BUSOLWA MINING LIMITED

ISHOKELA GOLD PROJECT

1
REPORT FOR THE MINERAL

RESOURCE ESTIMATE

Prepared for

ISHOKELA GOLD DEPOSIT

BUSOLWA MINING LIMITED

NOVEMBER
2016

2
CONTENTS
1. EXECUTIVESUMMARY.................................................................6
2. INTRODUCTION...........................................................................9
3. DATABASE................................................... ................................9
4. RESOURCE ESTIMATION PROCEDURES..................................... 11
4.1 Geological Interpretation...................................................................11
4.2 Statistical Analysis................................................................................12
4.3 Capping................................................................................................13
4.4 Compositing.........................................................................................14
4.5 Rock Density........................................................................................15
4.6.1 Resource Estimation ........................................................................16
4.6.2 Block Model Validation ............................................................17
4.6.2.1 Comparing cross-sectional data with a Ishokela model ….............17
4.6.2.2 Grade-Tonnage Curve from Ishokela block model report
........................................................................................... ................19
4.6.2.3 Ishokela basic statistics of model values…………………………………....19
4.6.2.4 Trend Analysis..............................…...............................................21
4.7 Resource Classificstion.............................................................23
4.8 Mineral Resource Estimate for phase one Grade Control
model......................................................................................26
4.9. Pit Design Engineering............................................................27
4.9.1 Introduction...........................................................................27
4.9.2 Geotechnical........................................................ .............................27
4.9.3 Pit Design..........................................................................................28
4.10. Ore Reserve..........................................................................30
4.11. Mining Operations….............................................................31

3
 List of Figures

Figure 1: November2016 Ishokela phase one drilling coverage……………...12.

Figure 2.1: Cross-section comparing Ishokela model data and raw data……18

Figure2.2: Grade-Tonnage Curve from Ishokela block model report……......19

Figure2.3: Basic statistics of model values……………………………………...20

Figure 2.4 Shows a north-south Au swath plots across Ishokela ore body….21

Figure 2.5 North-South Au plot bars across Ishokela ore body……….…….…22

Figure 3: Plan View of the Block Model Classified on Resource codes…..….25
Figure 4: The current pit design parameters for the Ishokela Pit……….…….28
Figure 5: The current pit design for the Ishokela Pit……………………….….29

Figure 6: Drillhole Plan--Ishokela Grade Control Drilling Phase1….……..…32

.
Figure 7: N-S Section showing grade ranges, Ishokela………………….…..33

Figure 8: Assay (Cu) Data analysis, Ishokela…………………………….…..34

Figure 9: Horizontal variogram fan for Cu, Ishokela..............................…...35

Figure 10: Downhole Variogram for Cu, Ishokela…………………………...36

Figure 11: Directional Variogram for Cu (Axis1), Ishokela………………….37

Figure 12: Continuity Models, Ishokela………………………………………38

4
List of Tables
Table 1: Summary of Resource Classification……………………………….......8

Table 2: Basic Statistics for Au of raw data by modelled ore zone………......13

Table 3: Capping of Raw Assays by modelled ore zone……………....….…..14

Table 4: Basic statistics for gold composites………………….………........….15

Table 5: Summary Specific gravities of various types of rocks………………….15

Table 6: Classification of Mineral Resources based on sample spacing.......23

Table 7.1: Ishokela phase one grade control resources………………………26

Table 7.2: Summary of the bench to bench indicated and inferred resources
@ a cut-off of 0.5g/t Au……………………………………………….26

Table 8.1: Ishokela Phase One Grade Control Reserves…………………….30

Table 8.2: Summary of the bench to bench proven and probable reserves @ a
cut-off of 0.5g/t Au…………………………………………………….30

5
1 Executive summary
Estimation of the Ishokela gold deposit grade control phase one
mineral resource used the robust drillhole data that was available at
the time of estimating the mineral resource. The mineralisation
orebody model was built using Geovia Surpac software version.6.6.2
and the geostatistical sample analysis done using micromine software
version 10.0.5. The mineralized domain was estimated using both
inverse square distance weighting and ordinary kriging and results
compared with a correlation coefficient of about 0.9303 indicating
significant correlation. Statistical and visual validation of the mineral
resource block model was carried out in Geovia Surpac software
version.6.6.2.

The mineral resource model estimated Ishokela grade control phase

one deposit at 486,153t @ 1.83 g/t indicated and 2,264t @ 1.95 g/t
inferred resources equivalent to 28,736 ounces of gold for inverse
distance weighting estimation while ordinary kriging estimated
486153t@1.81g/t indicated and 2264t@1.98g/t inferred resources
equivalent to 28,422 ounces of gold.

Ishokela mineral reserve was calculated using the mine pit designed
using Geovia surpac version 6.6.2. This mine design pit is called
Ishokela_dsn_final.dtm

The mineral reserve model estimated Ishokela grade control phase

one deposit at 488392@ 1.83g/t for inverse distance weighting
estimation equivalent to 28,697 ounces of gold. Ordinary kriging gave
an estimated reserve equal to 488392t@1.81g/t equivalent to 28417
ounces of gold.

6
Drillhole parameters, geology logs and sampling information are
entered in excel database by the geologist/field technician at site in
the field. Importation and validation of drillhole logging data
occurred via ACCESS, a drillhole database management system
supplied by Geovia Surpac Inc. All data was checked prior to being
loaded into the database tables to ensure no repetition of existing
data and that data is in the correct format.

A total of 226 drilled holes with a total 8856 samples were

completed and uploaded into Geovia Surpac software version.6.6.2,
which was then used for the interpretation of the mineralized zones.

In the current Resources estimate, a total of 1,873 assay intervals

were used in the block modeling techniques.

The block model was based on a parent block size of 10m along
strike, 10m across strike and 2.5m vertical with sub parent of 2.5m
along strike, 2.5m across strike and 1.25m vertical.

The methodology to categorize estimated material as measured,

indicated and inferred for the resource model was based on the
classification method used by JORC CODE. Measured material is
defined as block estimates that have a closest sample distance of less
than 10m for all domains. Indicated material was defined as having a
closest sample distance of more than or equal to10m and less than
40m. Inferred material is the estimates that have a closest sample
distance between 40m to 90m as tabulated in table 1

7
Table 1: Summary of Resource Classification

MEASURED INDICATED INFERRED UNCLASSIFIED

< 10 ≥ 10 and < 40 ≥ 40 and < 90 ≥ 90

Drillholes were composited using 1m sample length downhole.

Composite intervals were coded according to the location of centroids
with respect to the modeled mineralization solids.

The output surpac composite file is is_comp_cut.str. This composited

string file was used for geostatistical analysis and estimation

8
2. Introduction
This report summarizes the data and methods used to produce the mineral
resource block model of the grade control phase one for Ishokela gold
Deposit, Misungwi district, Tanzania. The model was produced in
November 2016

The resource model and this report were produced by

Efraim Herman, a Senior Resource Geologist at Stamigold Biharamulo
Mine.

3. Database
The Ishokela database of all surface samples, drill hole geology data and assay
results is stored in Microsoft Access database.
Drillhole parameters, geology logs and sampling information are entered by the
geologist/field technician.
Importation and validation of drill hole logging data occur s via ACCESS
DATABASE supplied by Geovia Surpac Inc.
All data is checked prior to being loaded into the master database tables to
ensure no repetition of existing data and that data is in the correct format.
Validation routines are also run after data is loaded to ensure that no gaps or
overlaps in downhole data occurs.
Drillhole database can retrieve tables such as collar, survey, geology and assay.
This Drillhole data can be used in a number of different software applications
through some special functionalities such as SQL .

9
Special Comment
It is important that Busolwa Mining Limited mining office assigns
the responsibility of quality control to a geological technician or
geologist who compiles and monitors data immediately upon receipt
of results from the laboratory. Suspect analytical data must be
identified immediately, before it is entered into a master database
Each mine site should have a dedicated quality control technician or
geologist on-site to monitor all aspects of sample collection, QC
sample positioning, database design and updates, sample
preparation, laboratory or field failures, data acceptance, and
master database updates

Recommendations
Drilling practices, sample logging and sampling MUST be in
compliance with international best practices and appropriate for the
estimation of mineral resources, and ore reserves, according to the
guidelines of the JORC Code.
Quality control monitoring practice comprises of three essential
stages:
Firstly it must be standard practice to include the
right mix of QC materials in every batch of samples.
There must be a QAQC culture.
Secondly, the geologist initiating the analysis must
review critically the results of all QC samples as
soon as results are received. This should be done
prior to the import of data into the database, and

10
 its use in sections/plans etc.
Finally, action must be taken when QC results fall
outside of predetermined acceptable limits.

4 .0 Resource Estimation Procedures

4.1 Geological Interpretation

The data imported into surpac access database was interpreted using Surpac to
generate the resource model.
The wireframes/ solids were created for the mineralised domain to be used in the
block estimation.
The mineralized envelopes were outlined using a nominal cutoff of 0.4g/t Au.
The 0.4g/t mineralized envelopes were interpreted on 10m interval sections
taking into accounts quartz veining systems and mineralised BIF units.
In order to define zones of continuous +0.4g/t Au mineralisation for the
Ishokela phase1 grade control resource model, mineralized outlines were pushed
through dead drill holes except when two dead drill holes occurred on 2 adjacent
sections.
Lines were ‘snapped ‘to the drillholes as necessary, to get accurate lithological
and structural boundaries. Mineralised envelopes were extended out 5m from
the limits of drilling where necessary
Mineralized wireframes were set to solid and validated for open sides, duplicate
triangles, invalid edges and intersecting triangles.
CSV Data files for collar, survey and assay values were imported into Surpac
ACCESS database. In the assay data, blanks within the Access database were
replaced with -99 values and zeros remained unchanged.

11
Figure 1 - November2016 Ishokela phase one drilling coverage

4.2 Statistical analysis

Micromine software was used in determining the metal distribution for the
geological domain. The common statistics compiled included total number of
sample, average or mean grade, variance and standard deviation of the grade,
coefficient of variation (Standard deviation/Mean), minimum and maximum
grade. The statistics for Composite data (Au) calculated for the
geological/mineralised domain is summarized in the table below:-

12
Table 2: Basic Statistics for Au of Raw Data by modelled ore zone

Number of samples 1873

Minimum value 0.01
Maximum value 28.8

Mean 1.831148
Median 1.16
Geometric Mean 1.084458
Variance 4.472563
Standard Deviation 2.114843
Coefficient of variation 1.154928

Skewness 3.59396

Kurtosis 27.112626

4.3 Capping
Drillhole assays were examined for the presence of local high grade outliers. Once
these outliers were identified, the overall grade distributions were utilized to
establish capping values.
The raw assay data was trimmed by mineralized domain and grade capping was
applied to the domain. Grade capping was employed only for gold (see Table 2).

13
Table 3: Capping of Raw Assays by modelled ore zone

Geology Domain Capped Value

QV/BIF Domain1 7.71

4.4 Compositing
Drillholes were composited using 1m sample length based on the 5m (2 flitches).
Composite intervals were coded according to the location of centroids with
respect to the modeled mineralization solids.
The output surpac composite file is is_comp_cut.str. This composited string file
was used for geostatistical analysis and estimation

Zeros in the database were included in the compositing process and

-99’s for blanks/missing data. Un-assayed intervals were replaced with 0.01 g/t au
values prior to compositing. Composites were checked on screen to ensure
proper coding of composites within modeled mineralised ore zone.

14
Table 4: Basic statistics for gold composites
Number of Samples 1873
Minimum Value 0.01
Maximum Value 7.71
Mean 1.75874
Median 1.16
Geometric Mean 1.077014
Variance 3.047277
Standard Deviation 1.745645
Coefficient of variation 0.992554

Skewness 1.773455
Kurtosis 5.938011

Natural Log Mean 0.074193

Log Variance 1.177231

4.5 Rock Density

Specific gravities were assigned to various rock types. Assigned values were 2.2
for the oxide, 2.4 for the transitional and 2.8 for the primary or sulphide material
(Table 4). A detail test work should be undertaken to validate the assigned
numbers.
Table 5: Specific Gravities of Various Types of Rocks

Material Type Specific Gravity

Air 0.00

Oxide 2.20

Transitional 2.40

Primary Sulphide 2.80

15
4.6.1 Resource Estimation
The mineral resource and reserves estimates for the Ishokela gold deposit phase
one grade control drilling were based on the Ishokela_blockmodel.mdl block
model. The model is both an inverse distance weighting and an ordinary kriged
model created in Geovia Surpac Version 6.6.2. It was created in November 2016.
A resource estimate was prepared from a block model built within wireframes
based on mineralised ore.
From this model resource estimates at various cut-off grades are produced.

In carrying out an estimation, the following procedures were followed

• Assay samples were composited to nominal 1m down-hole

intervals within the wireframe shapes
• Block size used within the mineralised ore zone was 2.5 x 2.5 x
1.25m with sub blocks of 0.5 x 0.5 x 0.5m dimensions
• Initial search ellipse radii for this ore body were based on the
variograms parameters developed from the spatial analysis of the
deposit using micromine software version 10.0.5.
• A minimum of 6 samples and a maximum of 15 samples were
used in the block estimation for the first pass. A minimum of 4
samples and a maximum of 10 samples were used in estimating
grades for the second run while a minimum of 2 samples and a
maximum of 8 samples estimated ore blocks for the third pass.
• Both Ordinary kriging and inverse distance weighting estimation
methods were used in estimating Au grade within the ore body.
• The specific gravity was assigned as a single value of 2.8 to ore
blocks within a mineralised ore body.

• Resources were calculated at a variety of cut-off grades, and

classified in various categories as indicated and Inferred.
16
Comment
I considers that this interpretation, presents a sound and
acceptable method to ‘model’ the deposits.

4.6.2 Block Model Validation

An important step in a geostatistical evaluation is to validate the model after it
has been created. The Ishokela grade control phase one block model was
validated in mainly four ways
• By comparing cross-sectional data with model value
• By generating grade-tonnage curves from block model reports
• By running basic statistics of model values and
• By trend analysis

4.6.2.1 Comparing cross-sectional data with a Ishokela model

One method of validating a model is to view cross-sections of it compared to
composited assay raw data.

17
Figure2.1: Cross-section comparing Ishokela model data and raw data

You want to ensure that the values in the model appear to be corr ect. In this
Ishokela model example, this does appear to be the correct where there is
significant influence from high sample values due to the low number of samples
for kriging.

18
4.6.2.2 Grade-Tonnage Curve from Ishokela block model report
Ishokela model was also validated by means of reporting tonnes and grade and
construct a grade-tonnage curve.

Figure2.2: Grade-Tonnage Curve from Ishokela block model report

4.6.2.3 Ishokela’s basic statistics of model values

A scatter plot of the inverse distance and ordinary kriged data for Ishokela block
model is plotted with a line of regression showing the correlation between the
two data sets.
19
Figure2.3: Basic statistics of model values

The validity of the result is determined by the degree of correlation between the
two data sets. In this case, the correlation is 0.9303 and is close to 1, so the
results are considered valid.

20
4.6.2.4 Trend Analysis of Ishokela block model
The Ishokela block model was also analysed for trends in the data to validate the
output model data

Figure 2.4 shows a north-south swath plot across Ishokela ore body whereby the
blue line indicates the composite grade, the orange line the kriged grade and the
grey line the inversely distance weighed grade.

Model Average OK &ID2 Grade Vs Northing

2.5

1.5

0.5

0
9661350 9661400 9661450 9661500 9661550 9661600 9661650 9661700

Raw_Data ok_Model idw_Model

21
Figure 2.5 shows a north-south plot bars across Ishokela ore body whereby the
blue line indicates the composite grade, the orange line the kriged grade and the
grey line the inversely distance weighed grade

Model Average OK &ID2 Grade Vs Northing

2.5

1.5

0.5

0
9661410 9661440 9661470 9661500 9661530 9661560 9661590 9661620 9661650 9661680

Raw_Data ok_Model idw_Model

This analysis was used to identify regions where Ishokela block model estimations
might be different to the composited data.

Note
Importantly the kriged line in Figure 1.4 above displays a
‘smoother’ general plot and essentially underestimates the grade
compared to the composite raw data with a jagged plot shape.

22
In general a visual validation of the models has been undertaken in Surpac
software whereby vertical cross sections and plan views, with drill hole data,
have been examined to verify the quality of the block models.
A visual examination, as well as statistical comparison, of bloc k model grade
verses drillhole grade (input raw data) revealed comparable grades with no much
over or under estimation of the block model and is therefore a reasonable
representation of the deposit.

The block model generated is considered to be appropriate for the

dimensions of the deposits, as well as subsequent mining parameters and the
selective mining unit (SMU).
Grade estimates are smoother and the error of estimation larger as the
block size is reduced. It is generally considered that block dimension along plane
(X and Y) should be equal to, and not less than, one quarter of the sample
spacing. Block dimension of 2.5 by 2.5 by 1.25m in the X, Y and Z dimensions, and
drillhole spacing (and thus sample spacing) is typically between 10m at the
resource definition stage.

4.7 Resource Classification

The amount of data used to produce the estimates is sufficient in terms of

quantity and quality to enable the resources to be classified and reported to the
appropriate level of confidence.
A straightforward mineral resource classification was applied based directly on
drill hole spacing/density as shown in the table below

Table 6: Classification of mineral resources based on sample spacing

MEASURED INDICATED INFERRED UNCLASSIFIED

< 10 ≥10 and < 40 ≥ 40 and < 90 ≥ 90

23
Comment:
Although most mining companies now base resource classification on
geostatistical parameters the approach adopted here is rational for
the deposit being considered. I consider Drillhole spacing to be
close and absolute to the deposit size and acceptable for the
resource classification methodology applied.

24
Figure 3: Plan View of the Block Model Classified on Resource codes

Inferred Resource

Indicated Resource

25
4.8 Mineral Resource Estimate for phase one
Grade Control Model
Results of the mineral resource estimation for Ishokela phase one grade control
model deposit is presented in Table 7.1 Below: -

TABLE 7.1: ISHOKELA PHASE ONE GRADE CONTROL RESOURCES (NOVEMBER 2016)

TONNES_IDW(t) GRADE_IDW(g/t) TONNES_OK(t) GRADE_OK(g/t)

MEASURED - - - -

INDICATED 486153 1.83 486153 1.81

INFFERED 2264 1.95 2264 1.98

GRAND_TOTAL
(tonnes and grade) 488417 1.83 488417 1.81
OUNCES(OZ) 28736 28422

`Table 7.2: Summary of the bench to bench indicated and inferred resources @ a
cut-off of 0.5g/t Au.

INDICATED_RESOURCE INFERRED_RESOURCE
RL_FROM RL_TO TONNES AU_Ok (g/t) TONNES AU_Ok (g/t)
1215 1210 9671 2.06 16 1.69
1210 1205 59730 1.88 752 2.63
1205 1200 72732 1.92 700 1.62
1200 1195 79319 1.89 678 1.70
1195 1190 80041 1.68 82 1.91
1190 1185 77386 1.66 5 0.60
1185 1180 67610 1.94 14 1.43
1180 1175 29840 2.01
1175 1170 8 1.95
Sub total 476337 1.84 2248 1.99
Grand total 478585 1.84
TOTAL OUNCES 28299

26
4.9 Pit Engineering Design

4.9.1 Introduction
Surpac block model, including waste cells, produced for the mineral resource
estimates is used for the estimation of the Ore Reserves.

4.9.2 Geotechnical
Prior to designing the mine, a geotechnical assessment is r equired to determine
the angles of the final pit walls. It is strongly recommended that routine internal
geotechnical assessments should be put in place because the mine life of the
grade control mine pits for Busolwa mining Limited company is not long enough
to justify using external consultants.
I recommend that Geotechnical holes always be drilled around the intended
perimeter of every new grade control mine pit and the results of these holes be
used for classification of rock material making use of required angles in certain
ground types.
The use of rock mass classification methods can be ideal for the evaluation of the
stability of rock slopes.
Based on the ratings obtained, using bench heights of 5m, the overall slope
angles in all lithology the weathered and slightly weathered BIF, BASALT and TUFF
at Ishokela was 45°.
Ishokela mine pit have used the following pit design parameters:-
• Bench Angle: 70°
• Bench Height: 5m
• Catchment Berm: 5m
• Ramp Width: 12m
• Ramp Grade: 1:10
• Overall Slope Angle: 45°

27
Figure 4: The current pit design parameters for the Ishokela Pit.

4.9.3 Pit Design

The pit design work was performed in Vulcan Version 9.1. The block model, the
ultimate pit shell and the recommended face angles are used as guidelines for
defining the areas of extraction. The method of designing the pit varies
depending on the size and shape of the orebody, the expected production rate
and the type of mining fleet to be used.
Usually the initial pit design will commence at the lowest economic level of the
ultimate shell. A level perimeter string is created around the mineable ore in the
block model for that level. The mine is broken up into zones according to the
geotechnical characteristics so that the recommended final wall angles can be
implemented. From there the mine is created upwards by indicating the position,
width and gradient of the haul road and the software generates the contour
strings for each level until reaching the surface topography.
The pit is 40m deep (i.e. 1215mRL to 1175mRL) with 102 square kilometers (432m

28
strike by 235m) and contains 488,392 tonnes of Ore at average grade of 1.81 (g/t)
yielding 28,417 Ounces

Figure 5: The current pit design for the Ishokela Pit.

After the initial design has been made, it was necessary to modify the design to
optimize the mineable ore, the positioning of the haul road and the mine
entrance. When the pit design was finalised a final Ore Reserve was estimated.
Note
In designing the Ishokela pit the methodology used made much of
efforts to maximise the Probable and Proven Reserves.

29
4.10 Ore Reserve
Table 8: Ishokela Gold Project Mineral Reserve Estimate for phase one grade
control Model based on november2016 design pit namely ishokela_dsn_final.dtm

TABLE 8.1: ISHOKELA PHASE ONE GRADE CONTROL RESERVES (NOVEMBER 2016)

TONNES_IDW(t) GRADE_IDW(g/t) TONNES_OK(t) GRADE_OK(g/t)

PROVEN - - - -

PROBABLE 488392 1.83 488392 1.81

GRAND_TOTAL
(tonnes and grade) 488392 1.83 488392 1.81
OUNCES(OZ) 28697 28417

Table 8.2: Summary of the bench to bench proven and probable reserves @ a cut-
off of 0.5g/t Au.

PROVEN & PROBABLE RESERVES (NOV2016)

AU_Ok
RL_FROM RL_TO TONNES (g/t)
1215 1210 9688 2.06
1210 1205 60482 1.89
1205 1200 73432 1.92
1200 1195 79997 1.89
1195 1190 80123 1.68
1190 1185 77375 1.66
1185 1180 67624 1.94
1180 1175 29840 2.01
Grand
total 478561 1.84
OUNCES 28310

30
4.11 Mining Operations
The shallow nature of the deposit and the topography lends itself to conventional
truck and shovel surface mining as the extraction method. The main digging
equipment will be excavators mining a 5.0m flitch and loading the ore and w aste
into dump trucks which transport them to stockpiles.
It is highly recommended that waste material dug from initial top benches be
dumped into artisanal mined voids which are located traversing the mine pit thus
assist with safety as mining progresses.
Ishokela mine pit voids were surveyed around its perime ter on surface by
surveyors. It’s this surveyed surface that was used to interpret and model the
void shape.

31
Figure 6: Drillhole Plan--Ishokela Grade Control Drilling Phase1

32
Figure 7: N-S Section showing grade ranges, Ishokela

33
Figure 8: Assay (Cu) Data analysis, Ishokela

34
Figure 9: Horizontal variogram Fan and an Experimental Variogram for Cu,
Ishokela

35
Figure 10: Downhole Variogram for Cu, Ishokela

36
Figure 11: Directional Variogram for Cu (Axis1), Ishokela

37
Figure 12: Continuity Models, Ishokela

38