividend. Tax advisor said liability is due as soon as tnx is recognised in the GL.
6.25%
Not relevant
Not relevant
6.25%.
ROYALTIES
FREQUENCY The Government invoice based on each shipment - due for payment within 60 days of invoice date.
Rate for mining companies
RESEARCH
DEVELOPMENT
EXPLOITATION
Royalty
Value of the extracted product sold
3%, 4% or 5% depending on gold price
Not relevant
Not relevant
3% if the gold price is <US$1,000p/oz, 4% if the gold price is US$1,000p/oz to US$1,300p/oz, and 5% if the gold price is >US$1,300p/oz.
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Page 22-4
Table 22.3:
TAX
Other Company Taxes

SCOPE OF APPLICATION Fixed Duty: The rate is based on the amount of turnover taxes included estimated or realized during the year before the last fiscal year or the nature of the activity. Proportional Duty: Applicable on the rental value of land and business premises in addition to the means of production for factories and industrial establishments. The amount of proportional duty shall not be less than 20% of the fixed charge. For concrete buildings: applicable on the rental value of properties from 1 January of the year of the taxation after deducting 40% for houses and 50% for plants in consideration of the deterioration and the cost of maintenance and repair. Payable by the lessor. FREQUENCY Rate for mining companies RESEARCH Exempted PHASE DEVELOPMENT Not relevant EXPLOITATION Exemption for 7 years to a maximum of half the expected duration for mines whose duration is less than 14 years. Exemption for 7 years to a maximum of half the expected duration for mines whose duration is less than 14 years.
Patente/Trading tax (consists of a fixed duty and a proportional duty)
Annual
8%
Relevant
Relevant
TBM (Tax of mortmain property of communities)
Annual
10%
Not relevant
Not relevant
Exemption for 7 years to a maximum of half the expected duration for mines whose duration is less than 14 years.
VAT (Value Added Tax)
Tax on transactions carried out in Burkina Faso between two distinct legal persons for a consideration in cash or in kind.
Monthly. The VAT shall be paid to the Government no later than the 20th of each month. Annual
18%
Surface area taxes First year Second year Third year Fourth year Fifth year Sixth year to tenth year From the eleventh year Proportional duty Fixed duty Granting of permit 1st renewal 2nd renewal Transfer
Surface area of the permit
Exempted for local purchasing and imports of capital goods with the exception of excluded goods from the right to deduct under the Tax Code, and with the exception of services provided by Geoservice companies. Relevant CFA2,500/km CFA3,000/km CFA4,500/km CFA7,500/km CFA7,500/km CFA7,500/km CFA7,500/km
Exempted for local purchasing and imports of capital goods with the exception of excluded goods from the right to deduct under the Tax Code, and with the exception of services provided by Geoservice companies.
The rate applicable to companies in production is 18% which is reclaimable, except for excluded goods from the right to deduct under the tax code. Relevant 7,500,000/km 7,500,000/km 7,500,000/km 7,500,000/km 7,500,000/km 10,000,000/km 15,000,000/km
Surface area of the permit
Once 1,000,000 1,500,000 2,000,000 3,000,000 5,000,000 12,500,000 TBC 15,000,000
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Page 22-5
Table 22.4:
Payroll Taxes
Rate for mining companies PHASE RESEARCH DEVELOPMENT EXPLOITATION
TAX
SCOPE OF APPLICATION
FREQUENCY
IUTS (Unique Tax on Salaries and Wages)
This is a tax on salaries, wages, allowances, emoluments and fringe benefits paid to employees of private and public sectors.
Monthly
Progressive rate by income class from 2% to 30%
Relevant
Relevant
Relevant
TPA (Employer's Tax on Salary & Apprenticeship)
Tax paid by employers whose tax base is composed of the total remuneration paid in cash as salaries, allowances, emoluments and fringe benefits.
Monthly, payable no later than the 10th of the following month.
3%
Exempted
Not relevant
Exemption for 7 years to a maximum of half the expected duration for mines whose duration is less than 14 years.
CNSS (social security)
Employees contribution - withheld by the employer from workers gross income with a maximum of CFA33, 000 per month (CFA600,000 x 5.5%). Employers contribution with a maximum of CFA96,000 per month (CFA600,000 x 16%).
Monthly
5.5%
Relevant
Relevant
Relevant
CNSS (social security)
Monthly
16%
Relevant
Relevant
Relevant
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Page 22-6
Table 22.5:
TAX
Withholding Taxes
SCOPE OF APPLICATION FREQUENCY Monthly, payable by 20th of month following month of invoice. Monthly, payable by 20th of month following month of invoice. Monthly, payable by 20th of month following month of invoice. Rate for mining companies 1% for construction and civil engineering and 5% for the rest PHASE RESEARCH DEVELOPMENT EXPLOITATION
Withholding tax on payments to suppliers based in Burkina Faso
Applicable to service providers locally registered in Burkina Faso where the amount including taxes is equal to or greater than CFA50,000.
1% or 5%
1% or 5%
1% or 5%
Withholding tax on payments to suppliers that are not based in Burkina Faso Withholding tax on payments made to persons located in Burkina Faso but not registered in trade register Withholding tax on management fees
Applicable to services rendered or used in Burkina Faso supplied by non-residents.
10%
10%
10%
10%
Applicable to remuneration paid to persons not registered in the trade register
10%
10%
10%
10%
20%
20%
20%
20%
Table 22.6:
DUTY/TAX
Customs Taxes and Duties

SCOPE OF APPLICATION of FOB Value FREQUENCY for each import Rate for mining companies 1.0% PHASE RESEARCH Relevant DEVELOPEMENT Relevant EXPLOITATION Relevant
DPI (Pre-Shipment Inspection)
Duty
of CIF Value for all imported raw materials, equipment and spare parts, fuel and lubricants of CIF Value of CIF Value of CIF Value of CIF value
for each import
5.0%
Relevant
Not relevant
Relevant
Statistical Tax Communal Tax (ECOWAS) Communal & Solidarity Tax (UEMOA) VAT
for each import for each import for each import for each import
1.0% 0.5% 1.0% 18%
Relevant Relevant Relevant Not relevant
Relevant Relevant Relevant Not relevant
Relevant Relevant Relevant Relevant
November 2012
Page 22-7
Table 22.7:
Registration and Stamp Fees

SCOPE OF APPLICATION Acts that are not subject to progressive duty nor to the proportional duty as well as exempted acts and which freely fulfill the formality. Transfer for value or enjoyment of real or personal property, convictions of money, securities, sharing of real or personal property, contracts and contributions in society or in marriage. Transfer of real or personal property for free. SCOPE OF APPLICATION Relates to acts submitted to stamp duty because of the size of the paper. FREQUENCY Rate for mining companies FREQUENCY Rate for mining companies PHASE RESEARCH Exemption from the fixed duty on capital increases DEVELOPMENT Exemption from the fixed duty on capital increases EXPLOITATION Exemption from the fixed duty on capital increases
REGISTRATION FEES OF ACTS
Fixed duty
CFA6,000
Proportional duty
Depending on the nature of the act
Relevant
Relevant
Relevant
Progressive duty STAMP FEES
Relevant
Relevant PHASE
Relevant
RESEARCH Relevant
DEVELOPMENT Relevant
EXPLOITATION Relevant
Stamp duties on size The stamp duties on the values a) Proportional stamp duties
Imposed on commercial bills negotiable or not. Apply to securities of any kind signed or unsigned which carry discharge or observe the payment or the deposit of money. Paid annually based on annual rental value for lease renewals of all houses. Paid annually based on annual rental value for lease renewals of all offices. 5% 10%
Relevant
Relevant
Relevant
b) The receipt of stamp duties
Relevant
Relevant
Relevant
Registration Fees (rental contracts)
Relevant Relevant
Relevant Relevant
Relevant Relevant
November 2012
Page 22-8
Table 22.8:
Depreciation
DEPRECIATION SCOPE OF APPLICATION The exploitation company will be allowed to double the first year of the straight line depreciation. This is applicable only to assets with a tax law life of 5 years+. Buildings Process Equipment Vehicles Trucks Computer Equipment Office Equipment Furniture Small Equipment 3% - 5% 10% - 15% 25% - 33% 25% - 33% 10% - 20% 10% - 20% 10% 10% - 20% Rate for mining companies
Accelerated Depreciation
Standard Depreciation Rates
22.8 CAPITAL COST ESTIMATE
22.8.1 Validity of Estimate Every effort has been made to ensure relevance of the capital estimate. It is suggested that some costs have been rigorously estimated where one has a high degree of confidence and others have been derived through insider or specialist knowledge and estimated with a level of confidence that can be construed consummate in line with the level of professionalism of the contributing personnel, all of whom have extensive knowledge and experience in the mining and construction industry. The basis for the estimate is described in some further detail below: Mechanical Equipment - Costs exhibit a high level of accuracy since they are based on quotes supplied by the relevant suppliers; Structural and Plate Steelwork These have been estimated from general arrangement (GA) and layout drawings and supplemented by vendor quotes for selected support structures. Where not available a suitable factor in line with project expectation was included; Earthworks and Civils - These costs were determined by using material estimates from GA and site layout drawings. Unit rates were based on historical data from similar jobs; Power Generation and Reticulation Estimate was garnered from actual quotations for the generator sets and industry standard estimated costs for MCC installations. The operation is expected to be manually operated so no requirement for PLCs or SCADA control has been made. No further instrumentation has been included except for that which may already be supplied as part and parcel of the direct mechanical equipment vendor packages; Construction/Erection: An estimate was made on the assumption that much of the work could be undertaken by a local construction team already incumbent at Kalsaka, who are already familiar with these kinds of activities having been responsible for installing much of the recent crusher installation at Kalsaka;
November 2012
Page 22-9
EPCM The figure is reflected as being 18% of the costs directly related to the Sega crusher installation. This is thought to be reasonable given the relatively small-scale size of the project; Sustaining Capital This is largely related to the lifts and resources associated with the heap leach pads and with an allowance of $US 0.5 million per annum is well in line with the costs already experienced by Kalsaka, equivalent to $US 41,700 per month; Transportation - Freight was estimated based on the project equipment and actual shipping weights and volumes as specified from the supplier quotes which were used in calculating the total project shipping volume. Container filling rates were based on similar data. Transport rates are well known through the operational experience at Kalsaka and were then applied to the Sega material. Most of the material will emanate from South Africa where it will be shipped from Durban Harbour to Tema in Ghana before being transported by road across the border through to Sega; Spares Quotes for suggested spares were obtained by suppliers of the mechanical equipment. This was critically reviewed by site maintenance personnel at Kalsaka and ultimately the extent of any potential order and cost agreed upon; Resettlement Allocation Plan (RAP) Implementation - Digby Wells Environmental have provided in-depth research into this area. There will be a need of resettlement as some of the works will impact directly upon incumbent residential and agricultural properties. There is also the presence of a significant artisanal mining community that will need to be managed. A selection of solutions have been suggested and costed through the environmental contractor and these associated costs range between $0.8 million and $4.1 million, any of which may be applicable depending on the extent to which one is able to target the implementation. Amara is in favour of a fair and pragmatic approach and is of the opinion that the RAP may be successfully undertaken within a $2.0 million budget figure, therefore inserting a degree of conservatism i.e. well above the minimum figure, it is this that has been included into the capital base; Closure Cost Kalsaka have historically been provided with an estimate for rehabilitation and closure and provision has been made for this eventuality. Based on these costs, Sega too requires such a provision and since its footprint will not be insignificantly different to that of Kalsaka, particularly in respect of the mine pits and waste dumps, it was felt that a similar provision would suffice. This figure amounts to $2.0 million; and Contingency The costs are believed to be of a sufficient accuracy for the purposes of this PEA and even ultimate implementation within the defined area of scope. Notwithstanding the uncertainty surrounding the RAP implementation, it is felt that a 10% contingency value will cover any inexactness particularly within the scope as defined, since the project is relatively small and reasonably straightforward.
22.8.2 Overall Capital Cost Summary The overall capital cost summary includes the following major costs: Direct project costs; Project related costs; and
November 2012
Contingency.
The detail of each sub-cost is shown in the table below.
Table 22.9:
Overall Capital Cost Estimate Summary Capital Cost Item Sega Crusher Installation Sega Mining Capital (incl. haul road) Sega Infrastructure Costs Subtotal (Direct Project Costs) Pre-Project PEA Other Taxes ESIA RAP Subtotal (Project Related Costs) Contingency (10%) Total CAPEX Cost (US$) 2 384 375 2 249 039 315 839 4 949 253 349 200 649 980 640 700 2 000 000 3 639 880 858 913 9 448 046
22.8.3 Crusher Installation Costs The Sega process installation has been adequately described elsewhere in this document. Suffice to say that the processing facility will comprise a primary jaw crushing circuit from where ROM ore may be crushed and conveyed to a stockpile from whence it may be hauled by road to Kalsaka to be processed at the heap leach processing plant there. Major mechanical items at Sega include a primary modular jaw crusher with a dedicated rock breaker and the required transfer conveyors which includes a stacker conveyor. Power will be supplied from a 415kVA generating set for which there will be a dedicated standby. There is no need for transformers since the generators and electrical motors exhibit the same voltages. The requisite motor control centre (MCC) will be installed as required. Provision is made to prepare a base area from where a contracted fuel supplier will erect their fuel supply tanks and distribution facilities. This has been negotiated with ORYX, a supplier incumbent in Burkina Faso.
The crusher installation capital costs required for construction are detailed in the table below and include the following main cost items: Mechanicals; Structural steel & platework; Earthworks & civils; Electrical; Construction/Erection; EPCM; Transport; and Spares.
November 2012
Page 22-11
Table 22.10:
Crusher Installation Capital Cost Estimate
Crusher Installation Capital Cost Item Osborn 42x48 primary jaw crusher module Rock breaker Transfer Conveyors (CV-002 & CV-004) Stack conveyor CV-005 40m long with hydraulics Mechanicals Maintenance structure Emergency Loading Hopper Structural Steel and Platework Earthworks Gabion retaining wall at ROM tip Concrete Works Earthworks and Civils 2 x electrical gensets 415KVA Containerized MCC Lights and power distribution Electrical Site Establishment Labour/installation cost Construction/Erection EPCM Transport Spares Total Crusher Installation CAPEX
Cost (US$) 477 500 181 250 37 500 150 000 846 250 1 875 1 250 3 125 93 750 85 000 172 500 351 250 200 000 75 000 102 500 377 500 6 250 137 500 143 750 312 500 250 000 100 000 2 384 375
22.8.4 Mining Capital Cost Summary The strategic objective is to effect a seamless transfer from completing the mining of Kalsaka material to commencing the mining of Sega material. It is quite conceivable that the mining contractor already established at Kalsaka could simply transfer their efforts in this manner. Notwithstanding this, a new contractor could also site establish and utilise where applicable all the infrastructural facilities already situated at Kalsaka. It is envisaged that the mining discipline will be largely serviced as normal directly from Kalsaka, but that certain satellite facilities will need to be installed at Sega, some 20km distant. The retention of a mining contract philosophy means that there will be a capital outlay which is limited to certain taxes and duties which will be incurred for additional equipment including their mobilisation and site establishment. A new haul road is envisaged despite the fact that there is already a public national road that links the sites of Kalsaka and Sega. It was felt prudent to construct a dedicated haul road for which a contractor quote has been supplied and used for the capital estimate.
Kalsaka has recently installed a pump and water pipeline supply to supplement its dust suppression capabilities. A similar such system, directed as a dedicated facility in the Sega direction will also be required and the relevant costs thereof have been included. Other owner costs as identified below were required considering the distance between the mine site and the processing facility and costed via requested quotes from relevant suppliers. The overall capital cost summary includes the following major costs: Contractor costs; and Owners costs.
The detail of each sub-cost is shown in the table below.
Table 22.11:
Mining Capital Cost Estimate
Mining Capital Cost Item Mining Contractor Site Establishment Mining Contractor Mobilisation Mining Contractor duties on additional imported equipment Haul Road Construction Top Soil Removal Clearing and Grubbing (waste dumps) Contractor Costs Sub-Total Tracking system (locating trucks on haul road) Radios/Repeater stations and installation Office Internals Pump station and pipeline installation for dust suppression Owner's Costs Sub-Total Total Mining CAPEX
Cost (US$) 95 692 393 250 67 300 1 475 410 25 667 25 667 2 082 986 5 940 22 800 10 000 127 313 166 053 2 249 039
22.8.5 Infrastructure Costs The infrastructure capital costs required for construction are detailed in the table below and include the following main cost items: Security; Environmental; OHS; Camp; and Fuel farm.
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Page 22-13
Table 22.12:
Infrastructure Capital Cost Estimate
Infrastructure Capital Cost Items Perimeter fencing Illumination Security monitoring system Security Monitoring equipment (water noise, dust, weather, etc.) Computer and accessories Tree planting and gardening tools Water boreholes Environmental Site health post establishment Safety office plus internals OHS Mess chairs and tables Standby Generator set (150KVA) Laundry equipment TV Connectivity Sega Camp Oryx fuel farm (site preparation) Total Infrastructure CAPEX
Cost (US$) 169 000 5 100 2 800 176 900 14 086 1 900 2 000 20 000 37 986 5 000 6 743 11 743 5 100 36 910 4 100 3 100 49 210 40 000 315 839
22.8.6 Other Project Related Costs The other project related capital costs required are detailed in the table below and include the following main cost items: Pre-Project PEA; Other taxes; ESIA; RAP; and Closure provision.
November 2012
Page 22-14
Table 22.13:
Other Project Related Capital Cost Estimate
Other Project Related Capital Cost Items Survey Digby Wells Environmental Pre-Assessment Process Design and CAD services Geotech Drilling Geotech Assessment (SRK (Ghana)) Orezone resource confirmation Mining Resources Determination (SRK (SA)) Report compilation (SENET) Pre-Project PEA Suppliers Withholding Tax Other Taxes Patente/TBM tax Other Taxes ESIA RAP Total Other Project Related CAPEX
Cost (US$) 12 700 35 000 60 000 75 000 40 500 40 000 42 000 44 000 349 200 403 949 46 031 200 000 649 980 640 700 2 000 000 3 639 880
22.8.7 Contingency A contingency of 10% was used on all capital cost items.
22.9 OPERATING COST ESTIMATE
22.9.1 Summary of Operating Costs The Sega Projects operating costs for the life of the mine were estimated for mining, processing, general and administration (G&A), royalties and refining charges and are summarized in the tables below and described in greater detail in the sections that follow. The mining costs were developed by Amara based on contractor quotes and verified by SRK before being edited by SENET to be consistent with the format of the report while the remaining costs were developed by Amara based largely on the existing operational reports emanating from Kalsaka which thereby contain a wealth of reliable up-to-date cost data. The Sega Projects operating costs were determined for the following cost centres: General & administration (G&A); Processing; Additional crushing; Mining technical services; ROM rehandle; and Mining.
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These are described in more detail in the sections that follow. Below is a table that shows a summary of the operating costs.
Table 22.14:
Summary of the Operating Costs
Sega Nameplate (1.6Mtpa) Operating Costs Mining Area Ore Type Main Zone - Gambo and Bakou Oxide Transition Oxide Tiba Unit Transition
Mining (incl drill and blast)
2.19
2.44
2.24
2.49
US$ per ANY ton mined
Incremental Mining Cost for Ore (incl. haul to Sega crusher) Grade Control Owners Technical Services Mining Team Haul from Sega Crusher to Kalsaka Excess Fuel Charge Processing (excl. crushing) Crushing RoM Rehandle General and Administration
US$/t ore 0.17 0.13 0.83 5.72 1.08 9.71 1.65 0.78 4.66 0.17 0.13 0.83 5.72 1.08 9.93 1.65 0.78 4.66 2.07 0.16 0.83 5.72 1.08 9.71 1.65 0.78 4.66 2.07 0.16 0.83 5.72 1.08 9.93 1.65 0.78 4.66 US$/t ore US$/t ore US$/t ore US$/t ore US$/t ore US$/t ore US$/t ore US$/t ore
Total Ore Processing Cost (excl mining) - Whittle
24.73
24.95
26.66
26.88
US$/t ore
22.9.2 G&A Costs The G&A costs were estimated to be US$4.66/t of ore treated. This cost was used for both the oxide and transition ore phases detailing items typical such as office and maintenance, travel and consultancy costs but also includes on-going environmental costs. Below is a summary of a breakdown of the annual costs expected to be incurred.
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Page 22-16
Table 22.15:
Summary of G&A Costs
G&A Cost Unit Admin staff costs Construction staff costs Office costs Travel costs Legal and professional costs External relations costs Insurance Other site expenses Clinic costs Safety costs Camp costs Environmental costs Taxes and fees Finance costs Total G&A Costs Tonnage Treated Total G&A Costs US$ US$ US$ US$ US$ US$ US$ US$ US$ US$ US$ US$ US$ US$ US$ tonnes US$/t US$ 2 745 067 265 239 326 913 244 982 261 015 152 128 1 046 038 697 172 6 629 150 347 660 000 90 430 800 000 10 775 7 456 735 1 600 000 4.66
General and administration expenses (G&A) have been calculated at US$4.66/t of ore processed equivalent to approximately US$650,000 per typical month when ore is treated. Nameplate treatment rate is 133,000 tpm. The calculations for G&A have been made with reference to the current rates incurred at the Kalsaka mine and flexed for known changes in such items as staffing levels; insurances and catering costs therefore are considered to exhibit a high level of accuracy.
Staffing G&A staffing levels include both the expatriate and national complement. These comprise staff from the general administration, health and safety, environmental, construction, security and camp departments. The costs contain all elements of employment tax and other related costs.
Construction Staff Costs Kalsaka possesses a dedicated construction team which encompasses amongst their duties, maintenance of the camp, infrastructure and administrative blocks.
Office This relates to the expected costs relating to general office expenditure on site and in Ouagadougou. This includes such items as communication costs, stationery, and office and guest-house rentals.
Travel Travel relates entirely to the provision of flights for expatriate staff. Operational staff generally uses Ghanaian flights whereas corporate personnel flights are generally Europebased. These costs are based on past history. Expected staff increases should not lead to a concomitant increase.
Legal and Professional Includes the retention of a local legal service to advise on Burkinabe points of law. In addition there are audit and tax advisory and compliance fees.
External Relations This allowance is for the community and social relations (CSR) initiative, making donations or driving projects to provide educational, medical or other infrastructural improvements directly for the surrounding community.
Insurance Pertains to insurance which covers property, business interruption, and bullion. This also relates to expected provision of health insurance for employees.
Other Site Expenses This predominantly relates to the expected cost of the management contract for the supply of security personnel for the project, both at Sega, on the haul road and at the plant at Kalsaka.
Medical Clinic Provision of supplies for a medical facility which exists at the plant site.
Safety This is for the supply of all safety equipment including regular training.
Camp Camp costs are mainly in relation to the estimate for catering and accommodation costs for the senior and junior staff. These are based on the costs currently incurred the Kalsaka camp as flexed for the changed staffing levels.
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Page 22-18
Environment Environment costs encompass all monitoring equipment, testing and includes nursery expenses.
Taxes and Fees In addition, other costs includes amount likely to be payable in respect of withholding taxes on group management charges and other irrecoverable taxes.
Finance Costs These relate to incurred bank charges.
22.9.3 Processing Costs The processing operating costs were estimated to be US$9.71/t for the oxide phase and US$9.93/t for the transition phase. These costs do not include bullion shipment or refinery costs, which are reported elsewhere. The operating costs take into account the following: Processing staff costs; Engineering staff costs; Power costs; Reagent costs; Maintenance costs; and Other processing costs.
Processing costs are deemed to be of a high degree of accuracy on account of the fact that they are for the most part based on costs and prices already being incurred at the Kalsaka operation. Sega ore by its nature exhibits slightly different reagent additions as stated elsewhere in this report and this has been taken into account and reflected in the figures given below. Below is a breakdown of the processing costs.
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Page 22-19
Table 22.16:
Summary of Processing Costs
Oxide Processing staff costs Engineering staff costs Power costs Total Reagent costs Cement Cyanide Caustic Soda HydroChloric Acid Other Reagents Maintenance costs Other processing costs Total Processing Costs US$/t US$/t US$/t US$/t US$/t US$/t US$/t US$/t US$/t US$/t US$/t US$/t 1.36 0.77 1.31 4.49 2.30 1.80 0.03 0.04 0.32 1.23 0.55 9.71
Transition 1.36 0.77 1.31 4.71 1.79 2.53 0.03 0.04 0.32 1.23 0.55 9.93
22.9.4 Additional Crushing Costs The additional crushing costs were estimated to be US$1.65/t for both the oxide and transition phases. The costs were determined from first principles and based on transitional ore. Although Kalsaka has a long-standing experience of crusher experience, the circuit is often used in conjunction with the softer oxide mineral-sizer circuit. This has made it difficult to isolate pure crusher circuit costs. For this reason a dedicated crushing cost was derived from first principles which would include the costs of both Sega primary crushing circuits and include the crusher circuit pertaining to Kalsaka. It includes items as listed below: Labour in respect of Sega crushing; Power generation including fuel; Liner consumption for all crushers; and Maintenance cost.
This was performed assuming the worst case scenario of transitional material which is both harder and more abrasive than oxide. Due to the observation of what appears to be hard diamond drill-core oxide samples and the prevalent occurrence of quartz rock present in the oxide, it was deemed prudent to keep the costs consistent for oxide ore. It is nevertheless hoped that oxide ore may in reality exhibit lower operating costs more in line with that expected by the limited samples taken which exhibited both lower abrasion and Bond ball work indices. Below is a summary of the total processing cost including additional crushing costs.
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Table 22.17:
Additional Crushing Costs
Oxide Total processing costs Estimated Crushing Costs (Additional) Total Processing Cost (Including additional crushing costs) US$/t US$/t US$/t 9.71 1.65 11.36
Transition 9.93 1.65 11.58
22.9.5 Mining Technical Services This comprises the owners mining team consisting of contract management personnel and costs relating to grade control. The mining technical costs were estimated to be US$0.83/t and based on Amaras actual mining staff costs incurred during 2011. This cost was applied to both the oxide and the transitional phase.
22.9.6 ROM Rehandle A rehandling cost of US$0.78/t, for both oxide and transition ore, was given by the mining contractor which was based on actual costs incurred during 2011.
22.9.7 Mining Costs The mining costs were based on the following: Ore mining costs including haulage; and Waste mining costs.
Below is a summary of the mining costs for the oxide and transitional ores.
Table 22.18:
Summary of the Mining Costs
Oxide Total Mining Costs Ore Mining Costs including haulage Less: Waste Mining Costs US$/t US$/t US$/t 7.10 9.29 2.19
Transition 7.10 9.54 2.44
The ore mining costs for the oxide and transition phase as summarised on the table below. Also included is the breakdown of the waste mining costs.
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Table 22.19:
Breakdown of Ore and Waste Mining Costs
Oxide Ore Fuel Excess (Mining) Fuel Excess (Haulage) Grade Control Drilling Ore Haulage Equipment Spares Tax Water for dust suppression Drill and Blast Mining Contractor Rates Ore Mining Costs including haulage US$/t US$/t US$/t US$/t US$/t US$/t US$/t US$/t US$/t 1.08 0.13 5.72 0.25 2.11 9.29
Oxide Waste 0.20 0.04 0.01 0.25 1.69 2.19
Transition Ore 1.08 0.13 5.72 0.50 2.11 9.54
Transition Waste 0.20 0.04 0.01 0.50 1.69 2.44
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Page 22-22
SECTION 23.
23.1 INTRODUCTION
ECONOMIC MODEL AND FINANCIAL ANALYSIS
The Project economic assessment has been prepared with the input from Amara Mining and SRK, (mining). Amara Mining and SENET also undertook the economic evaluation and report compilation respectively.
23.2 EVALUATION METHOD Project economics have been evaluated using the discounted cash flow method, by taking into account year on year milled tonnages and grades and the associated recoveries, gold price (revenue), operating costs, royalties and capital expenditure (both initial and sustaining). The Project has been evaluated as stand-alone and 100% equity financed, with no debt financing.
23.3 PRODUCTION SCHEDULE A detailed production mine schedule for the mine is shown in Table 17.5 Part of Mining Section. Mining is accomplished over a period of 17 months. The ore treatment schedule by virtue of plant capacity constraints is also seen in Table 23.1 below and amounts to a period of 21 months i.e. the effective life-of-mine (LoM). Though ore feed ceases after this period there is still a time lag for the gold to be extracted due to the kinetic functions characteristic of a heap leach operation. In fact gold is still recovered from residual solution for some three months after the last ore is loaded onto the heap.
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Table 23.1:
MINING RZ & GAMBO
Production Schedule
kt kt kt waste:ore g/t g/t oz oz kt kt kt waste:ore g/t g/t oz oz kt g/t kt g/t oz % % oz LoM 12 258 1 442 373 6.75 1.87 1.81 86 753 21 769 5 091 683 42 7.03 2.24 3.78 49 235 5 066 2 125 1.99 415 2.01 162 825 87% 70% 137 095 Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 Month 13 Month 14 Month 15 Month 16 Month 17 Month 18 Month 19 Month 20 Month 21 633 597 598 739 545 618 656 998 1 066 1 116 1 147 1 019 799 891 498 276 61 10 31 41 99 53 7 86 26 100 118 116 205 131 154 138 83 43 1 13 2 15 47 14 1 11 50 79 57 83 3 56.65 13.55 14.01 6.45 5.48 28.90 7.64 38.50 10.61 9.43 9.86 4.72 4.42 3.83 2.56 1.67 1.33 1.39 2.12 1.68 2.11 1.56 1.58 1.72 2.41 1.61 1.83 1.31 1.61 1.39 2.25 2.34 2.15 3.37 2.29 2.06 2.03 1.44 2.05 2.07 1.30 1.51 1.44 1.45 1.70 2.34 2.07 457 2 133 2 197 6 712 2 640 380 4 750 2 012 5 203 6 965 4 879 10 632 5 847 11 132 10 382 5 724 4 709 72 848 131 714 3 079 926 22 537 2 294 3 674 3 086 6 207 179 372 443 578 364 551 562 478 191 68 30 15 45 306 162 554 286 85 28 75 63 65 85 78 55 37 21 34 21 47 54 19 1 5 9 17 8 2 13.25 5.87 9.10 5.22 5.86 5.91 7.51 4.88 3.20 9.13 7.81 11.68 5.25 4.61 2.35 2.30 2.69 2.85 2.16 2.02 1.90 2.19 1.94 1.70 1.85 2.00 2.10 3.42 3.08 3.45 3.95 4.06 3.63 2.54 2 118 5 584 5 424 5 952 5 897 5 104 3 387 2 603 1 325 1 838 1 238 3 054 3 673 2 041 94 528 1 142 2 174 956 171 38 2.09 1 2.29 2 646 87% 70% 2 290 107 2.25 13 2.06 8 565 87% 70% 7 307 103 2.29 3 2.37 7 846 87% 70% 6 787 133 2.40 10 258 87% 70% 8 924 109 2.06 7 203 87% 70% 6 267 127 1.96 8 016 87% 70% 6 974 149 1.82 8 710 87% 70% 7 578 74 2.21 61 2.58 10 300 87% 70% 8 102 122 1.67 12 2.58 7 551 87% 70% 6 396 118 1.83 12 2.58 7 984 87% 70% 6 773 116 1.31 12 2.56 5 892 87% 70% 4 954 120 1.61 6 244 87% 70% 5 432 131 1.51 6 335 87% 70% 5 512 136 1.92 8 413 87% 70% 7 320 135 2.10 9 155 87% 70% 7 965 133 2.11 9 031 87% 70% 7 857 109 2.40 8 384 87% 70% 7 294 127 2.40 9 836 87% 70% 8 558 37 2.40 112 1.82 9 425 87% 70% 7 085 135 1.82 7 886 87% 70% 5 520 54 1.82 3 143 87% 70% 2 200
TIBA
Waste tonnes mined Ore Mined (Oxide) Ore Mined (Transitional) Strip Ratio Grade (Oxide) Grade (Transitional) Contained gold (Oxide) Contained gold (Transitional) Waste tonnes mined Ore Mined (Oxide) Ore Mined (Transitional) Strip Ratio Grade (Oxide) Grade (Transitional) Contained gold (Oxide) Contained gold (Transitional) Ore Processed (Oxide) Head Grade (Oxide) Ore Processed (Transitional) Head Grade (Transistional) Contained gold Recovery (Oxide) Recovery (Transitional) Recoverable gold
PROCESSING
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23.4 ASSUMPTIONS Assumptions used in the financial analysis were provided by Amara and are summarised in the Table 23.2 and explained below.
Table 23.2: Financial Evaluation - Assumptions
Parameter Gold Price Nameplate Processing Rate NPV Discount Rate Royalty Payment Tax rate Diesel fuel price
Units US$/oz Mtpa % % % US$/l
Assumption 1,500 1.6 10% 6% 17.5% 1.54
Cash flow analysis is reported in United States Dollars. Plant and mine equipment salvage value has been assumed as zero. In line with the practice in the mineral industry, no inflation was applied to the cash flow analysis. Further assumptions are described below:
Taxes o Corporate Tax The agreement between Amara and the government of Burkina Faso is that a Corporate Tax of 17.5% of gross profit will be applicable. A detailed tax working has been applied to assess the tax relief on the initial investment, subsequent capital expenditure and the capital allowance regime in-country. o Fuel Tax All taxes have been included in the fuel price. Royalty o The Project is subject to a royalty or Tax ad Valorem payable to the government of Burkina Faso on production, which is set at 5% for this project. o In addition to this is a historical founders or net smelter royalty (NSR) of 3% payable to Royal gold Inc. There is an option however to reduce this royalty to 1% by means of an upfront payment made upon the commencement of production for a sum of $2.0 million. Since this is the intention this sum is evident in the cash flow model effectively increasing the initial capital from $9.5 million to $11.5 million. o Therefore total effective royalty payment as captured in the cashflow model is 6%. Ramp-up and ramp down The nature of the heap leach process implies that there will be a lag in recovering gold at the beginning of production. The cashflow flow model applies a ramping period of four months before one can expect a full revenue stream. By the same token the revenue stream is shown to continue for a four-month period after the last of the ore has been added to the heap. Refining and selling costs Since Kalsaka has an existing contract with Metalor it is likely that Sega will use the same refiner at similar rates. The refining process is typically completed within 3 working days after receipt of bullion. The refiner charges cover melting, assaying, refining and the provision of bars accredited to LBMA. The charges applicable between Sega and Metalor are therefore expected to cost
November 2012
US$5.50 per ounce based on the Kalsaka rates being paid. These costs were omitted from the cashflow model but included within the operating costs used for the mine plan optimisation runs. Closure costs As gleaned from the Environmental section 21, an allowance of US$2.0 million has been allowed for in the cashflow model. This sum becomes payable at the end of the mine life. Inter-company payments and transfers including other minor equity shareholders The proposed new Sega Mining entity, Kalsaka Mining SA, parent company Amara Mining plc, government of Burkina Faso and other minor shareholders (Amara owns 78.0% of Kalsaka and 90% of Sega) are all beneficiaries of the Sega Project in some form or another. For the sake of not causing confusion, it was decided to keep the cashflow model as simple as possible so as to be able to fairly assess the benefits of Sega as a standalone entity. Thus the cashflow model takes into account the usual principles of initial capital expenditure required for the project including sustaining capital, operating costs of mining at Sega together with the requisite processing and administration costs as incurred at Kalsaka. Other items found in the cashflow model include royalties, purchase of royalties and closure costs which are described in greater detail above.
23.5 SUMMARY OF FINANCIAL ANALYSIS Financial analysis results are summarized in the table below.
Table 23.3: Summary of Financial Analysis Results
Summary (LoM Operating Costs) Cash cost (excl. royalty) Cash cost (incl. royalty) Mining (incl. hauling to Sega Crusher) Haulage (Sega Crusher to Kalsaka) Processing G&A
US$/oz 821 911 376 106 226 114
US$/t*
2.59 5.72 12.18 6.14
*Mining tonnes are per mined tonne. The rest are per processed tonne
Note that these operating costs have been derived from the cashflow model and therefore take into account some months where mining and processing do not occur. In addition are G&A costs for more months than the ore treatment period. The effect of this is that the operating costs as expressed are higher than were they simply based on a pure nameplate throughput capacity rate of 1.6Mtpa. Nevertheless it was felt prudent to express the projected reality as per the financial model. The upside of the Sega Project where it is hoped that further resources might be included into the mine plan signifies a decision to include nameplate cost parameters when performing the optimisations through whittle in order to decide upon a suitable pit shell as these would be more realistic given the potential of further mineable tons being identified which would have the effect of lengthening the mine life and therefore shorten the relative periods of ramp-up and tail relative to the bulk of the mine life.
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Table 23.4:
Salient Features
Summary - Salient Features Ore Waste Strip ratio Average treated Au grade Overall Recovery Gold price Total gold sold Initial capex Average annual production LOM Total cash generation NPV NPV - pre tax 000 tons 000 tons w/o g/t % US$/oz (oz) (US$000) (oz) Months (US$000) (US$000) (US$000) 2,540 17,349 6.8 2.0 84 1,500 137,095 11,488 81,444 21 59,094 49,471 55,119
Major highlights of the financial analysis are as follows: Net Present Value (NPV) The Sega Project exhibits a final NPV of US$49.5 million using a discount rate of 10%; Pre-tax Net Present Value (NPV) The pre-tax NPV is given as US$55.1 million using the same discount rate; Net Cash Flow The total cash generation is US$59.1 Million based on a gold price of US$1,500 per ounce; Cash Operating Costs The total cash operating costs excluding royalties amount to US$821 per ounce produced; Internal Rate of Return (IRR) When the acquisition costs are included the project still exhibits an attractive IRR of 48%. The calculated figure for this cash flow model where they are in fact excluded as sunk is in fact much higher; Contained gold After mining dilution and loss the contained gold is 162,825 ounces over the effective and initial mine life of 21 months; and Gold produced At an average process gold recovery of 84% (87% for oxide ore and 70% for transition ore) total gold production over the life is 137,095 ounces.
23.6 PROJECT LIFE CASH FLOW The project LoM cash flows by year are given in Table 23.5.
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Page 23-5
Table 23.5:
MINING RZ & GAMBO
Cash Flow Model Summary

Unit Waste tonnes mined Ore Mined (Oxide) Ore Mined (Transitional) Strip Ratio Grade (Oxide) Grade (Transitional) Contained gold (Oxide) Contained gold (Transitional) Waste tonnes mined Ore Mined (Oxide) Ore Mined (Transitional) Strip Ratio Grade (Oxide) Grade (Transitional) Contained gold (Oxide) Contained gold (Transitional) Ore Processed (Oxide) Head Grade (Oxide) Ore Processed (Transitional) Head Grade (Transistional) Contained gold Recovery (Oxide) Recovery (Transitional) Recoverable gold Month 1 Month 2 Month 3 Month 4 TOTAL PRODUCTION kt kt kt waste:ore g/t g/t oz oz kt kt kt waste:ore g/t g/t oz oz kt g/t kt g/t oz % % oz 50% 35% 10% 5% oz US$ 000 US$ 000 US$ 000 US$ 000 US$ 000 US$ 000 US$ 000 US$ 000 US$/oz US$ 000 US$/oz US$/t mined US$/thauled US$/t processed US$/t processed TOTAL 12 258 1 442 373 6.75 1.87 1.81 86 753 21 769 5 091 683 42 7.03 2.24 3.78 49 235 5 066 2 125 1.99 415 2.01 162 825 87% 70% 137 095 -1(+) Month -1 87% 70% 8 314 1 Month 1 633 10 1 56.65 1.39 2.29 457 72 372 28 13.25 2.35 2 118 38 2.09 1 2.29 2 646 87% 70% 2 290 1 145 1 145 132 2 232 289 33 381 65 31 650 1 665 103 3 419 2.36 5.72 12.15 16.57 1 134 2 000 1 145 1 717 (2 686) (476) (650) (103) (42) (2 239) 2 Month 2 597 31 13 13.55 2.12 2.06 2 133 848 443 75 5.87 2.30 5 584 107 2.25 13 2.06 8 565 87% 70% 7 307 3 654 801 4 455 409 2 343 857 99 1 164 197 93 650 795 401 1 395 2.61 5.72 12.16 5.44 4 455 6 683 (3 708) (1 454) (650) (401) (42) 428 3 Month 3 598 41 2 14.01 1.68 2.03 2 197 131 578 63 1 9.10 2.69 3.08 5 424 94 103 2.29 3 2.37 7 846 87% 70% 6 787 3 394 2 558 229 6 180 362 2 615 753 88 1 033 175 83 650 849 556 1 022 2.50 5.72 12.15 6.12 6 180 9 270 (3 819) (1 291) (650) (556) (42) 2 913 4 Month 4 739 99 15 6.45 2.11 1.44 6 712 714 364 65 5 5.22 2.85 3.45 5 952 528 133 2.40 10 258 87% 70% 8 924 4 462 2 376 731 114 7 683 645 2 466 1 214 153 1 290 219 104 650 755 691 967 2.66 7.93 12.14 4.89 7 683 11 524 (4 477) (1 613) (650) (691) (42) 4 051 5 Month 5 545 53 47 5.48 1.56 2.05 2 640 3 079 551 85 9 5.86 2.16 3.95 5 897 1 142 109 2.06 7 203 87% 70% 6 267 3 133 3 124 679 365 7 301 679 2 504 1 321 160 1 054 179 85 650 1 058 657 998 2.76 10.19 12.14 5.99 7 301 10 952 (4 665) (1 318) (650) (657) (42) 3 620 6 Month 6 618 7 14 28.90 1.58 2.07 380 926 562 78 17 5.91 2.02 4.06 5 104 2 174 127 1.96 8 016 87% 70% 6 974 3 487 2 193 892 339 6 912 396 2 737 884 97 1 236 210 99 650 905 622 1 003 2.66 5.23 12.14 5.11 6 912 10 368 (4 113) (1 546) (650) (622) (42) 3 396 7 Month 7 656 86 7.64 1.72 4 750 478 55 8 7.51 1.90 3.63 3 387 956 149 1.82 8 710 87% 70% 7 578 3 789 2 441 627 446 7 303 519 2 523 1 001 124 1 449 246 116 650 875 657 998 2.58 5.73 12.14 4.36 7 303 10 954 (4 168) (1 811) (650) (657) (42) 3 626 8 Month 8 998 26 38.50 2.41 2 012 191 37 2 4.88 2.19 2.54 2 603 171 74 2.21 61 2.58 10 300 87% 70% 8 102 4 051 2 652 697 313 7 714 222 2 616 462 54 1 322 222 105 650 698 694 823 2.38 2.76 12.24 4.82 7 714 11 571 (3 354) (1 650) (650) (694) (42) 5 181 9 Month 9 1 066 100 10.61 1.61 5 203 68 21 3.20 1.94 1 325 122 1.67 12 2.58 7 551 87% 70% 6 396 3 198 2 836 758 349 7 140 431 2 486 744 101 1 304 221 104 650 945 643 936 2.44 5.19 12.16 4.85 7 140 10 710 (3 763) (1 629) (650) (643) (42) 3 984 10 Month 10 1 116 118 9.43 1.83 6 965 30 118 1.83 12 2.58 7 984 87% 70% 6 773 3 386 2 238 810 379 6 814 426 2 513 677 98 1 271 216 102 650 879 613 964 2.40 5.18 12.16 4.98 6 814 10 221 (3 714) (1 588) (650) (613) (42) 3 614 11 Month 11 1 147 116 1 9.86 1.31 1.30 4 879 22 15 116 1.31 12 2.56 5 892 87% 70% 4 954 2 477 2 371 640 405 5 892 419 2 547 665 97 1 247 211 100 650 1 198 530 1 097 2.40 5.19 12.16 5.07 5 892 8 838 (3 728) (1 558) (650) (530) (42) 2 330 12 Month 12 1 019 205 11 4.72 1.61 1.51 10 632 537 45 120 1.61 6 244 87% 70% 5 432 2 716 1 734 677 320 5 447 780 2 347 1 234 179 1 168 198 94 650 1 224 490 1 311 2.58 10.26 12.14 5.41 5 447 8 170 (4 540) (1 460) (650) (490) (42) 988 13 Month 13 799 131 50 4.42 1.39 1.44 5 847 2 294 306 34 9.13 1.70 1 838 131 1.51 6 335 87% 70% 5 512 2 756 1 901 495 339 5 491 772 2 490 1 301 178 1 268 216 102 650 1 266 494 1 360 2.67 9.37 12.14 4.98 5 491 8 237 (4 740) (1 586) (650) (494) (42) 725 14 Month 14 891 154 79 3.83 2.25 1.45 11 132 3 674 162 21 7.81 1.85 1 238 136 1.92 8 413 87% 70% 7 320 3 660 1 929 543 248 6 380 926 2 391 1 498 210 1 323 225 106 650 1 001 574 1 239 2.73 10.64 12.14 4.77 6 380 9 570 (5 025) (1 655) (650) (574) (42) 1 624 15 Month 15 498 138 57 2.56 2.34 1.70 10 382 3 086 554 47 11.68 2.00 3 054 135 2.10 9 155 87% 70% 7 965 3 983 2 562 551 272 7 367 869 2 366 1 492 201 1 316 224 106 650 907 663 1 070 2.74 10.21 12.14 4.80 7 367 11 051 (4 927) (1 645) (650) (663) (42) 3 124 16 Month 16 276 83 83 1.67 2.15 2.34 5 724 6 207 286 54 5.25 2.10 3 673 133 2.11 9 031 87% 70% 7 857 3 929 2 788 732 276 7 724 793 1 279 1 381 182 1 290 219 104 650 751 695 854 3.04 9.45 12.14 4.89 7 724 11 586 (3 636) (1 613) (650) (695) (42) 4 950 17 Month 17 61 43 3 1.33 3.37 2.07 4 709 179 85 19 4.61 3.42 2 041 109 2.40 8 384 87% 70% 7 294 3 647 2 750 797 366 7 560 227 327 413 54 1 054 179 85 650 410 680 485 3.07 3.41 12.14 5.99 7 560 11 340 (1 021) (1 318) (650) (680) (42) 7 629 18 Month 18 127 2.40 9 836 87% 70% 8 558 4 279 2 553 786 398 8 016 1 236 210 99 650 257 721 364 12.14 5.11 8 016 12 024 (1 546) (650) (721) (42) 9 065 19 Month 19 37 2.40 112 1.82 9 425 87% 70% 7 085 3 543 2 995 729 393 7 660 1 473 246 116 650 351 689 415 12.31 4.36 7 660 11 490 (1 836) (650) (689) (42) 8 273 20 Month 20 135 1.82 7 886 87% 70% 5 520 2 760 2 480 856 365 6 460 1 338 222 105 650 420 581 448 12.36 4.82 6 460 9 691 (1 666) (650) (581) (42) 6 751 21 Month 21 54 1.82 3 143 87% 70% 2 200 1 100 1 932 709 428 4 168 533 89 42 650 597 375 405 12.36 12.10 4 168 6 253 (664) (650) (375) (42) 4 522 22 Month 22 87% 70% 770 552 354 1 676 650 151 478 1 676 2 514 (650) (151) 1 713 23 Month 23 87% 70% 220 276 496 650 45 1 401 496 744 (650) (45) 49 24 Month 24 87% 70% 110 110 650 10 6 000 110 165 (650) (10) (495) 25 Month 25 87% 70% (2 000) (7 282) (9 282)
TIBA
PROCESSING
137 095 9 007 38 783 16 186 2 108 24 751 4 190 1 981 15 600 821 12 339 911 2.59 5.72 12.18 6.14 9 448 2 000 137 095 205 643 (66 084) (30 922) (15 600) (12 339) (875) (2 000) (7 282) 70 542
COSTS mining mining mining mining processing processing processing
Mining Cost (Contractor - ore) Mining Cost (Contractor - waste) Ore haulage Mining Cost (Owner) Processing Cost Additional crushing ROM rehandle General & Administrative Cost C1 Cash Cost (gold produced) Royalty C2 Cash Cost (gold sold) Mining Haulage (exc Tiba to Sega) Processing G&A
COST METRICS
Cluff Gold Sega - CAPEX Total startup capex and project costs US$ 000 Net smelter royalty US$ 000 Sega Mining Co - OPERATIONS GOLD SOLD oz Revenue US$ 000 Mining US$ 000 Processing US$ 000 General & Administrative Cost US$ 000 Royalty US$ 000 Sustaining Capex US$ 000 Rehabilitation Provision US$ 000 Tax US$ 000 Cluff Gold Interest - Sega profit US$ 000 Sega cash flow Free Cash Flow Cash Balance Pre tax cash flow US$ 000 US$ 000 US$ 000
59 094
(8 314) (8 314) (8 314)
(5 373) (13 687) (5 373)
428 (13 259) 428
2 913 (10 346) 2 913
4 051 (6 296) 4 051
3 620 (2 675) 3 620
3 396 721 3 396
3 626 4 347 3 626
5 181 9 528 5 181
3 984 13 512 3 984
3 614 17 126 3 614
2 330 19 456 2 330
988 20 445 988
725 21 170 725
1 624 22 793 1 624
3 124 25 918 3 124
4 950 30 867 4 950
7 629 38 497 7 629
9 065 47 562 9 065
8 273 55 835 8 273
6 751 62 586 6 751
4 522 67 108 4 522
1 713 68 822 1 713
49 68 871 49
(495) 68 376 (495)
(9 282) 59 094 (2 000)
66 376
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Page 23-6
23.7 SENSITIVITY ANALYSIS Sensitivity analyses were performed on the after tax profits by varying the major key variables (gold price, capex, and opex) from -30% to +30% of the base case cash flow and each sensitivity was performed independent of the other. The results of the sensitivities are summarised in Table 23.6 to Table 23.8, which show gold price varying from US$1,050 to US$1,950 per ounce, capital and operating cost variations. The figure below shows the detailed sensitivity analysis of changing the key variables to 30%.
Table 23.6:
Gold Price Sensitivity
Gold Price Change % -30% -15% 0% 15% 30%

Table 23.7: Capex Sensitivity
NPV (US$000) 0% $8,384 $35,150 $59,094 $83,038 $106,982 5% $6,590 $31,519 $53,969 $76,306 $98,632 10% $5,056 $28,358 $49,471 $70,382 $91,277
CAPEX Change % -30% -15% 0% 15% 30%

Table 23.8: Operating Costs Sensitivity
NPV (US$000) 0% $61,641 $60,368 $59,094 $57,820 $56,547 5% $56,503 $55,238 $53,969 $52,700 $51,431 10% $51,989 $50,734 $49,471 $48,208 $46,945
OPEX Change % -30% -15% 0% 15% 30% 0% $90,519 $74,853 $59,094 $43,243 $27,299
NPV (US$000) 5% $83,458 $68,762 $53,969 $39,005 $23,952 10% $77,232 $63,400 $49,471 $35,309 $21,063
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Page 23-7
Figure 23.1:
NPV Sensitivity at 10% Discount Rate
NPV Sensitivities
NPV Gold Price NPV CAPEX NPV OPEX
$100 000 $90 000 $80 000 $70 000 NPV US$ (000) $60 000 $50 000 $40 000 $30 000 $20 000 $10 000 $0 -40%
-30%
-20%
-10% 0% Percentage Change
10%
20%
30%
40%
23.8 DISCUSSION When ranked, the sensitivity analysis indicates that the project is most sensitive to gold price followed by operating costs and then capital expenditure. This provides weight to the notion of robustness exhibited by the Sega economics where unexpected increases in expenditure may have a lesser impact, especially considering the current positive outlook for the gold price which at date of report issue was some US$200 higher than the assumed base case.
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Page 23-8
SECTION 24.
24.1 INTERPRETATION
INTERPRETATION & CONCLUSION
The Sega Project as described exhibits a relatively short life-of-mine at 21 months and this has both positive and negative implications. On the positive side the following points are made: Prolonged Cashflow Stream - This Sega Project serves to fill a vital area in the development of Amara into a mid-tier producer since the ore at Sega is used to prolong the cashflow stream by utilising the Kalsaka processing facility to process the ore, effectively increasing the life of mine or operations for close to two extra years. Besides the obvious positive cashflow benefits that accrue to the corporate entity it also provides for a continuous cashflow to the region both through salaries but also in the form of direct and indirect taxation; Low Environmental and Social Disruption - The relatively short life means that the ESIA-related negative impacts potentially caused by the project will be unlikely to have a lasting effect either from an environmental or social point of view, thus restoration of livelihoods should be a simpler process and moreover the entire permitting procedure is hoped to become easier from the point of view, not of any short cuts being taken, but rather the understanding that the project will not cause major disruption to either the local communities in the area or the artisanal mining community for that matter. The resettlement process by implication is hoped to be easier given that the time impact is relatively short, especially when considered on a pit by pit basis, whose life can be measured in months rather than years which would seem to be the norm for this kind of undertaking; Existing Processing Facility - The existence and proximity of the Kalsaka heap leach processing plant with its integrated crushing circuit proves to be a model of serendipity in view of its current design and state. Thus the need for a dedicated plant for Sega ore is forgone resulting in a straightforward primary crush and haul from the area over a modestly flat stretch of earth to the Kalsaka processing facility This makes it ideal and immediately available for the successful processing of Sega ore; Positive Exploration Potential - Recent exploration drilling results, particularly at Touli which is an area close to the proposed Sega pits have been published which though not yet incorporated into a formal resource estimate certainly show positive results. These are as follows: o 26m at 3.05g/t from 8m in hole SRB0232; o 26m at 2.14g/t from 24m in hole SRC0119; and o 18m at 3.49g/t from 18m in hole SRB0290. It is therefore conceivable that going forward further resources will be identified which may result in an expanded mine plan thereby potentially increasing the life-of-mine even further. Positive Gold Price Outlook - At gold prices at US$1,500/oz, the economics of the project have been demonstrated to be robust and beneficial. With a significant portion of economists and financial advisors advocating the call for ever higher gold
November 2012
prices, the implementation of this project looks even better with projected higher gold prices. It should also be borne in mind that there are some potential negative issues which if not carefully managed and considered, could come to bear: Timing is Critical - Time becomes a precious commodity from the point of view that Kalsaka itself has limited reserves left to exploit and the goal should be to have a seamless transition for the Kalsaka processing facility to be able to produce Sega ore just as soon as the last of the Kalsaka ore bodies are treated. Any gap or delay in this process will have a negative effect on cashflow which provides such a benefit to all and would by implication simply cease. There is no doubt that would be damaging to all stakeholders not least of which are the corporate entity itself of Amara, but government tax revenues and pecuniary inflow into the community through ongoing social plans and wages paid; and Extent of Resettlement and Presence of Artisanals - The significant presence of both local community dwellings and infrastructure including migrant artisanal mining and personnel in the area requires that the resettlement action plan (RAP) be very carefully considered so that all stakeholders are satisfied with the end result. Any meaningful dissatisfaction will undoubtedly lead to obstructive measures being applied to the projects implementation plan thereby resulting in inevitable delays. For this reason, whilst time remains of the essence, clearly the correct and proper procedures need to be followed in terms of the regulatory requirements but also international standards of practice bearing in mind the relatively short duration of the project.
24.2 CONCLUSION Amara is of the opinion that based on its earlier due diligence exercise, the Sega acquisition was a strategic step taken which is crucial to its success since it has the potential to extend the existing cashflow stream necessary to maintain its position in the market as it develops into a fully-fledged mid-tier gold producer. The results of this PEA have demonstrated robust economics and serve to further confirm this earlier notion. What remains is to develop the project to its ultimate conclusion manifested by successful implementation. For this to be realised accordingly, care should be taken to ensure items related to budget and timing remain on track and Amara are under no illusions that this will simply happen without intervention. Rather it is considered that with appropriate intervention and management, where certain recommendations set out below are actively pursued, the Sega Project will indeed deliver and Amara is therefore confident that the Sega Project PEAs results are a fair and valid reflection of the asset.
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Page 24-2
SECTION 25.
25.1 INTRODUCTION
RECOMMENDATIONS
The implementation of the Sega Project would realise substantial benefits to its many stakeholders however needs to be implemented subject to critical due diligence exercised in all discipline areas. Due to the fact much of the associated parameters pertaining to the project exhibit modest yet finite resource benefits, this by implication suggests that there is limited margin for error. Each discipline needs to be carefully considered so that it can pass scrutiny both independently and together as a part of the all-encompassing, comprehensive yet rational implementation plan. Thus some of the issues associated with each discipline in the form of recommendations are expressed in greater detail with a view to ensure its robustness, alignment and congruence with the stated goal which is the ultimate successful implementation of the Sega Project.
25.2 RESOURCES Consider a program of infill drilling which would convert the current inferred resources into an indicated category. It is also conceivable that this may be considered as part of an over-arching grade control philosophy; Update the current mineral resource model with the 10,000m of outstanding drilling and assay data gathered in 2012 subsequent to the issue of the last mineral resource statement in order to potentially enhance the total resources within the Sega permit area but also to expand the indicative mine plan alluded to in this PEA, thereby possibly enhancing the projects already attractive economic indicators even further as well as creating the opportunity of an extended mine life; and Though clearly an integral aim of every gold mining company is to increase its resource base, which by nature is constantly being reduced due to successful operational exploitation and depletion of known reserves, it has to be said that Sega must and will continue to actively follow leads for new targets to be geologically explored within its substantial footprint whose boundaries are defined by the exploration licence.
25.3 MINING Actively engage potential mining contractors interested in mining at Sega to provide competitive quotes so that a comparative adjudication process can take place thereby ensuring an optimal choice for the benefit of the project. Naturally this will include the mining contractor already incumbent at Kalsaka, but should not be limited to such; Consider the concept of an owner-haul operation. This is likely to warrant a lower level of expertise than that encountered with mining, and will involve investigating the sourcing of suitable mechanical equipment and the operation and maintenance thereof. Though not considered for this PEA it is believed that this concept offers some distinct advantages for the owner especially considering the forecast duration
November 2012
Page 25-1
of the project which by being relatively short appears to have the effect of having contractors loading their rates to cover this perceived risk; Re-visit the mine plan with a view to optimise it through selecting the sequencing of the mining of the designated pits including reviewing their concomitant grades, but at the same time taking into consideration the constraints in place due to the presence of dwellings requiring resettlement or upset allowances and hence the timing of the implementation of mandatory relocation or RAP implementation programs; and Conduct further geotechnical investigation to support and verify selected estimates of pit slope angles.
25.4 PROCESSING Continue with the current campaign of performing additional column or heap-leach simulation leach tests to understand the variability of process parameters both in terms of reagent consumptions i.e. cement and cyanide addition and gold recovery considering a variety of samples expected to emanate from the identified mine pit shells; For the longer term conduct a program of metallurgical testing that includes both comminution and hydrometallurgical aspects for any sulphide resources identified. The program could include mineralogy and diagnostic leach tests should a refractory nature in the sulphide mineralisation be evident and therefore consider all processing options available with a view to select the optimal one; Verify the indicative tests undertaken which point to the fact that a coarser crush size could be used at the Kalsaka processing facility either with a view to increase production at a coarser size or reduce operating costs for an equivalent nameplate throughput. Despite the fact that this opportunity was not used for the purposes of this PEA in the interests of conservatism and prudence, this opportunity provides real scope for enhancing the economics of the scoped project; and Whilst the Kalsaka processing facility has proved both reliable and efficient historically it is imperative that this record of operation be maintained going through the anticipated Sega mine life and thus a focussed effort should be made to ensure that the plant, especially its integrated crusher circuit remains well suited to the installed Sega circuit and indeed it is hoped that this might lead to some form of rationalisation between the two discreet operations leading to a new optimality.
25.5 WATER AND POWER MANAGEMENT Water is known to be a very scarce commodity in the area in particular over the dry season. Though there is a water source in the form of a dam at Seguenega, it is unlikely that this resource will be exploited as a part of the Sega Project implementation plan since its primary use is agricultural and effectively utilised by the local community. Therefore alternative sources of supply should be sought be this via pit dewatering or other. Since geotechnical boreholes returned dry results other plans require investigation for the period of the year when very little or no rain falls. There is known to be a water dam near Kalsaka and this is currently used for Kalsakas benefit amongst others. A concerted effort will be made to ascertain whether there
November 2012
are any other alternatives for water supply to the Sega Project area. Since there is not expected to be any processing facility there, the major consumer for this resource is expected to be directed towards dust suppression both on the haul roads and at the proposed primary crushing facility. Due care needs to be taken that any design/engineering related to the water supply ensures that the plan takes into account the needs of the local communities as well as the operation and is sufficiently robust to cater for all seasons particularly the drought conditions which are endemic to the region during the dry portion of every year; and The Seguenega town is supplied with power via overhead transmission lines. There is an opportunity that this may be able to be utilised at the Sega crushing facility and surrounding infrastructure in favour of the currently envisaged standalone diesel generator sets. The generator sets considered have been specifically selected to be consistent with those already installed at Kalsaka and so are well placed to serve as back up or standby generator sets for the Kalsaka facility. It can be said too that a single generator set as specified is already generously sized for the Sega primary crushing facility and becomes close to being effectively used if a secondary crushing stage becomes implemented at Sega, something that is not foreseen as occurring in the nearterm nor considered for this PEA. On top of this is provision for a full-sized dedicated standby unit. It is therefore conceded that the envisaged configuration may be further optimised or could benefit from some form of rationalisation however the current envisaged selection does satisfy other issues of a pragmatic nature e.g., commonality of spares in the area etc. Thus a comprehensive investigation is recommended with a view to rationalise or optimise the power supply scenario at Sega.
25.6 INFRASTRUCTURE Much of the Sega infrastructure already exists as acquired from Orezone Gold Corporation and remains in a good state of repair. The installation of other infrastructural satellite facilities such as a security office or fuel depot needs to be well integrated with that which is already on the ground. The impact of the haul road particularly with the existing national road and those affected by its footprint should be subject to critical analysis so that all benefits and disadvantages are weighed; and Sterilisation drilling should be expedited to ensure that project infrastructure is not located on areas likely to be mined at some future date. The area of Touli where gold mineralisation is known to exist springs to mind as being an area to consider when placing the haul road so that it is convenient for potential future exploitation but also ensuring selected infrastructural footprints are cleared from being areas of potential mining.
25.7 ESIA AND RAP RELATED ISSUES The ESIA program is already well underway which is considering all of the following: o Baseline establishment; o Specialist studies; o Environmental and social management plans; o Resettlement action plans (RAP); and
November 2012
o .
Closure plans.
Areas that may need further attention is the potential for acid generation in particular from transitional material or perhaps even sulphide material that might be exposed as a result of mining to the pre-selected pit shell shapes. It may therefore be necessary to initiate kinetic cell tests on those rocks both ore and waste with acid-generating potential to determine the need to implement post-closure ARD mitigation and monitoring measures; Whilst every effort should be made to expedite the ESIA and RAP process, it is acknowledged that sometimes this may not be possible in a desired timeframe and that due process will need to take precedence over time, since it has already been strongly confirmed that any impatience in this respect may well result in even longer delays since it is imperative that the local community and artisanal mining presence be fully supportive of the Sega Project process at all times. To support this notion, attention was actively focussed on engaging the use of local environmental consultants who with their local knowledge are ideally placed to offer valid and relevant service including advice to the selected lead environmental contractor of Digby Wells. This process will continue to be encouraged and where possible the use of local consultancies maximised; Critically assess the footprint on an on-going basis with a view to change if necessary to accommodate those changes which may come about either as a result of the change being of greater benefit to the project and operation but also to ensure that a minimum impact is inflicted upon the local community both in terms of their agricultural assets but also areas of residence including community infrastructure; and Every effort will be made to minimise disruption to the local communities. This philosophy will be conveyed as being of crucial importance to Amara, not only so as to reduce the liability incurred due to the RAP implementation but in fact that due to the relatively short life of the mine, one could reduce the impact on all area stakeholders and minimise disruption by confining the resettlement to those only directly impacted by the footprint. Thus for example, although the anticipated survey will consider the maximum amount of households, personnel, infrastructure and cultivated areas as defined by best practise, it is trusted that a small percentage of this maximum will in reality be resettled and that the majority will continue to live as is with minimal interruption if any from the anticipated mining activities. This will be subject to only full and voluntary acceptance by the community without any form of coercion applied. It is suggested that this may serve the community to a greater extent than a full resettlement program due primarily to the minimum disruption concept.
25.8 CAPEX-OPEX AND SCHEDULE VERIFICATION Though costs are believed to have been well defined in fact in excess of the requirement for a PEA, it remains that there are still areas of risk which by virtue of their lack of definition should be subject to greater scrutiny and review. Such areas are suggested below:
November 2012
Page 25-4
Mining and Hauling - Explore all possibilities of operating philosophy from owner operate to contract to possibly incorporating some form of equipmentleasing as a means optimise the economics of the project; o RAP Implementation Since the initial asset survey has not been conducted nor definitive feedback from the community been obtained as yet the provision made in respect of this entity remains an area of risk. Amara is considered to have been conservative in their estimate of this cost, being well above a substantiated minimum; and o Closure This too remains subject to comprehensive investigation and quantification though despite this fact Amara is confident that the provision amount is adequately suited to the environment. The program alluded to in an earlier section of the PEA is based on an optimistic yet considered realistic scenario for implementation. Notwithstanding this, there are several issues which could have the effect of delaying or even extending the projects duration. Contingency plans should be in place to cater for these foreseen and sometimes unforeseen occurrences. Known potential causes could be: o Late arrival of critical equipment or disrupted freight services; o Neglect in following due regulatory process when seeking completion of the permitting process. This could be related to anything from anomalies identified in the ESIA submission, a result from the consequent public consultation process and probably more importantly the setting of the RAP framework or its ultimate implementation. Careful management and planning remain crucial for the successful management of this implementation; and o Disruption of the cashflow stream currently emanating from Kalsaka, whose protraction remains critical to the success of the corporate entity hence all of its subsidiaries and indeed associated stakeholders. This is important not only for investors but all stakeholders including local communities and government and the project will be well served with all in support of this necessary and indeed exciting venture.
November 2012
Page 25-5
SECTION 26.
REFERENCES
Amankwah, R.K., Ph.D., W.T. Yen, Ph.D., P.Eng., Department of Mining Engineering, Queen's University, Kingston, Ontario. (April 2005). Gold Recovery from Oxide and Transition Samples from the Sega Property, Burkina Faso. A Report for Orezone Resources Inc. Buro Y. et Cheong Youne K., (February 2006). Mineral resource estimation of the Sega Gold project. Rapport prepare par Met-Chem pour Orezone Resources Inc. Buro Y, Saucier G, (October 2007), Technical report on the mineral resource estimation of the Sega(Tiba) Gold project. Rapport prpar par Met-Chem pour Orezone Resources Inc. Buro y, Saucier G, (February 2009). Technical report on the mineral Resource estimation of the Sega (Tiba) gold project. Rapport prepare par Met-Chem pour Orezone Gold Corporation. Kerr, D. J., Kingston, Ontario, Canada: AccuMin Mineral Services Inc. (April 24, 2005). Preliminary Observations Regarding Structurally-Controlled Gold Mineralisation on the Sgunega Permit and Implications for Resource Estimation. A consulting report prepared for Orezone Resources Inc., Rpt. 006-SG-01. (July 9, 2005). Exploration Targets on the Sgunega Permit, Northwestern Burkina Faso. A consulting report prepared for Orezone Resources Inc., Rpt. 006-SG-02. (July 15, 2005). Recommended RC+DD Drill Programme on the Sgunega Permit, Northwestern Burkina Faso. A consulting report prepared for Orezone Resources Inc., Rpt. 006-SG-03. (September 10, 2005). Geological Investigations at the Sgunega Permit, Northwestern Burkina Faso. A consulting report prepared for Orezone Resources Inc., Rpt. 006-SG-04. (March 1, 2007). Site Visits to Orpaillage Sites in the Sega Region A Preliminary Summary. Marquis, P. F.; VP Exploration; DERRA, Oussni, Directeur d'Exploration. ( 21 February 2007). Rapport Final d'Activits du Permis de Recherche Minire Sgunega, Priode du 4 juillet 1995 au 4 janvier 2007. Marquis, P.F., Ph.D.; Directeur Gnral, Succursale de Ouagadougou. ( 9 October 2007). Rapport Annuel d'Activits du Permis de Recherche Minire Sgunega; Priode du 4 juillet 2005 au 3 juillet 2006. Norris, Ken; (November 2005). Column Leach Test Procedures. Osborne, H.; (December 13, 2006) Sgunga Project; Bottle Roll Test Program September 2006. Simoneau; J. (July 2001). J.; Placer Dome Exploration Inc.; Sgunga Project F13, Technical and Geological Report on the Exploration Carried Out Between October 2000 and April 2001. SOCREGE; (August 2005). tude de l'tat Initial de l'Environnement du projet Aurifre de Sgunga. Spiteri, J. G.; (August 23, 2006). Sample Collection Instructions Sega Bottle Rolls. Taner, M. F., Ph. D., Consulting geologist and mineralogist; (June 21, 2005). Report on the Petrographic and Mineralogical Study of Samples from the Sega Gold Prospect, Burkina Faso, of the Orezone Resources Inc. (November 10, 2005). Update from mineralogical and petrographic study. (November 21, 2005). Report-2 on the Petrographic and Mineralogical Study of Samples from the Sega Gold Prospect, Burkina Faso, of the Orezone Resources Inc. (December 21, 2005). Report-3 on the results of microprobe analyses of samples from the Sega Gold Prospect, Burkina Faso, of the Orezone Resources Inc. Yen, W.T. and Xia, C.; (October 2005) Gold Recovery from Sega Samples As supplied by Orezone Resources; Department of Mining Engineering, Queen's University, Kingston, Ontario, Canada.
November 2012
Page 26-1
SECTION 27.
DATE AND SIGNATURE PAGE
Sega Preliminary Economic Assessment (PEA)

NI 43-101 PEA Report Effective Date: 30 November 2012 AUTHORS SIGNATORY PAGE
Amara Mining plc. 4th Floor, 29-30 Cornhill, London EC3V 3NF Amara Author: Richard Quarmby Group Project Manager BSc. CEng
Orezone Gold Corporation. 290 Picton Avenue, Suite 201, Ottawa, Ontario K1Z 8P8, Canada Orezone Author: Pascal Marquis SVP-Exploration
BSc PhD PGeo
SRK Johannesburg. 265 Oxford Road 2196 Illovo, South Africa SRK Author: Mark Sturgeon Principal Mining Engineer BSc PrEng
Digby Wells. Fern Isle, Section 10, 359 Pretoria Avenue, Randburg, Gauteng, South Africa Digby Wells Author: Johan Hayes Manager-Integrated Services BSc PriSciNat
Richard Quarmby Group Project Manager
Pascal Marquis SVP-Exploration
Mark Sturgeon Principal Mining Engineer Date: 30 November 2012
Johan Hayes Manager Integrated Services
November 2012
Page 27-1
SECTION 28.
CERTIFICATES OF QUALIFIED PERSONS

CERTIFICATE OF QUALIFIED PERSON
I, Richard Quarmby, do hereby certify that:
1.
I am currently employed as the Group Project Manager by Amara Mining plc. My address is 4d Sutton Road, London, N10 1HE, United Kingdom; This certificate relates to the technical report titled Preliminary Economic Assessment of the Sega th Project in Burkina Faso, prepared by Richard Quarmby dated 30 November 2012 (the Report); I graduated with a BSc engineering degree from the University of the Witwatersrand in 1985 and earned a Master of Business Administration degree in 2005; I have been registered as a Professional Engineer (Pr Eng) with the Engineering Council of SA since 1991 and in 2010 was accepted to the UK equivalent institution i.e. Chartered Engineer with the Engineering Council UK (C Eng). Further, I am a Member of the South African Institution of Chemical Engineers (SAIChE) since1989 and am also a registered member of the Institute of Materials Minerals and Mining (IoMMM) in the UK; I have worked as a graduate and professional engineer for the private sector without interruption since I graduated in 1985. I have read the definition of Qualified Person set out in National Instrument 43 -101 (NI 43-101) and certify that I am a Qualified Person for the purposes of NI 43-101; My most recent personal inspection of the property that is the subject of the Report was on 24 September 2012 for a 1-day review of the project; I am the Qualified Person currently responsible for the preparation and supervision of the Report; I am not independent of Amara Mining plc; I have been involved with the Sega property in my capacity as Group Project Manager acquisition by Amara plc earlier in 2012; since its
th
2.
3.
4.
5.
6.
7. 8. 9.
10. 11.
I have read NI 43-101 and confirm that the Report has been prepared in compliance with NI 43-101; and At the date of this certificate, to the best of my knowledge, information and belief, the Report contains all scientific and technical information that is required to be disclosed to make the Report not misleading.
DATED this 30 day of November, 2012.
th
Richard Quarmby Group Project Manager Amara Mining plc
November 2012
Page 28-1
I, Pascal Marquis, do hereby certify that:
1.
I am currently employed as Senior Vice President Exploration by Orezone Gold Corporation. My address is 977, route de la Seigneurie, Saint-Roch-des-Aulnaies, QC, Canada;
2.
This certificate relates to the technical report titled Preliminary Economic Assessment of the Sega Project in Burkina Faso, prepared by Richard Quarmby dated November 30, 2010 (the Report);
3.
I graduated with a geology degree from the University of Montreal in 1985 and earned a PhD in 1990 . I am a registered member of the Ordre des Gologues du Qubec, membership no. 1110. I have worked as a research graduate or a professional geologist for the private sector without interruption since I graduated in 1985. I have read the definition of Qualified Person set out in National Instrument 43 -101 (NI 43-101) and certify that I am a Qualified Person for the purposes of NI 43 -101;
4.
My most recent personal inspection of the property that is the subject of the Report was on October 27, 2011 for a 1-day review of the project;
5.
I am the Qualified Person currently responsible for the preparation and supervision of the preparation of the Resources related sections of this Report;
6.
I am independent of Amara Mining plc;
7.
I have been involved since 2003 on the Sega property in my capacity of Exploration Manager (July 2003-March 2005) and then Vice-President Exploration (March 2005-June 2007) and President (July 2007-February 2009) for Orezone Resources Inc., and since February 2009 as Vice-President Exploration for Orezone Gold Corporation ;
8.
I have read NI 43-101 and confirm that the Report has been prepared in compliance with NI 43-101; and
9.
At the date of this certificate, to the best of my knowledge, information and belief, the resources section of the Report contains all scientific and technical information that is required to be disclosed to make the Report not misleading. DATED this 30 day of November, 2012.
th
Pascal Marquis Vice President Exploration Orezone Gold Corporation
November 2012
Page 28-2
I, Mark Sturgeon, do hereby certify that:
1.
I am currently employed as a Principal Mining Engineer at SRK Consulting (South Africa), 265 Oxford Road, Illovo, 2196, South Africa; This certificate relates to the mining section of the report titled Preliminary Economic Asse ssment th Technical Report for the Sega Project dated 30 November 2012 (the Report); I am a graduate of the University of the Witwatersrand with a BSc in Mining Engineering obtained in 1975; I was awarded a Mine Managers Certificate of Competency (Dia mondiferous) in 1991 and have been registered as a Professional Engineer (Pr Eng) with the Engineering Council of SA since 2004. Further, I am a Member of the Southern African Institute of Mining and Metallurgy; I have worked continuously as a mining engineer since graduating in 1975. I have read the definition of Qualified Person set out in National Instrument 43-101 (NI 43-101) and certify that I am a Qualified Person for the purposes of NI 43-101; I have not visited the property that is the subject of the Report; I am the Qualified Person currently responsible for the preparation of the Mining Section of the Report; I am independent of Amara Mining plc; I have been involved with the Sega property in a consulting capacity since April 2012; I have read NI 43-101 and confirm that the Report has been prepared in compliance with NI 43-101; and At the date of this certificate, to the best of my knowledge, information and belief, the mining section of the Report contains all scientific and technical information that is required to be disclosed to make the Report not misleading. DATED this 30 day of November, 2012.
th
2.
3.
4.
5.
6. 7. 8. 9. 10. 11.
Mark Sturgeon Principal Mining Engineer SRK Consulting (South Africa)
November 2012
Page 28-3
I, Johan Hayes, do hereby certify that:
1.
I am currently employed as the Manager for Integrated Services by Digby Wells Environmental. My address is Fern Isle Section 10, 359 Pretoria Avenue, Randburg, 2125, South Africa; This certificate relates to the technical report ti tled Preliminary Economic Assessment Technical Report th for the Sega Project, prepared by Richard Quarmby dated 30 November 2012 (the Report). Digby Wells was responsible for the compilation of the environmental and social sections of the report, as also contained in the Environmental and Social Impact Assessment report; I graduated with a MSc degree in Ecological Assessment from the University of Stellenbosch in 2003; I have been registered as a Professional Scientist (PriSciNat) with the South African Council for Natural Scientific Professions since 2009. Further, I am a Member of the International Association for Impact Assessment (IAIA) since 2004; My most recent personal inspection of the property that is the subject of the Report was on 25 November 2012 for a 1-day review of the project;
th
2.
3. 4.
5.
6.
I am the Qualified Person currently responsible for the preparation and supervision of the Environmental and Social Sections preparation of, the Report; I am independent of Amara Mining plc; I have been involved with the Sega property in my capacity of Project Manager for the Environmental and Social Impact Assessment (ESIA) since the appointment of Digby Wells in 2012; and At the date of this certificate, to the best of my knowledge, information and belief, the Report contains all scientific and technical information that is required to be disclosed to make the Report not misleading.
7. 8.
9.
DATED this 30 day of November, 2012
th
Johan Hayes Manager: Integrated Services Digby Wells Environmental
November 2012
Page 28-4

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November 2012

SEGA Gold Project PEA NI 43-101 Report

EXECUTIVE SUMMARY .............................................................. 1-1

1.2.1 1.2.2 1.3 1.4

1.4.1 1.4.2 1.4.3 1.5

1.5.1 1.5.2 1.6 1.7 1.8

1.8.1 1.8.2 1.8.3 1.8.4 1.9

1.9.1 1.9.2 1.9.3 1.9.4 1.9.5 1.10

1.10.1 1.10.2 1.11

Economics and Financial Analysis .................................................................................... 1-26 Assumptions ................................................................................................................... 1-26

1.11.2 1.11.3 1.12

Summary of Financial Analysis ...................................................................................... 1-27 Sensitivity Analysis ......................................................................................................... 1-30

1.12.1 1.12.2 1.13

Recommendations ............................................................................................................... 1-32

INTRODUCTION AND SCOPE OF SERVICES ........................... 2-1

2.2.1 2.2.2 2.2.3 2.2.4 2.2.5 2.3 2.4 2.5 2.6

PROPERTY DESCRIPTION & LOCATION .................................. 3-1

EXPLORATION HISTORY ........................................................... 5-1

Introduction ............................................................................................................................ 5-1 Exploration Activities ............................................................................................................ 5-1

GEOLOGICAL SETTING ............................................................. 6-1

6.3.1 6.3.2 6.3.3 6.3.4 6.3.5 6.4

Structural Geology ................................................................................................................. 6-6

DEPOSIT TYPES.......................................................................... 7-1

Introduction ............................................................................................................................ 7-1 Deposit Types ......................................................................................................................... 7-1

MINERALISATION ....................................................................... 8-1

8.4.1 8.4.2 8.4.3 8.4.4 8.4.5 8.5

Other Prospects ..................................................................................................................... 8-4

TIBA PERMIT 2007 2009 EXPLORATION PROGRAMS ......... 9-1

Introduction ............................................................................................................................ 9-1 Exploration Programs ............................................................................................................ 9-1

DRILLING PROCEDURES ......................................................... 10-1

SAMPLING METHOD & APPROACH........................................ 11-1

SAMPLE PREPARATION, ANALYSES & SECURITY .............. 12-1

DATA VERIFICATION ................................................................ 13-1

13.3.1 13.3.2 13.3.3 13.3.4 13.4 13.5 13.6

ADJACENT PROPERTIES ........................................................ 14-1

14.2.1 14.2.2 14.3

Riverstone Resources Inc. .................................................................................................. 14-1 Karma Project................................................................................................................. 14-1

Pinsapo Group...................................................................................................................... 14-2 Peleguetenga, Tibou and Sassa .................................................................................... 14-2

High River Gold .................................................................................................................... 14-2 Bissa Hill ......................................................................................................................... 14-2

Goldrush Resources ............................................................................................................ 14-3 Ronguen ......................................................................................................................... 14-3

MINERAL PROCESSING & METALLURGICAL TESTING ....... 15-1

15.2.1 15.2.2 15.2.3 15.3

SEGA Gold Project PEA NI 43-101 Report

15.3.13 15.3.14 15.3.15 15.4

Metallurgical testwork Conclusions ................................................................................. 15-18

MINERAL RESOURCE AND MINERAL RESERVE ESTIMATE 16-1

16.2.1 16.2.2 16.2.3 16.2.4 16.2.5 16.2.6 16.2.7 16.3

16.3.1 16.3.2 16.3.3 16.3.4 16.4

16.4.1 16.4.2 16.4.3 16.4.4 16.5 16.6 16.7

MINE STUDY .............................................................................. 17-1

Geotechnical Investigation and Slope Stability Analysis ................................................ 17-1

SEGA Gold Project PEA NI 43-101 Report

17.4.1 17.4.2 17.4.3 17.4.4 17.5 17.6

PROCESS PLANT...................................................................... 18-1

INFRASTRUCTURE AND OTHER SITE SERVICES ................. 19-1

SEGA Gold Project PEA NI 43-101 Report

IMPLEMENTATION .................................................................... 20-1

20.5.1 20.5.2 20.6 20.7 20.8 20.9

ENVIRONMENTAL AND SOCIAL STUDY ................................ 21-1

21.4.1 21.4.2 21.4.3 21.4.4 21.4.5 21.5

21.5.1 21.5.2 21.5.3 21.5.4 21.6 21.7

ESIA Report .......................................................................................................................... 21-9 Environmental Authorisation .............................................................................................. 21-9